Tag Archives: Cap-and-trade

Graham Drops Climate Bill

After nearly 6 months of planning, it appears that Sen. Lindsey Graham (R-SC) has quit working on the latest climate change legislation bill, in lieu of a decision by the Obama administration and senate democrats to prioritize immigration reform [1].  The draft bill, which was also supported by senators John Kerry (D-MA) and Joe Lieberman (I-CT) (hence the nickname KGL) has had some details leaked to the public over the past several months.  These included an overall cap on carbon dioxide emissions beginning in 2012, with the aim of reducing US carbon dioxide emissions 17% by 2020 and 80% by 2050. Some measures to achieve these reductions include [2]:

  • Tax on transport fuels linked to the carbon content and price of carbon in other markets
  • Cap-and-trade scheme for some sectors, with a portion of the revenue redistributed to consumers as rebates
  • Price collar to maintain the price of carbon between $10-30/tC
  • $10 billion for clean coal [3]
  • Construction of 12 new nuclear power plants [3]

This latest setback comes on the heels of other recent climate change legislation, most notably the American Clean Energy and Security Act (sponsored by Rep. Henry Waxman [D-CA]).  The ACESA had proposed to reduce carbon emissions 20% by 2020 and 83% by 2050 (relative to 2005).  Although the proposed legislation passed the House 219-212 [4], the bill has since languished in senate committees and is unlikely to reemerge [5].

Garnering bi-partisan support for climate legislation is expected to be difficult (although another recent climate bill, supported by Susan Collins and Maria Cantwell is a laudable effort at bipartisanship [6]).  Disappointingly, some environmentalists groups opposed the KGL bill–most vocal was Greenpeace,  who blasted it complaining that it had been “hijacked by lobbyists” [3].  Given the concessions to industry, including a provision barring the EPA from regulating carbon dioxide, there may be some truth to this statement.  However, it is hard to imagine that a tougher bill would have any hope of passing congress–Kerry and Lieberman both scored 100% on the League of Conservation Voters environmental scorecard for 2009 [7].

Although the KGL bill does not do enough to address climate change, it is a significant step in more or less the right direction.  At a high level, the bill is not vastly different from the EU’s plan to cut carbon emissions by 20% (albeit from 1990 levels) by 2020.  The current price of carbon in the EU’s Emissions Trading Scheme (ETS) has hovered between 12-14 euro ($16-19) since the Copenhagen summit in December.  This falls at the low end of the $10-30 price range proposed by KGL.  However, there is no guarantee that this bill will be passed this year, or indeed at all, and the carbon cap proposed would not even go into affect until 2012.  While the bickering about climate legislation in congress is bound to drag for months if not years, the Europeans have been paying for their pollution since January, 2005 [8].

[1] http://www.politico.com/news/stories/0410/36301.html

[2] http://www.treehugger.com/files/2010/03/details-kerry-graham-lieberman-energy-reform-bill-leaked.php

[3] http://www.triplepundit.com/2010/04/greenpeace-attacks-kerrys-climate-bill-preview/

[4] http://www.opencongress.org/bill/111-h2454/actions_votes

[5] http://www.lexology.com/library/detail.aspx?g=453e3a8e-336b-41d0-a950-3ab25de2f473

[6] http://www.economist.com/world/united-states/displaystory.cfm?story_id=15453166

[7] http://www.lcv.org/scorecard/

[8] http://ec.europa.eu/environment/climat/emission/ets_post2012_en.htm


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Carbon Taxes and Cap-and-Trade: Where Do Sports Fit In?

Over the past decade, fervent debate, a multitude of legislation, and global summits have centered on climate change.  Many bills such as H.R. 2454, or the “American Clean Energy and Security Act,” and S. 1733, or the “Clean Energy Jobs and American Power Act,” have laid the ground work for gradual restrictions on greenhouse gases and the transitioning of the U.S. economy away from fossil fuels to more environmentally acceptable energy sources.  While several methods to reduce greenhouse gas emissions are being considered, the most common policies are carbon taxes and the cap-and-trade system.  The central idea of emission reducing modes is to create ceilings for the production of environmentally harmful substances, specifically carbon dioxide, and to enforce penalties for exceeding the set limits.  Though the carbon taxing system is more generally applied and is therefore less-prone to manipulations by special-interest and other lobbying groups, it is significantly more restrictive in nature and thus less attractive than the cap-and-trade system, although both systems are highly scrutinized in the United States.

