...Econ 339: Topic #6 Cap and Trade or Carbon Tax Wade Wong 25967118 Catherine Douglas Econ 339 University of British Columbia November 28 2012 The progress of technology change has increased dramatically around 1960-2012, a lot has been changed for the better of the world, and some technologies do not share the same path. Many of them are disembodied technology as process of production, methods, and labour efficiency has been vastly improved. On the other hand because most production or technology involves burning resources, wastes dumping, and gas emitting, it results in global warming, which is determined to affect the future of the world. The pollution causes a negative externality not just on specific individuals, but to the whole population and environment. To solve this problem, government intervention is a necessity for firms and individuals to completely comply with the situation for the welfare of the society (Samaras). In dealing with this crisis, nations or governments had implemented plans that would help reduce the emissions emitting from power plants, buildings, appliances household, and automobiles; the plans are “cap and trade system” and “carbon tax plan” (Samaras). With the cap and trade system, the governments sets a emission target on polluters of how much emission they can produce, and grants slips to firm if they need to produce over the target emission level. For carbon tax, it is a tax imposed on...
In September 2013 the Intergovernmental Panel on Climate Change (IPCC) published the Fifth Assessment Report briefing in its climate change series. Garnering international attention, the report has concluded that scientist’s are now 95% certain that humans are the ‘dominant cause’ of global warming [IPCC, 2013]. The report follows decades of scientific consensus around the potential of anthropogenic causes of climate change.
Whilst political, social and economic discussion has continued, the engineering world has been working strenuously to provide affordable and efficient methods of renewable energy generation.
In response to anxiety and European Union legislation, Westminster and Devolved National Governments have offered financial assistance in a number of different ways to expand the implementation of renewable micro-generation in the UK.
For small-scale installations, there are many different forms of renewable low-carbon energy generation. Scotland’s most utilized resource is on-shore wind, with an installed generation capacity in 2013 of 4.07 GW [Scottish Renewables, 2013]. The most effective way to capture potential energy supplied by the environment is to spread the generation responsibilities across different forms of renewable technology [Department of Energy and Climate Change, 2013]; however, the most utilised resource in Scotland is wind energy.
In the modern world, electricity has become imperative to the survival of our lives as we know them. Electricity illuminates homes and supplies factories with sufficient power to run the machines that make industry thrive. It helps to improve the standard of living and the economy of Governments. Electricity is also used heavily in transport and services to ensure efficient travel for millions of commuters, every day. The demand for power in the past few decades has increased enormously and is expected to keep growing, with particular acceleration being seen in emerging economies [International Energy Agency, 2013]. Further advancements in technology; such as electric vehicles [Qian, 2011], rising population levels and emerging economies continue to be the main contributors to the increasing global demand for electricity [Qian, 2011. International Energy Agency, 2013].
Electricity is most commonly generated through the means of a rotating shaft. This shaft is turned by a prime mover. The most common procedure for the movement of rotor shaft is through the combustion of fossil fuels [Fitzgerald, 2003]. Fossil fuels, when undergoing combustion release their stored carbon. The physical carbon is existent as a majority element in the coal, oil or gas found in wells/reservoirs and is a result of organic matter. The organic matter becomes subterranean and protected from decay. Without any decay, the organic matter slowly transforms into a fossil fuel and is then extracted from the ground and used to make bi-products such as fuels, plastics and car tires [McPherson, 2013].
As the fuel is combusted, carbon is then released into the atmosphere. The planet has become saturated in carbon dioxide (CO2), the form in which the carbon element takes. CO2 is a greenhouse gas, and as such contributes to the greenhouse effect [McPherson, 2013]. The gas is designed to trap heat from the sunlight before it can escape through the atmosphere. This is a natural phenomenon that is used to naturally regulate the global atmospheric temperature. If too much of this gas is present in the atmosphere, the regulated temperature of the planet begins to rise, causing ice caps to melt, which leads to catastrophic changes to the environment with irreversible consequences. Some of these include large resettlements of coastal populations and large scale food shortages [IPCC, 2013. IPCC, 2007. Department of Energy and Climate Change, 2013].
As carbon dioxide levels continue to increase, scientists have continually, and more strongly, claimed that these levels are most likely a direct consequence of anthropogenic activities [IPCC, 2013. IPCC, 2007]. As a result of burning fossil fuels the global temperature has increased by 0.85??C between 1880 and 2012 [IPCC, 2013. UCAR, 2013]. The Northern Hemisphere has seen between 1983 and 2012, the warmest 30-year period in the last 1400 years [UCAR, 2013]. One of the main arguments in the support of Scientist’s opinions on anthropogenic related climate change can be seen in the levels of carbon dioxide in the atmospherea, when compared to the global oil consumption levelb (Figure 1) [WorldWatch Institute, 2014].
A clear relationship can be seen from the two graphs, which help to strengthen the arguments suggesting humans as the dominant cause are.
A number of academics have issued stark warnings about the increase in CO2, as it has been suggested to be one of the leading actions causing the increasing temperature to reach levels that may cause ‘Dangerous Climate Change’ [IPCC, 2013]. This dangerous change may result in an increase to extreme weather events and many low-level land areas at risk of being submersed in water. This potentially disastrous outcome was also suggested during the winter of 2013, when the South of England faced large-scale displacement of the population with some even losing their lives. The UK’s chief weather scientist, Dame Julia Slingo, has directly linked these events to climate change [BBC News, 2014].
