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Outline: ChE 150, February 26, 2009 Finish Tradable Permits (simulation) Estimating costs associated with pollution Pollution prevention: source reduction / recycling / treatment / disposal Initial MAC Name of Firm Emissions Curve Erie Hydroelectric 2000 4000-2*E

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slide1

Outline:

ChE 150, February 26, 2009

  • Finish Tradable Permits (simulation)
  • Estimating costs associated with pollution
  • Pollution prevention:
    • source reduction / recycling / treatment / disposal
slide2

Initial MAC

Name of Firm Emissions Curve

Erie Hydroelectric 2000 4000-2*E

Ontario Electric 2000 8000-4*E

Volatile Venture Inc. 2000 10000-5*E

Logarithmics 4000 4000-E

U of R Power 4000 8000-2*E

Coals-R-Us 4000 10000-2.5*E

Classroom Game: SO2 Discharge Permits

  • Divide up in 6 groups - pick names.
  • Consider the following marginal abatement cost curves:

Simulation adopted from A.W. Ando & D. T. J. Ramirez, Univ. Illinois at Urbana-Champaign

slide3

Scenario 1: Command and Control

Each firm is subject to a uniform standard of 1480 tons of SO2 per year.

Your firm should calculate and report:

1) Abatement quantity (tons)

2) Cost imposed upon firm ($)

slide4

Scenario 2: Tradable Discharge Permits, non-facilitated

Each firm is provided permits worth 1480 tons of SO2 emission per year.

Find other firms to buy or sell with.

Report the following

-number of permits purchased or sold

-the total transaction cost or profit

slide5

Scenario 3: Tradable Discharge Permits, facilitated

Each firm is provided permits worth 1480 tons of SO2 emission per year.

Your firm should work through the market facilitator to determine the market price of a permit, and the number of permits your firm will buy or sell.

slide6

Tradable Discharge Permits: Summary

  • Approach to reduce pollution in a cost-effective fashion
  • Firms elect whether or not to abate pollution
  • Permit can be purchased (from other firms) to allow discharge
  • Number of permits is set by regulatory agency
slide8

What is the role of the market facilitator?

  • What would happen without a facilitator?
  • Is there another forum for trading?
  • For programs in the US:
    • most trading is bilateral
    • regulatory body approves trades, distributes initial permits, and imposes fines
slide9

What are the downside of permits?

  • Many unresolved problems
    • enforcement
    • initial allocation of permits
  • Is there another forum for trading?
  • For programs in the US:
    • most trading is bilateral
    • regulatory body approves trades, distributes initial permits, and imposes fines
slide16

What about greenhouse gases?

  • Meeting Kyoto Protocol Goals8% reduction in greenhouse gas emission from ’90 levels by 2012. (CO2, CH4, N2O, SF6) + fluorocarbons
  • This will adversely affect economic growth (~ 0.48% in 2010 alone)
  • 12,000 European Union firms begin CO2 emissions trading.
  • US legislation is “anticipated” by executives
  • US Policy
  • “signatory of Kyoto, not ratified
  • Climate Security Act of 2007: proposed US “cap & trade scheme”GH gas reduction (-70%) by 2050– killed in Senate by GOP
  • US legislation propelled at state level
  • Regional GHG initiative: (ME, NH, VT, NY, NJ, DE, MA, MY), allowances auctioned, Nov 2008
  • Obama stance: proposed cap program that mimics Kyoto
slide17

Cost-Benefit Analysis of Pollution

MD: Marginal Damage– loss in well being due to extra pollution; WTP to avoid pollut.

MAC

MD

$

MAC: Marginal Abatement Cost– cost of reducing depositions; “end-of-pipe” technology, e.g. flue gas desulphurization

a

P* is “optimal pollution”

b

pollution

level

p*

CL:critical load

Analysis relies on ability to estimate damages

slide18

Estimating the cost of externalities

associated with pollution.

  • Typical Problems
    • finding appropriate method
    • obtaining useful data
    • comparing results from different methods
    • interpreting the answer
  • Aim is to determine how human well-being is affected
  • Methods generally neglect
    • future generation well-being
    • animal well-being
slide19

Taken from David Pearce, Keynote address: “Energy Policy and Externalities: the Life Cycle Analysis Approach Paris”, November 15-16 2001

slide20

Quiz! (no credit…)

For each of the following, write down a dollar amount that you would be willing to pay in taxes, today, on an individual basis:

1) to reduce the random homicide rate from 13 ppm to 8 ppm (this year) in your community.

2) to prevent a single random case of mercury poisoning within Monroe County

3) to repaint highway stripes, statistically saving 3800 lives per year across the US

4) to reduce 5 heart fatalities per year in Rochester by offer health and wellness education programs

5) To reduce your risk of death, this year, by exactly 0.001 %

6) To reduce your risk of death in your 60th year by exactly 0.001 %

http://www.env-econ.net/2008/07/the-value-of-a.html

slide21

How does one estimate health impactsassociated with pollution?

