Course:ECON371/GROUP4
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Group 4: Wiki 1
Source
https://newsinteractives.cbc.ca/features/2024/emissions/
Problem
Canada's conflicting role as a climate leader while exporting large volumes of oil and gas, whose emissions abroad exceed domestic levels, undermining global decarbonization efforts. Balancing economic gains from fossil fuel exports with climate goals poses a significant dilemma for Canada's climate strategy.
Summary
Despite Canada claiming to be a climate leader, they have a big part in contributing to proucing emissions elsewhere. To achieve the global net zero emissions, the Canadian federal government stepped away from using oil and natural gas as their production process when drilling and refinement of oil. In this way, they are able to restrain the domestic greenhouse gas emissions to 708 megatonnes in 2022. Although, Canada is known to be a big exporter of these goods. An estimate shows that 929 megatonnes emissions equivalent to oil and gas are exported. As Canada caps emissions from the production process, they are able to keep the numbers down and maintain the reputation, although, considering the fact that most of the emissions come when oil and natural gas are used after they are imported by other nations, Canada still has a big part in contributing to global warming.
In terms of its domestic emissions, carbon tax and cap-and-trade system is playing a big role for Canada to reach its 2030 national emissions target domestically. Not only unique to Canada, these externalities, where exporting countries generate wealth by producing more than what they need for a sustainable environment, and not taking the responsibilities of the emissions after the goods are exported to a foreign nation are also seen in other wealthy countries such as the United States and Norway.
Despite this, there are prospects in regulating the fossil fuel market and potentially lowering the number globally.
Economic concepts
This article highlights the following economic concepts that we touched on in class:
- Externality: An externality can either be positive or negative, and it affects individuals who are not participating in an activity. To elaborate, a positive externality would be something like your neighbor plants flowers on a patch of grass that you both share, without you needing to do anything, and you end up liking the kind of flowers he planted because you find them visually appealing. On the flip side, a negative externality would be that the flowers he planted attracts all sorts of bugs and now you have to invest in window screens to keep the bugs out.
- Incentive based regulations: These are policies used by the government to encourage individuals and businesses to reduce their impact on the environment by offering financial incentives or by penalizing them. There are various types of incentives but we will focus on carbon tax and cap-and-trade for this news item.
- Carbon tax can be defined as the amount of money (tax) that companies/individuals have to pay to the government if they pollute the environment.
- Cap-and-trade is a system put in place by the government in order to reduce pollution, and to manage regulated activity by issuing a fixed number of permits. These permits can be bought and sold among individuals and companies. For example, a company can purchase the right to emit more greenhouse gasses by purchasing additional permits from other companies.
Application of concepts
However, the article above shows us the serious challenges on underestimated emissions, which are significant in impacting the environment but often neglected in those official statistics and reports. Eventually lead to an incomplete picture of the Canadian environmental situation. In this section, we will focus on and provide an analysis of this issue by using the economic concepts that we discussed above.
Externalities: The uncounted emissions are considered a serious negative externality where the individuals that cause pollution fail to completely take the externalities of pollution into account, including environmental damage and health related issues. The difference between the private cost and social cost causes a market failure since the real costs of those economic activities are not shown in the prices of goods and services. Therefore, pollution will be on a higher level than what society desires. At the end, it will cost other environmental issues such as climate change.
Prof: This description is not well connected to the article. The externality would be the emissions of carbon dioxide and the effects of those emissions on the global climate, and correspondingly the damages done to people who are not party to the decision to burn fossil fuels.
Carbon Tax: The carbon tax is designed for internalizing the negative externalities by charging businesses for the cost of carbon emissions. It helps to align private cost with social costs. With the implementation of carbon tax, businesses would be more financially motivated to control their carbon footprints if all emissions will be accurately recorded and taxed. The money collected from the tax can put back into green technologies or contribute to reduce the effects of climate change. However, the accuracy of emissions will determine how effective the carbon tax is. As the article mentioned, failing to report emissions will harm the efficiency of the tax since it will let businesses have a chance to avoid paying the externalities for their pollution
Cap-and-Trade: Another policy designed to lower emissions is cap-and-trade, which distributes permits to polluters based on a cap on the overall permitted level of pollution. Businesses that can reduce their emissions with lower costs can sell their extra permits to others, which contributes to the incentive for businesses to be efficient and innovate. Anyway, the issue of this policy is the same as carbon tax, where the inaccurate report can harm the effectiveness of the system. If the emission is undercounted, the cap could be set too high and fail to lower the pollution. Those businesses with inaccurate reports can also benefit from selling their permits that they should not have, eventually harming the integrity of the whole system.
