ENV222H1 Lecture Notes - Lecture 10: Sulfur Dioxide, Carbon Leakage, Emissions Trading
9 May 2018
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ENV222 Lecture 10 March 27
Not a cumulative exam
Carbon Pricing
o Map (from world bank reading)
o Illustrates ETS (trading schemes) or carbon taxes (in process)
o On provincial level, in Canada, some policies already implemented
o Read executive summary
Carbon tax market cannot exist without policy creating the demand for this policy
o Sort of an attractive thing to propose
o How this actually gets implemented is not same as commodity that has a natural
demand
Putting price on carbon
o Theoretical idea
o Origins of carbon market
▪ Pollution as environmental externality
▪ Theory – Ecological Modernization
▪ Natural Capitalism (how to bring together people and nature)
▪ Earlier pollution permit policies
o Negative externality – when we have a transaction happening in the free market,
customer pays a certain price for the product that the’e uig.
Environmental, social and other types of costs are not incorporated in the price
presented to the customers (externality not imbedded in the transaction)
▪ Theoretically, it would incentivize the producers to include those costs in
the price
▪ Issues: how to make this work practically? (externality in terms of money)
• Try to calculate the effect of an action (pollution or etc) is very
problematic
• Ethical consideration – humans who are assigning this cost
• This idea of negative externality – internalizing it – is a powerful
one – one of the basic ideas for carbon markets and other
pollution related issues
o Ecological modernization
▪ School of thought which sugges that the economy can benefit from
moving towards environmentalism
▪ Henges upon technological innovations
▪ Market forces play a part in technological innovation process
▪ Should be able to take care of any environmental problems that arise
▪ In this view, government is constantly in the process of environmentlal
transformation – minimizing the extent of environmental impacts that
humans are having (ooptimistic)
▪ Startin go=point for the carbon market
o Natural capitalism (optimistic)
find more resources at oneclass.com
find more resources at oneclass.com
▪ Key: we have a capitalist system (flawe, as negative consequences are
happening, inequality and etc)
▪ Tries to embrace capitalism , recognizes ttraditional conceptualism of
capitalism – flawed to failing to recognize true value of resources (which
the system dpends upon)
▪ Because we value resources,- we should move to resource efficiency
(incentivized to use less of the resources)
▪ If you create natural, proper capitalism model, in a way, environment can
be helped by this scio-economic model
Pollution Permits (basis for Clean Air act)
o Transferrable pollution permits
o Emissions trading framework fpr localized air pollutants (1980s) – no CO2 which
travels a lot
o CFC phase-out – often cited as a huge success(1980-s-90s)
▪ Some bans came into play eventually
o Cutting Sulphur dioxide (1990s)
o GHG emission – different
▪ As opposed to localized – effects are immediately felt
▪ GHGs – tend to flow all the way to the other side of the world, effect not
necessarily felt by local, long life span
Putting a Price on Carbon
o ASSIGNING A PRICE FOR CARBON EMISSIONS
o Making polluters pay for pollution
▪ Shifting the burden of damage onto polluters
▪ How much and how you charge them?
o Theoretically we want to internalize this GHG eternality
o What is the monetary value of my pollution? (hard time to come with answer)
o Incentivize polluters to reduce pollution
o Puttig a pie o ao does’t eessail tell podues ho to edue the
emisssions s
▪ Price signals
▪ Flexibility
▪ Least-cost method
o Figure out a way to price emissions without putting excessive burdens on people
What do you need to instate carbon pricing?
o Social buy-in
▪ People have to understand and accept the problem 2
o Political will
▪ Reflects what people are on board with
▪ Also tends to reflect to determine the chosen method
o System for measurement, pricing, penalties, trading, monitoring etc.
▪ Mutual agreed upon system which is actually complex? How to measure,
ho ou’e goig to taget, ho to ipleet et
▪ Details have to be determined and agreed upon
find more resources at oneclass.com
find more resources at oneclass.com
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ENV222H1 Full Course Notes
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Document Summary
Carbon pricing: map (from world bank reading) Illustrates ets (trading schemes) or carbon taxes (in process: on provincial level, in canada, some policies already implemented, read executive summary. Carbon tax market cannot exist without policy creating the demand for this policy: sort of an attractive thing to propose, how this actually gets implemented is not same as commodity that has a natural demand. Environmental, social and other types of costs are not incorporated in the price presented to the customers (externality not imbedded in the transaction: theoretically, it would incentivize the producers to include those costs in the price. If you create natural, proper capitalism model, in a way, environment can be helped by this scio-economic model. Incentivize polluters to reduce pollution: putti(cid:374)g a p(cid:396)i(cid:272)e o(cid:374) (cid:272)a(cid:396)(cid:271)o(cid:374) does(cid:374)"t (cid:374)e(cid:272)essa(cid:396)il(cid:455) tell p(cid:396)od(cid:272)ue(cid:396)s ho(cid:449) to (cid:396)edu(cid:272)e the emisssions s, price signals, flexibility, least-cost method, figure out a way to price emissions without putting excessive burdens on people.
