6 ms·

Carbon credits, a projected trillion dollar market

5 points by bd 18y ago

petercooper 18y ago
Pollution is bad. Pumping tons of CO2 into the atmosphere is bad. But.. won't there be incredibly crazy costs in enforcing these limits? There seems to be a lot of trust in companies "measuring" their CO2 outputs, but that's going to need a lot of enforcement and regulation. It's not like finance and taxation where the money has to go somewhere and can usually be traced. Once you've thrown a ton of CO2 into the atmosphere, you can't tell who put it there - so regulating the initial output would be necessary, to great taxpayer cost. I expect a lot of scams and corruption to occur around carbon credits. If it's going to be a "trillion dollar market", you can bet some real nasty pieces of work will want an unfair cut of it.. and when you can't track pollution with any accuracy (yet) will the costs of enforcement be worth it?
- Retric 18y ago
  Your almost there. It would be cheaper to just tax the use of foil fuels so this is all about setting up a scam. You give credit's to people who are already polluting for free which has value and then let them sell those credits to people who want to start or continue to pollute and are less willing to lie. PS: Methane (CH4) is a greenhouse gas, but it's far less stable so it's less of a concern. http://en.wikipedia.org/wiki/Anaerobic_oxidation_of_methane http://en.wikipedia.org/wiki/Anaerobic_oxidation_of_methane, but 2xO2 + CH4 > 2 x H20 + C02 also releases energy.
  - petercooper 18y ago
    * It would be cheaper to just tax the use of foil fuels so this is all about setting up a scam.* Agreed. Carbon credits or fuel taxes both reward efficiency.
ckinnan 18y ago
A straight tax on carbon emissions is far more transparent and less prone to political abuse and self-dealing. The tax could be totally offset by a cut in the payroll tax (as Gore proposes-- tax carbon, not work).
- Shamiq 18y ago
  There are a lot of economic reasonings behind supporting either carbon credits, a tax (known as a Pigouvian Tax), and straight up Command and Control (you will only pollute amount X). The failure in selecting the "correct" one depends on issues with how the marginal-damage-to-the-environment curve looks like. Ideally, we want the tax equal to the amount of damage the individual is causing at a given level. But, if the marginal damage curve is very flat, ie an additional unit of pollution doesn't have a large magnitude in effect, then an incorrect tax amount can lead to a lot of "dead weight loss" (ie we're not at optimal levels). This explanation is easier with graphs. Therefore, let me know if this is not very clear, and I'll whip up something appropriate.
sh1mmer 18y ago
http://sandbag.org.uk/ http://sandbag.org.uk/ was founded by someone at Greenpeace. It's a way to help buy up all the slack in the emission market (by buying emissions permits) in Europe which has a regulatory cap. The theory is that by buying the permits off companies they loose the ability to carelessly grow their emissions. At some point it's going to be more economic for them to curb the emissions than try to buy more permits from someone else in the market. Especially since Sandbag retires them and won't resell them at any price.

5 points by bd 18y ago

Pollution is bad. Pumping tons of CO2 into the atmosphere is bad. But.. won't there be incredibly crazy costs in enforcing these limits? There seems to be a lot of trust in companies "measuring" their CO2 outputs, but that's going to need a lot of enforcement and regulation. It's not like finance and taxation where the money has to go somewhere and can usually be traced. Once you've thrown a ton of CO2 into the atmosphere, you can't tell who put it there - so regulating the initial output would be necessary, to great taxpayer cost. I expect a lot of scams and corruption to occur around carbon credits. If it's going to be a "trillion dollar market", you can bet some real nasty pieces of work will want an unfair cut of it.. and when you can't track pollution with any accuracy (yet) will the costs of enforcement be worth it?

Retric 18y ago
Your almost there. It would be cheaper to just tax the use of foil fuels so this is all about setting up a scam. You give credit's to people who are already polluting for free which has value and then let them sell those credits to people who want to start or continue to pollute and are less willing to lie. PS: Methane (CH4) is a greenhouse gas, but it's far less stable so it's less of a concern. http://en.wikipedia.org/wiki/Anaerobic_oxidation_of_methane http://en.wikipedia.org/wiki/Anaerobic_oxidation_of_methane, but 2xO2 + CH4 > 2 x H20 + C02 also releases energy.
- petercooper 18y ago
  * It would be cheaper to just tax the use of foil fuels so this is all about setting up a scam.* Agreed. Carbon credits or fuel taxes both reward efficiency.

ckinnan 18y ago

A straight tax on carbon emissions is far more transparent and less prone to political abuse and self-dealing. The tax could be totally offset by a cut in the payroll tax (as Gore proposes-- tax carbon, not work).

Shamiq 18y ago
There are a lot of economic reasonings behind supporting either carbon credits, a tax (known as a Pigouvian Tax), and straight up Command and Control (you will only pollute amount X). The failure in selecting the "correct" one depends on issues with how the marginal-damage-to-the-environment curve looks like. Ideally, we want the tax equal to the amount of damage the individual is causing at a given level. But, if the marginal damage curve is very flat, ie an additional unit of pollution doesn't have a large magnitude in effect, then an incorrect tax amount can lead to a lot of "dead weight loss" (ie we're not at optimal levels). This explanation is easier with graphs. Therefore, let me know if this is not very clear, and I'll whip up something appropriate.

sh1mmer 18y ago

http://sandbag.org.uk/ http://sandbag.org.uk/ was founded by someone at Greenpeace. It's a way to help buy up all the slack in the emission market (by buying emissions permits) in Europe which has a regulatory cap. The theory is that by buying the permits off companies they loose the ability to carelessly grow their emissions. At some point it's going to be more economic for them to curb the emissions than try to buy more permits from someone else in the market. Especially since Sandbag retires them and won't resell them at any price.