Cap and Share (C&S) a brief guide
to a scalable climate framework
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Here’s how Cap and Share would work
1 The Cap
C&S can be implemented nationally, at EU level, or around the world. If it was adopted internationally, a world Atmosphere Protection Trust would cap (limit) global greenhouse gas emissions at their present level. Then, using the best scientific advice, it would tighten the cap each year so that emissions eventually fell to a level at which they were no longer causing the climate to change. The Atmosphere Protection Trust would share out Production Authorisation Permit (PAP) quotas between countries on an adult per capita basis.
2 The Share
Every year, national Climate Protection Trusts would share out whatever emissions tonnage had been allocated to them by the Atmosphere Protection Trust by issuing PAPs equally to every adult resident in their country. Independent Trusts are important to provide a third sector in the economy - alongside companies and governments - with the remit of both protecting our “climate commons” and sharing out the benefits to all.
3 The Sale
When people received their PAPs, they could take them to a bank, post office or other financial institution and sell them at the current market rate, exactly as if they were foreign currency notes. On the other hand, they might choose not to authorise the production of fossil fuel the permits conveyed. In this case, they would destroy their permits and thus reduce the world’s emissions by their share.
This annual distribution of fossil fuel PAPs would provide those who sold them with a supplementary income to offset the rising cost of fossil fuels. The tighter the cap became, the fiercer the competition for PAPs would become and the more we would get when we sold them. Indeed, since a majority of the world’s population use little energy and would thus get more for their PAPs than their cost of living went up, there would be pressure on the global Atmosphere Protection Trust to accelerate the rate at which it was tightening the cap.
4 The Buy
Surprisingly few companies introduce coal, oil and gas into the world economy. These firms would need to acquire enough PAPs to cover the eventual emissions from the fuels they sold. Only these fossil energy suppliers would need to buy permits from the banks or other financial intermediaries. Fuel users, whether families, companies or utilities, would never need them to purchase fuel, keeping the system simple and easy to manage.
5 The Enforcement
A corps of inspectors would be set up to verify that the quantity of fossil fuel each company produced was in line with the number of PAPs it had bought. Unless there was serious undiscovered cheating, the world would be certain to stay below its emissions target. An important feature of C&S it that policing it would only involve fossil fuel producing companies. Other companies and individuals would not be affected, again keeping the system simple.
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When people “own the sky” together - having rights and entitlements supports the capping of GHGs This Sri Lankan brick making family could double their $1 a day income by selling the Production Authorisation Permits they would be directly given. |
C&S would drive a multi-pronged approach
A mock EU citizens PAP that would probably be issued as part of an informative booklet nationally. Why 2.65 tonnes? Four per year would be 10.6 tonnes and smooth out the sales flow. At present 395 million adults in the EU27 average 10.9 tonnes of CO2 per year each. To stay below a 2 degree C rise in temperature the Stop Climate Chaos coalition proposes a 3% year-on-year reduction - so next year’s permits would be 10.6 tonnes, and in 2009 some 10.3 tonnes. If the EU was in an emissions permit trading bloc with poorer countries this would be set lower - so that EU fuel companies would have to buy more permits from poorer people emitting less carbon. How much might this PAP be worth? A price of €20 to €30 per tonne seems likely, so each adult would get €212 to €318 for 10.6 tonnes. As the cap tightened year by year each tonne would be worth more and more. If issued as part of a global scheme the PAPs would be about 6 tonnes CO2/adult/year.
What is C&S’s history?
C&S emerged in late 2006 from the think tank Feasta, the Foundation for the Economics of Sustainability, an international network based in Dublin. The new Irish Government with the Green Party in coalition and Comhar, the Irish Sustainable Development Council, are seriously considering C&S to control Ireland’s escalating transport and other emissions. In the UK, C&S can provide the mechanism for the secondary legislation to the Climate Change Bill.
Can we act now?
Yes, we don’t have to wait for a global agreement. C&S can be built up sector-by-sector, country-by-country, and region-by-region into a full global solution.
