Friday, June 29, 2012

Social Irresponsibility: Energy and the cost of carbon

These are all part of a dramatic change in the way that we view carbon emissions.

There are three things that are prominently in the news about carbon emissions and addressing them in June of 2012. These are all part of a dramatic change in the way that we view carbon emissions.
  1. Australia is opening up a Carbon Tax at $23 per ton. They are adjusting from the mistakes of Europe when they started cap and trade at too low a price. Undermining the whole process.
  2. In the meanwhile, Texas is opening a market for carbon. The Oil capital of the US is also the largest Wind producer of electricity.
  3. California credit allowances jump in price dramatically.
Generally there are three ways to address the issues associated with externalities caused by carbon emission (and greenhouse gas emissions)

1. Voluntary corporate social responsibility (CSR). Look at Shaklee corporation and Microsoft. Shaklee, a health and nutrition company, is the first company to be certified climate neutral in April 2010. In the meanwhile, Microsoft intends to be carbon neutral by the end of 2013.

2. Cap and Trade exchanges. Texas and California.
a.   Texas is opening a market for carbon. “Bad joke, or perhaps an oxymoron”, right?  Nope, it is the Texas Climate & Carbon Exchange. The Oil capital of the US that produces about 1m barrels of oil per year is also the largest Wind producer of electricity (producing about 6.5m GHw/hr in 2010, nearly twice as much as Kansas). This is one of several exchanges, with the most notable one in the us operating in California.
b.   This headline from Reuters: “California carbon allowances (CCAs) for delivery in 2013 closed at $16.75 per tonne on Thursday, up $1.10 from one week ago on a growing belief that the shutdown of a California nuclear power plant will boost carbon emissions due to higher fossil fuel use.” A 7% jump was followed by $20+ call options that anticipated future CCAs rising aggressively in the future.

3. Tax Mechanism.
The carbon pricing scheme will impose costs on big polluters, which will result in higher end prices for certain products. Treasury estimates that an average family will pay $9.90 more per week in the first year of the scheme’s introduction.” But 9 out of 10 households will get some level of reimbursements “ through personal income tax cuts and increases in pensions and allowances, as well as other measures”. This will already take effect from May-June 2012. Check out the Household Carbon tax estimator for Australia 
a.   What is the Carbon Tax? (Australia): A $23 per ton initial tax on heavy polluters.
c.   Discussion (Australia). Australia is one of the worst (developed countries) for carbon footprint per capita. Unlike Canada (cold) this is partially because of the sprawl of the country and the abundance of fossil fuels. The tax is directly on the producers of carbon (starting with coal) and this tax is applied directly to those impacted. Those households impacted can spend the money any way they want.  The more accurate costs of dirtier energy (coal and oil) will serve to shift prices to cleaner energy.

So, what does this mean? It means that in lots of places and within lots of organizations (and governments) there is a movement toward addressing carbon emissions. Even the glacial movements in the US are starting gain speed, much like the melting glaciers themselves are.

A market mechanism like Australia's seems like an good approach. There is not a massive initial gift of credits to the coal-burning companies. The government doesn't take all the money and run. The market is given an opportunity to improve the costing to accommodate the externalities of fossil fuels.

Let's see how that plays forward? 

Coming soon to an eBook store near you: Social Responsibility by the

1 comment:

  1. Actually, Shaklee was Carbon Neutral Certified in April of 2000. a whole lot sooner than posted in this fact sheet: