Mayes and I were discussing this the other day. The people that buy these will indirectly cause a resurgence in nuclear power investment over time. Nukes right now are uneconomic due to relatively cheap fossil fuels and expensive fixed and O&M costs (and a credit crunch in the industry). As emissions become more expensive, Nukes, which emitt no emissions other than steam, become more competative.

1. i don't have a car. i take public transportation. so again, you're an idiot. 2. i didn't see carbon being into account, which would probably be more expensive. 3. long term periodic expenditures, such as gas, maintenance, possible future emmissoins permits, will never be built into a sticker price. People are very, very bad at discounting (one example would be to look at my cc debt). the job of the car dealership is not to make the customer better off or help them make good financial decisions, it's to sell cars.

1. The company that does this is not owned by you despite your economic ramblings. I could give a crap if you had a car. 2. I don't see any numbers posted by you on what goes into their equation so how do you know that carbon isn't factored in? 3. This is a sticker that you buy and put on your car, not sticker price. I no longer believe that you even read the article.

The Chicago Climate Exchange is a voluntary program, and they base credits on carbon equivalents, as some gases have higher potential to cause warming than CO2 (such as methane which is 10-20x worse than CO2). So I guess they just figure out how many tons of CO2 your car would emit over its lifetime, then you pay the market price on the Exchange per ton of CO2, which would take away from the total # of credits allocated to the businesses in the market. Theoretically it reduces the amount that all of the businesses could emit in the program, but it ends up causing higher prices for the credits and becoming economically inefficient.

Okay, there's two ways to respond to "JG". There's the 'Old School' way: That's how you debate!!! Or the 'Billy Madison' way: Eric (JG) drinks his own pee.

uh, not quite. the issue is that it will be economically efficient if and only if the clearing price for a permit is equal to the marginal cost of the use of the last unit used, that is, the damage caused to the public by emitting the marginal unit of pollutant. therefore, the allocation of the permits is important. who is allocating here, and who is getting the proceeds of the sale of permits? If it's not some representative of the public at large, then it doesn't mean shit.

by allocation, i mean, who is setting the number of permits to be issued, i.e. how much are we going to allow people to pollute this year...

Well since the Marginal Cost should be equal to the Marginal Damages of the good to set the price, we have to assume we also have the figured that out, which is pretty tough for climate change since they can't really guess what the damages will be based on current uncertainty in the global climate change models (such as cloud interactions) to then quantify them into a price as an externality. Plus it being a voluntary program, efficiency is basically thrown out the window since not all parties involved are included in the market. The EPA likes to use the Sulfur Dioxide trading program to show the success of them as a policy, but that's a regional problem, while climate change is a global one. But basically it will take a helluva lot more than some people buying stickers to make any impact. They got the technology for hybrids, they might as well just increase the average fuel efficiency standards by 5-10 mpg and force mass production of them. Sticker's don't do much. Just look at all the Kerry Edwards stickers still out there, or all those rainbows on people's cars... are you more tolerant of PhiKaps now?

or we should stop fucking talking about it and just do this, chums... LEEEEEEEEEEEEROOOOOOOOOOY NNNNNNJEEEEEEEEEEENKIIIIIIIIIIIIIIINS

You can disregard marginal cost and marginal damages of goods by simply doing a number crunch.

Stickers would work fine. Just like parking permits. You say "We allow X amount of pollution in a year". You auction them off. Market sets the price. You levy huge fines on people who pollute without a permit. All of the proceeds go to the government, allowing them to reduce taxes by a commensurate amount. The problem, especially in the case of air pollution, is that if everyone isn't doing it, like other countries, you're essentially putting a huge strain on your economy without any real benefits. A more sensible arena for this sort of licensing is something like traffic. You issue permits to drive at certain times of the day, auction them off, people who actually have to get places during rush hour pay for the privilege, everyone else finds another way to work. Less time is wasted, productivity goes up.

a better system would be to just do this as a addon to fuel costs. owning a car doesn't pollute the atmosphere, burning the fuel in the car does. therefore, a person like rob who uses his suv like a sport utility vehicle instead of as a commuting vehicle would then pay much much less since he's doing much much less of the polluting. again, this would require some upfront cap of emissions set somewhat arbitrarily by a governing agency (but there's really no way around that as of yet), but would probably be the easiest way of implementing something like this for car owners.

Well, he already pays less for gas than the other people, so I fail to see how this adds to the point at all. Raising the price of gas would do the exact same thing as what you just said. "a person like rob who uses his suv like a sport utility vehicle instead of as a commuting vehicle would then pay much much less"

Instead of creating carbon caps we could offer nuclear subsidies. A single 2,000 MW nuclear station, at a horrible 75% capacity utillization factor, in a single year would displace at least 100 billion cubic feet of carbon producing natural gas or 20 million barrels of oil.

I smell nerds....

right sam, so clearly that means gas is underpriced. increasing the price of gas sends a signal to the true value of what you are consuming, and you will adjust your consumption because of it.

so which would be easier again dr ass?

And according to the price of permits on the exchange, the life emissions of your car is about 100 bucks. How much does that raise the price of gas if you spread that 100 bucks over the lifetime of the fillups? Estimate: you drove your car 100,000 miles, it gets 20 miles to the gallon, that means you put 50,000 gallons in it. 100 bucks over 50,000 gallons and you think gas is underpriced? Or are you saying that the pollution stickers are underpriced and it should be more that $100?

you're using the price from the climate exchange, which is voluntary. You can't possibly think that that represents the actual price. And yes, buying per gallon would be much easier. You're not driving a power a plant. for individual compliance, buying your permit along with your gas would be much easier then having to do the following: 1. estimating your personal yearly emissions 2. going to some sort of market and buying enough permits 3. having monitoring equipment set up on your car (to make sure you're complying) 4. reporting the appropriate agencies or, you could just pay an extra haypenny per gallon of gas. Any scheme that doesn't involve buying it with the gas (i.e. paying for the carbon in your fuel when you buy your fuel) is going to involve one of the 4 items above, none of which is really all that easy/cheap. What sounds easier to you penis boy.

Aren't you ass clowns always spouting about the true price as only being attainable in a market? I would say this is a step in that direction and there was jizz flying everwhere from your excitement when this was announced. And you still didn't answer the question. Is the true price higher or lower than the one offered by TerraPass ? Perhaps you could do some experiments by setting up a voluntery exchange and hoping to get a better estimate of the true price of emissions... You could pick a random name too and call it the Chicago Climate Exchange.

Clarification: By "you ass clowns", I meant all economists that attended CMU for more than 6 years and are not named Rob, Tony, Andy, Chad, or Nino.

all i'm saying is that this market is likely way underpricing emissions. if there isn't a real scarcity, then how can the price be anywhere near what it should be? play a poker game with fake money, or with oof with a .25/.50 structure. if it's not viewed as real money, then it won't be played like real money and the game degrades. the deal with this, is essentially this "exchange" is giving a way for some consumers to deal with some sort of guilt. if anything, they'll probably use their cars more often because that guilt has been assuaged. I refer you to a section brian's favorite book, freakonomics (which I actually liked and is a very quick read. Also, you should rethink my old herpes argument and how Levitt would react to my argument. I think he'd agree with me). He talks about an experiment run by a day care center. It so happened that many parents were late picking up there kids, making teachers or whatever you call the laborers there have to stay late. Some economists told the center to enforce a fine for late parents. So did this lead to more on time pickups? the answer to those who haven't read it is no. what actually happened is that late pickups actually increased because the fine was a way to cover for the guilt. now, if the fine imposed by the daycare center covered the marginal cost of keeping people longer, then no big deal. Their customers valued that option to pick up the kids late more than it cost the center to keep the kids longer, so economic gains were made on both sides. However, if the fine was set too low, then the day care center screwed itself. The same thing goes for this climate exchange. If the price is too low, the right signal isn't being sent and will probably serve to distort the market even further. stick to taking notes.

You didn't bring anything new to the table with that textbook excerpt. The voluntary exchange is already established and is definately not just for trading a few car emission permits around. The COMPANY TERRAPASS is offering to buy permits on the already existing exchange thus taking away from the amount of pollution that other participants in the exchange (large corporations) will pollute, or causing them to pay more for the priviledge. If you want to know who is participating in the exchange, go ask someone who lives in Chicago (Pro). So they are just a broker. Go look up the exchange already. Jesus. Don't read someone elses book out loud next time.

did anyone else notice that sam said that, to go 100k miles in a car that gets 20 mpg, you have to put 50k gallons of gas in it? You could get a good look at a t-bone by sticking your head up a butcher's ass, but wouldn't you just rather take his word for it?

I think the gas tax would have to be pretty damn high before people start actually changing behavior over it. Plus people would have to realize why they are paying the tax, and not think that gas prices are high because of some greedy bastards in the Middle East. Taxes on gas are already almost 1/4 of the gas price, but it doesnt look like it is doing much so far. But the reporting or maintenance costs of making a permit system for a couple hundred million cars just would be too high to make it worthwhile. State agencies can't afford enough staff as it is to do all of the permitting for stationary sources and end up getting sued by nonprofits to get that done, leading to people like me being in business as consultants doing the work for them. So they might as well just stick to a tax since it is easier policy-wise for politicians and regular people to understand, and the for the feds or states to implement. They just have the problem of setting the right tax, since potentially they can hurt the economy now while trying to prevent future damages from current emissions, the extent to which these damages will be is uncertain.

As long as they don't raise the chicken tax, i'm ok with it.

And you still aren't making a point either way. Its the classic economics class problem; once the permits rise in price above the cost of enhancements for a cleaner plant, people will switch to doing that instead of buying a permit. Here http://www.chicagoclimatex.com/about/members.html If you are arguing about the validity of such a thing, go take it up with these companies and the exchange itself. I'm sure they will be happy to discuss the measures they are taking on enforcement.

5000

And considering they think we have maybe 40 years left of coal, and maybe 70 (don't quote me on these #'s) of natural gas, they best get on using alternative energy sources, or even nuclear if the people in Nevada would shut up about housing the waste. According to this guy though, we got nothing to worry about: http://economics.about.com/cs/macroeconomics/a/ru. . .

actually, it was the guilt thing that i brought to the table. for an individual consumer (and car driver), the only service that buying the sticker does is to provide a way to be free from the guilt associated with burning the gas. it does little properly price the emission and does nothing in terms of compensating those hurt on another note, whether the price is high or not doesn't matter. if it turns out that putting out those emissions isn't very costly to the environment, then no big woop. as long as those who are hurt by the use of the public good are compensated, then market efficiency has been obtained.

That won't happen - I don't think the farmers in Egypt or China who will lose crops from changes in climate 50 years down the road would get reimbursed by the US for emitting half of the GHGs that caused it. Good thing we aren't talkin bout Pareto efficiency.

Well there is a pool of members in the exchange. They pollute X amount collectively. Your car pollutes Y amount. By buying a sticker, Members can now pollute X - Y amount collectively. So even if not all people in the world are members, and assuming that those that are members are following the rules of the exchange (a COMPLETELY different arguement), you are accounting for the amount that your car pollutes. Why you did it, is up to you and that "guilt" thing doesn't seem to exist among the SUV owners. Which was a point made in the link that you didn't read but argue about anyway. The exchange is pricing the emission and I didn't read about the compensation to the public. You can go look that up and report back in. If those emissions aren't costly to the environment, the price won't be high. Since you seem to say they are too low, I have to assume that you think they are costlier to the environment than what the price is. Which is your answer to my question 16 paragraphs later.

What good is compensation if the climate is f-d up? There are points where "market efficiency" isn't an ideal state, and excusing climate destruction by requiring monetary compensation to those hurt is one such point.

Also, JG, if you want another intersting read on the creation of oil, read this: http://www.telegraph.co.uk/connected/main.jhtml?x. . . My cousin (Dr. Henry Scott) has done a lot of research into the creation of sub-surface oil by hydrocarbons - he'e quoted here about half way down.

Also, if any economist caught you making this statement: "if there isn't a real scarcity, then how can the price be anywhere near what it should be?" then they would throw you out of the club. In fact, I can see Rob, a baseball bat (possibly wiffle), and a pair of your nuts in the future.

T-Rex, interesting read. Whether or not there is a finite source of petroleum isn't the only problem - it's the continued use and reliance on them that is since their is gonna be emissions during their combustion and create other problems, therefore creating the need for the alternative energies.

sam, i would just like to point out that mayes's nuts and rob have probably already met, and i think mayes has some bats too.

jt, the proper compensation for a messed up environment would be the amount of resources it would cost to maintain lifestyle in said environment. you can think of this as the money it would cost to build and maintain a biodome for everyone. pauly shore, would of course come standard with every dome. Sam, with no scarcity, there is no price. If something isn't scarce, then the marginal cost to produce is 0. thus, it's price will be 0. i wouldn't go speaking for other economists if I were you.

here's my concluding thoughts for the individual (not business participating), the only thing the market does is to price their guilt. this is because as of now, the government does not enforce emissions limits on individual consumers. therefore "the ability to legally emit into the atmosphere" is a resource for the individual consumer which has 0 scarcity. That is, no one is going to pay for the right to pollute more, as an individual. However, there are people who feel guilty about it for one reason or another. Thus for individuals, buying the permit only serves to help with that guilt, period. On a corporate level, this is different because they do have regulations that they have to follow and their "ability to legally emit" is constrained and thus scarce and thus has a price.

the proper compensation for a messed up environment would be the amount of resources it would cost to maintain lifestyle in said environment I do not agree. This is an economical pipedream, so to speak... although it is mathematically (and economically) correct, we both know that our current environment cannot be replaced by a pseudo-environment (or a biodome, even if pauly shore is there). This is why I think that "market efficiency" isn't the solution for this problem.

Maybe you should read it again then: "if there isn't a real scarcity, then how can the price be anywhere near what it should be?" Clearly the price can be what it should be without a real scarcity, even if that is 0. You are out of the club and your nuts on their way to another redevous with Rob.

josh, that's the answer. i didn't say it's possible, but that's the answer. the costs for a messed up environment are extremely large and probably impossible to reach, which should mean that the price of messing it up should be prohibitive, which would mean people would do it. market efficiency is precisely the answer, but only when every single cost is included in the price of the good consumed. that's what people don't like to understand. the externalities are poorly understood if not completely ignored which leads to the inefficiency.

sam, you're an idiot. i know critical reading is hard for you, but let me help you out. there isn't a real scarcity in this particular market because no one is regulating consumer emissions. thus, the price of the permits being sold in the market can't possibly be close to the actual cost of polluting.

"which would mean people wouldn't do it, (because it would be too costly)."

This is a market for corporate emissions, not individual emissions. The company estimates individual emissions, equates them to the market price of corporate emissions and lets you decide. This is why I keep telling you to take it up with the exchange. Its all based off of their pricing which you are saying "can't possibly be close to the actual cost of polluting." Why couldn't they be? Go ask them and their members instead of telling everyone that it isn't.

is the article about a government mandated program to buy emission permits? No. So how the hell did all this crap start coming out of your mouth?

I think I said what Mayes just said in my second posting about not being able to estimate the Marginal Damages. Again, since this includes valuation of a shitload of possible damages, I don't see it possible. Assuming the xchange was working perfectly and that the permit price was theoretically correct... the problem with the exchange and the car stickers is that they are trading a certain pool of emissions, however the individuals who are buying permits from within this pool end up messing up the efficiency of that market.

Why don't you stop talking about crap like the environment, and get back to the real issues. Like all these old Sega logos.

Here's the short point. Pollution, particularly co2, is a global problem. the market does not contain the entire globe. therefore it has very little meaning. that's all. can we just go back to talking about how much i like cock now?

Wait, before we move on, i'd like to highlight this gem: josh, that's the answer. i didn't say it's possible, but that's the answer. Then what are you even talking about?? Why support or suggest something that isn't possible? For example, I think that we should just create a whole new Earth and put it into orbit around our current Earth so that we can move there when we ruin our atmosphere, but that isn't possible so i'm not suggesting it. Obviously people either a) don't give a crap, or b) don't know enough to care about the price of messing up the environment and whether or not its prohibitive. Maybe we're arguing semantics here (in fact, i'm fairly sure we are), but the market will never be truly "efficient", so I don't see the point in suggesting it as a viable answer.

yeah, CO2, the huge global problem... http://cdiac.esd.ornl.gov/trends/emis/tre_coun.ht. . .

