# Does anyone understand how carbon credits work?

I keep hearing quotes about different effects of an ETS and can’t work out how they come up with the numbers.

Today I heard this about petrol prices.

"Recent modelling by the Australian Industry Greenhouse Network has predicted that petrol will increase about 2.8¢ a litre for every \$10 a tonne of carbon.

Many lobbyists are hoping the Government will set the price of carbon at a “safe” \$20 a tonne – meaning the price at the bowser would increase by about 6¢ a litre. The price of carbon will not be known until the end of the year."

Now I take this to mean that 333 litres of petrol will produce a tonne of carbon. How? The whole lot only weighs about a quarter of a tonne.

I was going to suggest maybe they mean a tonne of CO2 (the O2 part having mass derived from outside the source fuel), but there’s mass in the fuel that doesn’t end up in the CO2, too - so it could be a bit of a wash.

I think they mean “ton” as in the HVAC “ton” (1 ton = 12,000 BTU/hour of energy).

. . . that if they tax a liter of gasoline at 2.8 cents per 12,000 BTU/hour, then your lower octane gas (or less energetic) would be taxed less, while your higher octane would be taxed higher as they have more “bang for the liter” and thus, put more carbon into the air.

Just a WAG, but I suspect it’s close.

Tripler
You can tell what side of the Atlantic/Pacific I’m on with “ton” and “liter”, eh?

No, I think you’re right. Remember, the “other stuff” in a hydrocarbon like gasoline is hydrogen, which is very light compared to carbon. However, oxygen is heavier than carbon, so CO[sub]2[/sub] contains proportionally much less carbon by mass than gasoline does.

If you think of gasoline as being approximately octane (C[sub]8[/sub]H[sub]18[/sub]) – it’s not exactly, but it’s close enough for this purpose – then carbon makes up (12 x 8) = 96 mass units, while the hydrogen only makes up 1 x 18 = 18 mass units. In other words, carbon makes up 96/114 = approx 84% of the mass of gasoline.

With carbon dioxide CO[sub]2[/sub], the carbon makes up 12 x 1 = 12 mass units, the oxygen makes up 16 x 2 = 32 mass units. So carbon makes up 12/44 = about 27% of the mass of CO[sub]2[/sub].

So if you have one tonne (1000kg) of gasoline, that contains approximately 840kg of carbon, which can produce about 840 x 44/12 = 3080kg of CO[sub]2[/sub].

Does that make sense?

Peter Martin explains it well: Here’s how a carbon price would add 25 cents a litre to the price of petrol

Isn’t this one of the issues that has stymied negotiations? This is just one aspect of it, but I believe there is a definitional problem, which in turn leads to politically competing conjectures about the outcome.

I assume you’re not asking about the basics of emissions trading—that if I have 100 one-ton permits and you have 100 one-ton permits, I can reduce my emissions by 50 units, sell them to you (to pay for the technology to reduce), and the world ends up with 50 (me), 150 (you), the same amount of emissions. It can get wacky complicated in an instant, but leave it at just that for a moment.

How do you define the terms? Cut out all the silliness from both wings (i.e., Luddites and industrialists), and even reasonable, honest, careful scientists and economists can come to significant rational differences in assumptions and definitions.

I think it interesting that there is a lot of hue and cry over imperfections and assumptions inherent to climate models, yet prognostications over economic impact have as many – if not more – in their models.

I haven’t been steeped in the world of climate change negotiations for a few years now, so delving into specifics would be unwise.
(By the way – higher octane gasoline has more energy? I thought it just burned at a different temperature/compression or something like that.)

Missed the edit window. Found this: What’s the difference between premium and regular gas?

I stand corrected. Ignorance fought, stupidity burned at the \$4.00/gallon rate.

Tripler
\$4.00/gal = \$1.06/liter