Policy Innovations The central address for a fairer globalization

A publication of the Carnegie Council

Equitable Carbon Revenue Distribution under an International Emissions Trading Regime

By Daniel Kammen

Political Economy Research Institute, January 1, 2004

With Nathan Hultman

Abstract: "When people hear about 'global warming' or the Kyoto Protocol, many think of a topic of boundless uncertainty and political controversy. One reason for this reaction is the current U.S. administration's statement that 'Kyoto is dead' and impossible to implement in the United States. As the largest greenhouse polluter in the world, the U.S. is indeed vital to any meaningful attempt to address the certain threat of climate change. Yet climate change will not go away simply because the Bush Administration refuses to sign one particular international accord. Scientists believe with high certainty that the impacts of current greenhouse gas emissions have started but may not be completely felt for 100 years or more. "The long-term nature of the climate problem requires fundamental, long-term changes in how economies produce goods and services, particularly reductions in the amount of fossil-fuel energy they use. One of the most likely policies to encourage this transition is a system of overlapping national and international emissions permits. The Kyoto Protocol would set up such a system, but even if this Protocol fails, the movement toward a global emissions market is likely to continue for several reasons. First, all major polluting countries apart from the U.S. have endorsed the aims and the mechanisms of Kyoto. Second, several countries have already implemented domestic emissions-trading systems like that proposed in Kyoto, and the entire European Union is planning to start one in 2005. Third, many large corporations—including the major European oil companies—have endorsed the mechanisms of the Kyoto Protocol, and some have initiated their own emissions trading systems. Finally, the idea of trading has strong American support—the U.S. lobbied tenaciously for the inclusion of a flexible, market-based structure in the now-controversial Kyoto Protocol."

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