December 03, 2007 07:36 PM UTC

Colorado Carbon Markets

•  
• by: bpilgram

( – promoted by Colorado Pols)

If folks are serious about global warming rather than just complaining about it or looking for who should be blamed, we ought to be discussing solutions.  Here’s one idea.

At a high level, the Kyoto Protocol created a world-wide market in greenhouse gases.  The basic idea was to cap or reduce growth in greenhouse gases.  Countries with higher growth rates that would generate more greenhouse gases could buy credits from counties with lower rates of emission.  The process imploded when the US, China and India refused to participate.  

How about applying that same concept at a micro level in Colorado?

Here’s how it might work.

Carbon loads for various activities can be calculated.  They might include:

(1) the carbon load generated by an electric power plant expressed on a MWh unit;

(2) the carbon generated by producing a ton of concrete;

(3) the carbon produced by vehicle (published just like MPG ratings are published); and,

(4) the carbon produced by laying down new roadway.

The carbon reducing capacity of vacant land and trees can also be estimated, which is not a terribly complicated endeavour.  When I worked there as a grad student, the California Department of Water Resources estimated water usage for crops by using satellite photos of the state and employing only 3 grad students and an engineer for the exercise.  Likewise, every county in Colorado establishes a market value every two years generally using econometric models and one or two staffers.

Similar techniques could be applied to estimate carbon reduction characteristics of land types (e.g.,. the rock summit of Pikes Peak or downtown Denver will have lower or zero carbon absorption capacities whereas heavily forested areas (private or public lands) will have greater capacity; grasslands will be somewhere in between).

Carbon emitters would be required to buy some fraction of carbon offset (100%, 75%, 30%, you pick the number) from the owners of the lands.  The owners would include both public and private land owners, so a far proportion of the purchases would be payments to government entities.

Those who sell carbon credits would sell a carbon easement that would be recorded and run with the land.  If they later developed the land, they would be required to replace the easement and meet whatever carbon requirements their new use would have.

The key positive elements of this idea in my view include:

(1)  The idea is not a tax that funds government activities (e.g., workshops and feel-good activities) that will, in all likelihood be unrelated to solving the problem.  Government’s role is limited to deciding what carbon producing activities would be subject to the market, setting the exchange proportion between carbon emitters and carbon reducers and establishing the official estimate of the carbon reduction per acre for various land uses in the state.

(2)  The market sets the price of the exchanges that take place.  Those prices will change over time (e.g., lower now and higher over time) unlike tax rates that tend to remain fixed or change only as political parties change.

(3)   People (including government carbon-emitting activities) are economically incented to reduce carbon emissions either by driving more efficient vehicles, using less concrete, etc.

(4)   Unlike carbon taxes that can change with political winds, this seems more permanent as it creates private easements and private property rights which tend to remain intact between administrations.

(5)   It is a Colorado solution that does not have to be developed with the approval and consent of 435 members of Congress or a world-wide mega-agreement (like Kyoto).

I realize that this idea is so far out of the box that it is unlikely to ever be pursued by  Colorado legislators, but I think it’s worth floating to see what folks’ reactions are.