ECON 310 Chapter 9 Notes
The Use of Energy and the Environment
The only certainty is
uncertainty.
Pliny the Elder, Historia Naturalis
The way we currently produce and consume energy has negative environmental impacts. Although all types of energy have some types of environmental impacts, fossil fuels are responsible for the majority of the negative impacts of energy use. This occurs both because of the large environmental impact per BTU of fossil fuel use, and because of the magnitude of fossil fuel production and use.
Perhaps the greatest negative interaction between energy and the environment occurs with air pollution, where the combustion of fossil fuels is the major source of the air pollutants that were initially regulated by the 1972 Clean Air Act, with amendments in 1977 and 1990. These pollutants include particulates, sulfur oxides (SOx), nitrogen oxides (NOx), carbon monoxide (CO), volatile organic compounds (VOCs), and lead (Pb). For most of these pollutants, emissions peaked in the past and are now declining.
However, this is not the case for PM-10 (particulate matter less than 10 microns in diameter) and nitrogen oxides. PM-10 has increased because of increasing emissions of “fugitive dust” which refers to dust from unpaved roads, paved roads, and other sources. Nitrogen oxides have increased because of increasing emissions from on-road vehicles, off-road vehicles and off-road engines.
Despite the existence of progress in reducing pollution, we have not satisfactorily reduced the exposure of individuals to air pollution. This is because the US as well as most other countries has become decidedly more urban since 1970. Approximately 98 million people in the US live in “nonattainment areas.” Nonattainment areas are locations that persistently fail to meet national ambient air quality standards.
Stationary sources of criteria air pollutants (smokestacks from factories and buildings) are regulated under the Clean Air Act of 1972 and its amendments (1977 and 1990). Command and control policies target national ambient standards on concentrations of each pollutant. Regulations did not permit firms to make cost-minimizing adjustments in their own facilities. "Pollution Bubbles," the bubble concept, was a modification of regulations which treated each firm as if a glass bubble encased the entire firm's operations. All pollution was treated as if emanating from a single imaginary smokestack. This allowed reallocation decisions within one's own firm. These were still not effective.
Southern California, primarily because of automobile traffic, could not meet the federal standards. Consequently, southern California declared a non-attainment zone, with no new sources of pollution permitted. Implication was stagnation of the economy. Modification to the Clean Air Act allowed new emission sources if they induced existing polluters to reduce pollution by 150 percent of the amount generated by the new source. This "offset" system allowed development but limited trade to new firms. As a result, this was not as efficient as marketable permits. California currently has more stringent standards on emissions from automobiles than does the nation as a whole.
Acid deposition refers to a process by which certain types of pollutants chemically transform into acidic substances in the atmosphere and then fall to the earth. Forms of precipitation include acid rain, acid snow, and acid fog. It also possible to have dry deposition. There is considerable uncertainty about the actual damages generated by the emissions of acid deposition precursors. Precursor pollutants are those pollutants that are chemically trans- formed to generate the substances that actually cause the environmental damage.
Acid rain or acid deposition is an important type of environmental change that is generated by stationary sources of air pollution, particularly coal-burning electric power plants and other facilities where fossil fuels are used as boiler fuel. The Acid Precipitation Act of 1980 was the culmination of concerns about acid deposition which began in the 1970s. This act established the National Acid Precipitation Assessment Program (NAPAP). The NAPAP was established to provide regional information about effects of acidity on resources, the extent to which acid deposition and related pollutions are responsible for causing these impacts. The NAPAP was reauthorized by the 1990 Clean Air Act Amendments.
Acid rain belongs to a category of pollutants referred to as regional pollutants. Regional pollutants are those that have effects over more than just the vicinity of their emission. Unlike global pollutants, location of emissions is important with regional pollutants. Acid deposition problems often are manifest as transboundary (transfrontier) pollutants. For example, sulfur dioxide emissions in the United States affect environmental quality in Canada and vice versa. Transboundary pollution problems are prevalent in Europe as well.
