Problem 1: The government is considering introducing a carbon tax in the amount of $100/ton of Carbon.
A. How much tax would a business that emits 1000 tons of CO2 have to pay?
B. How much is the tax rate per ton of N2O?
C. Any suggestions as to how a tax might be devised that must be paid by emitters of N2O?
Problem 2: (Socially optimal emissions.) The total damage from emissions is represented by the function D=2e2. The cost of abatement function is AC=a2, where ??= ??-?? is abatement, ?? is initial, unabated level of emissions, and e is the final level of emissions. ?? is equal to 100 tons.
A. What is the expression for the MAC?
B. What is the expression for the MD?
C. What is the socially optimal level of pollution?
D. What are the total abatement costs and the total damages experienced by the public at this level of pollution?
E. The government wants to achieve the social optimum by imposing a tax on emissions.
If the tax is $25 per ton, does it achieve the social optimum?
Problem 3: (Emissions and electricity) A household uses 0.8 kWh for each hour between midnight and 06:00, 1.5 kWh for each hour thereafter until 09:00, then 1 kWh each hour until 17:00 (5pm), and then 2 kWh each hour until midnight, when they all go to sleep.
A. Draw the consumption profile in a graph where the x-axis displays the 24 hours of the day and the y-axis is kWh.
B. Assuming that this household has exactly the same consumption and consumption pattern every single day of the year, what is its total annual consumption? Is this an average household, a heavy or a light user of electricity?
C. What percentage of the total daily usage does baseload account for? Remember that baseload is the minimum level of consumption of the household (because it is due to equipment that runs all the time).
D. The utility that serves this household generates electricity from wind and nuclear, at zero CO2 emissions, from midnight to 06:00. From then until midnight it generates 50% of its power from nuclear, still at zero emissions, and the remaining 50% from natural gas fired power plants (0.805 lbs CO2/kWh, or 0.365 kilograms CO2/kWh). What are the total emissions associated with the generation of the electricity used by this household in a year?