Prof: While these policy tools are certainly things we have mentioned, and will dive more deeply into, you have not connected them with the article. The article speaks to the issue of emissions from people who burn products we produce. The suggestion in the article is that Canadians should be accountable for the damages done from the use of the fossil fuels we export. This is not a typical approach, where the liability for the damages caused by the use of a product fall on the person who is using the product, not the producer.
Conclusion
As Canada's oil and gas industry is growing to be the biggest producer of emissions, domestically and globally from exports, it is imperative to look toward the impacts and potential solutions relating to these issues. There is a dire need for rapid shifts away from fossil fuels to change Canada's Global Carbon Footprint both domestically and globally. As solutions and methods continue to be a necessity, the Canadian Government has set in place such as systems like a carbon tax and cap-and-trade to combat the detrimental influences and externalities that oil and gas extraction has on the global climate. Canada must balance these concepts along with the economy and its own environmental goals to reach the country’s national emissions goal for 2030.
Group 4: Wiki 2
Source
Prof: I had to fix the link.
Problem
Our focused challenge is accurately measuring the willingness of customers to pay those outstanding premiums for sustainable products, due to the extreme weather. It’s about valuing non-market environmental benefits such as air, which are difficult to quantify but are pretty important for effective policy-making. (Also with possible bias)
Summary
Bain & Company’s recent study highlights a significant gap between businesses’ current sustainability goals and their actual progress, with over 60% of businesses failing to achieve their sustainability goals. Francois Faelli, the head of Bain’s Sustainability practice, emphasizes the important role CEO’s play in using policy, technology, and behavior changes to close this gap. The study is based on insights from thousands of executives, consumers, and employees worldwide, and it shows a growing awareness among consumers and employees surrounding sustainability issues, heavily driven by concerns over extreme weather events.
Contrary to popular belief, consumer behavior reveals that people of all ages are increasingly concerned about the environment, not just younger consumers. Additionally, younger and older consumers are willing to pay more for sustainable products. However, it is important to note that there is a disconnect between what consumers want, and what companies offer, along with a general lack of trust in large corporations’ sustainability claims. Bain suggests that companies should adopt flexible strategies, find new ways to meet consumer needs, and stay ahead of changing regulations in order to achieve real sustainability goals. The company also underlines the importance of regular employee training, to “upskill” the existing labor force, so that sustainability can be integrated effectively into businesses.
Economic Concepts
- Consumer willingness to pay: Consumer willingness to pay, also denoted as WTP is the maximum price that a customer is willing to pay for a product or services. In the environmental economic context, the price an individual is willing to pay to protect a particular park or a species incorporated into their tax, or corporation’s willingness to pay for a new production instrument for a more sustainable production method.
- Intergenerational equity: Intergenerational equity in the context of environmental economics is the idea of fairness or justice in protecting the current state of “environment” for the future generation. Society wants to ensure that our children and grandchildren also get the same quality of the natural resources as what we are getting in this current age, or better.
Application of Concepts
Within this article the consumers' willingness to pay is used in order to determine what sectors of sustainability are of major concern to consumers, businesses and employees. This in turn helps businesses such as Bain & Company identify the alarming number of businesses that are failing to reach their sustainability. And consumer concerns have increased drastically within the past two years.
Willingness to pay: As previously stated the willingness to pay (WTP) is the most consumers are willing to pay toward a certain product or service. In this article the biggest risks or concerns consumer products have on their environments. In the case of Bain & Company they observed that consumers were showing an increasing concern about weather patterns, in turn they measured the consumers WTP and found that due to the intensity of these conditions customers are willing to pay at least a 12% environmental premium in order to move towards sustainability goals. Within this they break down misconceptions in regards to environmental concerns relating to generation gaps, political views, behavior changes and differences in WTP between countries. By collecting all of the data businesses can observe the most baseline rate that should be set as a tax globally or nationally in order to combat climate change. By using the statistics companies can adopt better ways of implementing sustainability policies, tailor it to consumer concerns and analyze patterns that need to change before major interventions are required.
Prof: The article does speak to WTP. What struck me in the article is the gap between what consumers are willing to pay and what companies are typically charging, which seems to be double. The article,which does seem to be directed at business, appears to focus on how to raise that WTP, which in part is about addressing the misconceptions and lack of trust. It doesn't talk much about bringing down the price of goods to within the WTP of consumers.