The most important precursor pollutants in the acid deposition problem are sulfur dioxide and nitrous oxides. Sulfur dioxide is associated with the burning of coal and oil as boiler fuel. Nitrous oxides are primarily associated with automobile emissions. Acid rain and other forms of acid deposition are caused when sulfur dioxide and nitrous oxides form sulfate and nitrate in the atmosphere, which then combines with hydrogen ions to form acids. Sulfate and nitrate molecules are formed when sulfur dioxide and nitrous oxides combine with oxidants in the atmosphere.
Tropospheric ozone (03) is an important oxidant which is formed when two pollutants, nitrous oxide and volatile organic compounds (VOCs) chemically interact in the presence of sunlight. The presence of VOCs in the atmosphere, while not directly responsible for acid deposition, leads to greater proportions of sulfur dioxide being converted to sulfate and nitrous oxides being converted to nitrate.
A coordinated effort of reducing differing pollutants is important because of the nature of the chemical relationships. A reduction in nitrous oxides not only directly reduces acid rain, but indirectly reduces the conversion of sulfur dioxide by reducing ozone. The interactions among these pollutants make the identification of the optimal level of pollution an extremely difficult problem. The marginal damage function for sulfur dioxide depends not only on itself but also on the level of nitrous oxide and VOCs.
Even if the marginal abatement cost function was known, one could not determine the optimal level of sulfur dioxide emissions without also knowing the costs of reducing nitrous oxide and VOCs, which in turn could shift the marginal damage function. The process of identifying the optimal level of sulfur dioxide (or nitrous oxide or VOCs) can be even more complex if the marginal abatement cost of one pollutant is a function of the abatement level of other pollutants.
Changes in the production process could reduce the level of all pollutants. Some abatement devices, scrubbers for example, result in a decrease in one type of pollutant and an increase in another. Figure 9.3 illustrates the resulting impact upon the marginal damage and marginal abatement functions should the above relationships occur. The optimal level of pollutant becomes a moving target.
Since the optimal level of each of the three pollutants cannot be determined independently of each other, the level of emissions of each must be chosen to minimize the sum of the total abatement costs and total damages associated with all three pollutants. Equation 9.1 represents the situation where total abatement costs (TAC) are a function of the level of emissions of all three pollutants (El E2, E3). Equation 9.2 represents total damages (T) as a function of all three pollutants.
The minimization of the sum of total abatement costs and total damages requires that the marginal damages of each pollutant are equal to the marginal abatement costs of each pollutant. Since the marginal abatement costs and marginal damages of each pollutant are a function of all other pollutants, these three equations must be solved simultaneously to determine the optimal level of each pollutant.
Acid deposition and related pollutants have many significant impacts on natural systems and human systems. These include acidification of surface water and detrimental effects on high elevation coniferous forests. Sulfur dioxide, sulfate particles, and acid aerosols are all suspected of having detrimental effects on human health. Ozone, caused by the emission of nitrous oxides, has harmful effects on both vegetation and humans. The particles that generate acid deposition also serve to scatter light, creating a "pollution haze" and reducing visibility.
Acid deposition leads to the premature weathering and degradation of materials used in buildings, monuments, fences, and other structures, particularly paints, metals, and stone. Table 9.1 illustrates the effects associated with acid precipitation, as presented in the 1990 Integrated Assessment Report of NAPAP. Market effects indicated impacts that are felt by producers and consumers of goods that are bought and sold. Nonmarket values can be either use or non-use values.
Given the decade of study associated with the initial NAPAP program, one might wonder why very little is known about people's willingness to pay to prevent the impacts associated with acid deposition. Although research conducted to determine acid deposition relationships yielded important insights into cause and effect relationships, the knowledge was site specific and not easily generalized to larger regions. The NAPAP research program, which spanned the decade of the 1980s, resolved many scientific questions concerning the dispersion of pollutants, the chemistry of its transformation into acid deposition, and many of the ecological effects of the acid deposition. Very little research money was spent looking at the willingness to pay to prevent identified impacts based on the belief that the uncertainty involving the scientific relationships would result in meaningless estimates of economic relationships.
