Researchers calculate the cost of CO2 emissions, call for carbon tax

Jul 07, 2010
Photo of natural gas production plant. Credit: Wikipedia

Two Rice University researchers are calling on policymakers to encourage the transition from coal-based electricity production to a system based on natural gas through a carbon tax.

Such a mechanism would help limit carbon dioxide (CO2) emissions. At the United Nations Climate Change Conference in Copenhagen last December, the United States pledged to reduce the 2005 levels of CO2 emissions by 17 percent by 2020.

Dagobert Brito, the George A. Peterkin Professor of Political Economy, and Robert Curl, the Kenneth S. Pitzer-Schlumberger Professor Emeritus of Natural Sciences and winner of the 1996 Nobel Prize in chemistry, made this recommendation in a paper published by Rice University's Baker Institute for Public Policy.

Brito and Curl argue that there are three important unresolved questions in the current debate on the reduction of carbon dioxide emissions: "First, what is the range of prices on carbon dioxide emissions that will be necessary to achieve the desired reductions? Second, should electrical generators and transport fuels be regulated jointly or separately? Third, should the restrictions be in the form of a quantity limit such as cap and trade or in the form of a carbon tax?"

The authors calculated the cost of CO2 emissions by modeling the transition from coal-based electricity generation to a system based on . Because coal-based electricity generation accounts for about a third of U.S. CO2 emissions (some 2 billion metric tons), Brito and Curl describe it as "the 900-pound gorilla in the room." Replacing generators with natural gas, they believe, "is the most economical way to achieve a target of reducing carbon dioxide emissions by 20 percent."

The United States is already moving from coal-based to a system based on natural gas. The authors said policymakers should encourage this transition, but they doubt whether natural gas supplies will be adequate to maintain this shift in the long run. Development of nuclear and renewable electricity generation will need to continue at a rapid pace. Natural gas, however, can be the transition technology to carbon-neutral electrical generation. "Unless or until there is a technological breakthrough in carbon sequestration," Brito and Curl wrote, "the carbon intensity of coal means that 'clean coal' cannot be an important factor in reducing carbon dioxide. Replacing existing coal generation capacity with modern coal generation plants can only reduce total carbon dioxide by 5 percent."

The authors noted that the efficiency of coal generators is very concentrated. For instance, "at current prices for fuels, a carbon price of approximately $30/ metric ton (MT) will shut down 10 percent of coal generator capacity," they wrote. "An additional increase of $15 — resulting in a carbon dioxide price of $45/MT — will shut down 90 percent of coal generator capacity."

The narrow range for the price of carbon dioxide means that coal generator capacity is very sensitive to the price of carbon dioxide emissions. Consequently, small variations in the price of can lead to large variations in the amount of electricity supplied by coal generators. The market in permits could possibly create volatility in the market for electricity.

As a result of the risk of high volatility, the authors back a to assist the transition from coal to natural gas. They also assert "it is possible to decouple the pricing of allocations for transportation fuel from the allocations for the production of electricity," because the rise in carbon prices needed to effect the shift in would have very little impact on transportation fuels.

Explore further: A multi-model geoengineering assessment looks at potential climate effects

More information: A PDF of the paper can be viewed at www.bakerinstitute.org/publica… s/BI-pub-BritoCurlCO2ElecEcon-070210.pdf/view

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TegiriNenashi
4 / 5 (1) Jul 07, 2010
I can't comprehend the idea that coal generated electricity is cheaper than the one produced from natural gas. First, tar sands seems to be abundant gas resource, and their discovery caused recent gas price plunge. Second, transportation with pipeline is orders of magnitude less expensive, than rail. The plant structure is similar. Therefore, it seems no tax incentive is needed to promote new gas plant construction.
GSwift7
2.7 / 5 (7) Jul 07, 2010
This will never get enough support in the US Senate to become reality, thank God.

Oh, and the cost calculation should actually be $X/MT/KW. You have to factor in the amount of power generated so that efficiency is rewarded, and if lots of energy is generated without any carbon, then there should be a refund rather than a tax. I also want a guarantee that Obama and Gore aren't going to get rich with their scheme to broker the credits. The last thing we need is for people to bleed the system dry for personal gain. The credits should be brokered by a non-profit contractor selected by a bidding process.
Caliban
2.5 / 5 (4) Jul 07, 2010
@Tegiri,

It has to do with energy density. One ton of coal represents far more energy than a ton of natural gas.

IMO, a carbon tax is an incredibly stupid, short-sighted idea, unless it's primary purpose is to fund the research to discover, develop, and deploy the non-toxic renewable energy we so desperately need.

Taxing one fossil fuel phase to fund conversion to the use of another phase is an excercise in futility.

@GSwift7,
Don't you think that it's naive to expect that there will be any change in the status quo that doesn't involve massive personal gain for some small elite- like the ones currently in control?
Would it be better if the profits went to Rockefeller?

