The Citizen’s Guide to Carbon Capping What you can do to climate change

The Citizen’s Guide to Carbon Capping What you can do to climate change

The Citizen’s Guide to Carbon Capping What you can do to 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?

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 2 emissions and issues that number of emission permits annually. What is carbon capping?

Carbon capping is a market-based way for states to combat climate change. The state ‘ caps ’ total CO 2 emissions and issues that number of emission permits annually. 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 2 emissions and issues that number of emission permits annually. The number declines from year to year until a safe level of emissions is reached. Companies must acquire permits in order to emit CO 2 or bring carbon into the state. What is carbon capping?

Carbon capping is a market-based way for a state to combat climate change. The state ‘ caps ’ total CO 2 emissions and issues that number of emission permits annually. The number declines from year to year until a safe level of emissions is reached. Companies must acquire permits in order to emit CO 2 or bring carbon into the state. Companies can buy and sell permits. What is carbon capping?

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 Why carbon capping is better than carbon taxing

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 World War II

Carbon capping is a form of rationing. War-time rationing was temporary World War II

Carbon capping is a form of rationing. Because of global warming, carbon rationing must be permanent World War II RATIONING GIVES YOU YOUR FAIR SHARE Do with less – so they’ll have a planet!

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.

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.

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.

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.

Carbon in = carbon out

Think of a garden sprinkler.

Carbon in = carbon out Think of a garden sprinkler. Water in = water out

Carbon in = carbon out Water in = water out If you want to save water, what do you do?

Carbon in = carbon out Water in = water out If you want to save water, what do you do?

Now consider how carbon flows through your state. Carbon in = carbon out well or mine pipelinetanker into sky

If you want to reduce carbon flow, what do you do? Carbon in = carbon out well or mine pipelinetanker into sky

If you want to reduce carbon flow, what do you do? Carbon in = carbon out well or mine pipelinetanker into sky

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

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 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?

Polluter State Distribute Grandfathering Auction Shares Which way is best? After carbon is capped, what then?

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 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. 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 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. 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, carbon rationing will be politically sustainable.

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. 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, carbon rationing will be politically sustainable. Residents can retire shares from the market, speeding the reduction of CO 2 emissions.

III. Lessons from Europe

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

£ 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

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. Frequently asked question

For more information CALIFORNIAwww.carbonshare.ca.org NEW YORKwww.carbonshare.ny.org MASSACHUSETTSwww.carbonshare.ma.org MINNESOTAwww.carbonshare.mn.org OREGONwww.carbonshare.or.org VERMONTwww.carbonshare.vt.org Stopping climate change one state at a time. Sites listed do not exist.