gistfile1.md

The intent of the mechanism is to create a transfer of money from polluting providers to non-polluting providers, scaled by the amount of power they provide and the amount of pollution they create.

The proposed mechanism is as follows.

First, to save time: the measurements here are flexible and can change. It doesn't have to be per day, or per ton; it could just as easily be per week and per pound. I'm going to pick units to keep things simple.

1. In a given day, anyone who produces one ton of carbon pollution puts a fixed amount of money into a pool.

2. At the end of the day, anyone who put energy onto the grid shares the pool equally by proportion of energy put onto the grid.

Simple: revenue transfer from polluting providers to clean providers, without steering money out of the generation system or into government permanently.

Bonus: you can change the fixed amount of carbon without changing the rest of the system, allowing the selective adding and removal of pressure as appropriate.

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Next let's have an example. We're going to use made up numbers to make the math easy; if you fact check this they'll be wrong.

For this discussion there are six power providers. One coal, one natural gas, one nuclear, and three solar.

For this discussion:

• the coal provider can make six units of energy per day
• the gas provider can also make six units per day
• the nuclear can make eight per day
• the solar can make one per day each

For this discussion:

• the coal provider makes three tons of carbon per unit energy
• the gas provider makes two tons per unit energy
• the nuclear and solar each make zero

One day goes by. All plants are running at full bore. This means that 23 units of energy (6 + 6 + 8 + (1+1+1)) have been placed onto the grid. This also means that 30 units of pollution have been created (63 + 62).

So 30 fixed money amounts are placed into a pool, then divided equally among the 23 units of energy placed online. So each energy producer receives 1.304 (30/23) money per unit energy provided.

The coal provider gives up 18 (6*3) units of money, and receives 7.826 (6 * 1.304) money, resulting in a per-day loss of 10.114 units money.

The gas provider gives up 12 (6*2) units money, and receives 7.826, resulting in a per-day loss of 4.173 units money.

The solar providers receive 1.304 money each.

The nuclear provider receives 10.434 (8*1.304) money.