Reducing Carbon Dioxide Emissions in

WyomingBy: Gregory Nolan Thomas

Introduction

Describe current Carbon emissions Describe negative externalities associated with climate change and

CO2

Argue for government intervention Present Policies Argue for Carbon tax and describe implementation

Carbon Emissions in Wyoming

Emits more then some highly populated states Leader in Per Capita CO2 emissions Carbon Intense Economy “As measured in metric tons (mt) of CO2 per million dollars of state

GDP (mt CO2/million chained 2009 dollars of GDP) are also the states with the highest values of energy intensity and carbon intensity of that energy supply. In 2013, these states included: Wyoming (1,915 mt CO2/million dollars of GDP).” (EIA, 2015).

Total Emissions

(EIA, 2015)

Per Capita Emissions

(EIA, 2015)

The Negative Externalities of Climate Change Degrades Wyoming’s forests

Mountain Pine Beetle (MPD) Increased Survival Rate (Régnière and Bentz, 2008)

(Chalfoun, 2013).

The Negative Externalities of Climate Change Invasive Plant Species More CO2, more growth, more frequency.

(Ziska, Faulkner, and Lydon, 2004). More herbicide usage, more costs to Agro-

Business Estimated 100 million acres infested, yearly

costs of $120 billion. (The Nature Conservancy, 2016).

(Wyoming Weed and Pest Council, n.d.).

The Nessecity of a Government Administered Solution According to Carl

Dahlman; “However, there is also one more strong implication of the analysis: private contracting in markets will not lead to the elimination of the negative influences of externalities.” (1979).

Negative Externality in Production

MBPMCMSC

Quantity

Price

Q*

PFM

QFM

P*

Based on (Hyman, 2011).

Policy Options

Tax, Tradable Permits, Command and Control

(Florida, 2012).

Tax Increase PMC to reach

social optimum Expected Impacts

Increased Consumer Prices

Layoffs, additional Business operating costs

Emissions Reductions Increased Gov’t

Revenue (Robson, 2013).

Negative Externality in Production

MBPMCMSCPMC+T

Quantity

Price

Q*

P*

Based on (Policonomics, n.d.).

Permit Trading (Coase Bargaining) Permits auctioned off to firms,

permits to be traded at the firm’s discretion, firms must possess permits to pollute. Government maintains quantitative control.

Follows demand curve, encourages investment in abatement technology, chances for arbitrage

Impacts Reduced emissions (Tietenberg,

2000). Barrier to entry. (Tietenberg, 2000). Price Volatility (Goulder and Schein,

2013).

Q’/S’ Q/S

P’

P

Based on (Mankiw, n.d.).

Command and Control Government creates regulatory

agencies, laws, and enforces policy.

EPA, Clean Air Acts Impacts Ambient air pollution down

22.6% (1981-1989), benefits of $1.2 trillion. (Cole and Grossman, 1998).

Increased Administrative costs

(ISHN, 2013).

The Superiority of a Carbon Tax

Lower administrative costs, easily employed Revenue source, revenue neutral, Very predictable, less volatility

Implementing a Carbon Tax

Goal; 2.3% - 2.8% yearly reductions of CO2 emissions, in line with Paris Agreement (Office of Press Secretary, 2015).

Establish Baseline Tax Set aside funds to the University Study correlation between invasive plant species and carbon growth, find

marginal cost of an acre of invasive plants, find by how many acres an infestation grows per metric ton of CO2, combine findings to derive marginal cost of ton of CO2. Use statewide contingency valuation method to find the willingness to avoid

beetle killed trees. Ex: “How much would you pay to protect a tree from being killed by beetles?” Add these together to provide a baseline per ton CO2 tax.

Implementing a Carbon Tax

Using baseline, fine tune tax to achieve reduction goals, if reductions <2.8%, reduce the tax, if reductions >2.3%, increase tax.

Taxes will be levied on consumption of fossil fuels by homes, businesses, vehicles, and farms, tax will be based on CO2 emitted, for example natural gas would be taxed less then coal. Similar to the tax model implemented in Ireland. (Carbon Tax, 2016)

Tax will be 95% revenue neutral, state-wide sales tax revenue will be cut by 50% of carbon tax revenue, property tax revenue will be cut by 45% of carbon tax revenue, and the last 5% will be set aside for energy labor retraining.

Conclusion

This presentation explored Wyoming’s carbon emissions, the negative externalities associated with climate change, explored policies, and recommended a carbon tax to reduce emissions.

References

See References paper