A Call To The U.S. & China For A Carbon Fee-and-Dividend Solution to Climate Change

Sunday, November 29, 2015

The international Climate Change summit starts in Paris within hours.

If things run the way most expect them to, there will be a concentrated effort by all leaders involved to make it look like everybody did something important. Especially since the previous major attempt at the Kyoto accords was such a complete disaster, resulting in greenhouse gas emissions continuing to rise, climate change accelerating faster than almost anyone was predicting, and topped off by October 2015 being the hottest month ever for the entire world.

So what can one expect? Lots of sad looking faces as leaders throughout the conference acknowledge that we as a human race have not done enough. Statements that something more must be done to stop what could be the inevitable downfall of the human race. Agreements that differences between nations must be set aside in order to get something to happen quickly.

There will also be discussions of models like the so-called “German Model”, which on the surface looks good as the country moves to 100% renewable energy on a rapid basis, but which after evaluation has as part of its process government subsidies for renewables, reducing emissions via a cap-and-trade scheme, and exporting production for many items to countries where fossil fuels may be used. Not all countries can afford such subsidies, cap-and-trade is a crazy shell game with questionable real results (with emissions caps but allowing for fuzzy math trading of some hypothetical future carbon reduction in return for allowing high emissions now), and sending your dirty production elsewhere only just moves around where the emissions are happening. The last is also something developing countries have been doing for far too long anyway.

There are some real and positive examples in the form of slight reductions in the U.S. and other countries over the last several years. Italy and the United Kingdom have done much better, with 25% overall reductions in the last 14 years.

But the danger of the Paris meeting is it will end the way all the others have. Lots of posturing, claims of agreement, but little concrete accomplished.

Unfortunately overall emissions have increased by almost 50% in the last 14 years. And with China, at 25% of global emissions as the biggest current greenhouse gas polluter on the planet and growing fast even with the country’s current slowdown, the U.S. at #2 with 15% and declining slightly as a polluter but only slowly, and India at #3 with 7% of global emissions and coming up fast, things are looking bad.

Time is running out and the old ways cannot continue.

The conclusion is clear. As renowned climatologist James Hansen says it well it in his paper published just a few days ago*:

“We must leave most remaining fossil fuels in the ground, or our children and future generations are screwed.”

So what can be done? What Hansen recommends is that there be a carbon fee placed on all fossil fuel products, with the fee rising over time and the “profits” from that fee redistributed back to all legal residents of the countries producing the fees. Duties would be collected at individual country borders as way to ensure compliance and minimize costs of administering the solution.

Would those work? According to Hansen, “Economic studies show that in the U.S. the fee-and-dividend would decrease carbon emissions by 30% in 10 years and more than 50% in 20%, while increasing GNP and creating more than 3 million new jobs”.

That’s great for the U.S., even with politics having at best a very short-term view of things, but what’s the incentive for the rest of the world to go along with this?

With two of the three countries involved in the highest emissions being developing countries, China and India, the initial thought is that maybe it might not work because they need fossil fuels to help drive their economic growth. Adding fees to fuels would just add to costs involved.

A closer look suggests a different view, especially when one takes just a slightly-longer look ahead for each country. The reason is in part because fossil fuels are truly only appear to be cheap to, as Hansen points out, “because they do not incorporate their costs to society, including the effects of air pollution, water pollution, and climate change”.

And if the developing countries do add such a fee-plus-dividend approach in their countries, the benefits to the country include among other things that it creates a specific incentive not to use fossil fuels, it provides a financial incentive to the very poor, and it could minimize the impacts of world climate change in places like China and India, where rising waters and “climate refugees” could become a real and costly reality in the future.

As to what the best way is to get this implemented, Hansen suggests a radical alliance of the U.S. and China working together to agree on the plan, both because they are the number one and number two polluters and because of their combined economic and political clout.

But if that doesn’t work, Hansen suggests, maybe China can do something it has already begun to do worldwide in other areas, with targeted investments, social programs, and more: create a worldwide “coalition of the willing” nations that can rally behind China and agree that the time has come for something dramatic to be done and save humanity for all.

In the end, some might accuse China and the U.S., assuming they agree on the strategy, or China as a leader of the whole process, as playing politics in the matter.

But at this point, it is results that matter. No matter how it happens. Because the future of our children and the planet depend on it.

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