The pre-1990 Acid Deposition Policy focused primarily on the establishment of cause and effect relationships. The Reagan administration's policy required that more information be developed before implementing any reductions in emissions of SO2 and NOx. SO2 and NOx are "criteria pollutants” that are regulated under the 1972 Clean Air Act and the 1977 Clean Air Act Amendments. The fact that these regulations focus on local effects of emissions may have exacerbated the problem.
One way in which a local polluter can minimize the local effect of pollution emissions is to build a tall smoke-stack which injects pollutants into higher wind currents which carry these pollutants into other areas.
Given the regional nature of the acid deposition problem, the question of who should pay for environmental improvements is particularly important. The appropriate level of comparison is the change in consumer and producer surplus associated with the competing activities.
The political problem associated with supporting legislation which reduces the standard of living of constituents was dealt with through the creation of the 1990 Clean Air Act Amendments (CAAA), which packaged several environmental problems within the same pieces of legislation. These amendments address the problems of acid rain, local air quality associated with ozone and carbon monoxide, pollution from cars and trucks, air toxins, and stratospheric and global climate protection. Acid deposition is dealt with in Title IV of the 1990 CAAA, which specifies a ten million ton reduction in annual sulfur dioxide emissions to be achieved by the year 2000. An interesting aspect of Title IV of the 1990 CAAA is that it represents the first attempt by the federal government to implement a system of marketable pollution permits.
Economists have applauded the incorporation of marketable permits as an important step in improving the efficiency of environmental regulations. The primary criticism is that there is no attempt to make geographic distinctions associated with the location of emission of SO2. The first trade to occur was between a Wisconsin utility and the Tennessee Valley Authority (TVA). The sale of allowances from Wisconsin to Tennessee required the Wisconsin utility to pollute less and TVA to pollute more.
The cost of reducing pollution by the amount of the traded allowances must be less than the price of the allowances, or the Wisconsin utility would not have agreed to the sale. Similarly, the savings in the abatement costs for TV A must be greater than the cost of the permits. Both companies have lowered their costs.
If the only impact of sulfur dioxide pollution is acid rain, the cost of which is independent of location, then there will be no change in environmental quality. If local pollution effects exist, then the trade will reduce local environmental quality in Tennessee and increase the quality in Wisconsin. A comparison will have to be made between the loss to citizens in Tennessee and the gain to citizens in Wisconsin. A potential Pareto improvement is still possible if the citizens of Wisconsin gain by more than the loss by citizens in Tennessee.
Another potential problem with the acid rain provisions of the 1990 CAAA is that not all emitters of SO2 are incorporated into the system, and NOx is not part of any trading system. It may be that obtaining greater reductions from small emitters and mobile sources (not included) is cheaper at the margin.
The 1990 CAAA amendments did take positive steps to reduce the acid rain problem. With a goal of reducing sulfur dioxide emissions by roughly 50%, Phase I of the program, which began in 1995, developed a cap on emissions of most polluting power plants. Power plants participating in the program were entitled to trade emissions allowances with any other plant participating in the program.
One of the fears expressed by opponents of the Sulfur Trading Program was that local air quality would decline. Of particular concern were areas where most of the electric power generation was from older plants, where abatement was more expensive. Although the system has lead to some patterns of trading that increase emissions in certain areas, it does not appear that this has caused any areas to violate the federal standards.
The sulfur trading program has been relatively successful. Trade volume has been less than anticipated. Factors which have contributed to this include uncertainty about the future, obstacles to trading created by state-level regulatory agencies, and a desire to bank emission reductions for the future, rather than selling them today. Long run cost savings associated with the program have been estimated to be).78 billion dollars.
