[Committee] Talk on 4CMR and Energy Economics

[Steve Stretton]

Dear Jonathan,
Sadly, I'm not sure that I am going to be able to make it. I'm based in the
Midlands now and Colchester is a long way from Birmingham and the travel and
conference expenses are a little too much, unless I can find a source of
funding today...

Sorry I haven’t been able to get back to you concerning your talk. It would
be excellent to hear you speak on climate change mitigation generally and
about the economics of energy supply. Nicky Scordellis and the rest of the
committee can help organise a date if you are still interested in speaking.
(Looking at the calendar a talk earlier in the week might be good: e.g.
22nd, 29th Jan; 12th, 19th Feb.) When would be convenient? 

Best wishes,
Stephen

-----Original Message-----
From: J. Kohler [mailto:jk235 at hermes.cam.ac.uk] On Behalf Of J. Kohler
Sent: 08 January 2007 09:33
To: Stephen Stretton
Subject: Re: Policy Event (Conference): Design and Public Policy: Markets
for Congestion and Emissions Trading - Conference Thu 11 Jan - Fri 12 Jan


Hi Stephen,

I am going and I speak on friday on aviation

Jonathan

On Jan 7 2007, Stephen Stretton wrote:

>Hi, Just a quick question: is anyone attending the conference in 
>Colchester on Thursday and Friday? It looks pretty exciting. Last 
>chance for registration is today/tomorrow. Steve
>
> Programme now available   Book your place now (Extended till 8 Jan. 2007)
>
>http://www.essex.ac.uk/eccc/
>Design and Public Policy: Markets for Congestion and Emissions Trading
>
> This two day high profile conference aims to critically examine market
> oriented solutions to the control and pricing of negative economic 
> externalities from road transport congestion and industrial environmental 
> pollution. Keynote speakers and panellists include leading academics, 
> policy makers and practitioners who have in depth knowledge relating to 
> wider policy issues, hands on trading experience and who have pioneered 
> market designs and guided implementation of trading and control systems 
> for congestion and carbon. This landmark conference moves away from 
> rhetoric to actual design and implementation issues in order to prevent 
> over use and degradation of resources due to missing markets and other 
> institutions. Special forums have also been organized to inform and 
> advise local authorities and firms on joining ETS, carbon offsetting and 
> on obtaining finance for sustainable development and eco-innovations.
>
> Keynote and Plenary Speakers: Prof. Brian Collins (Chief Scientific
> Advisor DfT), John Barrett (Research Associate, SEI York), Prof. David 
> Brownstone (University of California, USA), Dr. Dallas Burtraw (Resources 
> For The Future, USA), Prof Stephen Glaister (Imperial College), Lorenz 
> Koch (Project Leader, World Business Council for Sustainable 
> Development), Jonathan Kohler (Cambridge University and OMEGA Aerospace 
> and Environment Management Group), Simon Kyte ( Economist, Greater London 
> Authority), Matt Prescott (CarbonLimited), Bruce Pittingale (Head of Low 
> Carbon Programme, UK CEED), Prof. Charles Plott (Caltech, USA), Richard 
> Price (Chief Economist Defra), Dr. Robert Rabinowitz (Director of Climate 
> Exchange (Europe)), Jonathan Selwyn (Executive Director, UK CEED), 
> Richard Starkey (Tyndall Centre), Trevor Sikorski (Senior Analyst and 
> Advisor, Point Carbon), Andrea Young (Deputy Regional Director, Regional 
> Economy, Environment & Partnerships)
>
>
>Chairs and Panellists on Roundtables : Ian Swingland (Pioneer 
>Environmentalist and Advisor on Commercialization of Biodiversity), 
>James Beale (Director, Renewables East), Hugh van Cutsem 
>(Conservationist),  Tim Lunel ( Director, National Energy Foundation),  
>Steven Joseph (OBE, Transport 2000), Richard Burrett (Director 
>Sustainable Development, Global Markets, ABN-Amro), Nicola Steen 
>(Senior Vice President, CO2e), Richard Gardiner (Director OMEGA 
>Aerospace and Environment Management Group), Hugh Parnell (NW Brown), 
>Richard Frost (Energy Manager, University of Essex), Trevor Platt 
>(Managing Consultant SERCO Integrated Transport), Terence Bendixson 
>(Independent Transport Commission), David Ong (Reader, International 
>and Environmental Law, University of Essex), Lucinda Turner (Policy 
>Manager, TfL), Bob Russell (Lib Dem MP), Jean Lambert (Green Party
>MEP)
>
> The conference is aimed at the following types of specialists, NGOs 
> and
> government bodies: ·academic, professional and government economists 
> ·local transport and environmental authorities ·regional development 
> agencies ·environmental agencies ·carbon traders ·corporate innovators in 
