FAQ - Capping Carbon

Why is capping carbon so important?

Because we need to be serious in stopping global warming. We have to stop the atmosphere filling up with greenhouse gases (which cause climate change), just as we had to stop the streets filling up with sewage (which caused disease).

Our emissions are still rising, which means that the amount of greenhouse gases in the atmosphere is not only still rising, but is still accelerating. This has to stop. We may well be able to develop methods to extract CO2 (already in the atmosphere) back out of the atmosphere, and this will help, but there is no question that we will also have to radically curb our emissions, which are making the problem worse all the time.

It’s not the only thing we need to do, of course. Huge efforts are also needed on tackling deforestation, on developing sequestration, on research into geo-engineering techniques as a last-resort fallback. Moreover, to get all this done we will need to change our outlook and attitudes, particularly in acknowledging and tackling poverty and inequality. All these efforts are necessary, for the survival of our civilisation and all that we hold dear.

Why a cap? Isn’t it enough to “do our bit”?

No, it isn’t. We need to make sure that everyone does their bit, and that the bits add up to solving the problem.

Nobody would pay income tax if it were voluntary. We only pay it, at the levels necessary (to fund hospitals, roads and everything else), because we know that everyone else has to pay it too. There has to be a cap, and it has to be not just a vague target, but a target that is guaranteed to be achieved. It needs to be a mandatory (compulsory) system. And we need to do this fairly. C&S is a good way of doing this.

What about China?

This is the same question writ large. It’s no good the UK doing something, for example, unless all the other countries do too. So we need a global framework where everyone contributes, such that these contributions add up to solving the global problem. This is why the Copenhagen conference is so important.

It is no good waiting until China does something; they are waiting for us. And there is a good argument for the West (especially USA and Europe) to act first, since we are responsible for most of the global emissions which has caused the problem in the first place. But if we take the first step, the second step should have all countries acting together (although contributing by different amounts).

Won’t this hurt our standard of living / exports / jobs?

Not so much as you’d think. Businesses often claim “jobs” as an excuse for everything from airport expansion to excluding German car manufacturing from the EU ETS. But it needn’t be so.

For example, suppose we bring in Cap & Share in the UK (say) very swiftly (and for our own benefit - more people would be better off than would lose out). To begin with, we could have a mild cap, and this would minimise any of these concerns over competitiveness.

Once we demonstrate that C&S works and that we are serious, then other countries - starting with the EU say - would be encouraged to follow suit. Then, we can all go forward together, making more serious cuts in emissions. At this point, the competitiveness issue becomes greater, but so does the market “inside” the cap. If necessary we can impose “border tariffs” on imports from “outside the cap” to cover the cost of the “embedded carbon” in these imports.

Finally, nothing will affect exports, jobs and our standard of living as much as runaway climate change would. We simply have to avoid this: our survival as a planetary civilisation is at stake. When we get on the survival path back down to safe levels of CO2, it will mean transforming our world in a thousand different ways, with opportunities for new businesses (not to mention much healthier lives).

Are carbon taxes a better way than setting a “hard” cap?

Carbon taxes are certainly the simplest way to put a “price” on carbon. Carbon taxes can be applied upstream, and so could capture all the carbon emissions easily, in the same way that C&S (or any other upstream capping system) does.

The respected climate scientist James Hansen has called for carbon taxes rather than cap and trade mechanisms. In particular he dislikes the international trading and CDM systems (these are like carbon offsets) which are a part of Kyoto, as these encourage developed nations to ignore or avoid tackling their own emissions in any meaningful way. But anyone who is really serious about tackling climate change would be equally sceptical of these systems (and of other features of Kyoto).

So what are the pros and cons of carbon taxes?

Governments will be tempted to keep the money raised from carbon taxes - putting it in the “general taxation” pot, or spending it on “green” projects - which means that the population will be worse off. For this reason, taxes may be unpopular. However, the money raised from carbon taxes could instead be given back (“rebated” or “recycled”) to the population, just like the benefits are returned to the population in C&S or Cap & Dividend.

A downside of carbon taxes is that they are a “price” rather than a “quantity” mechanism. What this means is that setting a carbon price puts up the price of fossil fuels, and all carbon-intensive goods, and this will reduce demand and hence emissions, by some amount - but not necessarily by the amount needed to stabilise the climate. Applying a tax does not guarantee any particular level of emissions like a cap does. Conversely, setting a cap guarantees a level of emissions (but we don’t know what the carbon price may be - it might go very high). Politicians may value the certainty of knowing that there is a ceiling on the carbon price, more highly than they value the certainty of knowing that an emissions target is met.

In theory we could keep increasing the tax until the emissions reduced to any given target - but in practice governments would find it politically hard to do this.

Is capping carbon basically all we need to do then?

No, of course not (as mentioned in the answer to the first question above). But it is a vital part. We need to have a world agreement which caps carbon globally. Getting there will be a messy business, but that’s where we have to be heading, and quickly.

But it’s not just about setting a cap and sitting back. We have to smooth the way to a low-carbon economy. The cap will force the pace of this transition, and we will need to provide Information, support and encouragement to help everyone adapt in the least disruptive ways. And people will be taking decisions for themselves and in their local communities, as is starting to happen with the Transition Towns movement.

And we face many other challenges, not least peak oil. But a stable climate is a pre-requisite for tackling all the other challenges, in fact for much of life on earth.