Intergenerational equity: Along with the willingness to pay another concept that can be inferred in this article is intergenerational equity. Throughout the research done by Bain & Company they find a surprising percentage of Baby Boomers (68%), among all countries, are just as concerned with climate and environment as Gen-Z (72%). Inferring that the older generations concern tie into the desire to preserve the environment for the future generations we can thus identify the underlying concept of intergenerational equity. This concept of preserving the environment for the future is also readily talked about among Gen-Z. This however is not always communicated in data that is normally gathered on climate concerns. Thus leading to a gaps between businesses sustainability goals and consumer demands.
Conclusion
The article, however, shows us the growing consumer willingness to pay more for sustainable products to contribute to relief in extreme weather. Even there is still a challenge on the willingness measurement and intergenerational equity. We can see that most of the businesses are failing to achieve their sustainable goal, which is represented by the gap between customer demand and corporate action. Eventually, these businesses will have to quickly adjust their strategies in order to meet consumer needs in sustainability, and make consumers confident in their sustainable propaganda.
Group 4: Wiki 3
Source:
https://globalnews.ca/news/10539034/carbon-pricing-climate-change-policy/
Problem:
The key issue with the current carbon pricing in Canada is the low social acceptance, such as the carbon tax, which influences citizens on cost of living. Although long-term emissions are effectively reduced, criticism rises from short-term financial issues, and insufficient public knowledge of rebates worsens the situation.
Summary:
The article shows whether the carbon tax in Canada is effective in fighting climate change from a political perspective and an economic perspective.
From a political perspective, implementing a consumer carbon tax is not as desirable for their political campaign because of the rising cost of living. The current affordability crisis, influenced by the carbon tax, puts the Conservative Leader Pierre Poilievre more advantageous because he promises to “axe the tax.” What political scientists and economists agree on is that carbon tax is indeed an effective strategy for a greener society, but the benefits only show in the long run. Rebate is one of the strategies that the Liberals use to maintain their popularity, though political scientists suggest that unless the benefits of them are properly communicated with the population, they are not as effective, as they underestimate their value. They state that “People’s partisan, ideological preferences dominate their perceptions of carbon pricing, much more so than the objective costs or benefits that come from the policy.”
From the economist's perspective, they state that carbon pricing is theoretically the cheapest and most effective way to reduce emissions. They also suggest that it might be more effective when the policy offers an “incentive for polluters to invest in emission-reducing technology” instead of only limiting the amount corporations emit.
In the article, it has also suggested other policies that could lead to a cleaner environment and will not hurt the citizens as much as now with the rising living cost.
Economic Concepts:
Carbon-Tax Policy: Is an approach the government uses to reduce greenhouse gas emissions by imposing tax on carbon. As a result, it creates a financial incentive for businesses and consumers to reduce their carbon footprint by making goods/services that are carbon intensive more expensive, therefore encouraging the adoption of cleaner energy sources and technologies.
Prof: The Canadian Carbon Tax is a close approximation to an emissions tax.
Willingness to pay (WTP): Is the maximum amount an individual or entity is willing to spend to acquire a good, service, or even a policy benefit. It represents the value that an individual or an entity places on the good/service, and it varies based on income, preference, and perceived benefits.
Application of Concepts:
There are multiple applications of concepts within this article, the ones that have been identified are the Carbon-Tax Policy and the Willingness to pay.
Carbon-Tax Policy: The carbon tax is the set tax on the amount of carbon that is being emitted, in this This article emphasized the current issues surrounding the carbon tax. It is a political analysis between the liberal party and the Conservative party of Canada. The current carbon-tax policy provided by the liberal government is currently ‘failing’ in the current economic state. This is due to the tax increasing prices on food, transportation basically anything uses emissions which increases the price of living. This however is given back annually in a rebate. However, the issue expressed within this article states that many citizens are not aware of the carbon rebate. The issue that the Liberal party is facing. The conservative party has taken this backlash on the Carbon Tax and has chosen to ‘ax the tax’ if they are elected. This has appealed to many voters who believe that the Carbon-Tax is not effective in its current state. However, many economists have stated that proper carbon pricing is one of the best ways to combat climate change. Although, with that being said the politics of this Tax have definitely the effectiveness of future climate solutions.
