International Herald Tribune – Posted by Daniel Altman in High energy
Could power generators cut pollution if it helps them to make money? From Hong Kong, Keith Bradsher descibes a new scheme agreed by the government and two electricity providers. It looks like a fairly marginal proposition, but, if it works, it could lead to big changes around the world.
The generators in Hong Kong will be allowed to set their rates to earn a fixed return. But if they pollute more than the law permits, then they’ll be forced to lower their rates. If they pollute less, they’ll be allowed to charge more. The differences here aren’t big; the maximum bonus is 0.1 percentage points added to a fixed return of 9.99 percent, and the maximum penalty is 0.4 percentage points.
This system is definitely a work in progress, if a very interesting one. Until a couple of years go by, it will be hard to say whether Hong Kong’s government has set the incentives correctly to make a difference. The generators may even find that it’s profitable to pollute more! And that’s where a potential moral objection comes in: Should you be able to pay to harm the environment? I doubt that objection will get in the way, though – it applies equally to emissions trading programs, and they’re not going away any time soon.