  • Intense pollution ultimately results in higher health costs and shorter lives.
  • How does one estimate costs of shorter lives?
  • Economic statisticians accomplish this through valuation of “statistical lives” and “statistical years”
  • Not surprisingly, survey results have large error margins, but provide a starting point.
  • Value of a statistical life: $ 6.7 million (6-2008)
slide22

Allen, D.T., Shonnard, D. Green Engineering: Environmental Conscious Design of Chemical Processes, Prentice Hall 2002

slide23

Allen, D.T., Shonnard, D. Green Engineering: Environmental Conscious Design of Chemical Processes, Prentice Hall 2002

slide24

A risk assessment is used to estimate risks associated with an engineering option or scenario.

What is the environmental impact of a new facility?

What is the benefit gained from switching to a “green” solvent?

Is a business decision consistent with institution’s (company’s)environmental philosophy?

- assemble, interpret scientific data, statistics

- be objective

- get help (engineer, toxicologist, ecologist, chemist, …)

- document everything, be thorough

slide25

potential for harmto people or env.

magnitude of timesusceptible (exposed)

to hazard

e.g. risks of lung cancer

not exposedto asbestos

exposed to

asbestos

non-smoker

x

smoker(fixed “pack years”)

In order to estimate the cost of an externalitywe need to know something about risk.

Risk = f (hazard, exposure)

- usually expressed as a probability

  • new environmental risks will be
  • discovered!

8x

9x

92x

slide26

ptot

OR : add ‘em

AND : multiply ‘em

p1

p2

p3

p5

p4

A fault tree analysis is a simple, “back of the envelope” method to estimate risk probability.

Failure pipelineper (km year)

corrosion

3rd Party digs

Other

ptot= [ (p4+p5) x p3 ] + p1 + p2

Protectionsystem fails

coatingdamage

3rd Party

Environment

Allen, D.T., Shonnard, D. Green Engineering: Environmental Conscious Design of Chemical Processes, Prentice Hall 2002

slide27

fault tree analysis of collision into biker on right turn (on red) at traffic light

p = 0.001

(1 min / 18 hours)

p = 0.1

p = 0.01

crash intobiker on rt. turn

p = 0.00011

bike present in target lane

car fails to yieldto bike

p = 0.11

driver does notsee bike on approach

Driver only looksleft when turning right

For 100 RTs (on reds) per day, 1 crash every 90 days!

slide28

Pollution Prevention

Priority: Reduce quantity of waste stream altogether: “any practice which reduces the amount of pollutant entering any waste stream or otherwise released into the environment” (EPA, 1991)

Source Reduction

Recycling

Reuse of materials that would otherwise be disposed of.

decreasingpreference

Chemical, biological or physical processes to reduce or eliminate waste material (incineration)

Treatment

UltimateDisposal

Pollution Prevention: Problems & Solutions, 1994

slide29

Cost-minimization analysis of recycling

MRP: Marginal Recycling Profit – arising from resale of used materials

MRP = dp/dQR

$

Q*

Qu*

MCD: Marginal Cost of Disposal – includes landfill disposal and waste incineration.

0

Q

Q*: “optimal recycling”

Qu* : where we would be withoutregulation

MCD = dC/dQD

Optimal recycling involves a marginal cost (no profit!)

*Kirkwood, R. C., Longley, A. J. Clean Technology and the Environment. Chapman & Hall, Glasgow 1995

slide30

Taxes can be used to repartition costs.

Disposal taxes:

Landfill tax (per ton),

subsidy for incineration

MRP = dp/dQR

$

Q*

Qu*

0

Q

Product taxes:

Per unit volume

Virgin materials taxes:

E.g. PET plastic in unformed state.

MCD = dC/dQD

Ideally, taxes would respond to curve shapes and level of societal recycling / reuse.

slide31

Disposal is another form of pollution.

What do we do with our waste?

Landfill ~85%

Other

e.g. incineration,

sea dumping

physical, chemical treatment ~15%

Inappropriate disposal of waste has negative social side-effects (externalities).

External costs: noise, smell, unsightliness

External benefit: recovery of methane or energy recovery (incineration)

slide32

Pollution Prevention

Priority: Reduce quantity of waste stream altogether: “any practice which reduces the amount of pollutant entering any waste stream or otherwise released into the environment” (EPA, 1991)

Source Reduction

Recycling

Reuse of materials that would otherwise be disposed of.

decreasingpreference

Chemical, biological or physical processes to reduce or eliminate waste material (incineration)

Treatment

UltimateDisposal

Pollution Prevention: Problems & Solutions, 1994

slide33

Accounting for material flow is a key to pollutionprevention.

- Represent process with discrete, interconnected control volumes

- Perform material balances around control volumes

On a per-unit-time basis:

[mass in] – [mass out] = [mass accumulated]

[moles in] – [moles out] + [moles generated] = [moles accumulated]

slide34

Example: Strawberry Manufacture

Strawberries contain about 15% solids, 85% water. To make strawberry jam, crushed strawberries and sugar are mixed in a 45:55 mass ratio. The mixture is heated to evaporate water until residue contains 1/3 water, by mass. Draw flowchart: calculate how many strawberries are needed to make a pound of jam.

Fleder, Rousseau, Elemententary Principles of Chemical Processes; John Wiley & Sons, 1986