Willingness to pay (WTP): As stated before a willingness to pay it the maximum amount that any consumer or companies are willing to spend for a good/service. In this case Canadian citizens are showing major push backs in terms of the Liberal Carbon Policy. This is thus affecting not only the liberal party’s chances of reelection, but as well the state of sustainability. The issue that the article points out is that consumers will pay very direct, short term taxes for carbon, yet the benefits of these taxes are seen within long term effects. This thus affects how willing consumers are to pay, especially because benefits are not received immediately. On top of that, many Canadians do not know about the rebates that come from the Carbon-Tax Policy. Another problem affecting the willingness to pay is the expenses that the Carbon-Tax is adding to the cost of living. This then decentivies consumers to buy products and also make basic needs less attainable for lower income houses. This then affects consumers' willingness to even pay this tax or have this tax which creates negative stigma around climate change solutions.
Prof: With the concept of WTP, need to identify what the good or service is that is being purchased or enjoyed. The tax is not something that people consume. That consumers don't seem willing to sacrifice now for long term benefits is an example of a high discount rate and/or having a low expected benefit.
Conclusion:
Anyway, carbon pricing in Canada faces both economic and political difficulties. In terms of politics, it is undesirable since politicians can use growing expenses as their justification for more support. Even though public opposition results from short-term cost and limited awareness of long-term benefits including rebates, economically carbon pricing is an effective method to lower emissions. The concept of willingness to pay shows that when long-term benefits are uncertain, consumers fight immediate financial obligations. With methods such as alternative policies, or incentivizing green technologies, the both political and economic, with the effectiveness will be increased.
Group 4: Wiki 4
Source:
https://www.unep.org/news-and-stories/story/beyond-gdp-making-nature-count-shift-sustainability
Prof: Had to fix link. It is an external link, which needs to be specified when creating the link.
Problem:
The concepts relayed in this article tie concerns to how environmental attributes get given little economic value and the importance of non-market values that go past the metric GDP value.
Summary:
The article emphasizes moving beyond GDP to include nature’s value in economic decision-making, as GDP often ignores essential environmental benefits. Tools like the Inclusive Wealth Index and System of Environmental Economic Accounting, introduced by UNEP, help reflect natural capital and promote sustainable development. Therefore, true prosperity requires valuing and restoring natural resources, leading to more sustainable policies.
Prof: The summary should be longer. A couple of sentences describing each of the IWI and the SEEA would have been good.
Economic Concepts:
Natural Capital Depreciation: It describes how over time natural resources are depleted or degraded. This is related, in the UNEP paper, to the idea of realizing the actual cost of environmental damage in economic evaluations. Neglecting forest loss, for example, will harm long-term ecosystem functions and biodiversity.
Inclusive Wealth: It covers the whole wealth of a country with considering natural, human, and produced capital. In accordance with Chapter 9 argument for more general measurements than GDP, UNEP advocates using the Inclusive Wealth Index (IWI) to evaluate sustainability by considering natural capital.
Ecological Footprint: It measures human consumption in ecosystem of Earth. The UNEP paper emphasizes the need of indicator like ecological footprints to monitor environmental effects and show how environmental limits must be taken into account in economic development.
Application of Concepts:
Natural Capital Depreciation: The article states that measurements of natural capital is one of the indexes to see the worth of nature and its benefits to people. They are mainly used by governments and decision makers as a tool for policy making. They use this to calculate the benefits of saving or restoring the natural habitat.
Inclusive Wealth: The UNEP has developed an Inclusive Wealth Index where they see the social value of economic, human, produced and natural assets to indicate whether countries are developing sustainably, and showed a decline in natural capital. From their study, they have concluded that “the index doesn’t show that we are not as wealthy as we think we are,” and “it shows how protecting or restoring the environment is as relevant as developing industries, expanding education and improving public health for our long-term prosperity.”
Ecological Footprint: The article suggests that for long-term economic development, taking environmental sustainability is an important consideration to make. Therefore, to approach the Sustainable Development Goals, Public and mostly private sectors should calculate and manage their ecological footprint when developing their industry.
Conclusion:
In conclusion, the article's driving point is the need for future considerations of environmental systems that move past just standard GDP generation. By using economic concepts such as natural capital depreciation, inclusive wealth and ecological footprints, we better understand the holistic natures of the environment and the economy. In the future by acknowledging these important environmental and ecosystem services policies can be created in order to protect their present and future values and promote sustainability
Group 4: Wiki 5
Source:
Prof: I had to edit the link. It needs to be set to an external source.
Problem:
The article's major concern is the declining Energy Return on Investment (EROI) for oil, which means more energy is required to extract oil, leaving less net energy available. This reduces the efficiency of oil extraction, meanwhile raising expenses and limiting the sustainability of oil as an energy source.
