Nick Bardsley, Milena Büchs, Brian Davey and Laurence Matthews

Recent scientific evidence on melting ice caps and permafrost, ocean ecology, etc. suggests that risks related to climate change have been underestimated by the 2007 IPCC report. To mitigate catastrophic climate change it is necessary to drastically reduce the atmospheric concentration of CO2, possibly to 325-300ppm or below, as advocated by James Hansen of NASA (Hansen et al 2008). Currently, the greatest obstacle for individual governments or world regions to adopt effective carbon reduction schemes are the dangers of “carbon leakage” and competitive disadvantage, posed by companies threatening to leave the scheme and take advantage of regulations in regions with less stringent climate mitigation policies.

What is NOT the biggest obstacle is a lack of effective ideas. Various schemes exist to combine an upstream cap with measures to mitigate fuel poverty and aid transition to an eventual zero carbon economy. Enforcing a cap on the supply of fuels “upstream” (based on carbon content) is easy because of the small number of suppliers; it is not evadable; and it makes possible 100% coverage of all fossil-fuel based emissions (emissions from land-use would be treated separately). For example, “Cap and Share” would require fossil fuel suppliers to buy permits for the greenhouse gas content of any fuels they sell. Permits are purchased from citizens, who receive equal shares of the economy’s supply, and the permit quantities reduce over time. “Cap and Dividend” is a variant which would set up an organisation, independent of government, to auction permits to companies and rebate the public with the revenues on an equal per capita basis. This arrangement prevents the state reclaiming the revenues for other purposes. Within both schemes, a fund from the auctioning revenue could be set aside to finance further climate mitigation policies or indeed a package of energy, transport and agricultural system changes – enabling societies to cope with the cap and preparing them for yet further carbon reductions. If adopted globally, carbon permits could be allocated to different regions in the world, reflecting GDP and historic emissions, before gradually moving to an equal per capita scheme.

But there is the rub. Without a global agreement, if an effective governance framework is adopted unilaterally the adopting power acts in the hope that others follow suit. It would be morally admirable, or even required, for a country like the UK, or alliance such as the EU, with historically high responsibility for greenhouse gas concentrations, to take this lead. However, both industrial and fossil fuel interests will argue that this will merely result in displacement of economic activity (and emissions) to another region. Thus, although it is an oversimplification to point to a “single biggest problem”, a fundamental problem is this: governments need to stand up against enormously powerful and well-resourced vested interests that work to play them off against each other. This can only be achieved either with a truly global deal on climate change or through a growing number of countries adopting a new form of eco-regulated market economy – whose states take economic sanctions to protect themselves from competition from other nations that refuse to participate in multilateral carbon reduction schemes.

Nick Bardsley, Milena Büchs, Brian Davey and Laurence Matthews,  Cap and Share UK

Notes

The Cap and Share/Dividend idea is currently promoted by

–          the Foundation for Sustainable Economics (FEASTA, http://www.feasta.org/),

–          Cap and Share UK http://www.capandshare.org/ and

–          Cap and Dividend in the US http://www.capanddividend.org/.

In the US, a Bill for a “Cap and Dividend Act of 2009” has been introduced to Congress in April 2009 (proposed by representative Chris van Hollen, Maryland).

Cap and Share has been investigated by the Irish Sustainable Development Commission, Comhar, as a possible means of controlling transport and household emissions in Ireland (see http://www.capandshare.org/resources_reports.html and http://www.feasta.org/energy.htm for documents).

Cap and Dividend was also nominated by the magazine Newsweek as one of its four truly “Transformative Ideas” from 2008, see http://www.newsweek.com/id/176336.

 Reference

Hansen, J., Mki. Sato, P., et al. (2008) ‘Target atmospheric CO2: Where should humanity aim?’ The Open Atmospheric Science Journal 2: 217-231.

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