The Thinking Behind CapGlobalCarbon

The current system is not suitably designed to address global problems

Why is there such a chasm between what we know about climate change and what we are doing, in particular in relation to fossil fuels? The basic contention put forward here is that it is because we have the wrong system, the wrong institutional infrastructure, to ensure that the necessary global reductions are achieved. Three flaws of the current system can be briefly mentioned:

  • The system is based on a view of the world as a collection of nation states, as opposed to the view of the human world as a single entity in which nation-states represented by their governments are important but not the only participants.

One of the consequences is that there is no adequate representation of the interests of the human family as a whole, let alone those of future generations of our species, or of other species and ecosystems.

  • As every law student in Britain learns, an agreement to agree “is no contract at all”. The UNFCCC was indeed no more than a framework for future negotiation. Moreover whilst the stated objective was to stabilise greenhouse gas concentrations, no target level was stated, nor has one ever been agreed. Action on the global problem of climate change thus depends on agreement being reached through negotiations between the governments of countries with widely differing circumstances and widely differing, generally competing and often conflicting, interests. The now widely recognised result is that it is extremely difficult, perhaps even impossible, for the nations of the world to agree about something as contentious and complicated as climate change and what to do about it, let alone to make a binding agreement that satisfies the climate science.
  • Another consequence of the current system of negotiations between the governments of nation-states is that there is a confusion between two different kinds of problem. Not only is climate change an issue about the relationship between humanity as a whole and the Earth’s climate system; it also involves issues of equity and climate justice: climate change and the need to address climate change give rise to massive moral issues both in terms of responsibility, mitigation and adaption as between countries and blocks of countries and between present and future generations. These are difficult, emotive, intractable issues of immense importance to poorer countries and to the climate justice movement, but they are of little or no concern to the climate system as a whole.

The problem is that the current system is not designed to allow the global issues to be dealt with separately from the equity and climate justice issues. Indeed it ensures that they cannot be dealt with separately, even though it is in everyone’s interests to address the global issues effectively and climate science has spelt out the necessary action very clearly. The global issues cannot be resolved unless the equity and climate justice issues are resolved.

In view of the systemic nature of the defects in the current system referred to above, there are limits to what politicians can do about it. People operating the current dysfunctional systems are simply not free to respond. So what needs to be changed is not the minds or attitudes of the politicians but the system. A new kind of system is required. CapGlobalCarbon is a project to bring that into being.

A feature of the existing system that is especially relevant in this context is that, whilst climate change is a global problem, there is at the moment no global-level institution or system of governance relating to climate change. The Global Climate Commons Trust described below is designed to fill this space.


A systems solution

In designing the partial reconfiguration of our climate governance system we have to take as given the nature of the current global economy and the nature of current nation-state governments, because however desirable it may be for the whole system to be transformed, there is no possibility of this happening fast enough. The reconfiguration proposed by CapGlobalCarbon is limited to what is needed to enforce the radical reductions in carbon emissions from the use of fossil fuels called for by climate science. We are faced with an emergency. We need to design and implement a system that enables us to address it.

Under the current economic system, if left to itself, the world economy, due its design, tends to trespass beyond/outside ecological limits. So some governmental (in a wide sense, not necessarily nation-state) intervention, or system of regulation, is needed to ensure that the economy operates within ecological limits. The purpose of CapGlobalCarbon is to provide that necessary element of control in relation to carbon emissions from the use of fossil fuels, a system to act as a governor for the global economy to make sure that its impact on the Earth System is restrained from getting out of control.

What we need is something that is compatible with the current world system and the modern form of capitalism it embraces and which embraces it, whilst at the same time avoiding the flaws of the existing system, in particular, outcomes depending on negotiations between the governments of nation states and the influence of multi-national corporations.

Finally, the reconfiguration needs to be capable of fitting into and in due course being part of the wider transformation of the economy called for by numerous writers, reflecting and responding to ecological limits, complementing and being part of the much needed de-growth revolution. It needs to have an ethos of climate justice, reduction of inequality, cooperation rather than competition, and non-violent governance .


The origins of CapGlobalCarbon

The late Richard Douthwaite, author of The Growth Illusion, Short Circuit and The Ecology of Money, was one of those rare people who make it their business to see if they can do something to bring about radical change to create a safer and fairer world. In 2004, Richard, working together with members of the Irish systems think tank Feasta, came up with the idea of Cap & Share and this was soon developed into a proposal for a global Cap and Share scheme administered by an independent global trust.