Summary:
Oil has played a key role for industrial civilization, as there is a correlation between production and demand of nonrenewable resources.
In the 2000s, to raise awareness of the oil scarcity, experts predicted a global peak in conventional oil production, giving rise to the term “peak oil”. After the financial crisis in 2008, the awareness of peak oil has gradually decreased due to an absence of political proposals, and a clash with the mainstream belief in abundance and unlimited technological progress. With new discoveries of shale resources, technological advancement to oil extraction and so on, facilitated a major boom in oil and gas consumption. Although, the challenges around the ability of the tight-oil industry to increase production are raising some awareness for a transition to low-carbon energy sources.
Among economists, Energy Return on Investment (EROI), has been an important index to measure the energy efficiency of different sources. This ratio is used to measure the amount of energy needed to extract new energy. This is used as an implication for energy policy and decision-making, by observing the cost and the potential sustainability.
Several studies show that oil production is expected to peak in 2035, and because it is expected more energy is needed for extraction in the coming years, the value of EROI is declining.
Without awareness of the EROI overtime, we might face a substantial crisis of energy shortage and economic instability, so it is important to start acting now and shift to a more sustainable source of energy.
Prof: The Energy Return on Investment is in fact little used by economists. Most economic modeling assumes a simplistic technological progress process which has ever increasing returns without any limit imposed by energy quantity or quality.
Economic concept:
Non renewable energy: Non-renewable energy refers to finite energy sources, such as natural gas, oil, and coal that cannot be replenished on the human timescale. Moreover as these resources are consumed, their extraction becomes more difficult and expensive, leading to higher environmental and economic costs. This increasing scarcity not only raises their market price but also worsens their environmental impact, such as pollution and greenhouse gas emissions, which contribute to climate change.
Energy Return on Investment (EROI): EROI measures the efficiency of energy production by comparing the amount of energy obtained to the energy used up in producing it. A higher EROI means more energy is gained for less effort, therefore making the source more efficient. As non-renewable resources become harder to access, their EROI tends to decline, meaning more energy is required to extract the same amount. This ties in directly to Hotelling’s Rule, which suggests that the price of non-renewable resources rises over time due to increasing scarcity. Furthemore, as the EROI decreases, the cost of extraction rises, aligning with Hotelling’s model, where companies may delay extraction to capitalize on future higher prices driven by resources depletion. Thus, lower EROI not only reflects diminishing efficiency but also influences economic decisions surrounding resource use.
Application of the economic concepts:
Non Renewable energy
Non-renewable resources, such as oil, are finite and become more difficult and expensive to extract as they are diminished. The textbook emphasizes the need for proper management of these resources because, after their use, they cannot be regenerated on a human timescale, and long-term sustainability depends on them. Resources get more difficult to reach as extraction goes on, requiring more energy and more expenses. This process increases the cost of the resource and, over time, reduces the financial sustainability of extraction. The growing challenge and cost involved in extracting non-renewable resources. As depending on non-renewable resources becomes less sustainable over time, these growing expenses and inefficiencies force societies to investigate alternative energy sources or create more efficient extracting technologies.
EROI
The Energy Return on Investment (EROI) in the article measures how much energy can be obtained from resource extraction compared to the energy spent. Declining EROI for oil indicates that more energy is needed for less return, indicating that oil reserves are getting more difficult to extract. The Hotelling model provides a structure to help us understand this. The Hotelling model argues that the price of a non-renewable resource should rise to reflect the increasing challenges of extraction and scarcity as it gets more scarce and extraction becomes more energy-intensive. In the case of oil, the declining EROI aligns with the Hotelling principle: as extraction becomes less efficient and more expensive, the market reacts with rising prices. This dynamic encourages resource owners to either invest in technological innovations that might slow down the rate of decline or cut current extraction to gain from future higher prices. The Hotelling model therefore forecasts that the declining EROI will cause a change in economic behaviour whereby more cautious resource management or the exploration of alternative energy sources is encouraged by higher future costs of extraction.
Conclusion:
Economists say that our society will hit ‘peak oil’ by the year 2035, and the concern about energy resources are counting to increase. The critical takeaway from this article is the decline of energy return on Investment (EROI) on oil. Due to oil being extremely energy intensive to extract it has led to issues surrounding it such as a raising costs, and diminishing returns in energy investment which could lead to more energy shortages. Through an analysis of EROI and Hotelling rule we come to find that there is a need to switch to more renewable energy sources. This analysis shows the importance of prioritizing sustainable resources and technological advancements. In order to ensure energy security, economic security and future environmental and generational benefits.
