Acid Rain: the Southern Company (a) Case Analysis Essay example

First and foremost, we established that EAs are to be treated as intangible assets, as specifically stated by Polluter Corp, and supported by the Accounting Standards Codification. In the SAB Topic 10.F, under section S99-1 - Summary of Decisions Reached to Date (As of November 18, 2010), it states that the Boards decided "purchased and allocated allowances should be recognized as assets.” This specific decision was in reference to emission trading schemes and tradable rights. Furthermore, the same section of the codification referred to above states that, "some entities follow an intangible asset model for emission allowances.” In December 2004, the International Financial Reporting Interpretations Committee (IFRIC) released IFRIC 3, Emission Rights, which stated that allowances are intangible assets and should be measured at fair value when received from the government.

The “Cap-and-Tax” program will be a mixture of carbon taxing and a cap-and-tax system. At the start of the year, the government will put a cap on the carbon emissions a company can produce for the year, then space can be auctioned around. Then, throughout the year, the government will tax the company on their emissions, but not as severely as a solely carbon tax system.

The regulatory constraints on businesses from government have been subdued recent years. Fulfilling the function of the state, Prime Minister Tony Abbott’s government proposed a new climate policy that the government will put off the existing levy on emitters and set up fund with as much as $2.6 billion to subsidize the mining enterprises in cutting green-house gas emissions (Anderson, Scott 2014). The subsidy released the financial burden of carbon tax which cost BHP $77.5 million in 2013 (Financial Review 2014) as an enabler in mining industry (Conrad 1993).

Refer to the above table. Suppose the government commands each firm to reduce its emissions by 1 ton each and allows these two firms to trade pollution permits. If a 1-ton credit is sold for $175, the total cost for both companies combined to reduce emissions by a total of 2 tons could be as low as:

In the absence of federal legislation, states have the liberty to address climate change and formulate policies that mitigate greenhouse gas (GHG) emissions. Texas and California have similar deregulated energy markets and economic goals, yet have pursued different policies, providing a fitting opportunity for Texas to analyze, compare and consider California’s comprehensive law and regulations designed to mitigate GHG emissions. Key focus areas include electricity generation and use , transportation, and industry . Given the comprehensive focus of energy policies, this report specifically emphasizes electricity generation and use. ,

Although the Abbott’s government has an intention to subdue regulatory constraints on businesses by repealing the carbon tax, recently the senate has voted to block carbon tax repeal legislation which was convicted as ineffectiveness and high costing (Griffiths 2014). As a result, the carbon tax remains relatively high at a price of $24.15 per tone of CO2e Rio (Tinto Coal Australia 2011) which cost Rio Tinto $36.3 million in the last fiscal (Rio Tinto Coal Australia 2013), representing a “big government” trait. Attributing to the

Common-sense regulatory initiatives, developed by EPA to minimize greenhouse gas was found to be efficient. For example, EPA's vehicle greenhouse gas rules will save consumers $1.7 trillion at the pump by 2025, and eliminate six billion metric tons of GHG pollution. EPA's Clean Power Plan addresses emissions from power plants, the largest source of carbon pollution in the country. When the Clean Power Plan is fully in place in 2030, carbon pollution from the power sector will be 32 percent below 2005

As we know, California is fighting to have an emission standard implemented on the state

This amendment allowed the government to enforce the cap and trade on specific companies and established the allowances market to commodify emissions. By treating emissions as a commodity, businesses are able to trade and sell allowances to either stay within regulations or gain revenue by being more efficient than others. The EPA’s first phase began in 1995 with the enforcement of 110 companies to reduce emissions, and the second phase was to include coal burning power plants. Overall, this led to a decrease by 41% of emissions compared to the 1980s. The ability of the government to enforce these cap and trade policies as well provide the public with a clear understanding of the ramifications of acid rain is a clear projection of the credibility of the science being put forth.

Europe uses a cap and trade program to keep its carbon dioxide pollution within levels required by International agreements. (Upton 2015) Texas and Ohio is some of the biggest polluters who are required to make big reduction under the new policy. As for the smaller states they will be allowed in the near future to increase their amount produced pollution. The cap and trade program covers industrial sectors

Acid rain is rain that has become acidic, because of air pollutants in the atmosphere. Rain has a normal pH level of around 5-5.5 which is only slightly acidic. 7 on the pH scale is the neutral and anything below that is considered acidic. Acid rain has a pH level around 4 which is 10 times more acidic. Acid rain can fall in many different ways and has many effects on the environment.

First we should understand how the carbon cap and trade system came about. The system of carbon cap trade used to be known as ‘emissions trading’, the alliance of free-market republicans and renegade environmentalists got the system adopted as national law in 1990 as a part of the Clean Air Act, to control the power-plant pollutants that cause acid rain, which is triggered by vast clouds of sulfur dioxide

Bunker fuel is a type of liquid fuel, which is fractionally distilled from crude oil (Geek, 2015). According to the oil industry’s material data sheets, the oil is a complex blend of hydrocarbons derived from various refinery streams, usually residue from the oil refinery processes (Wagstaffe, 2015). In comparison with petroleum products, bunker fuel causes high pollution and is extremely rough. When bunker fuel is burned, it releases sulphur and nitrogen into the atmosphere. These oxides then combine with water in the atmosphere and form acids, which is classified as ‘acid rain’. Generally, acid rain has not been a problem in Australia, but issues have been raised with acidic rain in industrial areas (high levels of sulphur oxides and nitrogen).

Even though it was still producing less than other companies it still had to address some changes that they needed to implement. During the 1990’s, Southern Company received 1 million tonnes of coal per day, emitting 30 tons of SO2/hour. In 1995 “phase 1” only received allowance for the emission of 254, 580 tons/year, which is higher than “phase 2” and it only allowed for 122, 198 tons/year.

The Direct Action Plan brought in by the Coalition involved a $2.5billion Emissions Reduction Fund (ERF) to incentivise firms to reduce their CO2 emissions. The ERF aimed to achieve the lowest cost per tonne of CO2 through market pricing. So, the emissions permits would be initially allocated and could then be purchased by auction. Firms would then be able to sell their carbon emissions abatement back the government if they reduce their emissions below the baseline level in a reverse auction. Businesses would cut emissions to the point that the cost is equal to the subsidy and businesses that increase their emissions beyond BAU would incur a penalty (Emissions reduction fund white paper, 2014). The ERF works on the presumption of continuous economic growth and thus also proposed a Renewable Energy Target, which allocated funds to emerging technologies brought in by larger renewable energy projects (2014). These within the safeguards put in place to ensure