The idea of an ‘upstream cap’ as the simplest and most certain way to control emissions from the use of fossil fuels has been described by Gerry Wolff and Oliver Tickell in their Green House ‘gas’ “Turn off greenhouse gases at source”:

  • Permits are required to extract coal, oil or gas from the ground. The permits are denominated in carbon units.
  • Based on climate science advice, the body administering the scheme decides on the number of permits it will issue each year. The numbers issued each year are progressively reduced in the light of climate science.
  • Under Cap and Share as first presented the permits are distributed to or for the benefit of people everywhere equally. It may be more realistic to envisage a global auction of permits, the net proceeds being distributed equally to all global citizens. Such a scheme is generally known as Cap and Dividend.
  • Fossil fuel extraction companies pay the open market prices for the global permits.
  • They pass on the cost of permits to their customers.

Whether the permits are distributed to people equally or auctioned with the net proceeds being distributed equally, the point is that low fossil fuel users will benefit more than they lose in higher fuel prices. Hence the contribution a global Cap and Share or Cap and Dividend scheme would make towards reducing inequality.

This is the simplest way to make sure the necessary reductions in global fossil fuel emissions are achieved because there are far fewer suppliers than users. An upstream cap involves issuing permits to far fewer licensees than a scheme, such as the European Trading System, controlling various classes of user further downstream. The reason it is also the most certain way to make sure that the required reductions in emissions are achieved is that it impacts directly on total global supply and hence automatically on total global emissions. Unlike a carbon tax, it does not depend on volatile market forces to achieve the reduction in emissions called for by climate science, though because it will increase the price of fossil fuels it should be equally effective in incentivising change towards a zero-carbon economy.

The body administering a global scheme would invite all nation-state governments to play their part in policing the scheme by passing laws or making regulations banning the introduction of fossil fuels into their respective jurisdictions without a permit issued by the global body and enforcing these by giving the necessary instructions to their customs or other officials.

The paper mentioned above advocated an upstream cap system for the European Union Trading Scheme but the authors went on to point out that there would be several advantages in a global upstream cap system. This is what they wrote:

“There would be several advantages in such a global system, in addition to those already mentioned. With controls applied at the level of coal mines, oil wells and gas wells, there would be no need for legally binding national targets for reductions in emissions. And the problem of how to account for the fossil carbon that is embedded in imported products, sometimes called the problem of import emissions, would be effortlessly solved.

More importantly, elimination of legally binding national targets would do away with all the beggar-thy-neighbour complexity and horse-trading of international negotiations over what those targets should be. And it would also do away with the difficulties of putting whole countries in the dock and enforcing penalties if they fail to meet their targets. In general, it is very much easier to ensure that the operators of coal mines, oil wells and gas wells play by the rules. Of course, there would still be a place for national initiatives for cutting emissions, but without confrontations.

With controls on fossil carbon applied at source, there would be no need for special arrangements for two important and fast growing emissions sectors: international aviation and shipping. The operators of planes and ships would simply buy their permit-paid fuel in the normal way, with a suitable uplift for aviation fuel to account for the additional impacts of non-carbon emissions – like high altitude steam and nitrous oxide from jet engines.

Overall, an upstream system would give us greater simplicity and lower costs in administration, fewer anomalies, a smoother path for negotiations, and fewer opportunities for fraud. There would be much more effective control over emissions, driving innovation and the development of an efficient low carbon economy in Europe and the rest of the world.”

Assuming the body administering the scheme is required by its constitution to announce its emissions reduction plans well in advance, even decades ahead, such a scheme should be attractive to both governments and industry including the fossil fuel industry, and including those who want to see the role of governments reduced and global market forces allowed maximum scope within a global carbon budget independently approved and based on climate science. Governments are relieved from the obligation to reduce the emissions of their firms and consumers. Firms and consumers can spend their money how they chose.

Oliver Tickell advocated a global upstream carbon cap system in his book Kyoto2 published in 2008. Also in 2008 Peter Barnes and others proposed a global upstream cap system administered by an Earth Atmospheric Trust. Most recently Mutsuyoshi Nishimura, a retired ambassador of Japan in the UN Climate Change Negotiations, has taken up the same cause. As he has written:

“The upstream global market solution is compatible with individual requirements of different national circumstances. Because the solution is price-driven and not volume-driven, it imposes no volume-wise emissions constraints upon governments and firms. The uniform carbon price does not alter existing competitive relationship among different industries and sectors both in national and international contexts, and it encourages all firms that wish to excel in global competition on the basis of their comparative advantages.”