Prof: The link between the Hotelling rule and the observed trend in EROI would work through the cost of extraction. We adapted the textbook model a bit by adding a cost of extraction, and showing that the marginal profit, or marginal net benefit generated by the resource must increase at the discount rate. The declining EROI is akin to an increase in the marginal cost of extraction. Extraction in the Hotelling model stops when there is no longer any amount of the resource for which the cost of extracting another unit of the resource is less than the price. This will occur somewhere before an EROI of one. If the EROI is one, then one unit of energy must be applied to produce one unit of energy, so that there is no net energy gained. This cannot be economic, except if the energy gained is in a form more valuable than the energy invested. This is where the value of liquid fuels shows itself, as it may be profitable to use low grade energy to produce high grade energy, even when the EROI is negative.
Group 4: Wiki 6
Source:
https://www.bbc.com/news/science-environment-62892013.amp
Prof: I had to edit the link. It needs to be marked as an external source. Note that this article is over two years old, older than expected for this assignment.
Problem:
The article rearranges the misconception that transitioning to renewable energy is costly. Study done in Oxford University has shown that using green energy actually reduces the cost of energy production and delivery so we should move towards renewable energy as quickly as possible.
Summary:
This article analyzes the common falsity that transitioning to renewable energy sources would be a costly process. In fact this article states that switching to renewable energy would actually save around 12 trillion dollars according to a study done by the University of Oxford. And the cost of net zero is greatly overestimated. As prices of gas continue to skyrocket the price of renewables is continuing to fall. This further demolishes the common misconceptions and worries about switching to green sources. Due to increases in technological advancement prices on sources such a solar and wind have fallen nearly 10% each year, and continue to be the cheapest renewable energy sources as of right now. They state that they expect renewable energy prices to continue to fall as they are more market wide accessible. By increasing the usage of renewable energy sources the price of them will continue to decrease.
Prof: The article mentions that over a century long history, and adjusting for inflation and price volatility, the price of energy from fossil fuel sources has barely changed.
Economic concept:
Efficient Harvest: This economic concept, as applied to renewable resources, emphasizes the optimal use of resources such as wind, solar, and hydroelectric power. For example, optimizing renewable energy sources helps to lower dependency on fossil fuels by reducing resource or ecosystem strain. Maintaining an effective "harvest" rate helps renewable energy systems to provide a constant energy supply without excessive stretching the technologies or resources, which then encourages a steady, low-cost energy transition.
Natural Capital: The concept of natural capital shows how valuable renewable resources such as sunlight and wind are, which offer both environmental services and financial advantages. Renewable energy lowers carbon emissions, hence supporting a type of "natural capital investment" for ecological health. Reducing carbon footprints and maintaining ecological balance directly support the long-term savings and economic resilience resulting from treating renewable resources as natural capital, improving both environmental and economic stability.
Application of the economic concepts:
Efficient Harvest: This study demonstrates the efficient harvest of renewable energy resources such as solar and wind, and how it offers significant economic advantages over fossil fuels. As the costs of renewable technologies continue to fall, accelerated by technological advancements, these energy sources are more capable of providing stable, low-cost supply. Furthermore, the transition allows for a steady energy supply without overextending resource uses, making the shift both economically wise and sustainable. With efficient harvest rates for renewables, this transition can replace fossil fuel dependency and help to counter energy market volatility. Thus, creating a more reliable and less expensive global energy framework.
Prof: Efficient harvest was that harvest rate for a renewable resource that maximized the present value generated. The key outcome of this analysis was that at the dynamically efficient harvest rate, the growth rate of the resource was equal to the discount rate. Right now, this is not particularly relevant for renewable energy resources. Except for bioenergy, this particular analysis is not directly applicable, as the supply - wind, solar, rainfall - is unrelated to the amount of energy we harvest from these sources.
Natural Capital: The report highlights renewable energy as a form of natural capital investment, underlining how clean energy sources deliver both environmental and economic returns. More specifically, solar and wind energy sources deliver both environmental and economic returns. They also significantly reduce carbon emissions, fostering environmental resilience while promoting economic savings projected to reach trillions by 2050. Renewable energy also highlights the idea of strong sustainability as it positions renewable energy not only as a low-cost energy solution but also as a safeguard for future economic and ecological stability. Furthermore, by treating renewables as natural capital, we can see them as investments in long term global health and sustainability, reinforcing that green energy adoption supports a sustainable, resilient economy while preserving natural ecosystems.