You are absolutely right that any cap'n'trade or carbon tax scheme be administered by a not-for- profit agency, with full oversight/regulatory authority and funding, and that all tax receipts, or a hefty percentage of C/T proceeds go to fund R&D of replacement clean, renewable energy technology.
TegiriNenashi
2 / 5 (4) Jul 07, 2010
How does one compare energy density of a solid matter with gas? Looked up the web, found no explanation why coal electricity is almost twice as cheap. I'm puzzled by the extraction phase as well. In natural gas case you drill a hole. For coal you have to strip off a mountain top (and then fill it up again). I would think the former is by an order of magnitude cheaper.

In the absence of other explanation I'd think the gas is almost pure profit with negligible cost factor. Then, if we remove the coal from energy mix, then gas mafia would raise the price!
GSwift7
3 / 5 (2) Jul 07, 2010
@ Caliban:

If you reward the clean companies in equal measure to the punishment meeted out to dirty companies then the research will be funded by the private sector because of market pressure. Licensing of green tech would become a huge commodity in itself.

There should also be an ending point built into the system. If you establish a system of both rewards and penalties, you can build into the system a tipping point at which the rewards exceed the penalties. If properly arranged, this would be the point at which you reach your targeted goal. At that point you either set a higher goal or end the carbon credit system. I think more people would go along with the concept if you set it up in some reasonable way like this.
marjon
4 / 5 (3) Jul 07, 2010
@ Caliban:

If you reward the clean companies in equal measure to the punishment meeted out to dirty companies then the research will be funded by the private sector because of market pressure. Licensing of green tech would become a huge commodity in itself.

What institutions do you trust to define 'clean', 'dirty' and establish 'punishment'?
GSwift7
2.3 / 5 (3) Jul 07, 2010
Let me be clear about this. I'm 100% opposed to the cap and tax method. I'm just thinking out loud about a better way, since it looks like certain people are hell-bent on pushing this thing on us all.

Marjon, you are totally right about that. That's another of my biggest fears about the cap and trade system. The whole thing is so arbitrary, and I'm not really convinced that reducing carbon emission will even have a measurable effect. If they reduce carbon, and the earth cools naturally due to some other factor, they will claim victory and we'll never know the difference. I think people 100 years from now are going to laugh at us.

I am in favor of cheaper renewable power though. It would be great if we could get away from foreign oil here in the US.
Caliban
3 / 5 (2) Jul 07, 2010
@Tegiri,
look up the Molar weight of Natural Gas on Wolfram Alpha or something. Once you've got that, you can calculate energy density in BTUs. Then do the same for an equal weight of coal, and you will have a direct comparison, and it will then be apparent that, for equal weights, coal contains greater energy.

@GSwift7,
You've probably noticed that I'm no fan of fossil fuels. It is only partly due to my acceptance of the reality of AGW.

Having said that, though, it isn't necessary to accept the premise of AGW to understand why it is needful for us to eliminate fossil fuel use- the list of toxic effects and impacts on humans and the environment is long, and only growing longer, BP being the most recent case in point.

It is no surprise, however, that even in the face of incontrobvertible evidence of these harms, that those who profit from the FF economy would resist attempts to change over- if for no other reason than that it costs money(which means reduced profits). CONT
Caliban
3 / 5 (2) Jul 07, 2010
While it may be morally, ethically, environmentally, and in humanitarian terms, totally reprehensible to resist that change, it is, of course, understandable in business terms.

Afterall- what is the primary goal of business, but to make profit? How better to make a profit than to extract a plentiful resource from the commons, at little expense to the business, subsidised by the state, and amenable to many additional modalities of profit generation?

The fossil fuel industry profits from the product at every stage of the process, from exploration to final sale to the end user. The amount of wealth(and the power represented by that wealth) is nearly unimaginable.

Therefore, the only way to shift energy production away from fossil fuel is through some type of pretty harsh disincentive system.

If I were a major stakeholder of the FF industry- I would be pumping money into the R&D to be the first one to get clean energy to market, and thereby maintain continued profitability.
CTF
3.7 / 5 (3) Jul 07, 2010
It is long past time to put good public policy ahead of political expediency, throw away the American Power Act with all its concessions and giveaways, and heed the advice of virtually all of the world's leading climate scientists by taking a serious look at a revenue-neutral carbon tax. It's what's needed, now, if we have any chance of stemming the tide of global climate change.
jscroft
1 / 5 (1) Jul 08, 2010
Odd, isn't it, that Government's preferred method of influencing your behavior involves confiscating your wealth and spending it themselves? What a great gig!

Good thing bureaucrats are intrinsically immune to any kind of perverse incentive...
marjon
1 / 5 (1) Jul 08, 2010
Afterall- what is the primary goal of business, but to make profit?

And the primary goal of the state is power.
Businesses must persuade people to buy their products to earn profit.
The state puts a gun to people's heads and TAKES your money.
Which is more ethical?
GSwift7
2 / 5 (4) Jul 08, 2010
"It's what's needed, now, if we have any chance of stemming the tide of global climate change."

