The winter holiday has come and gone, and my third post about participatory activities that are useful in teaching climate change law is finally here.  This post will discuss how to use a simulation of emissions trading to teach students the basics of a cap and trade regulatory system.  After a brief introduction to cap and trade (through assigned reading and a brief lecture), I break my class into eight groups of two students, who will represent eight different companies in the emission trading game.  The other students (two to four) will play the role of allowance traders, intermediaries that facilitate the buying and selling of allowances among the companies. 

Each company is given information about its projected emissions and its annual caps over the five years (rounds) of the program.  They are also told that the program as a whole is designed to reduce emissions by 50% over the program.  Each year, the companies have an opportunity to buy pollution control technology (at a given cost, which differs among the companies).  Also, at the beginning of each year, I make an announcement as to whether any other external factors have changed their projected emissions (for example, in a recessionary year, all the companies’ projected emissions may be 50% lower).   Each year, the students calculate their emissions and make their compliance decisions, including the decision of whether to buy or sell allowances through the allowance trader.  The allowance trader announces the market rate for allowances at the end of each year.

After the game, we debrief.  Through the game, students get a good sense of how companies in a cap and trade program decide whether or not to reduce their emission.  Most importantly, how does the price of allowance compare with the price of reducing emissions?  And will the price of allowances rise or fall in the future? If it rises, then investing in pollution control technology to reduce emissions now might pay off.  But if the price falls, then the company may have saved money by buying allowances to comply instead of actually reducing its emissions.  So for any given company, the decision to reduce emissions becomes a matter of market strategy and forecasting rather than of legal or moral obligation.  Students also see how more large, sophisticated companies may have an advantage over small companies; they are able to afford to hire the expertise necessary to play this new regulatory game.   And students see how the costs of compliance depend of the stringency of the cap, which explains why cap-setting and allowance allocation decisions are so political.  While actual cap and trade programs are inevitably much more complex, a simplified version such as this provides the students with a solid footing for discussing many of the pros and cons of this regulatory approach.

Over the next few weeks, I’ll post a few entries about using participatory learning activities in a Climate Change Law and Policy class.  I’ve just taught the class at the University of San Diego School of Law for the third time, and I have a few ideas to share.  I teach a three-hour seminar with no more than 20 students, which is a great length and size for doing such activities.

After an initial class focused on the science of climate change, we spend the second class on climate change mitigation.  For this, I use the Stabilization Wedge Game materials posted on the website of Carbon Mitigation Initiative (CMI), Princeton University (http://cmi.princeton.edu/wedges/).  The game was developed by Princeton professors, Stephen Pacala and Robert H. Socolow, based on their article entitled “Stabilization wedges: Solving the climate problem for the next 50 years with current technologies,” Science, 305, pp. 968-972 (2004).  The articles presents 15 technological strategies to reduce emissions such as mass adoption of solar (i.e. an array of photovoltaic panels with an combined area about 12 times that of metropolitan London would provide one wedge) or widespread energy efficiency retrofits (i.e. replacing all the world’s incandescent bulbs with compact fluorescent lights would provide 1/4 of one wedge.)  Some of the strategies are dated, particularly the ones involving hydrogen, but they still give a great sense of the types of technological change that are being called for.

I assign the Pacala and Socolow article as reading for the class, and I use the first part of class to talk through the mitigation technologies proposed in the article and answer any student questions.  Then I break the class into 4 or 5 groups, and they play the game, meaning that they select seven wedges representing technologies that could be implemented to stabilize atmospheric concentrations of CO2 at 500 ppm, as suggested by the authors’ model.  They generally take about 30 to 45 minutes to play the game, and they spend about 15 more minutes presenting their solutions to each other.

Then we debrief.  There is a lot that can be discussed:

1)      Many scientists now think that we need to stabilize atmospheric concentrations at a level much lower than 500 ppm – 450, 400 or even lower (we are currently at about 380 ppm.)  To do this, you need more wedges. See Joe Romm’s Grist post, http://www.grist.org/article/is-450-ppm-or-less-politically-possible-part-1/, for a discussion of how many wedges are needed to stabilize concentrations at acceptable levels given that we have continued to emit at ever higher rates in the past five years since the original analysis.  Here’s a preview: to stabilize at 450 ppm, we’ll need 14 wedges assuming we start next year.

2)      The game doesn’t provide much information about the costs of implementing the proposed strategies.  It gives a very rough estimate of cost for each approach symbolized by one, two or three $ signs.  Thinking seriously about costs – and the uncertainty of costs – makes decision-making more difficult.

3)      One of the premises of the article (and game) is that all the proposed technologies are available. Yet several have not been proven feasible at the scale that they would have to be implemented, such as strategies involving carbon capture and storage.  I have sometimes assigned an article that makes this argument, Hoffert, et al (2002) “Advanced Technology Paths to Global Climate Stability: Energy for a Greenhouse Planet.” Science,  298: 981-987.  Hoffert et al. argue that while a strategy may be technically available, it may require a large amount of government or private investment to make it available at the scale envisioned by Pacala and Socolow.

4)      The model does little to help understand the political challenges of various strategies.  Energy efficiency and conservation approaches are popular with students, but they tend to be difficult politically because they involve lifestyle choices.  And then there’s the wedge for nuclear power…  More generally, the model considers the needed changes in the world as a whole, without consideration of the political and social differences (and inequities) regionally, nationally, and subnationally.

Despite its limitations, the game is a useful interactive vehicle for getting law and policy students to understand something about the various emissions reduction technologies.  And the really great thing about the game is that it makes the problem of reducing emissions seem tractable while at the same time communicating what a huge challenge it will be.