GC 170 1st Edition Lecture 21 Outline of Last Lecture II Where are Greenhouses coming from a CO2 b CH4 N2O III What are fossil fuels a Coal oil natural gas b USA IV What will happen in the future a GCM b Storylines i A1 ii A2 iii B1 Outline of Current Lecture Outline Political solutions to climate change Stakeholders o Energy industry group o Environmental group Guest Ivan Rudik o Cost of carbon emissions o Why o Does it matter o How do we get the s Current Lecture Lecture by Erica Bigio Political Solutions to climate change Stalled for many reasons over the past two decades o One reason corporate interests energy industry claim that a reduction in fossil fuel will harm economy Millions of jobs will be lost Decline in gross domestic product These notes represent a detailed interpretation of the professor s lecture GradeBuddy is best used as a supplement to your own notes not as a substitute Stakeholders Person or group that has a financial or political interest in climate change policy Each group wants to influence government policy on the regulations of greenhouse gas emissions o Energy Industry group focus on cost of action If we take immediate political action to reduce GHG emissions Economy will suffer greatly Fossil Fuel energy is cheap and economy needs it Millions of needed to transition to renewable energy sources Renewable energy is not advanced or reliable enough Sun doesn t always shine Fear of cost of action Climate regulation will be costly Alternate energies are too expensive Will damage the economy o Environmental stakeholders cost of inaction doing nothing If we do not take immediate political action to reduce GHG emissions Cost of disasters such as storms floods fires Droughts heat waves caused economic losses crop failures People will need to migrate unexpectedly Fear of cost of inaction Without regulation climate impacts will be costly Alternative energies creates new jobs Will damage the economy Guest Ivan Rudik The social cost of carbon The SCC is the cost to society in of one ton of CO 2 emissions CO2 impacts society through many channels increases in temperature o Changes in agricultural output o Sea level rise o Health impacts o Ecosystem services non market amenities Number of studies analyzing warming in these sectors but additional steps are needed to get the cost of CO2 Why is it important to put a value on emissions o Need to value cost correctly in order to know cost of electricity Coal fired and gas fired electricity is inexpensive Does not account for cost to society of the emissions produced as byproduct To figure out what cheapest energy sources are need to know the cost of emissions o Determine the true costs and benefits of environmental policies Cost of setting carbon focused policy are costs of having carbon intensive firms meet whatever policy regulators set Need to know benefits of emissions we will be avoiding through these policies to determine o Set optimal carbon policy Does this matter o The US government established an interagency working group specifically to value cost of GHG emissions o Cost of carbon is not included in price virtually every good o Basic Econ tells us that the world will be better off if the cost of CO 2 is included in the price of goods so people account for the costs they impose on society can be achieved simply by tax on CO2 How do we determine SCC o Integrated Assessment models IAMs Models of the climate system linked to models of economic system o Per MWh coal generates approximately one ton of CO 2 among other pollutants One MWh of coal truly costs somewhere between 5 40 MWh more making it more expensive than solar