> climate change ·government planning departments ·policy makers 
> ·specialists in sustainable finance ·students of public policy, transport 
> and environment The conference will provide forums/stalls for: ·finance 
> and insurance advice for sustainable development ·advice to local 
> authorities and firms on joining Emission Trading Scheme ·showcase for 
> successful schemes for a sustainable economy ·publications in the area 
> .... and more Due to limited stall space, to book please complete a 
> registration form which can be found on the sponsors page, or for more 
> information contact Camilla Fox or Julie Peirson on +44 (0) 1206-874876 
> or Email: cfox @ essex . ac . uk
>
>>On 1/7/07, Robin Smith <robincsco at hotmail.com> wrote: >Steve, are you
>attending this event?
>
>On 1/7/07, Dr. Adrian Wrigley < amtw at linuxchip.demon.co.uk> wrote:
>>
>> Steve Stretton wrote:
>> > Sorry for the delay in responding to your email. I've been doing 
>> > some
>> work
>> > on a Carbon calculator
>> > (http://www.zerocarbonnow.org/cam/Energy-Log.xls) among other things.
>> >
>> > Here are some specific figures (with a back of envelope cost 
>> > breakdown)
>> for
>> > the limestone -> lime process: CaCO3 + Energy -> CaO + CO2, - 
>> > carbon
>> > tax excludes CO2 produced in the process and concentrates only on the 
>> > fuel
>> used.
>> > These figures are for a lime plant in Pensylvania, USA (thanks to 
>> > my
>> > dad
>> who
>> > consults in this industry):
>>
>> Interesting figures.  Thanks.
>>
>> I calculate producing one tonne lime drives off 0.21 tonnes carbon 
>> (as
>> 0.78t CO2). So the carbon tax on the CO2 driven off by the process 
>> should be about the
>>
>> same as from the fuel (0.2438 tonnes/tonne of lime, it appears).
>>
>> As I mentioned, cement and similar industries (import, production)
>> should pay for CO2 generated, same as fuel-derived CO2. The tax rate I'd 
>> like to see
>>
>> *as a starting point* is $85/tonne CO2 (roughly the $300/tonne C in
>> your right-hand column). So that pushes costs to $237/tonne including 
>> process and fuel. But this excludes labour and capital cost savings. 
>> Also, it excludes substitution of fuel (coal is one of the highest 
>> carbon fuels!). Switch to nuclear (or even geothermal or solar heat), 
>> and things look much more favourable.
>>
>> You describe a 71% cost rise as "quite significant". What is the 
>> effect
>> on the end user? You don't show figures for delivery cost (significant 
>> in this case(?)). As you know, limestone is the starting point in 
>> cement, mortar, plaster production. Reinforced concrete structures cost 
>> the customer about $1100/tonne in the UK (including labour, materials, 
>> transport). So the $121/tonne carbon additional cost of lime looks to be 
>> rather a *low* increase in cost to the end user (only 11%) (using 
>> $300/tC carbon cost). And this (construction) is a carbon intensive 
>> industry. And I haven't subtracted the tax reductions elsewhere.
>>
>> So it all depends on your perspective.  As a producer, you'd have a 
>> big shock to hear of this additional input cost (carbon cost of 
>> $121/tonne). But it will all (roughly) go on the sale price.  Imports 
>> pay the carbon tax (on certain, named commodities).  As a builder, 
>> you'll grumble, but save elsewhere.  As a customer, the effect is 
>> moderate. But... the producer is motivated to use a lower carbon 
>> process (new plant? carbon capture? solar heat? biofuel?).  The 
>> builder is motivated
>> to switch to (say) timber construction, or improved design etc.
>> The end customer is offered lower carbon alternatives at similar prices.
>> Remember, carbon abatement is *cheap*.  But why bother when pollution is
>> "free"?
>>
>> Once you get to $1100/tC, things start to get really interesting.
>> You've lost Capital Gains Tax, Inheritance Tax, Stamp duties, Value 
>> Added Tax *and* Corporation Tax. You've shed huge swathes of tax 
>> inspectors, accountants, avoidance schemes etc. And you've eliminated 
>> VAT carousel fraud and a large chunk of the black market. The National 
>> Insurance Contribution
>>
>> mess would probably have been dumped too.  Losing CGT and CT cuts the 
>> cost of capital, extending the time horizon of investors.
>>
>> A good thought experiment.  But impossible for the weak political 
>> leadership we're stuck with at the moment.
>> --
>> Adrian
>>
>

-- 
Jonathan Köhler

Tyndall Centre and 
4CMR (Cambridge Centre for Climate Change Mitigation Research)
Department of Land Economy,
University of Cambridge,
19 Silver Street
Cambridge CB3 9EP

jk235 at cam.ac.uk
tel 01223 (7)64871

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