Comment Log Display

Comment Log Display

Below is the comment you selected to display.
Comment 53 for Design Comments for the GHG Scoping Plan (sp-design-ws) - 1st Workshop.


First Name: Morgan
Last Name: Putnam
Email Address: putnam@caltech.edu
Affiliation:

Subject: Reducing Financial Risk: The Advantage of a Carbon Tax
Comment:
To whom it may concern,

I understand that there are both
pros and cons to carbon tax and carbon cap and trade plans. 
However, based upon my undergraduate education in chemical
engineering and my graduate education in photovoltaics (solar
cells), I strongly suspect that a carbon tax would provide a much
more stable pathway to AB 32's goal of a 20% reduction in carbon
dioxide emissions from 1990 levels by 2020.

One of the
largest challenges that I see facing the renewable energy
industries is the size and time scale of the financial investments
needed.  To clarify this point, I would like to briefly discuss the
Ôsilicon shortageÕ that has been present in the solar industry
since 2004.  The Ôsilicon shortageÕ is not a result of a shortage
of cheap silicon in the earthÕs crust, but rather the shortage
exists because plants that purify silicon are not being built fast
enough to meet the increased demand for purified silicon.  While it
might seem odd that companies would be hesitant to provide raw
materials for an industry that has grown over 40 % each of the
past five years, one must keep in mind that a plant to purify
silicon is an investment on the order of $100 million dollars. 
Additionally, it takes three years to build a plant.  This is a
typical cost and time-scale for a large-scale chemical
purification plant; confer plant costs and time scales in the oil
and gas industry.  Consequently, for companies to risk $100
million in a silicon purification plant, they need to know that
they will be able to sell their purified silicon, not this year or
next year, but three years from now and every year thereafter for
ten to fifteen years.  Undoubtedly then, there is a substantial
amount of risk in such an investment.  I believe this is the
reason why a Ôsilicon shortageÕ continues to exist in the solar
industry.  

Thus a key challenge for a carbon mitigation
system is the reduction of financial risk for large capital
investments.  Reducing this risk requires creating a system where
the cost of emitting carbon dioxide five, ten and fifteen years
from now is predictable with some level of accuracy.  Intuitively,
it seems to me that a carbon tax will be able to meet this
challenge with greater success than a carbon cap and trade system,
and it is for this reason that I urge you to consider how well the
system that you choose will be able to meet this important
challenge.

Lastly, I would like thank you for your time
and for granting the public the opportunity to offer
input,



Sincerely,

Morgan
Putnam



Morgan Putnam
Ph.D.
Candidate
Chemical Engineering
California Institute of
Technology

B.S. Chemical Engineering, Cornell University
2005

Attachment: www.arb.ca.gov/lists/sp-design-ws/56-carb.doc

Original File Name: CARB.doc

Date and Time Comment Was Submitted: 2008-08-01 00:15:11



If you have any questions or comments please contact Office of the Ombudsman at (916) 327-1266.


Board Comments Home

preload