Sunday, October 9, 2016

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http://dailyyasianage.com//news/33604/carbon-pricing-for-rampal--poower-plant-ignored

Carboon pricing for Rampal

R
power plant
p
ign
nored
MSSiddiqui
Atpresent,12%oftheworlld'sannualgreen
nhousegasemisssionsarecoveredbyapatchwo
orkofcarbonpricingpoliciesfou
undin
mentalriskandsshiftinginvestmeent
39countriessand23regionss.Carbonpricinggisacrucialfinaancialtoolinmanagingenvironm
towardcleaanerenergy.The
evaluationofcarbontechniquesstodeterminethepriceoncarb
bonusingtherigghttoemitapprroach,
businesscosstofcarbon,soccietalcostsofcaarbonarebasiso
ofstandardizedaapproach.Carbo
ongasemissionsscanalsobepriced
implicitlybyygovernmentpo
oliciesthatenco
ourageemissionssreductions,succhasenergyeffiiciencystandard
dsandrenewable
energysubssidies.Theoveraarchinggoalofth
heCOP21istorreducegreenhou
usegasemission
nstolimittheglo
obaltemperaturre
increaseto2degreeCelsiussabovepreindu
ustriallevelspreeferably1.5degrreeCelsius.

Carbonpricingischargesth
hosewhoemitcaarbongas(CO2))fortheiremissiionsintotheatm
mosphere.Carbo
onpricingusually
takesthefo
ormeitherofacarbontaxorareequirementtop
purchasepermitsstoemit,generallyknownascaapandtrade,bu
utalso
called"allow
wances".Carbon
npoliciescanbeeeitherpricebassed(taxes)orqu
uantitybased(ccapandtrade).A
Acapandtrade
systemisqu
uantitybasedbe
ecausetheregullatorsetsanemissionsquantitycapandthemaarketdeterminessthecarbonpricce.

Thestandarrdmethodsmeaasurethe'socialcostofcarbon'w
whenevaluatinggthedamageso
ofincrementalin
ncreasesincarbo
on
emissions.C
Currently,thegrridemissionfacttorforBangladeshis0.67tonso
ofcarbondioxideepermegawatt(MW)hourwhich,up
from0.62to
onsin2010,accordingtotheDeepartmentofEnvironment(DoEE).Intermsofth
heimpactsonglobalwarming,
developingcountrieslikeBaangladeshcontributeaveryneggligibleamounto
ofgreenhouseggasemissions.AcccordingtotheU
United
NationsFrameworkConven
ntiononClimateeChange,thetop
pthreegreenho
ousegasemitterrsareChina,theUnitedSatesan
nd
Indiawhichcontribute23%
%,19%and6%offtheglobalemisssionsrespectiveely.

wasoriginallyplannedforIndiab
buttheyaregrad
duallyswitchingtootherfueltogenerateelectrricity.Now,Indiaawill
Theplantw
selltheircoaltothisplantaandbuybackeleectricityforsomeeremoteareao
ofIndia.Thisproposedplantwillcreatean
onovertoBanglaadeshthroughsshiftingtheRampalplantin
opportunityyofshiftingtherresponsibilityoffCarbonemissio
Bangladesh.

Manycounttriesarecurrenttlytryingtoundeerstandpricelevvelsneededtoeencouragethesw
witchfromcoaltogasgenerated
electricity.D
DifferentcountriesimposedifferenttypesoftaxxonfossilfuelsinmanycountriesbutsuchCarrbontaxesexistin
India,Japan
n,SouthKorea,D
Denmark,Finland,France,theReepublicofIrelan
nd,theNetherlands,Sweden,th
heUnitedKingdo
om,
Norway,Sw
witzerland,CostaRica,partsofCanada,andparttsoftheUnitedSStates.Ofcoursee,therearetwo
omainwaysto
establishaccarbonprice.Firrst,agovernmen
ntcanlevyacarbontaxonthed
distribution,saleeoruseoffossilfuels,basedontheir
carbonconttent.Thishastheeffectofincreasingthecostofthosefuelsand
dthegoodsorservicescreatedwiththem,
encouraginggbusinessandp
peopletoswitchtogreenerprod
ductionandconsumption.