One interesting outcome of the program is that prices of allowances have been lower than anticipated suggesting that marginal abatement costs are lower than predicted. For example, the US Environmental Protection Agency originally predicted an allowance price of $1500 per ton, but revised this downward to about $500 in 1990. Actual prices started out around $250-$300 per ton and fell to $70 per ton by 1996. The price has risen in more recent auctions.
Table 9.2 contains a summary of the acid rain provisions (Title IV) of the 1990 Clean Air Act, and Figures 9.4 and 9.5 show the anticipated levels of emissions as a result of this legislation. An important point to remember is that the target of ten million ton reduction was not an optimal reduction but rather a value supported by the scientific research and acceptable to most members of Congress.
The 1990 CAAA requires NAPAP to conduct an assessment of the costs and benefits associated with this reduction by 1996 with periodic assessments every 4 years and to identify the levels of reduction that will prevent adverse ecological impacts (not defined in legislation).
Another important point is that
Title IV relies primarily on command and control provisions. The only
exceptions are the trading allowances described above. The Clean Air Act reflects a negotiated
agreement between the United States and Canada. The two countries entered into a
"Bilateral Agreement on Air
Quality" in 1991 to deal with acid deposition precursor
pollutants and other types of air pollution.
The primary regulation on mobile sources of pollution is specifying abatement control devices for vehicles. All automobiles are required to employ a catalytic converter. Platinum in the converter serves as a catalyst that lowers the ignition temperature of many of the unburned hydrocarbons and other pollutants in gasoline. Many problems are associated with this approach to regulation. It controls all areas of the country in the same fashion, regardless of impact of an additional U11it of emission. This does not give additional incentives to reduce pollution.
Air pollution from automobiles is also indirectly controlled by Corporate Automobile Fuel Efficiency (CAFE) standards, which specify the average miles per gallon that must be achieved by each automobile manufactured. A high MPG means less gasoline burned per mile which means less emission. Mills and White suggest that cars should be taxed based on the total amount of pollution that they generate each year. An annual diagnostic test would determine emissions. This multiplied by the odometer reading would give annual emissions. A combination of federal and state taxes could be used to account for regional difference in ambient air quality. Incentives would be in place to drive less, live closer to work, and develop lower polluting automobiles.
US Presidential Administrations have integrated environmental policy and energy policies in various ways. In general these policies have two major thrusts: 1) increase domestic supplies of energy and reduce dependence on foreign oil; 2) promote a cleaner environment by requiring energy users to utilize cleaner technologies. These policies have a mixed record of success. While air quality is better, the environmental impact of energy use is growing and the dependence on foreign oil has increased. One dominant factor in the failure of our energy/environmental policy is that we have failed to allow the cost of energy, particularly imported petroleum, to reflect its true social cost. This cost has two components, the social cost of dependence on insecure imports of petroleum and the environmental cost of energy use. Energy policy has traditionally been designed to keep energy costs low. A higher cost associated with energy use would result in the development of alternatives to fossil fuels, a reduction in the amount of pollution per unit of energy used, a reduction in energy use, the development of more energy efficient technologies and reduction in oil imports.
There is a fundamental disparity between the private cost of energy use and the social costs associated with its use. There are a variety of ways to eliminate this disparity. The least costly would be a comprehensive series of market pollution permits or a system of per unit pollution taxes. A combination of both, permits for large stationary polluters and a tax for mobile sources, may be best. Externalities in production energy could be addressed with liability and bonding systems.
Fuel taxes may be a second best solution to pollution taxes or permits. A tax added to the price of fuel based on the average amount of pollution of the fuel would provide an incentive to use fuel and be more energy efficient. However, this does not provide incentive to reduce emissions per unit of fuel burned.
Many people object to being taxed on both philosophical and practical grounds. Philosophical grounds center on the belief that government is too big and intrusive. Practical grounds center around the idea that government spending tends to be wasteful.
