When measures such as a Carbon Tax are suggested in order to battle Global Warming are suggested, it is inevitable that the price of Carbon is calculated at production. Carbon Pricing schemes also rely heavily on “credits” that can be purchased from companies or countries that have not used their allotment.
There are two major issues with such schemes:
- Production Costing flies in the face of what we have been hearing for decades by opponents of the War on Drugs. We’ve been repeatedly told that if we clean up demand, production will fall off. We shouldn’t go after the suppliers who are, after all, just trying to make a living.
- The concept of trade in “Carbon Credits” absolutely reeks of redistribution of wealth. It is hard to imagine a scenario better designed to meet resistance from the political right.
If we assume that Production Costing is simple hypocrisy, and an international coalition against drug production is not about to start carpet-bombing production and distribution areas in the drug trade, we can assume that Carbon Costs should be transferred to consumption. Consumption Pricing would have the affect of making items with a higher Carbon Cost more expensive. Consumers would then be faced with the choice of choosing a cheaper, less Carbon-Costly alternative. Even where prices are lower for a more Carbon-Costly choice, prices may have narrowed to the point where a Carbon conscious consumer is willing to accept paying a slight bit more for the environmental choice.
So now we have to devise a simple measure to price carbon at the consumption point, that place where the real decision has always been made. That location where the real driver in Carbon consumption and release into the environment can be found.
Carbon On The Shelf-COTS Pricing
So, how do we price Carbon on the store shelf, it’s point of consumption?
First, we start by assessing the efficiency of production. Goods produced in areas where the power grid is heavily dependant on non-renewable resources are penalized. These penalties can be mitigated by measures such as Carbon sequestration that prevent Carbon release.
Second, we assess how far from the point of consumption the product is shipped. Obviously there is an emissions price to be paid by shipping products further from the point of production. This has to be factored into the price of the item on the shelf in terms of Carbon release.
The third thing to consider is shipping efficiency. Items shipped via container ship are relatively efficient, items shipped via aircraft much less so. Even within shipping vehicles there are differences to consider. A standard 40′ shipping container has an internal volume of 67.7 m³ and a maximum payload capacity of 28.470 kg. This allows us to calculate the ideal density for a shipping container cargo as 420.5 kg/m³ . High-volume, low mass shipments are obviously less desirable from an emissions standpoint.
The last part of our considerations come in the form of raw material sourcing. Finished products are more efficient to ship, it’s not hard to understand that shipping bauxite around the world to make aluminium is far less efficient that shipping aluminium.
With these four factors in place we can understand the true Carbon Cost of a product as it hits the store shelves. I’m not going to try to find the right mathematical formula to balance all the factors, just lay out a framework. There are folks far more capable than me in the arcane arts of figuring out such numbers. I just want to present the framework of an alternative, we can now calculate the Environmental Surcharge to be applied to Carbon-Consumption of a product. Point #1 above has been addressed.
Point #2 I’m barely going to address at all. Monies collected via the Carbon-Consumption Environment Surcharge, my COTS pricing, can be spent as the Government of the day sees fit. It can be spent to help other Nations become more environmentally friendly, or to reduce taxes. Take your pick.
The main point here is that there is choice. Flexibility has been added and a major stumbling block to control of Carbon release has been eliminated.