Environmental Engineering Reference
In-Depth Information
make a
fixed percentage reduction, we could not have
done so because we were already very ef
cient. Under
Cap and Trade I would have had to buy credits from
those pro
igate neighbors. Fortunately, the crisis passed
before anything had to be done.
Translating this into the energy world, if you run an
electricity generation plant using natural gas as the fuel,
your ef
ciency for turning heat into electricity can range
from
% (for a new
one). If you are required to reduce emissions by
% (for an old plant) to nearly
%itis
much less costly to increase ef
ciency by
.
% from
%
to
.
% than it is to increase it by
% to go from
%to
%. If you were already at
% it would be impossible,
for there is no more ef
cient power plant. You can only
buy credits from the inef
cient producer. Cap and Trade
seems to create a new form of money in emission credits
and most of it would appear to go to the least ef
cient
producers. If the United States does introduce Cap and
Trade, I hope the economists can
x
this problem. There is a very interesting collection of
analyses by the Congressional Budget Of
gure out how to
ce that look at
the economic effects of Cap and Trade.
Their conclu-
sions are that such a system does create a new form of
money and if allowances are given away all the bene
ts go
to the emitters and all the bills go to the tax payers. My
economist friends tell me that auctioning emission permits
rather than giving them away reduces the effect. As for me,
if I could afford it, I would go out to buy the dirtiest coal-
find, and plan on making my
fortune by shutting it down and selling my permits.
fired power plant that I could
.
