Transcript The Citizen`s Guide to Carbon Capping

The Citizen’s Guide
to Carbon Capping
What you can do to
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climate change
The Citizen’s Guide
to Carbon Capping
What you can do to
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climate change
The Citizen’s Guide
to Carbon Capping
What you can do to
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climate change
“To stabilize the earth’s climate, global emissions
would need to peak in the next 10 years and then
fall at more than 5% a year, reaching 70% below
current levels by 2050.”
— Sir Nicholas Stern
Former chief economist, World Bank
I. What is carbon capping?
What is carbon capping?
• Carbon capping is a market-based way for states
to combat climate change.
What is carbon capping?
• Carbon capping is a market-based way for states
to combat climate change.
• The state ‘caps’ total CO emissions and issues
that number of emission permits annually.
2
What is carbon capping?
• Carbon capping is a market-based way for states
to combat climate change.
• The state ‘caps’ total CO emissions and issues
that number of emission permits annually.
2
• The number declines from year to year until a
safe level of emissions is reached.
What is carbon capping?
• Carbon capping is a market-based way for states
to combat climate change.
• The state ‘caps’ total CO emissions and issues
that number of emission permits annually.
2
• The number declines from year to year until a
safe level of emissions is reached.
• Companies must acquire permits in order to emit
CO or bring carbon into the state.
2
What is carbon capping?
• Carbon capping is a market-based way for a
state to combat climate change.
• The state ‘caps’ total CO emissions and issues
that number of emission permits annually.
2
• The number declines from year to year until a
safe level of emissions is reached.
• Companies must acquire permits in order to emit
CO or bring carbon into the state.
2
• Companies can buy and sell permits.
Why carbon capping is
better than carbon taxing
• Assures predictable, deep, long-term emission reductions
Why carbon capping is
better than carbon taxing
• Assures predictable, deep, long-term emission reductions
• Gets politicians off the hook for higher energy prices
(market, not government, sets prices)
Why carbon capping is
better than carbon taxing
• Assures predictable, deep, long-term emission reductions
• Gets politicians off the hook for higher energy prices
(market, not government, sets prices)
• If done right, protects household purchasing power
Five things you should know
about carbon capping:
• Carbon capping is a form of rationing
Five things you should know
about carbon capping:
• Carbon capping is a form of rationing
• Capping carbon creates economic value
Five things you should know
about carbon capping:
• Carbon capping is a form of rationing
• Capping carbon creates economic value
• After carbon is capped, there are 3 ways
to create a carbon market
Five things you should know
about carbon capping:
• Carbon capping is a form of rationing
• Capping carbon creates economic value
• After carbon is capped, there are 3 ways
to create a carbon market
• Carbon in = carbon out
Five things you should know
about carbon capping:
• Carbon capping is a form of rationing
• Capping carbon creates economic value
• After carbon is capped, there are 3 ways
to create a carbon market
• Carbon in = carbon out
• The sky belongs to all of us
Carbon capping is a form of rationing.
• Everyone must use less, or
buy someone else’s share
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World War II
Carbon capping is a form of rationing.
• War-time rationing was
temporary
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World War II
Carbon capping is a form of rationing.
Do with less –
so they’ll have
a planet!
• Because of global warming,
carbon rationing must be
permanent
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RATIONING
GIVES
YOU
World
War
II YOUR
FAIR SHARE
Carbon capping is a form of rationing.
A permanent rationing system must be
• Fair
Carbon capping is a form of rationing.
A permanent rationing system must be
• Fair
• Transparent
Carbon capping is a form of rationing.
A permanent rationing system must be
• Fair
• Transparent
• Simple to administer
Carbon capping is a form of rationing.
A permanent rationing system must be
• Fair
• Transparent
• Simple to administer
• Durable
Carbon capping creates economic value.
Carbon capping creates economic value.
• Without a cap, the value of carbon = 0.
$
Carbon capping creates economic value.
• Without a cap, the value of carbon = 0.
• With a cap, the value of carbon > 0.
S
Carbon capping creates economic value.
• Without a cap, the value of carbon = 0.
• With a cap, the value of carbon > 0.
• Because of the law of scarcity, as the supply of
carbon permits decreases, their economic value
rises.
