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Jan
09

TCS system and cap-and-trade

Post By gaia1 in Climate crisis

 

On January 13, 2010 the second carbon trading summit will be held in New York City where utilities, corporations, banks, hedge funds, carbon aggregators and brokers are considering how they can profit of the emissions market that is projected to reach $1 trillion by 2020. It is significant that the three expensive workshops that are offered mostly deal with carbon offsets, the weakest part of US and EU-ETS’s cap-and-trade legislation.

 

At the same time a citizens Climate Justice protest will be held, in preparation of which non-violent training, panel discussions and other sessions are being planned.

 

What is the position of the International Institute of Monetary Transformation and its TCS system in respect to this Summit and to carbon trading in general? The following 12 statements are part of its tripartite carbon reduction approach of the TCS system.

 

1.      The climate crisis being the challenge of the 21st century on account of its present and future disastrous consequences for people, species and planet presents an unparalleled opportunity to transform present international systems that enrich the few, impoverish the many and imperil the planet. A paradigm shift is to take place in thinking and institutional renewal to profit from this unparalleled opportunity.

2.      Climate change being an ecological change has to be reversed ecologically, i.e. this ecological reversal is to take place through the efficient use of renewable energy technologies, the de-carbonization of industry and REDD. New strategies are needed to re-inhabit the Earth to fully make that ecological reversal possible.

3.      Ecological indebtedness of industrialized countries in the North is to be recognized as a historical fact with great ethical import. It was both market and centralized economies in the past that externalized air pollution leading to climate crisis and thus both economic systems are to be blamed by engaged in this “atmospheric occupation”.

4.      Agreement on capping emissions is to be guided by science, not politics. As such the Copenhagen Accord is wholly insufficient, though the MRV (monitoring, reporting, verifying) agreement is valuable as a first step towards a FAB (fair, ambitious and binding) agreement.

5.      There is no efficient solution to the global climate crisis unless a global and "Whole World" view is taken: the pace of a “nation-by-nation” approach does not match the urgency of resolving the climate crisis.

6.      The cap-and-trade carbon reduction methodology is fatally flawed, because

a.       It does not take a "Whole World" view approach

b.      It believes that carbon trading plus off-sets can cope with the global climate crisis (offsets are dealt with in two of the three workshops of the above Summit, one focusing on the international, the other on the US scene.)

c.       Cap-and-trade does not address itself to all sources of GHG emissions, for it addresses itself to those that can measured and commodified. Apart from the dubious ethical issue of commodifying a global commons such as the atmosphere, and the opportunity for gaming in this unregulated carbon market,  it does not address itself to the emissions from land use, destruction of forests, etc. In other words, its scope is quite limited.

d.      The results of the cap-and-trade system in terms of actual reduction of emissions are poor, its greatest drawback.

7.      The carbon tax carbon reduction methodology is a little more acceptable, because, unlike the cap-and-trade which focuses on the price of carbon, carbon taxes are set by legislators who focus on the quantity of emissions themselves. Moreover, this methodology has greater international application than cap-and-trade, but still does not take a "Whole World" view approach

8.       The cap-and-dividend carbon reduction methodology has advantages over the methodologies in statement 8 and 9, because it does not permit offsets and returns the income of the auctions of the carbon emissions permits in a fair way to energy consuming families who have to pay higher energy prices. However, it, as in the Van Hollen legislation, lacks an international focus because it does not start out with a "Whole World" view approach.

9.      There are several "Whole World" view approaches to climate crisis of which global Cap & Share and Kyoto2 are examples. They and others are due to be evaluated by UNEP Technical Review panel in the near future.

10.  The Cap & Share approach is based upon an equal sharing of carbon emissions permits to all adults in a country or region or in the world. The latter, the global Cap & Share, would create ecological debtors in the North and ecological creditors in the South. Various ways are devised to trade those permits that are not needed by an individual with a low carbon footprint.

11.  The Tierra Cap & Share system adds an international monetary dimension to the global Cap & Share approach by having the carbon emissions permits become Tierras, constituting a country’s reserve currency, the amount of which is based upon the number of  residents 15 years and older. These monetized carbon emissions permits would become part of a nation’s carbon account in its balance of payments, thus constituting an institutionalized funding mechanism for mitigation and adaptation measures and development. The system would operate in a similar fashion as the International Clearing Union concept proposed by John Maynard Keynes for the Bretton Woods UN Monetary and Financial Conference of 1944. By introducing this carbon-based international reserve currency which operates like an updated Keynesian Bancor, the international monetary system becomes part of humanity’s battle to drastically and effectively reduce GHG emissions from fossil fuels and land-use by re-powering societies and re-inhabiting the Earth.

12.   In order for the tripartite TCS system to work the public sector has to reclaim the privilege of fractional reserve banking from the privately-owned banking systems, so that the regulation of international financial transactions via the Tierra International Clearing Union becomes possible and transparent. Banks become utilities which would also not engage in securities dealing.