Spring Break
Cap and trade a real solution for environmen
Sanjai Tripathi
Issue date: 4/21/09 Section: Forum
Back in the day, we had a problem called acid rain.
When high-sulfur coal was burned in power plants to make most of the nation's electricity, sulfur dioxide (SO2) was released into the air. It reacts with the water in the atmosphere, and the result is acidified condensation.
It wouldn't melt your face off, but it was bad for plants and aquatic animals, so forests, farms, streams and lakes were noticeably harmed. Buildings and concrete in cities were eroded as well.
In some parts of the county, coal was by far the least expensive source of power, and while the technology existed to install scrubbers on the smokestacks to clean the SO2 out, it was often expensive to install on old plants.
Usually, the government responds to this type of problem by making a bunch of rules. It would prohibit new coal plants from being built or require that all had to install the expensive scrubbers and meet exacting specifications. With that strategy, it would be expensive to make all the necessary changes.
Either that, or the industry lobbyists would have neutered the requirements, and the problem would just be left unsolved.
Facing this question in the 1970s, the government opted for a different method. Instead of micromanaging how each power plant operated, it gave the whole industry a simple imperative: we are going to cap the amount of SO2 you can emit, and you figure out how to get your emissions below that.
The mechanism was called "cap and trade." Rather than make rules, the government issued emissions credits. Coal plant operators could emit as much sulfur as they wanted as long as they had the credits. The government then addressed the acid rain problem by bringing down the number of credits issued each year by a small amount, meaning the industry had to find a way to keep finding small cuts.
The credits were also tradable, which was the key to the system. In some plants, it was easy to scrub the sulfur out, or to build an alternative power source when the coal generator's life cycle ran out, or for the community to simply cut inefficient power uses. In other places, sulfur was harder to scrub, and coal was the only cost-effective energy source available. Companies that needed to emit sulfur could buy the credits, and companies that could make easy cuts would do so to sell their credits or simply avoid buying them in the first place.
When high-sulfur coal was burned in power plants to make most of the nation's electricity, sulfur dioxide (SO2) was released into the air. It reacts with the water in the atmosphere, and the result is acidified condensation.
It wouldn't melt your face off, but it was bad for plants and aquatic animals, so forests, farms, streams and lakes were noticeably harmed. Buildings and concrete in cities were eroded as well.
In some parts of the county, coal was by far the least expensive source of power, and while the technology existed to install scrubbers on the smokestacks to clean the SO2 out, it was often expensive to install on old plants.
Usually, the government responds to this type of problem by making a bunch of rules. It would prohibit new coal plants from being built or require that all had to install the expensive scrubbers and meet exacting specifications. With that strategy, it would be expensive to make all the necessary changes.
Either that, or the industry lobbyists would have neutered the requirements, and the problem would just be left unsolved.
Facing this question in the 1970s, the government opted for a different method. Instead of micromanaging how each power plant operated, it gave the whole industry a simple imperative: we are going to cap the amount of SO2 you can emit, and you figure out how to get your emissions below that.
The mechanism was called "cap and trade." Rather than make rules, the government issued emissions credits. Coal plant operators could emit as much sulfur as they wanted as long as they had the credits. The government then addressed the acid rain problem by bringing down the number of credits issued each year by a small amount, meaning the industry had to find a way to keep finding small cuts.
The credits were also tradable, which was the key to the system. In some plants, it was easy to scrub the sulfur out, or to build an alternative power source when the coal generator's life cycle ran out, or for the community to simply cut inefficient power uses. In other places, sulfur was harder to scrub, and coal was the only cost-effective energy source available. Companies that needed to emit sulfur could buy the credits, and companies that could make easy cuts would do so to sell their credits or simply avoid buying them in the first place.
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RJ
posted 4/21/09 @ 7:55 AM PST
Sanjai - we will do cap and trade when all the other countries do, specifically China and India. There is no way our companies can be competitive with those of China and India if they are paying more for energy costs. (Continued…)
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