EBK ECONOMICS TODAY
18th Edition
ISBN: 9780133920116
Author: Miller
Publisher: YUZU
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Chapter 31, Problem 1CTQ
To determine
Impact on market clearing price of a permit.
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Germany is trying to lower its CO2 emissions by phasing out coal-based electricity production through the forced closure of coal power plants. Why is this policy, even if it is successful in lowering Germany’s CO2 emissions, unlikely to result in lower emissions at the European scale?a) this policy does nothing to address the emissions from the transportation sector, which far outweigh those of coalb) CO2 produced in Germany stays in Germany, and thus has no bearing on the European scalec) Germany has already made substantial reductions to its CO2 output, so that it is a small player on the European scaled) Germany is a member of the European Emissions Trading System (ETS), which sets a binding cap on greenhouse gas emissionse) coal power production in Germany has become extremely efficient, so that its CO2 footprint is insubstantial
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