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Jan
13

The Tierra Fee and Dividend System and Carbon Trading

Post By gaia1 in Tierra Currency

 

The January 9 blog post has been significantly improved after attending a panel discussion on Sunday January 10 and, especially  the reading and studying of Hansen letter of the chairman of the Carbon Trading Summit that is being held today.

 

Though I have abandoned the cap-and-trade approach for some time, had some positive opinion about cap-and-dividend and carbon tax approaches, have been in favor of the "Whole World" view approach of Cap & Share, I now go one step further. I have reanalyzed the Tierra Cap & Share approach with its monetary dimension and have decided to base the Tierra system on a variant of the Hansen fee & dividend. The two major differences, as can be seen below, are its inclusion of the concept of climate justice and its global orientation. So the TCS system is going to be labeled the Tierra Fee & Dividend or TFD system. Thus, the following 12 statements are reflective of this decision.

 

The reformulated position of the International Institute of Monetary Transformation’s tripartite TFD system in respect to the climate crisis and humanity’s pursuit of a sustainable energy future is the following.

 

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 and the pursuit of a sustainable energy future possible. Societies have to be re-powered quickly, formidably and fairly, so that low-carbon living becomes the norm.

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 guilty of past and present  “atmospheric occupation”.

4.      Agreement on capping emissions is politically not possible globally; scientifically determined caps can be used nations to determine the price of a ton of carbon and legislate a schedule of carbon fees accordingly. The Copenhagen Accord of COP 15  “took note” of the need for MRV (monitoring, reporting, verifying) of carbon emissions;  COP 16 in Mexico City is to agree on a range of carbon densities and target dates; on the social and ecological costs of a ton of carbon; and consider the establishment of UN Commission on Monetary Transformation to investigate, among others, the feasibility of a carbon-based international reserve currency; decide to accept the offer of Brazil to host the 2012 Earth Summit.

5.      There is value for the proposed UNEP Technical Review panel to evaluate alternative "Whole World" view approaches which would also include the global fee & dividend approach proposed in the TFD system.

6.      The cap-and-trade carbon reduction methodology and to a lesser extent other capping approaches is fatally flawed, because

a.                   It is fast, formidable and fair. Cf. Dr. Michael Dorsey of Dartmouth College

b.                  It believes that carbon trading plus off-sets can cope with the global climate crisis

c.                   Cap-and-trade does not address itself to all sources of GHG emissions and is not  formidable enough, 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 and scale is too 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 in a volatile carbon market, carbon taxes are set by legislators who use the fiscal system to tax different carbon users, either upstream or downstream.

8.      The cap-and-dividend carbon reduction methodology has advantages over the methodologies in statement 6 and 7, 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.

9.      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

10.  There Fee & Dividend approach to reducing carbon emissions and in the process push the private sector to develop alternative energy technologies does include carbon emissions permits that are issued or auctioned under a carbon cap. It is fee based to upstream users of fossil fuels by having a schedule of prices per ton of CO2 legislated the revenue of which are returned to legal residents. The Fee & Dividend approach does not include a global dimension with its demand for climate justice

11.  The  Tierra Fee & Dividend system adds an international monetary dimension to the  Fee & Dividend system that includes the historical fact of ecological indebtedness of countries in the North.

12.  The Tierra Fee & Dividend System also includes the monetary dimension of carbon-based international reserve currency of the Tierra, which is part of a UN based International Clearing Union as proposed by John Maynard Keynes in 1944 .These  Tierras are monetized carbon emissions permits, that like in a monopoly game, are equally distributed to residents 15 years and older. This “quantative easing” by Tierras becomes 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. In order for the tripartite TFD 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.