Prof: Natural capital are capital stocks that are supplied by nature. As a capital stock, it is something that supplies a service without necessarily being used up in the process. Nonrenewable resource are part of natural capital, but are used up. Renewables are potentially not used up, if the resource is not over-exploited. As noted above, for most energy sources, the amount available for humans to harvest is not related to the amount that humans actually harvest. This isn't really the same as most things we think about as natural capital. To capture this energy, we need to build capital - wind farms, solar farms, etc. - that can capture it. This would be an example of investing in human made capital to substitute for natural capital that is being used up. Given that this is an effective substitution between capital stocks, it is a case where sustainability is a 'weak' constraint on our economic development path, and as such the relevant concept would be weak sustainability.
Conclusion:
The transition to renewable energy is not only feasible but economically advantageous. The Oxford University study shows that green energy can lead to savings of up to 12 trillion dollars while reducing the perceived high costs of net-zero efforts. Concepts such as efficient harvest and natural capital reinforce that investing in renewables supports sustainable energy production, stabilizes markets, and ensures long-term economic and ecological balance. Falling costs of renewables, driven by technological progress, position solar and wind as the cheapest and most sustainable energy sources, proving that swift global adoption will benefit both economic resilience and environmental health.
Group 4: Wiki 7
Source:
https://news.gov.bc.ca/releases/2024ENV0003-000221
Problem:
The problem we can observe here is the challenge of mitigating climate change, while maintaining the economic output by the industries in B.C. The provincial government has been trying to solve this problem by imposing incentive based pollution policy, and encouraging industries to maintain their low cost of pollution.
Summary:
Starting April 1st 2024, British Columbia has updated its carbon pricing system in order to encourage large companies to reduce their emissions and increase their use of clean energy. This new system sets different emission limits for different industries, and companies that go over that limit will have to pay extra, but companies that do not exceed the limit can earn credits. Those extra credits earned by companies can then be traded.This new system supports BC’s 2030 goal of reducing its emissions by 40% and 80% by 2050.
Economic Concepts:
Uniform Standard: The uniform standard is a certain limit on total emission that every firm must meet or not exceed. This maintains homogeny and equality amounts emitters by creating a benchmark for all. The marginal abatement is not ever considered in this concept which makes it difficult for firms with higher MAC to reach than those with lower MACs. Given a uniform standard however, helps to incentives firms to cut emissions in order to stay under. Another aspect of this is the ability for lower MAC firms to trade credits with firms with a higher MAC to get savings and to decrease costs on the higher MAC firms to meet the set standard.
Cap and trade: This is another type of incentive-based regulation. With a cap-and-trade system a certain amount of ‘allowances’ are given to companies each year that are consistent with the government regulated cap. For any greenhouse emissions, emitters must have allowances. Lower emitters sometimes do not require all of their permits, in this case they profit by selling to higher emitters.
Application of Economic Concepts:
-Uniform Standard
In a uniform standard setup, every business are required to meet the exact same total emission limit, which does not consider different marginal abatement costs (MAC) across businesses. This often results in inefficiencies since businesses with lower MAC could reach savings at a lower cost while those with higher MAC find it difficult to reach the same limit, driving unnecessarily high compliance costs.
By setting sector-specific benchmarks based on average emissions per unit of output rather than an absolute cap for all, the emission intensity standard in B.C.'s OBPS avoids this inefficiency. Businesses that produce emissions that fall below this level get credits, which they may trade with others. While those with higher MAC can buy credits to satisfy regulation, this strategy lets businesses with lower MAC profit from further reductions. The emission intensity standard essentially solves the one-size-fits-all issue of uniform standards by matching regulatory requirements with the capabilities of every industry, hence promoting a more economically efficient route of emissions reductions.
-Cap-and-trade
British Columbia’s (BC) output-based pricing system (OBPS) involves key cap-and-trade principles. Although it does not set a specific emissions cap, BC's system creates benchmarks for emissions intensity for every sector. Businesses that emit less than this level get credits, which can be traded, stored or saved with others who exceed the limit, effectively generating a market for emissions comparable to cap-and-trade.
This credit trading gives businesses compliance flexibility and motivates them to lower emissions, enabling their profit from efficiency gains. Companies unable to meet the standards can purchase credits or offsets, reflecting the affordable compliance mechanism of cap-and-trade. The CleanBC Industry Fund also reinvests carbon income to help businesses implement sustainable technologies, ultimately fostering long-term innovation. B.C.'s OBPS presents a useful application of cap-and-trade ideas by providing tradable credits and flexible compliance options that promote cost-effective emissions reductions and clean energy investments across sectors.