npricestriggersaaswitchawayfrromheavyemitttingtorenewablleenergysourcees,andpromoteesinvestmentinthe
Thecarbon
developmen
ntofalternativeandcleantechn
nologiesincludin
ngcarboncaptureandstorageaandfuelcellstorrage.UKincreases
carbontaxffromaminimum
mof9.54($15)to18.08($28)pertonofCarbondioxideonApril1,2015.Ithasbeenestimatted
thatthispriceincreasewillcausegeneratorrstousegastorreplaceupto20
0terawatthourssofcoalgenerattioninthecomin
ng
year.

bontaxin1991ttocomplement
ThepriceinEuropecurrenttlyhoversaround7.15($8)perrton.Swedenesstablishedacarb
dramaticallyshifftedthetaxburd
denontocoalintensivesources,andlowereditonnaturalgasaaspart
existingeneergytaxes.Thisd
ofatargetedplantoreduce
ecarbonemissio
ons.Asaresult,theenergysecto
orquicklyinvesttedindevelopingbiomassextraaction
technologyandremovingsyystemicenergyeefficiencies,resu
ultinginaconsid
derableexpansio
onofbiomassusseindistrictheaating

systems.

Therearepowerfulincentivesbothfromthecarbonpriceandfromcomplementarypoliciessuchsubsidiesforsolarpowerfor
companiestosignificantlyreducegreenhousegasemissionsovertime,withoutcausingsignificantoperationaldisruptions.
Alongsidethegrowthinpopularityoftradingsystems,taxationbecomesthepreferredapproachofemergingeconomies
seekingtoefficientlyimposeapriceoncarbon.Afterthefirstfullyearinoperation,theSouthAfricancarbontaxisraisedby
10%.Therevenuefundsamajorpublicprivatepartnershipsupportinglocalpowergrids.Moroccoannouncesatthecloseof
the2015ParisClimateChangeConferencethatitispreparingforacarbontaxwithintwoyears.

Theninquicksuccession,fourothermajoroilproducingAfricaneconomiesNigeria,Egypt,AngolaandAlgeriaallenactcarbon
taxesby2018.Chileimplementsa$5pertoncarbontaxandMexico,whichalreadyhasacarbontax,commitstoacapand
tradeschemebeforetheendofthedecade.Investmentsinrenewablepowerandlowpowergridsareahighpriority,seenby
thesegovernmentsaskeytosolvingsystemicenergyinsecurity.Thesecountriesnextsettheirsightsoncreatingaconverged
systemthatlinkstheirrespectivecarbontaxregimes.

Thereisadistinctionbetweenanexternalcarbonpriceandaninternalcarbonprice.Anexternalcarbonpriceisanexplicit
marketorregulatoryprice.AninternalcarbonpriceisusedwithinacompanytovaluethecostofaunitofCarbondioxides
emission,while,thisisanimportantcontributiontoconversation.Theexternalcarbontaxisataxpaidtonationalexchequer
andtheindustriesalsoimposeinternalcarbontaxonthemselvesandusetoamountforimprovementandchangeof
technologytoreducegreenhousegas.Governments,businessesandinvestorsarerecognizingthatnationallyappropriatetaxes
andtradingschemes,aspartofawellalignedpackageofpoliciesforlowcarbonchange,canreducegreenhousegas(GHG)
emissionswithoutharmingtheeconomy.Supportforcarbonpricingisgrowingaroundtheworld.

ThemuchtalkedproposedcoalfiredRampalpowerplantisgoingtogettaxexemptionforbringinginmachineryand
equipmentfortheplantandexemptedfrompayingVATfor10yearsasitwasimplementingaprojectlistedunderthefast
tractprojectofthegovernment.Bangladeshgovernmentagreedto15yearincometaxexemptionfortheplant,anexemption
worth$936m.Secondly,IndianEximBankofferedloanatabelowmarketrateloanfora$988msubsidyeffectivelypaidby
Indiantaxpayers.Third,Bangladeshwouldbegrantinganeffectiveannual$26msubsidybyconductingmaintenancedredging
ofriverstoassurecoaldeliverytotheplant.Incontrast,differentcountriesimposedcarbonpriceonpolluterofatmosphere.

Acarbonpriceisacostappliedtocarbonpollutiontoencouragepolluterstoreducetheamountofgreenhousegastheyemit
intotheatmosphere.Bangladesh'sincentiveandsubsidyforcoalbasedthermalpowerplanthasnologicofignoringstandard
policyofothercountriesofconsideringthecostofcarbon.

ThewriterisLegalEconomist