Less pollution = greater value.
S
S
Carbon capping creates economic value.
• Without a cap, the value of carbon = 0.
• With a cap, the value of carbon > 0.
• Because of the law of scarcity, as the supply of
carbon permits decreases, their economic value
rises.
• When valuable new property rights are created,
who gets those rights is a political issue.
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Carbon in = carbon out
Carbon in = carbon out
Think of a garden sprinkler.
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Carbon in = carbon out
Think of a garden sprinkler.
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Water in
=
water out
Carbon in = carbon out
If you want to save water, what do you do?
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Water in
=
water out
Carbon in = carbon out
If you want to save water, what do you do?
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Water in
=
water out
Carbon in = carbon out
Now consider how carbon flows through your state.
into sky
pipeline
tanker
well
or mine
Carbon in = carbon out
If you want to reduce carbon flow, what do you do?
into sky
pipeline
tanker
well
or mine
Carbon in = carbon out
If you want to reduce carbon flow, what do you do?
into sky
pipeline
tanker
well
or mine
Once carbon is capped, there are
3 ways to start a carbon market:
Once carbon is capped, there are
3 ways to start a carbon market:
• Polluter grandfathering
Once carbon is capped, there are
3 ways to start a carbon market:
• Polluter grandfathering
• State auctioning
Once carbon is capped, there are
3 ways to start a carbon market:
• Polluter grandfathering
• State auctioning
• Distributing shares to residents
Polluter grandfathering
• Emission permits are given free to historic polluters
Polluter grandfathering
• Emission permits are given free to historic polluters
• The more a corporation polluted in the past, the more
free permits it gets year after year
Polluter grandfathering
• Emission permits are given free to historic polluters
• The more a corporation polluted in the past, the more
free permits it gets year after year
• The receiving corporations can sell their permits or raise
their prices to capture the value of the permits
Polluter grandfathering
• Emission permits are given free to historic polluters
• The more a corporation polluted in the past, the more
free permits it gets year after year
• The receiving corporations can sell their permits or raise
their prices to capture the value of the permits
• Result: windfall profits for historic polluters
State auctioning
• Instead of giving away valuable permits for free, the state
auctions them for whatever the market will bear
State auctioning
• Instead of giving away valuable permits for free, the state
auctions them for whatever the market will bear
• The state uses the auction revenue for:
- Rebates to consumers
– Investment in new energy infrastructure
– Other public goods
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Distributing carbon shares to residents
• The state distributes one carbon share to each resident
Distributing carbon shares to residents
• The state distributes one carbon share to each resident
• Residents can
- Redeem their share at any bank for cash
– Hold on to their share for future redemption
– Retire their share from the market forever
Distributing carbon shares to residents
• The state distributes one carbon share to each resident
• Residents can
- Redeem their share at any bank for cash
– Hold on to their share for future redemption
– Retire their share from the market forever
• Banks sell shares to carbon emitters or importers.*
* A carbon importer is any entity that brings carbon into the state.
The sky belongs to all of us.
The sky belongs to all of us.
• The earth’s atmosphere is a gift of creation
The sky belongs to all of us.
• The earth’s atmosphere is a gift of creation
• The atmosphere performs many valuable services:
• waste absorption
• climate regulation
• fresh water replenishment
• UV protection
The sky belongs to all of us.
• The earth’s atmosphere is a gift of creation
• The atmosphere performs many valuable services:
• waste absorption
• climate regulation
• fresh water replenishment
• UV protection
• If anything is a commons, it is the atmosphere
(we all breathe the same air)
The sky belongs to all of us.
• The earth’s atmosphere is a gift of creation
• The atmosphere performs many valuable services:
• waste absorption
• climate regulation
• fresh water replenishment
• UV protection
• If anything is a commons, it is the atmosphere
(we all breathe the same air)
• If the atmosphere has economic value, that value
belongs to everyone.
II. After carbon is capped, what then?
After carbon is capped, what then?
Polluter
Grandfathering
State
Auction
Which way is best?
Distribute
Shares
Polluter Grandfathering
• There is no public benefit from polluter grandfathering.
Polluter Grandfathering
• There is no public benefit from polluter grandfathering.
