Cap And Trade Policy Overview
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Cap And Trade Policy Overview

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From melting ice caps and rising sea levels to an increase in natural disasters and adverse health effects, the effects of global warming are vast and will continue to get worse if nothing is done......

From melting ice caps and rising sea levels to an increase in natural disasters and adverse health effects, the effects of global warming are vast and will continue to get worse if nothing is done reduce the amount of greenhouse gases emitted into the atmosphere. One of the main concerns is the health of humans as the earth warms. Injuries due to severe weather, respiratory problems due to bad air quality, and nutritional deficiencies due to food shortages are all expected to increase because greenhouse gases are warming the earth. The health of many people is being compromised by large emitters such as industrial businesses, but it is these businesses that contribute to a strong economy by employing many individuals. Therefore, completely eliminating these industries is not a wise economic choice. However, there is currently no incentive program to encourage these businesses to invest in methods to reduce the amount of greenhouse gases they emit. It is estimated that companies can reduce their rate of pollution by 20 to 50 percent while remaining profitable if there is a market to sell carbon credits. Continuing to generate profits while reducing the amount of pollution emitted into the atmosphere seems like an ideal solution, but with no market place to sell carbon credits there is no incentive for management to change the way their business operates

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  • 1. -Chris Thompson -Michael Nemmetz -Steve Hessler -Su Zanne Wong Implications of a Cap & Trade System in the United States
  • 2. Agenda
    • Global Warming and Greenhouse Gases
    • Introduction to Kyoto Protocol
    • Kyoto Protocol in ASEAN/EU Countries
    • Cap & Trade Program in the United States
    • Alternatives and Initiatives
    • Recommendations
    • Summary and Conclusion
  • 3. The Problem
    • Population growth and rapid economic development
    • Free market failures
    • Lack of alternatives
    • Excessive CO 2 in the atmosphere
    • Global Warming
  • 4.
    • "The challenge is either to build an economy that is sustainable or to stay with our unsustainable economy until it declines … the choice will be made by our generation, but it will affect life on earth for all generations to come."
    • Lester Brown, Worldwatch Institute
  • 5. The Fundamentals of Cap and Trade
    • Government establishes target reduction
    • Polluters buy and sell emission ‘allowances’
    • Allowances are reduced annually
    • Limits temperature increase by 2050
    • $50-$300 billion in government revenue
  • 6. Introduction to Kyoto Protocol
    • February 16, 2005
    • 183 Countries
    • Reduce GHG emissions by 5.2% of 1990 levels
    • Prevent significant human altercation of the climate
    • Establishes emission trading
  • 7. Mechanisms of Kyoto Protocol
    • European Union
      • Emission Trading
      • Sulfur Dioxide -> Carbon Dioxide
        • Privately
        • Over the counter
        • Spot market
  • 8. Mechanisms of Kyoto Protocol
    • ASEAN Countries
      • Emission Trading
      • Clean Development Mechanisms
        • Equity transfers
        • Technology transfer
        • Certified Emission Reduction
  • 9. Annex I Countries 1 Australia 12 Finland 23 Lithuania 34 Slovenia 2 Austria 13 France 24 Luxembourg 35 Spain 3 Belarus 14 Germany 25 Monaco 36 Sweden 4 Belgium 15 Greece 26 Netherlands 37 Switzerland 5 Bulgaria 16 Hungary 27 New Zealand 38 Turkey 6 Canada 17 Iceland 28 Norway 39 Ukraine 7 Croatia 18 Ireland 29 Poland 40 United Kingdom 8 Czech Republic 19 Italy 30 Portugal 41 United States 9 Denmark 20 Japan 31 Romania 10 Estonia 21 Latvia 32 Russian Federation 11 European Community 22 Liechtenstein 33 Slovakia
  • 10. Impacts of Kyoto Protocol
    • Investments
    • Terms of Trade
    • GDP Growth
  • 11. Cost Implications
  • 12. Slowed GDP Growth “ Each one percent increase in U.S. GDP growth is accompanied by a 0.3 percent increase in energy us (Thorning)”
  • 13. Factors of Slowed GDP
  • 14. Job Implications
    • Unemployment
      • Jobs in “green” sector
      • “ Leakage”
    Source: U.S. Department of Commerce: Bureau of Economic Analysis Unemployment vs. GDP Growth Rate Unemployment GDP Growth
  • 15. Cost Implications
    • Competing in a global market
      • Incentive to turn “green”
          • Public opinion
      • Economic policies
    • Kyoto Protocol
  • 16. Cost Implications
    • New accounting standards
      • Consistency
      • Comparability
    • Costly implementation
  • 17. Concerns about Equity
    • Under either a carbon tax or a carbon cap-and-trade policy,
    • wealthy people would be able to take advantage of their class
    • privilege to use more fossil fuels – both nationally and globally.
    • In order to withstand popular opposition to higher fossil fuel prices,
    • any climate policy must be widely regarded as fair by a broad base
    • of beneficiaries .
  • 18. Alternatives to Cap and Trade
  • 19. Policies and Legislation
    • Education, Education, Education!
    • PSAs to promote consumer awareness
    • Promote Eco-Sustainable lifestyles
    • Increase Energy-Star offerings
  • 20. Smart Grid Technology
    • 19 th century meets the 21 st
      • Increased efficiency of 5% is the equalivant of taking 21.6 million cars off the road
      • The electric grid is responsible for 40% of all CO2
      • GE Smartgrid
  • 21. Las Vegas, Lights off for Earth Day Las Vegas, a typical night
  • 22. Innovation
    • Promote and sponsor technological innovation through grants and subsidies
    • Simplify tax code to allow for increased rebates and incentives for using green energy
    • “ I’m feeling Green!”
  • 23.
    • Coal will continue to be largest source of energy production…
    But coal no longer needs to be seen as a dirty fuel source
  • 24. Regional Initiatives
    • Regional Greenhouse Gas Initiatives (RGGI)
      • goal of RGGI is to develop a multi-state Cap-and-Trade program covering GHG emissions.
      • Initially be aimed at developing a program to reduce carbon dioxide emissions from power plants in the participating states.
  • 25. Summary
    • Strong environmental and efficiency arguments for use of market-based mechanisms such as cap-and-trade
    • Many institutional details that need careful attention for actual cap-and-trade system to realize environmental goals in a cost effective manner
  • 26. Future Energy Consumption
  • 27. Additional Questions to Consider
    • Is it ethical to privatize the sky and treat pollution as a commodity traded like private property?
    • Is it ethical to make a profit from carbon trading ?
    • Will the complexity of a cap-and-trade system rival our tax system, opening similar opportunities for loopholes and favored treatment?
    • Would our political institutions be reliable to manage this massive new market over decades under tremendous pressure?
    • And if federal climate policy is not forthcoming from Congress fast enough…
    • What local, state, corporate, and regional policies for energy, agriculture, science, taxes, and trade could be pursued to meet the challenge?
  • 28. Questions ?
  • 29. For Further Reference
    • The following public interest organizations have a strong focus on climate policy design and development in the U.S.:
    • World Resources Institute www.wri.org
    • Pew Center on Global Climate Change www.pewclimate.org
    • Resources For the Future www.rff.org
    • Union of Concerned Scientists www.ucsusa.org