. Earth Science News .




.
THE PITS
Buy coal? New analysis shows purchasing fossil fuel deposits best way to fight climate change
by Staff Writers
Chicago IL (SPX) Apr 16, 2012

File image.

Environmental policy has historically been driven by a demand-side mindset - attempting to limit consumption of precious fossil fuels through pollution permits, taxation, and multi-national climate change treaties. However, new research from the Kellogg School of Management at Northwestern University suggests that actually buying coal, oil and other dirty fossil fuel deposits still in the ground could be a far better way to fight climate change.

The new study, "Buy Coal! A Case for Supply-Side Environmental Policy," suggests that the single best policy for a multi-national climate coalition is to purchase the extraction rights of dirty fossil fuels in non-participating countries (also called "third countries"), and then conserve rather than exploit the deposits.

According to the study's author, Bard Harstad, this would be a radical departure from the traditional view that focuses on reducing the demand for fuel.

"One of the biggest challenges for multi-national climate agreements is the role of non-participating countries. If a climate coalition reduces demand for fossil fuel, the world price of oil goes down and non-participating countries find it profitable to consume and pollute more.

"Similarly, if the coalition seeks to reduce the supply or extraction of fossil fuels, the world price increases and these countries find it optimal to supply more," said Harstad, associate professor of managerial economics and decision sciences and Max McGraw Chair in Management and Environment at the Kellogg School of Management.

"Thus, both on the demand-side and the supply-side the result is carbon leakage, which is an increase in pollution abroad relative to the emission-reduction at home. To limit carbon leakage, the coalition may set up tariffs or other border measures, but this will distort trade."

"In my analysis, I show that by letting coalition countries buy extraction rights in third countries - and preserve rather than exploit the fuel deposits - climate coalitions can circumvent the traditional problems of a demand-side policy," he said.

Harstad explained further that the most intuitive benefit from this policy is that emission is reduced if one buys and conserves deposits. Furthermore, the coalition finds it cheapest to buy the marginal deposits (ie, deposits that are not very profitable to exploit, but still quite polluting when consumed).

After selling its marginal deposits, a non-participating country's level of supply will be less sensitive to changes in the world fuel price. Consequently, there is no longer carbon leakage on the supply-side, and the coalition can limit its own supply without fearing that the non-participants will increase theirs.

"This does the trick," Harstad noted. After purchasing marginal extraction rights, the coalition implements its ideal policy simply by reducing its supply, not its demand. Fossil fuel prices are then equalized across countries. Also, the resulting fossil fuel price seems high enough to motivate even non-participating countries to invest effectively in new technologies, such as renewable energy sources. For these reasons, the policy is socially optimal in the analysis, even if some countries do not participate.

Most importantly, Harstad said, "The analysis shows that progress on international climate policy is best achieved by simply utilizing the existing market for extraction rights."

Multi-national companies are already trading extraction rights. "Climate coalitions should, as well," he concluded.

The study will appear in a forthcoming issue of the Journal of Political Economy.

Related Links
University of Chicago Press Journals
Surviving the Pits




.
.
Get Our Free Newsletters Via Email
...
Buy Advertising Editorial Enquiries






.

. Comment on this article via your Facebook, Yahoo, AOL, Hotmail login.

Share this article via these popular social media networks
del.icio.usdel.icio.us DiggDigg RedditReddit GoogleGoogle



THE PITS
Coal India faces government pressure
New Delhi (UPI) Apr 4, 2012
The Indian government issued a rare presidential directive ordering Coal India Ltd. to sign fuel supply agreements with power plants. The presidential order follows an order issued to Coal India in February through the prime minister's office, also to sign supply agreements with power producers, but the company missed a March 31 deadline as its board of directors rejected clauses requir ... read more


THE PITS
New underwater images show damage at Fukushima

Quake-hit Christchurch to build cardboard cathedral

Indonesia warns runaway prisoners after quake chaos

Indonesia's disaster-ready schools pass quake test

THE PITS
SciTechTalk: Rude awakening for Mac owners

Controlling the cut - Nottingham engineers top the leader board

Moody's downgrades Nokia's rating, keeps negative outlook

Twitter alive with talk of dead rapper hologram

THE PITS
South Africa issues shark warning around washed-up whale

Study shows adaptive capacity of reef corals to climate change may be widespread

Hatchery, OSU scientists link ocean acidification to larval oyster failure

New insights into when beach sand may become unsafe for digging and other contact

THE PITS
No ice loss seen in major Himalayan glaciers: scientists

China seeking to expand role in Arctic

Penguins aplenty in Antarctica, satellite map shows

Long-term studies detect effects of disappearing snow and ice

THE PITS
Poor Spring Rain Projected in Africa

Which plants will survive droughts, climate change?

Fuelling the agricultural energy debate

Climate said threat to Asia's 'Rice Bowl'

THE PITS
Indonesia revises quake toll to 10 dead

Thieves compromise Indonesian tsunami alert system

Asian tsunami warnings test post-2004 systems

Two strong quakes strike off Mexico: USGS

THE PITS
G.Bissau army says coup bid over secret deal with Angola

ECOWAS council asks regional leaders to okay Mali force

Coup attempt in G.Bissau, attack on PM residence

DR Congo must arrest war crimes suspect: rights group

THE PITS
Chinese-Brazilian superkid insists he's no 'genius'

Data mining opens the door to predictive neuroscience

The Neurogenics of Niceness

Scientists find evidence that human ancestors used fire one million years ago


Memory Foam Mattress Review

Newsletters :: SpaceDaily Express :: SpaceWar Express :: TerraDaily Express :: Energy Daily
XML Feeds :: Space News :: Earth News :: War News :: Solar Energy News

.

The content herein, unless otherwise known to be public domain, are Copyright 1995-2012 - Space Media Network. AFP, UPI and IANS news wire stories are copyright Agence France-Presse, United Press International and Indo-Asia News Service. ESA Portal Reports are copyright European Space Agency. All NASA sourced material is public domain. Additional copyrights may apply in whole or part to other bona fide parties. Advertising does not imply endorsement,agreement or approval of any opinions, statements or information provided by Space Media Network on any Web page published or hosted by Space Media Network. Privacy Statement