7: Cap and Trade Flashcards
What is the geographical distribution of SO2 emissions in Canada and the US?
East coast has produces most tons of SO2
In the west, soils are better at buffering acidity
What was the ‘dilution approach’ used to address emissions in the 1970s?
A new 381m tall “superstack” smelter built in Sudbury
Spread emissions out further
Built higher and higher smoke stacks to dilute impact over larger area
Just ended up spreading the problem further
What was the Canadian Coalition on Acid Rain? When did it begin?
NGO established in 1981 that raised awareness of the acid rain issue through advocacy, educational programs and lobbying the governments of Canada and the US
Disbanded after passage of amendments to US Clean Air Act in 1990
Debate over which two groups of people are the true ‘doomsdayers’
Is it environmentalists or those who seek to resist policies to protect the environment
Who was Tom McMillan
Minister of environment in 1980s during development of acid rain program
Limits set by the Eastern Canada Acid Rain Program? What was wrong with the limit established?
1985
Set a target load of 20 kilograms per hectare per year (kg/ha/yr): limit of how much acid precipitation could fall in the area
Total Eastern Canada cap of 2.3 million tonnes/year
Level was significantly above what scientists considered to be the critical load
What is a target load?
Amount of pollution that is deemed achievable and politically acceptable when other factors (such as ethics, scientific uncertainties, and social and economic effects) are balanced with environmental considerations
How were the goals of the Eastern Canada Acid Rain Program achieved?
Intensive command and control: technology and procedural standards
Each province developed its own regulations and undertook negotiations with individual procedures
When was the Clean Air Act Amended in the US? How?
1990
Reduce emissions from electric generating plants by 50%
What was the US’s approach to Acid Rain Policy?
US system initiated system based upon tradable quotas (aka tradable permits; cap and trade system)
How were permits allocated in the US acid rain program? What changes occurred for companies?
Allocation given to plants based upon historical emissions and current approaches
Emissions monitoring equipment installed on all producers. At the end of the year, companies must have enough permits to cover their actual SO2 emissions
How expensive would the Canadian approach have been in the US? What was the cost of implementing the US policy?
Using the Canadian approach in the US would have cost $7.4 billion
American model ended up costing $0.9 billion with similar success
Why was the US cap and trade system more efficient than Canada’s regulatory monitoring system?
- competition encourages continuous incentive to innovate least cost reduction strategies
- can bank permits; firms invest in ‘over-achieving’ improvements, knowing they will receive a payoff
- not all firms need to change. Those that can reduce their emissions efficiently do, others can purchase extra permits.
How did the US and Canada’s acid rain programs differ?
In Canada, a handful of engineers sat down and decided what technologies to implement
In the US, some inefficient plants shut down and sold their quota, a lot of plants started using better quality coal, tore down/rebuilt plants; everyone figured out how to meet the requirements on their own. US reduced amounts of permits every year.
Other examples of cap and trade systems
- Alberta’s Technology Innovation and Emissions Reduction Regulation (TIER) program
- Quebec, California Carbon market
- Individual fishing quota’s