The importance of increasing the price of fuel can be seen both in pollution problems arising from energy and the lack of progress in developing alternative energy sources. Alternative sources of energy include solar power, geothermal power, wind power, and liquid fuel from renewable sources such as ethanol and methanol from a variety of plant sources.
Alternative sources of energy are generally less polluting than fossil fuels. Wood burns cleaner than coal, leaving fewer unburned hydrocarbons in the emissions. Replanting after harvesting would mean burning of the bio- mass fuel does not increase global warming.
Alternative energy technologies are more expensive for energy users than coal or oil, so they have not become established as important sources of energy. Alternative fuels and energy technologies would be significantly advanced if the price of fossil fuels rose to incorporate the full social cost of these fuels as illustrated in Figure 9.6.
The marginal private cost curve for all fuels is constructed by horizontally summing the MPC curve for alternative fuels and the MPC curve for oil. The market equilibrium is tl where total fuel MPC is equal to the market demand curve. The social optimum, t2 occurs at a lower output where total marginal social cost is equal to market demand. MPC plus an externalities tax or other options would bring private and social optimum together. At this lower output level, oil usage declines and alternative fuel use increases.
Are low energy prices a requirement for U.S. economic success? Table 9.3 lists gasoline prices in US dollars (current, not inflation adjusted) per liter for selected developed countries. As the table illustrates that U.S., Canada, and Australia have very low oil prices relative to other developed countries. Undesirable macroeconomic problems in the 1970s resulted from a sudden increase in fuel price. Firms were unable to adjust quickly to higher energy prices. The problem of higher fuel costs can be mitigated through a gradual increase in taxes over time. This would allow businesses to plan for increases in fuel prices. Higher energy prices have the potential to lower GDP. Government policy can mitigate this by lowering taxes in other areas, i.e. income taxes, therefore decreasing the cost of labor.
Figure 9.7 illustrates how increasing marginal extraction costs will result in use of oil until marginal extraction cost of oil approaches that associated with coal. At this point the opportunity cost of using oil today decreases toward zero. Eventually, total marginal cost (price) of oil is equal to that of coal and a switch is made to coal. A similar switch will occur in the future as transition is made to solar energy.
Policy makers are concerned with transition because they feel the market will not adequately spur development of new technology. Radically different technology may be particularly risky. The policy of abundant cheap energy may provide disincentive for development of alternatives. A more recent concern with energy tradition is the environmental effect of tradition. If environmental externalities are not incorporated into market price, then transition to cleaner fuels will occur at a later than optimal date.
The Carter administration advocated coal as a transition fuel but this ignored the environmental costs associated with burning coal. Deep natural gas has been suggested as an alternative fuel. While this is a clean fuel, it is expensive to produce.
Third World nations, with less sophisticated economies, were much less capable of adjusting to oil shocks. Their need to use more foreign reserves to purchase oil stretched their already thin foreign reserves. This led to borrowing for development projects, imports, and other goods and created big debt problems in the late 1970s.
The increased fuel prices increased the use of fuel wood, which is primary source of energy in developing countries. The result was an increase in deforestation in many areas of the world. Environmental externalities from energy use are responsible for the dreadful environmental quality of Eastern Europe. A reliance on low quality coal and the absence of abatement laws led to air quality that is the leading cause of sickness and death in countries such as Poland, Czechoslovakia and Romania.
Although the Clean Air Act and other legislation in the U.S. have had some impact in reducing the negative consequences of energy use, much progress needs to be made. The dual problem of the social costs from environmental impacts from energy use and social costs of reliance on imported oil from insecure sources should be internalized through emission permits or taxes.
KEY CONCEPTS AND
DEFINITIONS
Pollution Bubbles – the bubble concept was a modification of clean air regulations which treated each firm as if a glass bubble encased the entire firm's operations. All pollution was treated as if emanating from a single imaginary smokestack. This allowed the firm to reallocate pollution emissions within its own operation based on a cost- minimizing goal.