Since the majority of current legislation revolves around the cap-and-trade system, I wanted to learn precisely who would be regulated under such a policy.  As expected, the main focus for emission cuts include electricity producers, oil refineries, steel manufacturers, concrete producers, and many other companies that fall under the umbrella of “industry”.  The other somewhat unexpected area covered by the proposed system includes delivery services or companies that have significant distribution fleets.  Though the overall scope of these bills is to reduce the national levels of greenhouse gas emissions, their level of detail extends even to local, small producers and distributors.  At first glance these rather lengthy bills seem to be fairly all-inclusive, but it seems that little attention is given to recreational emissions.  While it is certain that transportation, including airlines, will be regulated in some way, there is little to no mention of treatment of recreation based emitters.

As a case study, I decided to do a rough estimation of the carbon dioxide emissions from NASCAR in a given year and to compare their output to regulated entities.  The analysis performed calculated carbon dioxide emissions for the three racing series covered under NASCAR: the Sprint Cup Series, the Nationwide Series, and the Camping World Trucks Series.  All necessary information was found using NASCAR’s website, which included racing mileage, stadium seating, and racer roster.  Any assumption made was taken as conservative as possible, and in some cases on the extreme low-end.  Assumptions made include 4.5 MPG for race cars, 27.5 MPG for fans with 3 passengers per car, fan travel distance of 100 miles, and 20 lbs CO2/gal gasoline for both race cars and fan vehicles.  Fan attendance included a high and low value corresponding to 150% of seating (estimates in-field seating which can be up to four times the stadium seating) and 75% of seating to simulate lower attendance due to depressed economy.

The emissions of carbon dioxide for racers and fans plus racers for the high attendance assumption were calculated to be 4.74 million pounds and 6.17 billion pounds per year, respectively.  The low level attendance emissions were found to be 6.09 billion pounds per year.  The previous values correspond to 0.0413% and 0.0408% of U.S. CO2 emissions accordingly. 

A direct comparison of NASCAR emissions can be made to a highly regulated industry such as refineries.  149 refineries in the United States produce roughly 277 million pounds of CO2 per year.  Therefore, annual carbon dioxide emissions for NASCAR correspond to approximately 3 average refineries.

While these values incorporate a number of assumptions, great care was taken to use only reported numbers.  Any non-reported values were estimated as conservatively as possible.  Therefore, the reported values should be accurate within an order of magnitude, especially since stadium lighting, racer transportation, and tire consumption were neglected.  I would like to conclude that, since the magnitude of output from racing emissions are approximately equivalent to a highly regulated industry, NASCAR CO2 emissions should also be regulated.

Though NASCAR lends itself easily to calculation, I would assume that other sports emit similar amounts of carbon dioxide due to stadium lighting, fan attendance, and event amenities.  The problem with implementing restrictions is how to evenly distribute the imposed burden.  Carbon taxing would apply directly to NASCAR due to fuel consumption, whereas the electricity burden for stadiums would be absorbed by electricity producers.  For cap-and-trade to be employed all recreational organizations should be included; however, the issue of stadium location would be problematic.  Most NASCAR stadium are located farther away from population centers than stadiums, therefore their corresponding burden would be greater than other sports.  In an effort of fairness, perhaps the most appropriate method is a combination of carbon taxes and cap-and-trade where most directly applicable.

The purpose of this analysis was to show that carbon dioxide emissions for recreational organizations should be regulated in the same manner as other industries since their emissions contribute similar amounts.  Creating policy to restrict sports emissions may require unique methods to incorporate fairness of application.











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