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February 14, 2009 / or4green

The Carbon Trading Game


src: C.HicksMSNBC

You may already be familiar with the Beer Game, used in classrooms throughout the world to teach students about supply chains and the bullwhip effect. Now meet the Carbon Trading Game. Players take on the role of utilities and they buy, sell, and/or trade power plants, fuel, and carbon dioxide emission allowances. (Under a cap and trade system, overall power plant emissions are limited (the “cap”) with the limits decreasing over time, plants are required to have credits to cover their emissions, and those with shortages can buy them from those with excess credits (the “trade”)). Neil Dikeman wrote about a version of the game he devised in a post on Cleantech Blog. It could be a great way to educate students and others on the basics of power planning in the face of a market shifting away from fossil fuels, as well as on emissions market design and auctions. These games tend to work best when they are simple but can have complex results. That is certainly true of the beer game (see for example the extensive literature on chaos in the beer game). And it appears to be true in Dikeman’s game as he noted that “the results were an interesting summary of how small rules can have big impacts in the outcome.” He outlines the rules in his post and there is enough there to get you started running the game. Let me know if you do.

Here are a few related games:

MSNBC “Paying to Pollute” game – this game is quite simple, more of a demonstration. But it provides a nice basic introduction to the concept of cap and trade and looks great (see the image above).

Lehrer Newshour “Mercury Emissions Cap and Trade Game” – lesson plan designed for high school students, the mercury comes from coal plant emissions.

BBC’s Climate Challenge – from the site: “you are president of the European Nations. You must tackle climate change and stay popular enough with the voters to remain in office.” You decide on policy, game has a slight Sim City feel.

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