That statement is so dilusional that I don't even know where to start. Are you really saying that CO2 is the answer? Do you really think that if humans stop producing CO2 that the climate will stop changing? In the history of the Earth, there has never been a time when climate doesn't change. You can't make it stay the same. There are many things that make it change, mostly the sun and the ever-changing geology of the planet. Your statement also implies that it's a bad thing if the climate is actually warming, but paleo-science clearly shows that warmer times are more favorable for life on our little planet. I challenge you to refute that, and I challenge you to show how much of the climate is being changed by each of the factors that are changing it. Show me a percentage of change caused by CO2, O3, H2O, CFC's, solar variation, geological forces like volcanos and continental drift, etc.
GSwift7
2 / 5 (4) Jul 08, 2010
I know this is gonna shock some people, but the effect of CO2 is actually just a tiny fraction of the whole picture. For example, since water vapor is a much more potent greenhouse gas, don't you think it might be important to measure the effect of water vapor added to the atmosphere by humans, or maybe even the amount of water vapor added to the atmosphere by humans? Is it possible that manmade lakes and global irrigation are changing the water cycle? Could it influence the climate if billions of gallons of water are taken from underground and moved to the surface every day? Hmmmm. Where are the studies?
Caliban
2.3 / 5 (3) Jul 08, 2010
Could it influence the climate if billions of gallons of water are taken from underground and moved to the surface every day?


I know that this might shock you, GSwift7, but has it occurred to you that a far larger change in the water cycle is being produced by the melting of glaciers and ice caps? Did you think of that?
The effect on the water cycle due to irrigation, we can ascribe a nominal value, since that only represents an infintesimal fraction of additive water vapor.

No, only two things have changed over the last ~200 years- several trillions of tons of CO2 have been put into the environment. A small fraction of this has gone into the oceanic "carbon sink", and into whatever extent of revegetation has occurred over the same time period. The rest in in the atmosphere, creating additive heat gain through radiative forcing. Increased water vapor? Allright. What cause? Increase in CO2 cocentration. Result? GLOBAL WARMING.

Shot by your own gun.
GSwift7
2.7 / 5 (3) Jul 09, 2010
Caliban, that's dilusional. Compare global rainfall volume to global ice melt volume, annually. Pardon the expression, but the volume of ice that's melted is only a drop in the bucket compared to the amount of rain we get around the globe. Using your own logic though: The effect of water vapor added by melting ice has a greenhouse effect several orders of magnitude greater than CO2, which is actually only present in trace amounts, even after human influence. You have the tail wagging the dog, or in this case, the dog's tail is wagging an elephant. Water vapor is the 900 lb gorilla of greenhouse warming. All the other greenhouse gasses combined don't even come close to the effect of water vapor, even if they were present in equal quantities, which they aren't. Water vapor dominates the trace gasses in the atmosphere by far. See the forest that lies behind the tree in front of you.
GSwift7
2.7 / 5 (3) Jul 09, 2010
You actually don't have to look at CO2 levels at all in order to explain the additive feedback loop observed. Small increase in water vapor = small increase in greenhouse effect. Warmer air holds more water, so more warming. Warming melts ice, decreases reflectivity, causes more warming, which means increased solubility so even more water. Rinse and repeat. The effect of CO2 is probably not even measurable in this. Keep in mind that just because CO2 levels match your supposed temp trend lines, that doesn't proove a causal relationship, or rule out other factors. Are you really saying that you think CO2 is the biggest factor in warming?
GSwift7
2.7 / 5 (3) Jul 09, 2010
In answer to your question. Mankind has vastly changed the water cycle through irrigation, agriculture, forestry, (and man-made water bodies to a lesser extent). We do litterally pump billions of gallons of water per hour. One plant in Tampa FL supplies 25 million gallons per day, for example, and that's a small plant for local supply. That's gonna leave a mark on water vapor output.
Caliban
1 / 5 (1) Jul 09, 2010
Unfortunately for your argument, you forget that water vapor is not uniformly distributed globally, and that it has its own negative feedback mechanism built in - the more vapor>the more cloud>the more albedo>the more cooling. Therefore, tends quickly to equilibrium, not additive heating through radiative forcing.

And extraction of underground water doesn't contribute as much water vapor to the atmosphere as you seem to think it does. Much the larger fraction is for direct consumption by humans and animals, and much the largest fraction of that is then immediately returned to the earth, and not evaporated.

No, my friend, CO2 is the culprit- uniformly distributed and steadily increasing in concentration, and therefore, effect. The fact that it only comprises a fraction of the atmospheric volume is a strawman. Ozone comprises an even smaller fraction, so by your logic, we could eliminate it, or, hell- it could be multiplied many times- and not thereby suffer any effects, Right?
jerryd
5 / 5 (1) Jul 13, 2010
Not even including GW in it, the subsidies both direct and indirect are huge. For instance about 24k deaths/yr from coal and another 150k hospital visits from it's pollution. Land and water pollution is real bad too.

Oil not only pollutes but tax breaks and oil war, Persian Gulf military costs needs to be in it too as if not for oil, we wouldn't give a rat's a-- about them. The CIA and DoD agrees with me, we have to for national and economic security get off both imported oil and coal. Putting their full cost in them and and dropping all other subsidies for RE, solves the problem, pays down the national dent they mostly caused and puts a real free market back into play.