Catalytic Converter – command and control mechanism for regulating emission abatement of mobile sources. Platinum in the converter serves as a catalyst to lower the ignition temperature of many of the unburned hydrocarbons and other pollutants in gasoline. Result is cleaner emissions.
Corporate Automobile Fuel Efficiency Standards (CAFE) – specifies the average miles per gallon that must be achieved by each automobile manufacturer.
National Energy Strategy – conceived in the latter years of the Bush administration. Goals include improved environmental quality, increased flexibility in meeting regulations and reduced threat of "acid rain."
Acid Deposition –refers to a process by which certain types of pollutants chemically transform into acidic sub- stances in the atmosphere and then fall to the earth.
Precursor Pollutants-those pollutants that are chemically transformed to generate the substances that actually cause the environmental damage. The most important precursor pollutants in the acid deposition problem are sulfur dioxide and nitrous oxide.
Acid Precipitation Act of 1980 – This act was the culmination of concerns about acid deposition which began in the 1970s. Established the National Acid Precipitation Assessment Program (NAPAP).
National Acid Precipitation Assessment Program (NAPAP) –established to provide regional information about effects of acidity on resources and the extent to which acid deposition and related pollutions are responsible for causing these impacts.
Regional Pollutants –pollutants that have effects over more than just the vicinity of their emission. Acid rain belongs in this category of pollutants.
Transboundary Pollutants –also referred to as transfrontier pollutants. Problems which result from this type of pollution are not limited to one locale, but move across political boundaries. An example would be sulfur dioxide emissions in the United States which impact the environmental quality in Canada.
Volatile Organic Compounds – (VOCs), presence in the atmosphere, while not directly responsible for acid deposition, which leads to greater proportions of sulfur dioxide being converted to sulfate and nitrous oxides being converted to nitrate.
1990 Integrated Assessment Report of NAPAP –examines the effects associated with acid precipitation. This re- port examines two categories: market and nonmarket effects.
pH Scale-a scale used to measure the level of acidity, from the German "potenz Hydrogen." This scale represents the negative of the logarithm of the hydrogen ion H concentration. A pH level of 7 refers to neutral acidity. Moving from a pH of 7 to a pH of 6 means that acidity has increased tenfold. It also measures the concentration of hydroxyl OH ions. In this sense, a pH of 7 refers to neutral alkalinity and moving up one unit on the scale means alkalinity has increased tenfold.
Clean Air Legislative Acts –In the early 1970s under President Nixon, the 1972 Clean Air Act was passed. This act listed sulfur dioxide and nitrous oxide as "criteria pollutants" and thus, substances which should be regulated. The 1977 Clean Air Act Amendments also listed these two substances as "criteria pollutants." The 1990 Clean Air Amendments tackled the political problem associated with supporting legislation which reduces the standard of living of constituents by packaging several environmental problems with the same piece of legislation. The 1990 CAA amendments address the problems of acid rain, local air quality, and pollution from cars as well as global climate protection. Title IV of the CAAA specifies a ten million ton reduction in annual sulfur dioxide emissions. It also represents the first attempt by the federal government to implement a system of marketable pollution permits.
Chapter 9 Short-answer questions
1. The combustion of fossil fuel is the major source of the air pollutants that are regulated by the 1972 Clean Air Act. What are these pollutants and what type of impact do they have?
· Particulates, sulfur oxides, nitrogen oxides, carbon monoxide, volatile organic compounds, and lead.
2. What is acid deposition?
· Acid deposition refers to a process by which certain types of pollutants chemically transform into acidic substances in the atmosphere and then fall to earth. The most widely discussed vehicle for acidity to reach the ground is acid rain.