Would C&S be acceptable politically?
Its fairness and built-in fiscal neutrality make it a more politically acceptable way to control emissions than other allocation methods.
Low Carbon Education?
The yearly issue of PAPs is expected to become a major cultural event, with the government and media commenting on the battle against climate change. C&S aims for a broad understanding of how prices will reflect both direct and embedded emissions in all products and services. The educational and support effort would extend to preparing for the future, giving advice and linked grants. Local meetings would involve people in projects seeking funding from Community Transition Funds. As a rights-based approach, the connection to constructing a fair ethical and economic global framework would be stressed.
What about fuel poverty?
The poor are safeguarded by their yearly sale of the supplier permits. As the price of carbon goes up, so does the value of the supplier permits. Anyone living on less fossil fuel energy than the average could expect to get more than the increase in the cost of living. Only extravagant users of fossil fuel would pay more.
How does C&S help the poor in developing nations?
The yearly sale of supplier permits puts money directly into the hands of every citizen and into the base of the economy. The three billion people living on a dollar or two a day could see their income double without widespread corruption.
Is it a tax?
No, because none of the money from the sale of supplier permits goes to the government. It’s better than a tax because no carbon tax can guarantee that an emissions target can be achieved. A tax that is adequate in a boom is excessive in a depression, but with C&S, the value of the supplier permits adjusts automatically.
How can C&S help communities?
A percentage of permits can be sold for Community Transition Funds. Through participatory budgeting these will provide the start-up finance for local district heating, renewable energy or conservation projects, etc
How does C&S help companies?
High embedded carbon prices in products and services will favour the low carbon companies and the employment of the future.
What about the EU and other Emissions Trading Schemes?
The EU ETS “cap and trade” system gives free saleable emissions permits to the big polluters. These should be 100% auctioned, the EU ETS corralled to just big utilities and parallel C&S schemes used to cap the other 55% of emissions from transport, heating fuels, etc. Others, like US States, considering “cap and trade” can go straight for C&S.
What about peak oil, gas and coal?
Due to declining oil, gas and even coal, the only thing voluntary about cutting our emissions is when we do it. We can act now to stabilise the climate or be pushed later having wrecked the climate and with less energy capital available for the transition to a low carbon future.
Countries like China and India?
The introduction of C&S could help China achieve its carbon efficiency goals while simultaneously addressing the growing inequalities within its borders. India’s poor, some 75% of its population, would gain heavily from an international C&S scheme.
USA?
At first sight, it looks as though the United States, as the world’s biggest GHG emitter, would lose badly if C&S was adopted internationally - but even it would reap major gains. True, it would have to pay poorer countries a lot of money to buy their people’s emissions rights, but it would gain from better food and high-tech export prices, cheaper fuel imports and new monetary arrangements (ebcus) that would support the value of the dollar and help stabilise the world economy.
Carbon Debit Cards?
Every individual has to have a carbon account with a central authority. Businesses also have accounts and buy rations weekly. Individuals only get 40% of the allocation. We believe that C&S would be simpler, guard people better against fuel poverty, be easier to extend internationally and encourage more community cooperation.
C&S and the wider global economy?
If C&S went global, carbon permits could become the cornerstone of a new international monetary system. Just as international monetary arrangements used to be based on currencies backed by gold, it would become possible to issue an international energy backed currency unit or “ebcu”.
Contraction and Convergence (C&C)?
(1) C&C leaves the share-out of permits to governments while C&S gives them to individuals (2) C&C has a convergence period during which the rich countries get more permits per head than the poorer ones while C&S proposes that everyone should get the same allocation immediately and that any special difficulties that particular countries might face should be covered by selling a percentage of PAPs for a special International Transition Fund.
Summary
C&S is based on the soundest of underlying principles. It has inherent fairness, robustness, simplicity and political acceptability. As climate and economic events increase and people become more aware that “the sky belongs to all of us”, a C&S approach can provide the ethical and economic basis for an international movement to stabilise the climate and, to an extent, the economy.
