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The Kyoto Protocol and a Marketable Pollution Permit System for International Carbon Dioxide Emission Control: Why and How They Must Function

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The Kyoto Protocol and a Marketable Pollution Permit System for International Carbon Dioxide Emission Control: Why and How They Must Function University of Tennessee, Knoxville TRACE: Tennessee Research and Creative Exchange Supervised Undergraduate Student Research Chancellor’s Honors Program Projects and Creative Work Spring 5-2000 The Kyoto Protocol and a Marketable Pollution Permit System for International Carbon Dioxide Emission Control: Why and How They Must Function Christopher James Raybeck University of Tennessee - Knoxville Follow this and additional works at: https://trace.tennessee.edu/utk_chanhonoproj Recommended Citation Raybeck, Christopher James, "The Kyoto Protocol and a Marketable Pollution Permit System for International Carbon Dioxide Emission Control: Why and How They Must Function" (2000). Chancellor’s Honors Program Projects. https://trace.tennessee.edu/utk_chanhonoproj/425 This is brought to you for free and open access by the Supervised Undergraduate Student Research and Creative Work at TRACE: Tennessee Research and Creative Exchange. It has been accepted for inclusion in Chancellor’s Honors Program Projects by an authorized administrator of TRACE: Tennessee Research and Creative Exchange. For more information, please contact [email protected]. AppendixD- UNIVERSITY HONORS PROGRAM SENIOR PROJECT - APPROVAL N a me: ~~J~~~tk~------------------------------------------ College: ~~_~__ s..c~~,:::~_______ Oep ortmen t: ~i~~_+£'!-"~!':'J£'-____ _ Fa cu 1ty Men tor: k~-~~.i~~-?±~J.:r------------------------------­ P ROJE CT TITLE: Jh~_l(¥-~_R~-h~~_:~~_--,,=- __ ~~l(~~~l~j~dJJ,,_Y.:h~L fg'[!~/±_}1~f!~_'f>~~J~1t~~~'0~~~_~~kl).!__ !>l~'li~~_§'~J:.~~__ ~~~~_'. __ ~n/-~~--~~--~1--~Y~±-~~~~~~-------------------------- I have reviewed this completed senior honors thesis with this student and certify that it is a project commensurate with honors level undergraduate research in this field. r, Signed: ?f:--7~---~-~"-~fy-------, Faculty Mentor Date: -----I-J-Q-L-~cj_~:!__ Comments (Optional): ,/ 7'(f4 iJ c,,\ :ilk! ;4'1/X c:I- ~C/d q {/1 C/ rf' c __1 - l{e r /1 '(~ I £vp& If " vvllJ fafl (rl J}v ~rz 27 AppendixC- UNIVERSITY HONORS PROGRAM SENIOR PROJECT - PROSPECTUS Name: _(¥~l~-~~~~---------------------------------------­ Coli ege: ih±s_~--~~~~~~------- Dep artmen t: ~l&~_+.[~~~"~-----­ Faculty ~entor: ~I~p_~~~__ ~l~-------------------------------­ PROJECT TITLE: 1},-,-__~!? __ q3!:b.o~ __~ __ ~__ ~~~~1Lf~<1ii-'L- ~':<:":'t! __ 5l"~__ £ i _lll.~~~,,~'tA __S::~~_ ):-1-0. "-~!~ -_!:' ~;s0 ... ~-~--"'~ ~ -- ~~T-~--th~--~~r-1!~±--~~~~-------------------------- PROJECT DESCRIPTION (Attach not more than one additional page, if necessary): o _ c:. ') ') i j\.I.~ ~ +} 0 ,'I ad t,.~ c, ~ <, .J 'Wh r M~+h) 1\ S \J r~ <j;\ J)'(r ~ l ,1 f-o -t;euJr '-hr Ud~/)w'\ lID~'lk eW:(<;~~M r~cftot\ completion date: f'-Q\J.. i Projected ----------~r---------------------------J ~('~ ~w Q ~k Signed: -------~------------------------------------------ I have discussed this research proposal with this student and agree to serve in an adv.isory role, as faculty mentor, and to certify the acceptability of the completed proJect. -' :::~d: -t¥!r::~~~-~~£1J-' Faculty Mentor Return this completed form to The University Honors Program, FlOl Melrose Hall, 974-7875, not later than the end of your 3rd year in residence. 26 The Kyoto Protoco~: Why and How It Must Be Inp~e.mented University of Tennessee Honors Program Senior Project Chris Raybeck Faculty Advisor: Dr. Denise Stanley April 25, 2000 2 Abstract Popular environmentalism has always focused on a few, key areas of concern, and, even as environmental issues and policy begin to receive more public attention, these key areas remain central to the platform of environmental protection, especially on an international level. Among these is global warming. Caused by a process known as the greenhouse effect, global warming is fed by emission of certain gaseous pollutants and carries with it an array of established, detrimental environmental consequences. Primary among the greenhouse gases, as they are known, is carbon dioxide. Though naturally emitted by many of the planet's organisms, carbon dioxide is a major by-product of energy consumption by both individuals and industry. As such, it is essential in developing and maintaining the standard of living currently enjoyed by millions and hoped for by millions more. Consequently, the following question arises: Is curbing carbon dioxide emission in order to stall and, ideally, prevent certain negative effects due to global warming worth the economic repercussions of such control? This question is, in fact, presently in front of a number of nations considering ratification of the recently-developed Kyoto Protocol, a treaty