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|Last weekend's minimalist Copenhagen
global climate accord provides a great opportunity. The old
deceitful, ineffectual approach is severely wounded and must die.
Now there is a chance for the world to get on to an honest,
effective path to an agreement.
The centrepiece of the old approach was a "cap-and-trade" scheme,
festooned with offsets and bribes – bribes that purportedly, but
hardly, reduced carbon emissions. It was analogous to the
indulgences scheme of the Middle Ages, whereby sinners paid the
Church for forgiveness.
In today's indulgences the sinners, developed countries, buy off
developing countries by paying for "offsets" to their own emissions
and providing reparation money for adaptation to climate change. But
such hush money won't work. Yes, some developing country leaders
salivated over the proffered $100 billion per year. But by buying
in, they would cheat their children and ours. Besides, even the $100
billion hush money is fugacious. The US, based on its proportion of
the fossil fuel carbon in the air today, would owe $27 billion per
year. Chance of Congress providing that: dead zero. Maybe the UK
will cough up its $6 billion per year and Germany its $7 billion per
year. But who will collect Russia's $7 billion per year?
Most purchased "offsets" to fossil fuel carbon dioxide emissions are
hokey. But there is no need to flagellate the details of this modern
indulgences scheme. Science provides an unambiguous fact that our
leaders continue to ignore: carbon dioxide from fossil fuel burning
remains in the climate system for millennia. The only solution is to
move promptly to a clean energy future.
The difficulty is that fossil fuels are the cheapest energy, if the
price does not include the damage they do to human health, the
planet, and the future of our children. "Goals" for future emission
reductions, whether "legally binding" or not, are utter nonsense as
long as fossil fuels are the cheapest energy. The Kyoto Protocol
illustrates the deceit of our governments, which have not screwed up
their courage to face down the fossil fuel industry. As the graph
here shows, global fossil fuel emissions were increasing 1.5% per
year prior to the 1997 Kyoto accord. After "Kyoto" emission growth
accelerated to 3% per year. A few developed countries reduced their
fossil fuel use. The only important effect of that was to slightly
reduce demand for fuel, helping to keep its price down. The fuel was
burned in other places, and products made were shipped back to
As far as the planet is concerned, agreements to "cap" emissions,
such as the Kyoto Protocol and the imagined Copenhagen Protocol, are
worthless scraps of paper. As long as fossil fuels are the cheapest
energy, they will be burned somewhere. This fact helps define a
solution to the climate problem. Yes, people must make changes in
the way they live. Countries must cooperate. Matters as intractable
as population must be included. Technology improvements are
required. Changes must be economically efficient. The climate
solution necessarily will increase the price of fossil fuel energy.
We must admit that. But in the end, energy efficiency and
carbon-free energy can be made less expensive than fossil fuels, if
fossil fuels' cost to society is included. The solution must have
honesty, backbone and a fair international framework. We need a
rising price on carbon applied at the source (the mine, wellhead, or
port of entry). The fee will affect all activities that use fossil
fuels, directly or indirectly. The entire fee collected from fossil
fuel companies should be distributed to the public. In this
fee-and-dividend approach people maintaining a carbon footprint
smaller than average will receive more in the dividend than they pay
via increased energy costs. The monthly dividend, deposited
electronically in their bank account or on their debit card, will
stimulate the economy and provide people with the means to increase
their carbon efficiency. All that governments need do is divide the
collected revenue by the number of shares, with half-shares for
children, up to two children per family.
Some economists prefer a payroll tax deduction over a dividend,
because taxes depress the economy. The problem is that about half of
the public are not on payrolls, because of retirement or involuntary
unemployment. I suggest that at most 50% of the collected carbon fee
should be used for payroll tax deduction.
Cap-and-trade is the antithesis of this simple system. Cap-and-trade
is a hidden tax, increasing energy costs, but with no public
dividend. Its infrastructure costs the public, who also fund the
profits of the resulting big banks and speculators. Cap-and-trade is
advantageous only to energy companies with strong lobbyists and
government officials who dole out proceeds from pollution
certificates to favoured industries.
Fee-and-dividend, in contrast, is a non-tax – on average it is
revenue-neutral. The public will probably accept a rise in the
carbon fee rate, because their monthly dividend will increase
correspondingly. As fee-and-dividend causes fossil fuel energy
prices to rise, a series of points will be reached at which various
carbon-free energies and carbon-saving technologies are cheaper than
fossil fuels plus the fee. The market place will choose the best
technology. As time goes on, fossil fuel use will collapse, coal
will be left in the ground, and we will have arrived at a clean
energy future. A rising carbon fee is essential for a climate
solution. But how to achieve a fair international framework?
The critical requirement is that the United States and China agree
to apply across-the-board carbon fees, at a relative rate to be
negotiated. Why would China agree to a carbon fee? China does not
want to be saddled with the problems that attend fossil fuel
addiction such as those that plague the United States. Besides,
China would be hit extraordinarily hard by climate change. A uniform
rising carbon fee is the most economically efficient way for China
to limit its fossil fuel dependence.
Copenhagen discussions showed
that China and the United States can work together. Europe, Japan,
and most developed countries would very probably agree to a similar
status to that of the United States. Countries refusing to levy an
across-the-board carbon fee can be dealt with via an import duty
collected on products from that nation in accord with the amount of
fossil fuel that goes into producing the product. The World Trade
Organisation already has rules permitting such duties.
The international framework must define how proceeds from import
duties are used to assure fairness. Duties on products from
developing countries will probably dwarf present foreign aid to
those countries. These funds should be returned to developing
countries, but distributed so as to encourage best practices, for
example, improved women's rights and education that helps control
population growth. Fairness also requires that distribution of the
funds takes account of the ongoing impacts of climate change.
Successful efforts in limiting deforestation and other best
practices could also be rewarded.
James Hansen was the first scientist to warn the US Congress of the
dangers of climate change. The ideas discussed in this article are
expanded on in his new book "Storms of My Grandchildren".