This is an attempt at combining the three winning proposals of the 2010 contest. All three proposals have an emphasis on easing global negotiations.
Setting modest initial targets makes an initial agreement easier to achieve, paving the way for more aggressive action later.
Setting a price on carbon, instead of caps, allows countries to negotiate a single price they all agree on, instead of a separate cap for each country. This also makes it easier to renegotiate later.
Regional agreements are easier to accomplish than global ones. Adding carbon tariffs between the regions compensates for the economic inefficiencies that would otherwise result.
Each regional agreement should include both developed and developing nations, with the developed nations bringing developing nations along by assisting with climate adaptation. Focusing on adaptation initially helps build the foundation for more aggressive mitigation efforts later.
Overall cost-effectiveness is improved by allowing emitters to avoid carbon fees by sequestering ambient carbon. To compensate for the slow initial pace, consider using low-risk methods of reflecting more sunlight away from the planet, after appropriate research.
This proposal is related to the National proposal Cycling Carbon.
Dennis Peterson, author of the Carbon Rights proposal, with input from members of the Realistic and North-South teams.
What: Actions and impacts
Rather than cap-and-trade, apply a carbon fee with a fixed price per emitted ton. Nations may use a fee-and-dividend system, applying a fee per ton of emitted carbon and distributing the revenue to citizens on an equal per-capita basis.
Aim for a modest target of 600 to 650 ppm in 2100, using a carbon fee of $38 per ton of carbon initially, increasing to about $300/ton by 2100. (This schedule is based on William Nordhaus' work with the DICE model, in A Question of Balance, p. 83). With initial success, set more ambitious targets later.
Issue tradeable emission rights to entities absorbing carbon from the ambient atmosphere (by means such as biochar). Absorbing one ton grants the right to emit one ton without paying the fee.
Rather than waiting for global agreement, negotiate in regional groups. Each group collectively decides on an exact fee schedule, and methods to monitor compliance and approve sequestration methods. Emission rights can be traded between countries within the group.
Apply tariffs to imports from countries outside the group which have lower carbon prices. To promote goodwill, it may be helpful to grant a grace period before applying tariffs.
Keep in place the global adaptation fund agreed upon at Cancun. Countries may use carbon fees to meet their Cancun commitments. Regional groups may negotiate further adaptation funds, redirecting a portion of the carbon fees in developed nations to adaptation efforts in developing nations.
In case we need to buy some time, research methods of cooling the planet directly, with an emphasis on minimizing risk.
Why: Rationale for the proposal
Cap-and-trade presents significant practical difficulties. Developed nations tend to negotiate for high caps, since they can sell their excess credits. Developing nations don't want to be capped at all. To slow their emissions growth, developing nations are allowed earn credits based on claims that, in the absence of credits, they would have increased emissions even more...a system rife with opportunity for abuse. A simple fee on carbon emissions avoids these difficulties.
Aside from all that, it's just simpler to negotiate one fee schedule, rather than a separate schedule of caps for every country. Caps have to vary by country, but the same fee can work for every country. In fact, each region should have the same fee for each country, to prevent inefficiencies. If developing countries balk, developed nations can assist by transferring to them some of their own collected fees.
For economic efficiency and political palatability, nations may wish to distribute the fees to citizens. Everyone will have incentive to reduce fossil-fuel use, but a citizen with average emissions won't lose any net money. Lower-income citizens tend to emit less carbon, and will turn a profit. These factors allow for a higher carbon price than would otherwise be feasible.
(However, citizens will not really recapture all of their higher energy payments. Energy companies may choose to convert to higher-price technologies with lower emissions, if doing so is cheaper than paying the fee. The resulting higher energy prices will be paid by consumers, without being balanced by dividends.)
In some cases, it may be cheaper to absorb carbon from the atmosphere, rather than converting to lower-emitting technologies or paying the carbon fee. Awarding emission rights based on verifiable carbon absorption allows this to happen.
Modest initial targets make agreement easier to reach. Once frameworks are in place, further negotiations can make adjustments. A similar approach was successful for ozone protection; a modest initial agreement built early success, new technologies were developed at reasonable cost, and additional agreements built on those successes with stricter limits. (See the Cycling Carbon proposal for an extensive quote describing that history.)
Getting global agreement has proven to be difficult. Negotiating in smaller groups should prove to be more feasible, both for the initial agreement, and for negotiating more ambitious targets later.
At the same time, global participation is critical to lowering global emissions efficiently. If only some countries participate, major emitters can relocate to countries with lower or nonexistent carbon fees. This not only allows emissions to continue, but punishes countries that attempt to reduce emissions. Tariffs change the game. Emitters wishing to sell to a market with a carbon price can no longer avoid that price by relocating.
Given the modest initial target, positive feedback loops in the climate could become a problem. With icecap melt, forest fires, release of CO2 from peat, and methane release from permafrost and undersea ice, emissions of greenhouse gases from natural sources could exceed our ability to mitigate. All these feedbacks depend directly on temperature. To head them off, it's possible to cheaply increase the planet's albedo. Research methods that are easily reversible and minimize side effects.
One option is a method currently being researched by the Gates Foundation: build a fleet of wind-powered ships that seed clouds with small droplets of seawater. The advantage of this method is that if it causes unacceptable problems, it can be turned off, the effects dissipating in five days. Total cost is estimated at $9 billion.
To make sure we're not taken unawares, also emphasize research on potential catastrophic near-term climate feedbacks, such as arctic methane.
How: Feasibility of proposal
For details on feasibility (and other aspects), see the 2010 winners.
Vision of the future under this proposal
This proposal is a beginning of negotiation, rather than a 50-year plan. So its vision of the future is near-term. A series of modest climate agreements, in regional groups, using simple carbon fees. An agreement structure that makes it simpler to renegotiate. It doesn't get us to a cool world on its own, but it starts us along the path.
How should the global economy evolve through 2100, given the risks of climate change?