The purpose of this report is to examine the impact on carbon emissions a community wind energy project can have. The report will aim to show that the current technology available on the market can be feasibly used in several different sequences, based on geography, consumption and financial availability. To analyse the financial impacts and socioeconomic complications that regularly occur when such installation proposals are brought forward, different scenarios will be discovered which best meet the requirements of the selected communities financial situation. The key area to this analysis is to display a strong case for the use of available medium scale wind technology being implemented to reduce carbon emissions, and the associated financial gain to which reinvestment can be achieved for further emission based reductions. By showing that these methods can work, the next phase of the investigation is to critically analyse the impacts of financial variation and the availability of schemes aimed at enticing new investors into the market, with a particular view on how investors on low incomes can also be incorporated into a renewable way of thinking and in turn aim to increase their standard of living.
As the demand for energy increases, more people in Scotland are suffering from fuel poverty. In 2012, figures show that as much as 27.1% of households in Scotland are in fuel poverty. For those who are not connected to the gas grid however, these figures are at an alarming 52% [Wilson, 2012]. By implementing more community projects throughout Scotland, which is made affordable to those with less expendable income, an improved standard of living could be achieved, such that the low income families have more money to put back into the economy by way of sales tax (VAT) as a lower percentage of income would be spent on energy costs.
To undertake this research, a number of objectives have been set out:
1. The first objective is to show the impacts on financial return and energy output associated with a change in average wind speed, highlighting the importance of site selection.
2. The second is to quantify the CO2 offset and discover what bearing different levels of investment have on this value, thus indicating the level of work involved to have an effect on emissions.
3. The third is to analyse how the degression rates of the feed-in tariff could affect the levels of investment made.
4. The fourth is to investigate the relationship between installed rating capacity and the associated reductions in feed-in tariff and how these may then effect the duration of the payback period.
5. The last objective is to determine the economic viability of the investigated sites and suggest which proposal would be more financially viable in the long term.
It is with these objectives together that a critical conclusion can be drawn on the feasibility of the technology and the financial responsibility attached to each level of proposed construction.
The report will examine the feasibility of wind energy technologies used in small communities in Scotland to significantly reduce the carbon footprint of the area and in turn help to change local opinions, which can encourage further private use of micro-generation technologies.
To demonstrate this, three case studies will be developed. The case studies will use technical analysis of the selected area’s wind exposure to optimize micro-generation output and will inform the discussion on how to improve the realisation rates and see the industry increase its uptake.
The analysis will be compiled using a purpose written MATLAB script. The MATLAB script has been designed such that only a small number of variables are required to perform an analysis of any town. Just by knowing the hub height, rotor diameter and power coefficient of the turbine and the local area wind speed average, the script can determine the associated energy generation, and equivalent CO2 offset by the production of renewable energy. If the feed-in tariff rates ad installation costs are known, the script can then be continued and the payback period for the desired installation can be found. This script can be found in Appendix 1.
By comparing two towns, similar in population, but dissimilar geographically, the analysis will aim to show that despite the geology differences, the concept of utilizing renewable resources to develop electricity is not restricted to strict parameters and conditions. Proposals from micro-energy projects would have to be dealt with on a case-to-case basis, however the general procedure for implementation will seek to show strong similarities in terms of process.
The analysis will also compare two different turbines on the same site, thus to show a direct comparison of turbine size as all other factors remain equal.
After considering the achievability of the installation, this report will then reflect on the potential annual income from the renewable project and how these funds can be spent within the community to increase the carbon reduction, whilst benefiting the normal everyday lives of the residents.
The report will be separated into chapters, designed to create a flow through the investigation. Chapter 1 will discuss the background information surrounding climate change, and develop the international understanding on how mitigating emissions has become a matter of importance. Describing the international efforts through policy, which are aimed at reducing the global CO2 exposure, will show this. The chapter will also contain the list objectives required to compile analytic conclusions and the methodology detailing how the objectives will be researched.
Chapter two is the literature review. This chapter will aim to provide the understanding of UK national policies developed for carbon emission reduction to meet the European Union’s targets. The chapter will also give a brief overview into how technology has been used in community. This will be shown through examples of community energy schemes used in Scotland and a far, and why they have been a success for the communities themselves and potentially for the environment, whilst highlighting the benefits that can be available from the inclusion of renewable energy technology and carbon reduction schemes in local communities. The financial incentives to encourage the uptake of renewable energies, wind in particular, will be reviewed in this chapter. The review will also discuss the skeptical views some have on climate change and the legitimacy behind the science as this is an important factor in the consultation stage with local residents and important for the improvement of the overall opinions on renewable energy technology.
Chapter three examines the understanding of the energy in the wind and how this energy is then extracted and converted to electrical power. To do so the chapter will take the reader through the understanding of wind and its varying quantities, the energy conversion of the resource, and the associated efficiencies. This can then be used to determine the electrical energy that will be converted by a turbine at a desired location.
Chapter four will be the case study. In this chapter the locations selected for investigation will be discussed and justified. The study will then draw on previously discussed theory from chapter two and three to create a technical analysis of each site, deriving the desired size of the installation to meet with demand, and to assess the carbon emission reduction associated with the potential wind project.
Chapter five will progress from chapter four using the knowledge that a sum of money can be used from the project to reinvest in the community by means of a democratic process which benefit the town best. The chapter will look at a number of areas in which the carbon footprint of the town can be further improved by way of new investment.
Chapter six will be the chapter to conclude the report. The findings from chapter four will be summarized and concluded, whilst the limitations from the research will also be discussed and where the areas for further research lie for community renewable projects.