Carbon Emissions Trading.

AN EMISSIONS TRADING SCHEME FOR ALL.

Today, here in Australia, an emissions trading scheme was introduced. This is the news release.
Now both you and I will think of this is just a new tax, which it rightly is, but to get away from actually calling it a tax, the Government has done a very clever thing.
Remember way back at the start of my Kyoto Perspective series, I mentioned that psychology was a part of the whole thing. You had to be made to believe that just by living your everyday life, working at a job that is dependant upon electricity, using electricity in your home so much so that it is now a staple of life, and having electricity available in your cities, where you shop, everywhere. You had to be convinced that somehow this was a bad thing, because it contributed to global warming, because the bulk of that electrical power was sourced from coal fired power plants that burned coal, and part of that process releases Carbon Dioxide, (CO2) which is a greenhouse gas and is supposed to be the major contributor towards global warming.

So introducing a new tax is perceived as being just that. TAX.
So, to psychologically make you somehow feel bad about it, and in the same breath make you think that the extra money you shell out is going to a good cause, the Government here in Australia cleverly included the bad part in the title to give the perception that this was really just something we need to do to combat this dreaded calamity about to fall on all our heads.
The named it a Carbon Pollution Reduction Scheme, and I just know that from now it will be referred to by its acronym, the CPRS.

It has caused no end of discussion here in Australia, and it’s only been released for a few hours. The news stories are all full of it, and replies in the comments section of those stories are running at around a hundred an hour or more.
As is always the case, the Government Minister who releases the short bite for the media is really short on detail, mainly because I suppose they take us all for idiots, and that we wouldn’t understand the details behind it. I tend to believe that it’s the Government Minister who has no real idea, and they just come out with soothing sounding platitudes so that the feedback will be a little more positive than the outrage that something like this should engender.

I’ve sat down this afternoon and tried to work out the complicated parts of it, not because I need to know, and not because anything I do will have the slightest effect, but just to see what it really might mean, just what the ramifications might mean.

I come from a background of teaching the electrical trade, and a big part of that, along with the complex electrical theory is that Math plays a large part in it, and you need a better than average understanding of Math as an aid to that theory.
Now, even I understand that introducing Math will probably lose me some readers, so my task is to explain correctly that Math component with relation to this and to try and correlate it to this task while still keeping it interesting.
You’re going to see some pretty big numbers here, and even though the numbers bounce around like it looks just so easy, the effect of those big numbers is frightening in the long run.

So to the task itself. What I’m going to do is to correlate this to what the situation might be in the US. I want you all to keep in mind that this is not going to be the case in the US, as your policy will no doubt be totally different to what it is here in Australia. However, having said that, the situation will be somewhat similar, only on a scale much larger. All these figures are US figures based on information gleaned at that monstrous site I’ve referred you to in previous posts, the US Government’s Energy Information Administration.

The concept is not really a simple one to understand because in some cases I needed to work backwards, and the hard part of that was actually trying to think backwards, so I went through the task three times to perfect it.

THE MATH.

The US currently produces a total nameplate capacity of just on 1,100,000MW of electrical power.
In usable terms that amounts to 4.2 Trillion Kilowatt Hours, and that’s the number 42 with 11 zero’s after it. That is across all sectors in the US. Keep in mind that the Industrial and Commercial sectors use nearly 62% of that total power. They are charged less than household users. (Well, a lot less really.)  Averaged out across all users, the electricity is charged at a rate of 9.2 cents per Kilowatt Hour, so that the total retail cost of all that electricity amounts to $400 Billion.

To produce that electricity, a tick under half comes from coal fired plants, and to do that, those plants burn, wait for it, 1.1 Billion tons of coal each year, a number increasing slowly over the years.

Here’s a concept that will be difficult to comprehend, so to check if you wish go to this link and scroll down half the page to the heading that says ‘Coal’. I found it hard to actually believe myself, so I actually checked at half a dozen different places, and they all said basically the same thing.
Conservative estimates say the for each ton of coal that is burned it releases CO2 in differing amounts. For Lignite coal the amount is 1.4 tons of CO2 per one ton of coal. For Bituminous coal, it is around 2.4 tons and for the dirty brown coal Anthracite, it is 2.8 tons of CO2 for each ton. So, what I did here was to average it out to around that figure for bituminous coal which is the most used, at 2.4 tons of CO2 for each ton of coal.
To produce the total power from just coal fired means is 1.1 billion tons, so that then equates to a total CO2 production of 2.65 billion tons of that CO2.

Some Countries have introduced a tentative cost for that CO2 at around $45.00 per ton, and some Countries are charging a higher cost. I’ll work on the lower figure of that $45.00 per ton, and this then works out at around a cost to those coal fired power producers of $120 billion. That is spread across the whole industry so that equates to smaller amounts for individual Authorities, but that figure of $120 Billion is still pretty frightening, considering the total cost for all electricity is only 4 times that, so that will be an extra on top if you can see that. You can now see an impression of the scale of something like this.

Here in Australia, the Government is introducing permits, and you can see the psychology in this also, as they will be perceived as permits to pollute, again painting those coal fired power plant operators as the ‘bad guy’ in this emissions scheme.

Now here’s where the Math needs to be looked at in reverse.
Here in Australia, they are introducing a permit scheme, and at the start, those big emitters will get some of their permits for free, and this number will gradually shrink, acting as a form of incentive to lower your emissions as the ‘free permit’ percentage shrinks.
Currently, if you produce 2000 tons of CO2 per $1 million of total revenue, then 90% of those permits will be free, that percentage shrinking over time. 1500 tons per $1 Million will se you getting 60 percent of those permits for free.
The Government has stated that coal fired energy generators will receive limited assistance at the front end but will go onto the scheme like the rest of those emitters, giving them the incentive to lower their emissions with time.

Okay then, here’s the situation in the US if this same situation planned for Australia was applied to the US.
Here you have to take the whole revenue of the electricity cost into account, and not just the coal fired element. The whole revenue from electricity sales in the US is $400 billion, and the coal fired part of that produces 2.65 Billion tons of CO2, so for every Million of total revenue, those power authorities produce 6625 tons of CO2. That is so far over the mooted current level, that any reductions would be nigh on impossible to achieve to levels where permits at the full cost implication would come in.

Now, can you see the problem?
Those huge costs would inevitably have to be passed onto consumers and therein lies a frightening thought.
Bean counters at power authorities will also do their Math. They know that costs of that magnitude just cannot be passed onto consumers, so the only alternative would be to close down the plant. With no replacements coming on stream that is power that is just not there any more.

Also, consider that the cost of CO2 per ton set at the lower level means further huge numbers across all sectors of the whole gamut of life as we know it, if coal fired power plants are only a part of the total emissions, and the number for that sector is so large, then you’re looking at Trillions of dollars for the overall scheme.

So, even though this argument is dividing down political lines, the extent of the horror is aimed at all of us.

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