PLAN: Mercury Emissions: "Cap and Trade" Game
Jason McGraw, a high school science teacher
1 to 2 class periods
To develop an understanding of the role of government in regulating
To develop an understanding of the role of government in protecting
develop decision-making skills based on cost and benefit
develop an understanding of scarcity
To develop an understanding of how the
free market can distribute resources
- Students will:
in an activity where they run a profitable or unprofitable power plant in changing
the role of government in protecting the environment
the pros and cons of emissions credit trading
several market forces that can make "Cap and Trade" profitable or unprofitable
for a business
is dangerous to humans. High levels of mercury in a human can affect the nervous
system and is especially harmful to unborn children in the womb. The most common
way a person is exposed to mercury pollution is through eating fish. Lakes become
contaminated when mercury released by power plants mixes with rain. The mercury
is absorbed into the fatty tissues of fish, which pass that mercury on to humans
when the fish is eaten.
March, 2005, the Environmental Protection Agency announced new rules for mercury
that power plants release into the air when they burn coal to make electricity.
Coal-burning electric plants are the largest cause of avoidable mercury emissions.
The plan, called the Clean Air Interstate Rule (CAIR), is designed to limit the
tonnage of mercury that is released per year. The goal is to reduce mercury emissions
from 48 tons per year to 38 tons per year in 2010 and 15 tons per year by 2018.
major component of the CAIR plan is a "Cap and Trade" provision. All
power plants have a limit on how much mercury they can release legally. If a power
plant releases less than its allowed amount, it can sell its extra emission allowance
to a company that is exceeding their mercury emissions limit. Over time, the total
number of allowances will shrink until emissions are cut by more than two-thirds
in 13 years. During this time, it is expected that scientists and engineers will
develop inexpensive techniques to remove mercury from coal and coal smoke. That
will allow the power companies to make these emissions cuts without raising electricity
will experience how the free market can be used to reduce emission and not change
the price of electricity to consumers and still be profitable for power companies.
No knowledge of science is needed for this game.
to National Standards
Needed (handouts provided in printer-friendly PDF format)
make these lesson plans better
watch the NewsHour video "EPA
Limits Mercury Emissions." The students should think about the following
questions as they view the video:
is mercury harmful to humans?
will the industry be able to reduce emissions by two-thirds?
does "Cap and Trade" work?
the video, ask the students for answers to the questions.
Next, the students will participate in the Mercury "Cap and Trade" Game.
Make the index cards as outlined on the teacher instruction sheet. Then go over
the instructions on the handouts with the students. To make the rules clear, work
through the 2005-year as a group so that the students know how to make their calculations
rules of the game:
should be divided into groups of 4-6 people. This is a "trade association".
students to share ideas as they work.
student should draw a Power Plant card. Information on this card should be written
on the student's Balance Sheet. (Emission allowances until 2013 and electric
prices are pre-printed on the balance sheet. Emissions for 2005 and operating
costs of the plant are given on the Power Plant card.)
have students calculate emissions credit profit/loss, yearly profit, and total
profit. (Directions for the calculations are given in the glossary.)
each year, students should decide whether or not to make capital improvements
to reduce mercury emissions. The cost of improvements is based on the age of the
plant. (This is explained for the students in the glossary.) NOTE: If a plant
is consistently losing money year after year, a "real" power plant would
likely be closed.
the balance sheet is filled, ask students to reflect on their experience using
the questions on the Balance Sheets.
To make the game more realistic, the teacher can change market
conditions for a certain year or a number of years. For example:
quality is highly variable, even coal from the same mine. A certain type of coal
may become "dirtier" or "cleaner", thus increasing or decreasing
state may choose to tighten mercury emissions at a faster pace than the CAIR plan.
breakthroughs may make capital improvements less expensive.
The market price of emission credits may increase, especially as the emissions
prices may spike (like in California in 2000), or fall if supply suddenly increases
(from nuclear power, for instance).
students perform an informal survey of which group carried a total profit in 2013.
a. How old is their plant?
b. Did market forces have an effect, good or
a graph of the mercury emission allowances by year. Notice how the allowances
slowly drop and then drop sharply. This drop assumes that "clean burning"
technology will be developed to take the mercury out of emissions. By what year,
according to the graph, will this clean technology be developed?
a short essay, discuss the goals of the CAIR plan. Why does the government feel
that it needs to be involved in the power industry?
market forces will help or hinder a power company under these new emissions trading
will happen to the coal industry if power plants cannot make a profit due to these
to National Education Standards:
(from the National Council on Economic
Education - http://www.ncee.net/ea/standards/)
Standard 1: Scarcity
Productive resources are limited. Therefore, people
can not have all the goods and services they want
Standard 2: Marginal
Effective decision making requires comparing the additional costs
of alternatives with the additional benefits.
Standard 3: Allocation
of Goods and Services
Different methods can be used to allocate goods and
services. People acting individually or collectively through government, must
choose which methods to use to allocate different kinds of goods and services.
Standard 16: Role of Government
There is an economic role for government
in a market economy whenever the benefits of a government policy outweigh its
costs. Governments often provide for national defense, address environmental concerns,
define and protect property rights, and attempt to make markets more competitive.
the Author Jason McGraw graduated from Mississippi State University with an
M.S. in geoscience. He teaches high school science in the Chicago area and has
worked for several years as an industrial chemist. He frequently conducts workshops
for teachers on science content and science literacy.
find out more about opportunities to contribute to this site, contact Leah Clapman