Unit 7: Cap and Trade Flashcards
Sudbury Smelter
Constructed in 1965 to disasters environmental impacts. Affected plants and animals by creating acid rain.
Acid Deposition/Rain
Precipitation containing sulfuric acid that erodes buildings and causes harm to local agriculture and water sources.
Sudbury dilution
In 1972, a new taller “superstack” smelter was built at Sudbury that would in theory dilute the SO2 into the atmosphere.
Civil society
Community of citizens linked by common interests and collective activity.
Canadian Coalition on Acid Rain
Civil society created in 1981 to raise awareness about acid rain. Disbanded in 1990 after the USA amended the Clean Air Act.
Target load
Amount of pollution that is deemed achievable and politically acceptable when other factors (ethics, scientific uncertainties, and social and economic effects) are balanced with environmental considerations
Eastern Canada Acid Rain Program
Instituted in 1985 with a target load of 20 kilograms per hectare per year, which was significantly above what scientists considered to be the critical load.
The program surpassed its goals by 14% through intensive command and control Technology and Procedural Standards created by each province and individual producers.
USA acid rain policies (2)
In 1990, the Clean Air Act was amended to reduce emissions from electric generating plants by 50%. In 1991 the Canada-US Air Quality Agreement was signed
USA acid rain cap and trade system
Based on tradable permits that were allocated based on historical emissions and current approaches. At the end of each year, companies must have enough permits to cover their actual SO2 Emissions, otherwise they must buy or trade more.
Acid rain cape and trade results
Competition encouraged continuous incentive to innovate cost effective strategies. The ability to bank permits meant that firms could invest in ‘over-achieving’ improvements, knowing that they will receive a payoff for doing so. All firms didn’t need to make adjustments, those that can most efficiently improve their emissions can do, while those less able can purchase permits.
Cap and trade examples (4)
Alberta’s Technology Innovation and Emissions Reduction Regulation (TIER) Program. Quebec, California, Ontario’s Carbon Market. Individual Fishing Quota. China’s Cap and Trade system.
Quebec’s cap and trade carbon system
Distributors of fossil fuels used in Québec are required to cover the GHG emissions resulting from the products they distribute.
Since 2019, industrial establishments that report annual emissions 10-25 kt CO2 eq. can voluntarily register to the C&T system.
The government establishes the maximum emission limit that is progressively lowered over time to lower emissions. They sell emission units to registered emitters at auction four times a year that can be sold to other emitters.
Industrial emitters receive most of their emission units for free to prevent “carbon leakage” while electricity producers and fossil fuel distributors do not receive free allocations. The number of free units has been dropping about 1-2% a year to encourage less GHG emissions.
Border adjustments
Import costs equivalent to carbon pricing to make up the difference between carbon pricing systems in different countries.
Cap and Trade key points (6)
- More complicated and expensive
- More certainty in terms of total amount of emissions
- Less certainty in terms of cost for emitters
- Not revenue neutral
- More politically resilient
- Easy mechanism to address trade exposed industry (free permits)
Carbon taxes key points (5)
- Simple to administer
- More certainty in terms of cost of emissions
- Less certainty in terms of total amount of emissions
- Revenue neutral
- Politically fraught
