South-Western College Publishing - Economics  
We take carbon monoxide out of the air and put it into rocks!
Subject firms work on alternative technologies in the face of global climate change
Topic Economics and the Environment; Production and Costs
Key Words

climate change, fossil fuel, carbon emissions, technology, Kyoto Protocol

News Story

Arizona-based Global Research Technologies has a grand dream of saving the environment by using wind-powered machines to remove carbon from the air and storing the carbon in rocks or in the ground-leaving only oxygen to float in the atmosphere.

Scientists focus on the emission of carbon because it is one of the so-called greenhouse gases that traps energy and serves to heat the atmosphere. Carbon dioxide is harmless to humans in small quantities, because when we exhale it, plants, trees, etc, ingest it themselves to create oxygen. It becomes dangerous when the environment is saturated with CO2, however. In high quantities, CO2 traps energy near the earth's surface (greenhouse effect), and makes it more difficult for us to breathe, because the vegetation can't create enough oxygen from it to keep up. Thus, nature already has a mechanism (albeit a slow one) for taking carbon out of the atmosphere and compressing it into soda ash. The new machines from Global Research will serve to speed up that process. Scientists believe that the Earth can tolerate CO2 levels of up to 550 parts per million - compared to about 370 parts per million today - without facing dangerous effects, such as catastrophic climate change. However, scientists also believe that the Earth will reach that level by the middle of the 21st century. Further, to reduce CO2 emissions to below 550 parts per million, carbon emissions will have to be reduced by 55% to 85% over the next 100 years.

The Kyoto Protocol, most recently ratified by Russia, contains requirements forcing countries to cut emissions levels to below those in 1990. (The U.S. has not yet signed the Protocol because the treaty exempted developing nations, including India and China, from reducing their emissions.) Most policy analysts argue that the treaty was only intended as a first step in fighting global warming, so firms like Global Research Technologies are working to find a technological solution to global warming. Rather than moving toward more expensive alternative energy sources, some firms in the industry are searching for ways to increase fossil fuel burning efficiency, allowing less to be burned for the same amount of fuel. At the same time, Global Research is assuming that fossil-fuel based energy will remain sufficiently plentiful and cheap for decades to come. The firm is looking for a solution within the constraint that fossil fuel use will not decline much in the next century.


(Updated December, 2004)

Questions
1.

Assume that the carbon removal technology is perfected. What will happen to firms who adopt this new technology? Answer using a graph of supply and demand for that firm's product.

2. If the usage of fossil fuels isn't going to diminish with this new technology, and the amount of carbon emitted isn't going to fall, why are scientists spending so much time researching it? What should happen to the "optimal amount of pollution?"
3. In terms of a firm's costs and market output, what (if any) is the difference between utilizing a technology that will remove carbon from the air, and a technology that reduces reliance on carbon-producing energy?
Source Antonio Regalado and Jeffrey Ball. "As Planet Heats Up, Scientists Plot New Technologies." The Wall Street Journal.. 22 October 2004. http://www.wsj.com

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