• The economic value of the atmosphere is entirely captured
by shareholders of polluting corporations.
Polluter Grandfathering
• There is no public benefit from polluter grandfathering.
• The economic value of the atmosphere is entirely captured by
shareholders of polluting corporations.
• Polluters’ windfalls would be so large (and they’d rise as the
cap declines) that public support for carbon rationing would
collapse.
State Auctioning
• The government auctions oil rights. Why shouldn’t it auction sky rights?
State Auctioning
• The government auctions oil rights. Why shouldn’t it auction sky rights?
• Auctioning avoids windfalls for polluters.
State Auctioning
• The government auctions oil rights. Why shouldn’t it auction sky rights?
• Auctioning avoids windfalls for polluters.
• Auctioning avoids lobbying for preferential treatment.
Every carbon emitter is treated equally.
State Auctioning
• The government auctions oil rights. Why shouldn’t it auction sky rights?
• Auctioning avoids windfalls for polluters.
• Auctioning avoids lobbying for preferential treatment.
Every carbon emitter is treated equally.
• With auction revenue, the state can invest in new energy infrastructure.
State Auctioning
• The government auctions oil rights. Why shouldn’t it auction sky rights?
• Auctioning avoids windfalls for polluters.
• Auctioning avoids lobbying for preferential treatment.
Every carbon emitter is treated equally.
• With auction revenue, the state can invest in new energy infrastructure.
• With auction revenue, the state can return money to consumers
(who will pay higher energy prices).
Distributing Carbon Shares
• Government is a creation of the people. The people’s right to
the sky therefore precedes the government’s.
Distributing Carbon Shares
• Government is a creation of the people. The people’s right to
the sky therefore precedes the government’s.
• By redeeming carbon shares for cash, households can offset
higher energy prices. This protects the state’s economy
against a loss of purchasing power.
Distributing Carbon Shares
• Government is a creation of the people. The people’s right to
sky therefore precedes the government’s.
the
• By redeeming carbon shares for cash, households can offset
higher
energy prices. This protects the state’s economy
against a loss
of purchasing power.
• Carbon conservers come out ahead, while carbon guzzlers pay more.
Good behavior is thereby rewarded.
Distributing Carbon Shares
• Government is a creation of the people. The people’s right to
sky therefore precedes the government’s.
• By redeeming carbon shares for cash, households can offset
higher energy prices. This protects the state’s economy
a loss of purchasing power.
the
against
• Carbon conservers come out ahead, while carbon guzzlers pay more.
Good behavior is thereby rewarded.
• Because carbon shares will rise in value as the cap declines,
rationing will be politically sustainable.
carbon
Distributing Carbon Shares
• Government is a creation of the people. The people’s right to
sky therefore precedes the government’s.
the
• By redeeming carbon shares for cash, households can offset higher
energy prices. This protects the state’s economy
against a loss
of purchasing power.
• Carbon conservers come out ahead, while carbon guzzlers pay more.
Good behavior is thereby rewarded.
• Because carbon shares will rise in value as the cap declines,
rationing will be politically sustainable.
carbon
• Residents can retire shares from the market, speeding the reduction
of CO2 emissions.
III. Lessons from Europe
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Lessons from Europe
To meet its Kyoto Protocol commitments,
the European Union capped carbon emissions
and set up an emission trading system.
BUT…
The European emission trading system:
• Grandfathered permits to polluters
The European emission trading system:
• Grandfathered permits to polluters
• Covers less than half the carbon in the economy
The European emission trading system:
• Grandfathered permits to polluters
• Covers less than half the carbon in the economy
• Does nothing to protect consumers
The European emission trading system:
• Grandfathered permits to polluters
• Covers less than half the carbon in the economy
• Does nothing to protect consumers
• Has high administrative costs
The European emission trading system:
• Grandfathered permits to polluters
• Covers less than half the carbon in the economy
• Does nothing to protect consumers
• Has high administrative costs
• And caps that are too high
For German Fi rms,
New Emissions Caps
Roil La ndscape
_______
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To Pre pare for Kyoto Protocol,
Gas Bill
EU Embarks on Road Test;
Indust ry Responds Slowly
____
The Price of Electricity Jumps
____
profits of RWE and other utilities, because they have been able to raise electricity rates to more than cover the new
costs. Manufacturers that use a l ot of
juice are fuming. “T he utilities get a
huge amount of win dfall profits, and
the energy users get windfall costs,” complains Markus Weber, a manager responCar bonat dioxide
sible for CO 2-allowance trading
steel- also is padd ing the
maker Thyssen Krup p AG.
