Week 10- Climate Change Flashcards
Where emits the most emissions?
Asia with 53% of emissions
Which nation has contributed the most to emissions historically?
USA with 25%
What are the impacts of climate change?
Heat waves
Extreme precipitation
Sea level rise
What factors may be changed by climate change?
Technology
Weather conditions
Scientific thresholds
Adaption policies
What are some potential policy responses?
Mitigation
Adaption- Reduce vulnerabliity
What must be considered when formulating climate policy?
-Long lag time
-Global incentive
-No end of pipe technology
What are some mitigation policies?
-Use energy more efficiently and switch to less carbon intensive fuel
-Increase amount of carbon absorbed by trees by decreasing deforestation
What are some adaption policies?
Urban planning
Construction of flood defences
What are some challenges for the design of climate policies?
-Only policies that yield the largest benefits will be considered
-Large costs
-Time scale
How do you calculate Marginal Social Cost (MSC)
MSC = MARGINAL PRIVATE COST + MARGINAL EXTERNAL COST
What is a carbon tax?
A tax on fuel in proportion to the carbon content
What is the external cost?
Damages being inflicted onto society
What is the social cost of carbon?
It measures the avoided economic damages associated with a metric ton reduction in carbon emissions
How should the level of tax be determined?
In accordance with the MEC associated with emissions
What is the Target Consistent Approach?
Identify a target for climate policy, and then set a tax level to achieve the target at the least cost.
What is required to set the correct level of tax?
Price elasticity of demand for fuel
Cross-price elasticity of demand
What does the price elasticity of fuel suggest?
Due to its’ inelastic nature, a large change in price would be required to reduce demand for energy.
What is the estimate for price elasticity of demand for fuel?
Around -0.3 and -0.7
What are tradeable permits?
Firms are given permits to emit a particular amount of GHGs. If a firms emits less they can sell their permit to other companies
What is Marginal Abatement Cost (MAC)?
The cost of cutting pollution by one unit
How do MACs work?
If MAC>permit price the firm will not abate but buy permits
If MAC<permit price the firm will abate and sell spare permits
