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Global Carbon Trust

Peter Barnes: Capitalism 3.0 — Chapter 9: Building the Commons Sector (pages 135-154)

According to a near-unanimous consensus of scientists, the world is very close to a tipping point on atmospheric carbon: we must drastically curtail our carbon burning or climate hell will soon break loose. This means every nation must install economy-wide valves for reducing their carbon use. I described earlier how America might do this using a carbon, or sky trust. Since we can’t halt global warming by ourselves, however, the necessary complement to such an American trust is a global trust.

A global carbon trust would require national governments to recognize that, just as they can, and should, delegate internal trusteeship duties to trusts, so should they delegate global trusteeship duties. The alternative, I’d argue, is paralysis in the face of clear and present danger.

Consider the long and tortuous climate negotiations that began in the early 1990s. They produced, first, a toothless pledge by all nations — the Rio Convention of 1992 — to voluntarily reduce their greenhouse gas emissions to the 1990 level by 2010. Five years later, they produced a slightly toothier protocol in Kyoto, which took another five years to ratify and translate into operational rules. An equally prolonged negotiation now looms for the successor to Kyoto, which expires in 2012.

No doubt these negotiations could move faster if the current U.S. administration weren’t so obstinately opposed to them. But the deeper problem is that nearly two hundred sovereign nations are trying to negotiate a deal that satisfies everyone. The process is inherently cumbersome, and not surprisingly, the results fall far short of what scientists say is necessary. Perhaps, therefore, it’s time to delegate. I can imagine a global atmosphere trust working something like this. It would be governed by a smallish board of trustees and a general membership consisting of all signatory nations. The general membership would appoint the trustees. There might be, as in the U.N. Security Council, a number of seats reserved for “great powers” (in this case, large emitters) and another number set aside for regions. However, once trustees are appointed, their loyalty would shift from individual nations or regions to future generations. This is critical.

The trustees would decide, based on peer-reviewed scientific evidence, where to set a global cap on carbon emissions. Each year, they’d issue tradeable carbon emission permits up to that year’s limit. A portion of these permits (initially, a majority) would be distributed at no cost to participating nations based on a pre-agreed formula. The remainder would be auctioned by the trust, with the revenue used to remediate damage caused by climate change and aid the inevitable victims. The trust would determine on a yearly basis how many permits were needed for these purposes, and how the remediation funds would be spent.

The trustees would make decisions by majority vote, with no vetoes. Like a court, they’d explain their decisions in writing, showing exactly how they protect future generations. The general membership could override a trustee decision by, say, a two-thirds majority. In this way, signatory nations could put short-term interests over long-term ones, but they’d have to do so explicitly, and implicitly admit to stealing or borrowing from future generations.

The knotty question is, What formula should be used to distribute carbon emission permits among nations? The key to crafting such a formula, given the disparate interests of so many nations, is to ground it on some universal principle of equity. The Kyoto Protocol didn’t do this; it was a hodgepodge of deals and escape hatches aimed at pleasing the United States, which in the end didn’t ratify anyway. The next international regime, however, must appeal to the poor and the up-and-coming, as well as to the United States and other developed countries. Without an organizing principle based on equity, it’s hard to see how any deal can be reached.

Fortunately, an equitable organizing principle has been advanced: it’s known as contract and converge. Here’s how it would work.

First, an overall reduction schedule would be agreed to; this is the contract part of the equation. Then, rights to the global atmospheric commons would be divided among nations in proportion to their populations — in other words, one person, one share.

However, absolute proportionality wouldn’t kick in for a decade or two, during which time the allocation formula would converge toward proportionality. The rate of convergence would be a topic for negotiation; the goal of per capita equity would be accepted at the outset.

Before and after convergence, poor and populous countries with more permits than emissions could sell their excess permits to rich and relatively underpopulated countries that are short on them. In this way, nations could pollute at different levels, with overusers of the atmosphere paying underusers for the privilege. Americans could, in other words, extend our present level of carbon use for another decade or so, but we’d have to pay poor countries to do so.

Would a global atmospheric trust be too great a surrender of national sovereignty? I think not. We’re not talking about world government here. We’re talking about a trust to manage a specific worldwide commons. The one and only job of that trust would be to set and enforce limits on certain emissions into that commons. Some loss of sovereignty is involved, but less than we’ve already yielded to the World Trade Organization. Compared to the benefit we and all nations would gain — a stabilized climate — our loss of sovereignty would be small potatoes.

If a global atmosphere trust could be established, it would be a watershed twenty-first-century event. Geopolitically, it could lay the foundation for a harmonious century, much as the Versailles Treaty paved the way for a disharmonious one in the twentieth. It would also help the world deal gracefully with the decline in global oil production that experts say is imminent.

Economically, a global atmosphere trust would spur some important changes. Corporations the world over would immediately pour money into energy efficiency and noncarbon energy infrastructure. There’d be a rush to deploy new technologies. Economies — including ours — would boom, not despite higher carbon prices, but because of them.

Why would this happen? The simplest reason is that a global atmosphere trust would remove an enormous cloud of uncertainty. Businesses would see the future of carbon burning, and be more confident that a price shock — more damaging than a gradual rise — wouldn’t derail their plans. Such a trust would also remove a major source of international tension — the scramble for declining oil supplies — that could easily lead to war. In addition, the flow of money to poor countries (from sales of emission permits to rich countries) would lift their economies and wages, help U.S. exports and slow U.S. job loss. All these things would ensure that while high-carbon activity declines, low-carbon activity rises at a comparable rate.

But growth in aggregate economic activity isn’t the only benefit we’d see; qualitative improvements would also occur. Thus, as long-distance transport costs rose, manufacturers would shift from global to local production. Farmers would return to practices they used before cheap petrochemicals became available. They’d grow more food organically and sell more through farmers’ markets and urban buying clubs, cutting out middlemen and keeping more of their products’ value. For nonperishables, consumers would shop more on the Internet and less at drive-and-haul malls. Thanks to eBay, Craigslist, and similar services, they’d also buy more secondhand goods and dump fewer into landfills. More workers would ride bikes, jitneys, and trains, and work online from home. Cities would favor footpower, suburbs would reorganize around transit hubs, and new forms of co-housing would spread. All these changes would be profitable and even exciting. And they’d proceed with relative smoothness if we placed the global atmosphere in trust.

On the other hand, if we leave our atmosphere as an unmanaged waste dump, our glorious industrial party will abruptly end, brought to its knees by oil price shocks, climate disasters, or a monetary panic. After that, no one can know what will happen. That’s the stark choice we face. ... read the whole chapter



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Wealth and Want
... because democracy alone hasn't yet led to a society in which all can prosper