Germany’s experience with Eu rope’s
new emissio n constraints holds im portant lessons for countries that want to
curb emissions of CO 2, a produ ct of fossil
fuel comb ustion that contributes to global warming. In Germany, the caps are
starting to
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‘The uti lities get windfall profits,
energy users get windfall costs.’
—Wall StreetJournal,9/11/06
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£1bn windfall from carbon trading
Roger Harrabin
BBC News environment correspondent
Power firms could make a £1bn windfall profit from the
EU Carbon Emissions Trading Scheme
The windfall is likely because many firms have benefited from increases in electricity prices
brought about by the scheme without needing to make any extra investment in return.
Conservative environment spokesman Peter Ainsworth said:
"The problem will not be sorted out until the market is made to work
properly by forcing firms to bid for their permits instead of being
allowed to lobby government for them free of charge.”
IV. California Carbon Share
A carbon capping system that’s
fair, simple and durable
How It Would Work
• Air Resources Board sets long-term carbon budget
How It Would Work
• Air Resources Board sets long-term carbon budget
• Each year, it issues budgeted number of carbon shares
to state residents over 18
How It Would Work
• Air Resources Board sets long-term carbon budget
• Each year, it issues budgeted number of carbon shares to
state residents over 18
• Residents take shares to banks and receive cash
How It Would Work
• Air Resources Board sets long-term carbon budget
• Each year, it issues budgeted number of carbon shares to
state residents over 18
• Residents take shares to banks and receive cash
• Banks sell shares in carbon market
How It Would Work
• Air Resources Board sets long-term carbon budget
• Each year, it issues budgeted number of carbon shares to
state residents over 18
• Residents take shares to banks and receive cash
• Banks sell shares in carbon market
• Carbon importers purchase shares to cover their imports
How It Would Work
• Air Resources Board sets long-term carbon budget
• Each year, it issues budgeted number of carbon shares to
state residents over 18
• Residents take shares to banks and receive cash
• Banks sell shares in carbon market
• Carbon importers purchase shares to cover their imports
• Climate Registry verifies importers’ reports
Advantages
• Covers all carbon entering the state
Advantages
• Covers all carbon entering the state
• Offsets higher energy prices residents will pay
Advantages
• Covers all carbon entering the state
• Offsets higher energy prices residents will pay
• Avoids windfall profits to polluters
Advantages
• Covers all carbon entering the state
• Offsets higher energy prices residents will pay
• Avoids windfall profits to polluters
• Market-based and simple to administer
Advantages
• Covers all carbon entering the state
• Offsets higher energy prices residents will pay
• Avoids windfall profits to polluters
• Market-based and simple to administer
• Makes it politically possible to reduce carbon emissions to
the level required for climate stability
Advantages
• Covers all carbon entering the state
• Offsets higher energy prices residents will pay
• Avoids windfall profits to polluters
• Market-based and simple to administer
• Makes it politically possible to reduce carbon emissions to
the level required for climate stability
• Allows residents to donate shares to non-profits that
retire them permanently
Frequently asked question
Can the state distribute less than 100% of the shares
to residents?
Frequently asked question
Can the state distribute less than 100% of the shares
to residents?
Yes.
The state may withhold a portion of the shares and
auction them directly into the carbon market,
using the revenue for clean energy, mass transit,
bike paths and other public goods.
For more information
•
•
•
•
•
•
CALIFORNIA
NEW YORK
MASSACHUSETTS
MINNESOTA
OREGON
VERMONT
www.carbonshare.ca.org
www.carbonshare.ny.org
www.carbonshare.ma.org
www.carbonshare.mn.org
www.carbonshare.or.org
www.carbonshare.vt.org
Stopping climate change one state at a time.
Sites listed do not exist.