Ch 14 Energy and the Environment Homework

The U.S. EPA protects air, water, and land. What are the responsibilities of the U.S. Environmental Protection Agency (EPA), and why is there controversy over its actions? The U.S. EPA protects air, water, and land. One controversial aspect of their role is that they propose legislation based on benefits and not whether benefits exceed costs. Also, affected parties oppose the legislation if they experience greater costs than benefits, and not whether the legislation has positive net benefits overall.

How does California define a zero-emissions vehicle (ZEV) How does California define a zero-emissions vehicle (ZEV)? Explain whether you agree that the vehicle is indeed zero-emissions. California bases its definition on primary and not secondary vehicle emissions. They measure emissions from the vehicle. However, an electric vehicle requires electricity, a secondary source of energy. If the electricity is generated from fossil fuels, there are emissions associated with the use of the EV. Therefore, unless the electricity uses a generating fuel that has zero emissions, the vehicle is not truly zero-emissions.

Contrast the command-and-control, Pigou, and Coase approaches to mitigating oil spills. CAC: After the Exxon Valdez accident, oil tankers have to be double-hulled. This technology may not be the lowest-cost method of reducing oil spills to the socially efficient level. Pigou would tax oil, which would reduce its output. It would reduce spills to the socially efficient level if there is a fixed relationship between oil use and oil spills. Directly taxing oil spills is harder to envision. Coase would assign property rights, either giving the right to oil companies to spill oil, or to other parties to the absence of oil spills. Negotiations would lead to the socially efficient number of spills in the absence of transactions costs. More practically, the government could require permits to produce oil, and reduce the number of permits to achieve the socially efficient level of oil spills.

Based on the table, how many barrels of oil is efficient Based on the table, how many barrels of oil is efficient? How might transactions costs prevent oil companies and fishers from achieving that outcome? Answer: 2 barrels. If the fishing industry has the property rights, the oil company can compensate fishers for their losses from the first barrel and from the second barrel, but not the third. If the oil company has the rights, fishers can compensate the oil company for not producing the fourth barrel and for not producing the third barrel. You can also tell by adding up total profits for the two industries. Transactions costs could prevent fishers from working together to compensate the oil company Free rider problem could arise. Or if fishers have rights, oil company could encounter a holdout problem if some fishers see opportunity to extract rents. Barrels of Oil Oil Company Total Profit ($) Number of Fish Fish Industry (10 firms) Total Profits ($) 10 110 1 50 9 105 2 90 7 85 3 120 4 140

How does Dwight Lee suggest we decide whether or not to drill for oil in the Alaskan National Wildlife Refuge (ANWR)? He suggests offering environmental groups a percentage of the royalties from oil from ANWR that they can spend on the environmental project of their choice. They can then decide if they value ANWR as a wilderness more than they value money for other projects, such as protecting endangered polar bears from Arctic climate change.

What was the motivation for passing New Source Performance Standards (NSPS)? Explain how those standards could actually reduce environmental quality. New Source Performance Standards passed in 1978 sought to impose tougher standards on new plants but not exiting plants. The fear was excessive costs to retrofit old plants, as compared to the cost of meeting tougher restrictions for new plants. NSPS created an incentive to extend the life of old plants so as to avoid the more stringent standard. Plants that would have been replaced in the absence of NSPS now gained an extended life, but associated high emissions.

Explain what is meant by a multimedia approach to environmental standards, and how the approach could increase social efficiency. Multimedia refers to air, water, and land rather than considering each medium in isolation. Consider a dry cleaner using a bleaching agent such as phosphate to clean clothes. If the EPA imposes restrictions on releasing the chemical into a nearby river, but does not regulate land use, the company could bury its chemical wastes. Multimedia regulation calls for considering more than one media at a time in establishing regulations. In so doing, the dry cleaner will mitigate emissions in the lowest cost fashion while meeting both land and water restrictions.

Which of the following statements about the proposed Clean Power Plan (CPP) is true? The policy would impose uniform carbon emissions standards for all states. The plan ran into opposition because it dictates the type of technology that states must use to meet the standard. The plan ran into opposition from coal-producing states. Former President Obama was unwilling to support the act. Answer: c. The plan ran into opposition from coal-producing states.

Explain how to determine whether an electric utility should use an open-loop or closed-loop system for its cooling water. It is typically more costly for an electricity-generating plant to recycle water, a closed-loop system. However, they are more likely to do so if: Water has a high price or It is difficult to find sites with access to large amounts of water.

A single site could be away from population centers What is the argument in favor of a centralized disposable site for waste from nuclear plants? What are the obstacles to establishing such a site? A single site could be away from population centers It could be lower-cost to store the waste at a single site Monitoring costs could be lower For the wastes To make sure the material does not fall into the wrong hands. The primary obstacle is NIMBY Compensation for accepting the site, rather than simply imposing the site, could overcome resistance. Some object to dangers from transporting the wastes long distance (though that reason is not mentioned in this chapter).