Just carbon emission trading
There is an interesting article on Slate called ‘Adam Smith Meets Climate Change‘, which notes that now many countries are introducing carbon emission trading schemes, the next step is how to harmonise those schemes on an international market. In particular countries need to reach a consensus on how to globally acceptable level of carbon emissions among ourselves.
But a crucial sticking point is figuring out how to initially allocate emissions permits among the various countries of the world. Generally speaking, richer nations want permit allotments that track historic emissions rates—essentially locking in their economic advantage by awarding permits based on how much a country is already emitting. Developing countries, in contrast, want permits allocated according to population size, with every person on the planet getting equal emissions rights. Some representatives from poorer nations also point to the fact that countries have not contributed equally to the existing problem of global warming. They argue that the countries most responsible for the current state of affairs, like the United States, should get the fewest permits, since they have already spent their share of the planet’s GHG [greenhouse gas] budget.
You can imagine how long that argument might take to play out given how intractable negotiations about farming subsidies have become at the WTO. The authors have a proposal though:
Rather than debate endlessly about how to carve up the spoils from just one global GHG currency, why not separate GHG permits into different brands based on how seriously they take the question of climate justice? Imagine an annual GHG cap that is subdivided into two categories. First, each country would receive a share of “regular” permits based on historic emissions rates or whatever base-line allocation method emerges from international negotiations. Second, each country would receive “justice” permits based on some formula that takes into account factors like population size and previous contributions to climate change.
Then you let the market decide what the relative price should be between carbon permits from countries that have had their credits allocated justly and those that have had their allocated on the basis of power and short term greed. It’s an interesting proposition. Personally I think it places too much responsibility on voluntary, ethically motivated consumers to restore justice to our relative allocations of carbon emissions. It is also hard to imagine how it would work as the cap on carbon emissions is lowered from what is likely to be an initial cap that is too high towards a cap that actually starts to address global warming.