The three upstream cap proposals referred to above envisaged the system being created within the UNFCCC system and administered by, for example, a coalition of central banks (Kyoto2), a new institution established for the purpose by governments within the UN system (Earth Atmospheric Trust) or, in Mutsuyoshi Nishimura’s scheme, by ‘the assembly of governments’. Peter Barnes sees that the trust he proposed would need to be independent but it was nevertheless assumed that it would need to be established by governments. The sad but significant fact is that none of those proposals has been taken up in the international negotiations.

The Feasta scheme was discussed by the Feasta Climate Change Group at their annual weekend in 2008 held in Totnes. It was pointed out that the current system of global governance by nation-state governments is the product of history and could be adapted to meet the needs of today’s world.

It was also pointed out that the necessary independent global institution required to run a global Cap and Share or Cap and Dividend scheme could be established by ordinary citizens and thereafter accepted by governments. The idea that an international institution could arise from a citizen’s initiative is not new. There is the inspiring example of Henri Dunant whose actions, after he had seen 40,000 soldiers left dead or dying on the battlefield at Solferino in 1859, led to the formation of the International Committee of the Red Cross. A parallel initiative today is the current project to create an International Court for the Environment. Other examples of environmental governance beyond the state include the Forest Stewardship Council.


The CapGlobalCarbon concept takes shape

The small group of Feasta members working on launching this project envisage that the necessary new independent global institution, which we are calling a Global Climate Commons Trust, would be set up independently. We believe that this is in practise the only way such a body could ever be established; and that it is also probably the only way to make sure that this body is indeed independent.

The Trust could be established, for example, by a group of institutions and individuals. If established, for example, in England or Ireland, it could be constituted as a trust for public purposes. It would be a legal entity competent to develop relations with nation-state governments and the fossil fuel industry.

Under its constitution, the Trust would be charged with acting on behalf of humanity as a whole, including future generations, or perhaps the wider group of all living species or all life on Earth. It would be subject to the appropriate regulatory and court system of the country in which it is based. The law requires trustees to act with undivided loyalty to the purposes of the trust and they must act transparently. Obligations written into the constitution of the Trust to ensure transparency and accountability would be enforceable in courts of law.

The Trust would invite all nation-state governments to play their part in administering the global scheme, in effect to police the scheme within their respective jurisdictions, by passing laws or making regulations banning the introduction of fossil fuels into their respective jurisdictions without a permit issued by the Trust and enforcing these by giving the necessary instructions to their customs or other officials.

It is that concept, an initiative by global civil society to establish a new global institution to administer a global Cap & Share or Cap and Dividend scheme, that we are calling CapGlobalCarbon.


Recent developments

CapGlobalCarbon is almost identical to the proposals in Feasta’s publication Cap & Share – a fair way to cut greenhouse emissions published in May 2008. There are three important differences. The first two are differences in the situation. The third is a difference in what we are proposing.

The situation is different in two major ways. First, the science is both stronger, more solidly founded and more certain, than it was seven years ago. It is also telling us an even more serious story than it was then: the situation, according to the scientists, is yet more grave now than was expected then, due partly to our failure to cut back on fossil fuel emissions and partly to positive feedback systems in the climate system having resulted in warming faster than had been generally expected.

The second big difference in the situation that favourably affects the prospects of CapGlobalCarbon being accepted is that it is now widely recognised that, as Peadar Kirby has written, “We are now into the endgame for humanity”. There has been a sea-change in mainstream responses to climate change: there is now far more talk in international circles of the seriousness of climate change and the need for a transition to a zero-carbon economy. Cap&Share may have been an idea ahead of its time. Now its time has come.

The difference in what we are proposing is that we are now characterising CapGlobalCarbon, not as alternative to international negotiations under the UNFCCC or as something that could be organised within the UNFCCC, but as a safeguard against the possibility (to put it no higher) of the failure of the negotiations to achieve the net aggregate global reductions of carbon emissions required by climate science. There is no need to reform the UNFCCC system. We are proposing an addition to, rather than an amendment of, the existing framework.

Part II looks more closely at some central issues, how CapGlobalCarbon would relate to the UNFCCC, how it would relate to nation-state governments and how it would relate to business.


CapGlobalCarbon is a proposal by members of the Irish think-tank Feasta, the foundation for the economics of sustainability.  Implementation will require a new organisation with large resources and influential champions as well as widespread support. Will anyone interested in contributing in any way please contact us.

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