24% UNITED STATES OF AMERICA 12% CHINA (MAINLAND) 6% RUSSIAN FEDERATION 5% JAPAN 5% INDIA 3% GERMANY 2% UNITED KINGDOM 2% CANADA 2% ITALY (INCLUDING SA 2% REPUBLIC OF KOREA Top 10

Why should the Chinese curb their CO2 production when the current problem is a result of the cumulative build up since industrialization, primarily by the west?

jesus sam... 1. it's a global problem because it's the globe that is affected, not what is causing the problem. 2. jt, you are arguing semantics.

Woah Woah, this isn't showing any policy decisions here. Its just saying that it isn't a "global" problem.

ah. Kind of like if the Steelers won the Super Bowl and become "World Champions" because its the world that is affected even though they didn't contribute to the problem.

that's a textbook use of the strawman argument. congratulations

well that's the argument by all of the developing countries, that they shouldn't have to curb their emiessions since it's the US causing the problem. But if China continues to develop and become more and more like the US (other than in height and rice intake per capita) then we got some big problems in the future from their emissions as well.

Maybe we should just nuke them now before they get out of control.

mayes, way to pull out your standard comeback to a joke and you are the one who is the ball licker. You argue semantics with me and then tell JT he is arguing semantics. Clever Ruse. Clever.

Clever Girl.

Looks like one of the big problems with this exchange is that there is no barrier to exiting. So right now you essentially have a business making a marketing decision. The companies aren't paying for a right to pollute, they're paying for the publicity they get from being on the exchange. If it becomes too expensive they'll just pollute without being on the exchange. The prices on the exchange are not "price of emissions", they are "Cost of Leaving the Exchange + Cost of Emitting While not on the Exchange" = "Cost of Leaving the Exchange". Therefore, by buying on the exchange, what you're doing has a twofold effect: 1) Your purchase increases the viability of the exchange, therefore increase the value of being a member, making companies more likely to pay to comply and therefore less likely to pollute. 2) You make being on the exchange more costly, so you could in fact be pushing a company towards exiting the exchange and ratcheting up pollution. I would guess 1 outweighs two, so it's not a bad deal, but the argument that you are actually participating in some sort of efficient market for emissions is tenuous at best.

Haha... tenuous at best.

JT, you're argument "you can't put a price on the environment" is a common misconception when dealing with these sort of issues. We had a great seminar at work when I first got here done by one of a group of economists who went to the middle east to help advise on issues arising around water usage. One country was over using a river upstream of another and squeezing the water supply, creating a lot of tension. The economists advised a method of paying for usage...the response to which was complete indignation. The conversation went like this: Ambassador: "You cannot put a price on a water, it is our lifeblood! We will not stand for this outrage!" Economist: "Even if they dam the river, you can put in a desalinization plant on the coast and pipe the water overland to your cities" Ambassador: "That would be too expensive" People tend to get emotionally charged about certain issues, but that is irrelevant, resources will always have a value, it can be high, but it is never infinite.

Rob, i would agree with you in your example... but I was talking on a broader (and more hypothetical, of course) scale... say, when unregulated emissions increase our climate to the point where we can't grow crops. Your river example is a supply vs. demand problem which wouldn't hold water (no pun intended) if the supply was eliminated.

http://news.yahoo.com/s/nm/20050622/sc_nm/energy_. . . Looks like we are not the only ones discussion this.

Mayes, it might be time for you to go to Europe that they are a bunch of idiots for trying to solve a global problem on their own.

"say, when unregulated emissions increase our climate to the point where we can't grow crops".... we'll just assume you meant increase temperatures where we can't grow crops as you can't increase climate. None of the projections have this happening, but it may change what kinds of crops certain areas grow, effecting agricultural economies significantly, especially those areas with water supply concerns.

I thought the problem was melting the polar ice caps.

Yes, it's from all the hairspray.

they are. it won't work without the entire world's cooperation. it's the tragedy of the commons at its finest. there is no world gov't, therefore the problem won't be solved this way.

In step Thom Yorke and Bono.

In Soviet Russia, car drive you!

I LOVE COCK! YEAH!