3. What brought the passage of the Acid Precipitation Act of 1980 and what program was established by this act?
· Acid deposition received considerable attention in the media in the 1970’s and was generally regarded by the public as an important environmental problem. The passage of the Acid Precipitation Act of 1980 established the National Acid Precipitation Assessment Program (NAPAP). This program was coordinated by an interagency taskforce and was established to provide information on the regions and resources affected by acidity and the extent to which acid deposition and related pollutants were responsible.
4. What are regional pollutants?
· Regional pollutants are those pollutants that have effects over more than just the vicinity of their emission. Their effects are felt in broader geographic area, but they do not have global impacts in the manner of greenhouse gas or ozone-depleting pollutants. For example, with sulfur dioxide and nitrogen oxide emissions, the effects are felt primarily downwind of the emissions. Location is important.
· A special case of regional pollutants are transboundary pollutants. In this case pollutants are emitted in one country and transported across an international border to another country.
5. What role do VOCs play in acid deposition?
· VOCs are volatile organic compounds and their presence in the atmosphere leads to greater proportions of SO2 being converted to sulfate and Nox being converted to nitrate. The interactions of these pollutants make identification of the optimal level of pollution an extremely difficult problem.
6. What are the direct and indirect effects of acidity on aquatic organisms?
· Acidity of the water creates an environment that many organisms cannot tolerate, leading to their direct mortality.
· Second, acid rain can dissolve metals in the soil and these metals can have a toxic effect.
7. Two primary terrestrial impacts of acid deposition and related pollutants are on agriculture and forest ecosystems. Discuss the impacts in these two areas.
· Forest systems may be less able to withstand a severe winter cold, insects, disease, and other factors because of stress.
· Agriculture systems may suffer reduced yields, however, market forces may react and cause price increases as a result.
8. The Pre-1990 Acid Deposition Policy focused primarily on the establishment of cause and effect relationships. How has this policy changed?
· The 1990 Clean Air Act Amendments, which occurred under President George Bush, Sr., addressed not only acid rain, but local air quality problems associated with ozone and carbon monoxide, pollution from cars and trucks, air toxics, and stratospheric ozone and global climate change.
9. Discuss the marketable permits provisions of the 1990 Clean Air Act Amendments? What were some of the fears and have these been realized?
· Utilities that reduce pollution below allowed levels may sell allowances to other utilities. Each allowance represents the right to emit 1 ton of SO2.
· One of the great fears was that local air quality would decline as utilities bought allowances. Although the system lead to some patterns of trading that increased emissions in certain areas, it does not appear to have caused any areas to violate the federal standards. The sulfur trading program has been relatively successful.
10. Discuss the various parts of Title IV of the 1990 Clean Air Act Amendments.
· SO2 reduction and allowances; Nox reductions; Repowering clean coal technologies; Energy conservation and renewable energy and monitoring.
11. What has been the approach used to regulate mobile sources of pollution?
· Command and control mechanisms which mandate the use of catalytic converters, which facilitate the more complete burning of gasoline. An indirect method of regulating mobile sources are CAFÉ standards for automobiles, which specify the average miles per gallon that must be achieved.
12. Since the passage of the Clean Air Act in 1973, what have been the two major thrusts of Presidential positions’ on environmental policy and energy policies?
· Increase domestic supplies of energy and reduce dependence on foreign oil; promote a cleaner environment by requiring energy users to utilize cleaner technologies.
13. What are the benefits and drawbacks associated with implementing energy use and/or environmental taxes?
· Benefits include providing individuals with an incentive to use less energy or to use energy more efficiently, without mandating specific methods by which this would be achieved. In addition, by raising the price of traditional fuel sources, there will be an incentive to explore new sources and new technologies.
· Drawbacks include the objection to the implementation of taxes on philosophical grounds (government is too big and too wasteful) and practical grounds (government spending is wasteful). Macroeconomic impacts to the economy of rising fuel costs can be quite large (however, if taxes raised by fuel tax are used to fund government, may be less of impact on the economy than an increase in fuel prices through OPEC action.)