initiating international reduction of carbon dioxide emissions. While seemingly a rather straightforward cost-benefit analysis, this paper attempts to show that the above question is misleading and that, when striving to optimize aggregate social 3 welfare, worldwide carbon dioxide emissions should be reduced. The environment can be proven to be a valuable public good and, therefore, international regulation makes sense economically as well as environmentally. The question at hand, then, transforms to one of how emissions should be controlled in accordance with the Kyoto Protocol. Governments may engage in three primary forms of regulatory behavior - command-control techniques, taxation, or maintenance of a pollution permit system. While each is generally successful at controlling pollution, the latter is proven to be the most efficient with respect to a free-market system and, indeed, has been proposed by several Kyoto participants. Extending standard permit system requirements developed intranationally to international carbon dioxide regulation, however, presents several novel concerns. These issues, which include comparative advantage shifts, inequitable concentrations of capital, and arrest of economic growth, generally result from existing dichotomies between developed and developing countries. Sensible solutions, such as recognition for reduced deforestation and credit for investment in technological innovation, have been proposed, however, and are examples of alternatives to direct credit trading possible within the permit system. These alternatives would allow it the flexibility to exist as the best structure by which to reduce international carbon dioxide emissions, permitting the benefits from the treaty to outweigh the costs. 4 Introduction Over the past several decades, society has seen the field of environmental science popularized. Concern for natural resource degradation has spread from portions of the scientific and economic communities to the general public. As proof of this, one only need note the increasing importance of definitive environmental policy for an elected official; public policy decisions are now quite often dependent upon an understanding of environmental dynamics. Among the numerous popular environmental issues is global warming. Now a political buzz phrase, global warming, whose occurrence has finally been accepted as scientific fact, is caused by a rather simple physical process. A solution, however, especially considering political and economic arguments, is not nearly as clear. Global warming, caused by a process known as the greenhouse effect, is the gradual warming of the planet's surface and atmosphere. Though measured in averages of less than a degree Celsius per year, this increase is enough to perhaps drastically alter the environment's delicate homeostatic balance. (Though some emission-control opponents insist global warming is merely one of the Earth's many climatic cycles, humans still perilously spur the process by emitting enormous amounts of greenhouse gases.) Projected consequences of this warming range from climate-dictated shifts in agriculture to increased population density in certain areas due to receding coastal land. Effects can, in fact, then feed on themselves; temperature change can 5 alter ocean current circulation, thus affecting further climate change (Hammond 197; 1994). To compound these consequences, flooding, crop loss, and the like will be most prevalent in those countries least equipped to handle them - developing countries. The greenhouse effect is so named because of its mechanistic similarity to an actual botanical greenhouse. According to Oxtoby et al, the process, outlined below, is well-understood (598; 1996). certain gaseous molecules are released constantly into the atmosphere, from both natural and anthropogenic sources. Visible sunlight (energy) from the sun that is allowed to pass through the Earth's upper atmosphere is either absorbed by the planet's surface or reflected back through the atmosphere into space in the form of infrared radiation (still, energy). However, the greenhouse gases, which include carbon dioxide, chlorofluorocarbons, methane, nitrous oxide and water vapor, trap much of the irradiated energy meant for space due to their high infrared absorption spectra. It is this chemical characteristic that allows greenhouse gases to work, in a sense, as a thin thermal blanket covering the planet. An obvious deduction is the positive correlation between levels of greenhouse gases and energy entrapment, thus leading to the notion that increasing levels of greenhouse gases in the atmosphere will only speed global warming. Accounting for approximately fifty-seven (57) percent of total greenhouse gas accumulation as of 1990, carbon dioxide is the most prominently emitted greenhouse gas (CNN.com; 1999). Its 6 sheer rate of annual atmospheric accumulation from anthropogenic sources, estimated in
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