Conclusion:
British Columbia, as a climate leader, has updated the carbon pricing system to effectively mitigate the emissions while sustaining their economic growth. The output-based pricing system sets a benchmark for the producers and incentivises companies with lower marginal abatement cost to reduce emissions further, while companies with higher cost can purchase credits to meet standards. By allowing credit trading, it could maintain output efficiency by reallocating pollution allowance across sectors so companies with higher marginal abatement cost could maintain their output by paying for permits. Furthermore, the revenue made from credit trading could be put into innovating environmentally friendly technology.
Group 4: Wiki 8
Source:
Problem:
The article's concern about Newfoundland company GH2 is the delayed global market for green hydrogen limited by local environmental concerns, and insufficient Infrastructure. To overcome these problems and ensure environmental viability, GH2 will have to turn to another renewable energy sources.
Summary:
World Energy GH2 is developing an alternative wind-to-hydrogen project in western Newfoundland to support the promotion of Canada’s green energy export plans to Europe. They are working to develop a “renewable energy campus,” which will power the data center for artificial intelligence companies. They are diversifying from its primary goal of producing hydrogen and ammonia for export through its Project Nujio’qonik.
However, they are facing some challenges regarding the high production costs, and environmental concerns by the locals. Because of these reasons, the experts argue that it would take at least another decade for this technology to improve enough to lower the cost for the German buyers. At the same time, the Mayor of Stephenville also sees potential and an opportunity to build the greenest energy hub region in North America by attracting numbers of interested companies and skilled workers.
Economic Concepts:
Clean Technology: Clean technology involves products and services that rely on renewable materials or energy sources to reduce emissions and waste, significantly lowering their environmental impact compared to fossil fuel-based alternatives that contribute to pollution and climate change. This concept includes two main types: early-stage cleaner technology, which involves innovative solutions still under development but showing promise for significant environmental benefits, and mature clean technology, which refers to well-established, widely adopted technologies that are cost-efficient, scalable, and reliable, such as solar panels and wind turbines. Together, these technologies drive the shift toward a more sustainable future.
Incentive-Based Policies: Incentive-based policies are government initiatives aimed at promoting sustainability by encouraging businesses and individuals to adopt environmentally friendly practices. These policies operate through financial rewards, such as subsidies, grants, or tax credits, to support sustainable efforts, or through penalties like carbon taxes, which discourage harmful activities. By combining rewards and penalties, governments aim to create a framework that motivates businesses to innovate and adopt green practices, ultimately driving a transition to a more sustainable economy while addressing pressing environmental challenges.
Application of Economic Concepts:
Clean technologies: Within this article World Energy GH2 is hoping developing a wind-to-hydrogen project in Western Canada to supply green energy to Europe, however this has had delays and troubles coming to fruition. Clean technologies are supposed to be innovative, cost-effective usually, scalable, and long lasting.The company is working on Project Nujio'qonik, as a different path right now, which works to transform hydrogen to liquified ammonia to be able to be shipped across between Canada and Germany. All of the power would be generated by the company with renewables such as wind turbines and their “renewable energy campus, this is helping in AI generation plants. All of this is inherently clean technology as it looks towards reducing emissions and transitioning to a more sustainable future which World Energy GH2 is implementing.
Incentive-based policies: Their process is not fully surrounding incentive-based policies, however, their idea works as a win win for many countries. The incentives come from Canada and Germany and the economic relationship surrounding the 2022 green-hydrogen initiative. this incentives companies to look towards more usage of hydrogen production. Along with this the project is set to create jobs as stated by the a Tom Rose in regards to development in Stephanville Newfoundland, which further incentives going forward with this project. The promise of a clean green energy market is the biggest incentive within this article. As more governments and countries switch to more sustainable resources, ie the growing green hydrogen market, other frims are more inclined to change their technology as well. It is this incentive that drives clean technology and innovation towards greener renewables.
Conclusion:
In conclusion, our work looks at World Energy GH2's renewable energy project from the perspectives of environmental economics and clean technology. The company's shift to AI data centers exhibits agility in dealing with high costs and infrastructure delays, highlighting the larger issues of shifting to sustainable energy markets. This case, however, shows the economic and environmental potential of renewable energy as well as the need of overcoming institutional barriers in order to reach long-term sustainability by using clean technologies and matching with ideas such as market signals and possible incentive-based policies.