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Cap and Share was originally developed by Feasta (the Foundation for the Economics of Sustainability). It is a regulatory and economic framework for controlling the use of fossil fuels in relation to climate stabilisation. Convinced that climate change is a global problem and that there is a need to cap and reduce
greenhouse gas emissions Greenhouse gas emissions from human activities strengthen the greenhouse effect, contributing to climate change. Most is carbon dioxide from burning fossil fuels: coal, oil, and natural gas. The largest emitters include coal in China and lar ...
globally, the philosophy of Cap and Share maintains that the earth’s atmosphere is a fundamental common resource. Consequently, it is argued, each individual should get an equal share of the benefits from the limited amount of fossil fuels that will have to be burned and their emissions released into the atmosphere in the period until the atmospheric concentration of greenhouse gases has been stabilised at a safe level.


Design

This market based mechanism was devised by Feasta in 2005 and 2006, and they have set out the case for the introduction of Cap and Share globally in policy documents.The Foundation for the Economics of Sustainability, 2008
Cap and Share: A Fair Way to Cut Greenhouse Gas Emissions
Feasta, Dublin.
It calls for global emissions to be capped at their current level and then brought down year by year at a rate fast enough to prevent catastrophic climate change. Each year, the emissions tonnage involved would be shared equally among the Earth's adult population, each of whom would receive a certificate representing their individual entitlement. The recipients would then sell their certificates through the banking system to oil, coal and gas producers who would need to acquire enough of them to cover the carbon dioxide emissions that would be emitted from all of the fossil fuel they sold. Everyone would receive at least partial compensation for the higher cost of fossil fuels that limiting their availability would necessarily involve. Comhar, the National Sustainable Development Council of Ireland, commissioned a report on the mechanism which incorporates policyAEA Energy and Environment, 2008
Cap and Share: Phase 1; Policy Options for Reducing Greenhouse Gas Emissions.
Report to Comhar Sustainable Development Council. AEA, Didcot.
and economic analysis of using Cap and Share to control emissions in Ireland, particularly from the transport sector. The final reportAEA Energy and Environment and Cambridge Econometrics, 2008
A Study in Personal Carbon Allocation: Cap and Share
Comhar Sustainable Development Council, Dublin.
was published in December 2008. Cap and Share is partly an extension and popularisation of the
Contraction and Convergence Contraction and Convergence (C&C) is a proposed global framework for reducing greenhouse gas emissions to combat climate change. Conceived by the Global Commons Institute CIin the early 1990s, the Contraction and Convergence strategy consists of ...
proposal developed by the Global Commons Institute, which also calls for an equal per capita distribution of emissions. Cap and Share differs in that it insists that emissions allocations should be distributed equally to individuals as their right, whereas Contraction and Convergence (C&C) allows governments to decide if this is the way they wish to share out what is, essentially, their national allocation. C&C also allows for (but does not insist on) a convergence period, during which the richer countries would receive higher per capita emissions allowances than poorer countries. Cap and Share says people in rich countries should get the same emissions entitlement as those in poor countries from the start, but suggests that in the early years of the system, a portion of everyone's emissions entitlement should be held back and distributed to governments of countries which were facing exceptional difficulties in adapting to climate change or to low levels of fossil energy use. The governments involved would sell their certificates to raise money for remedial works. For example, the government of Bangladesh might sell its allocation to pay for better defenses against rising sea levels. If the cap is too high, then the permits lose their value; if it is too low, the price of energy can rise past the point that is accepted.


Principles

# That a ceiling or cap on carbon dioxide and other green house gas (GHG) emissions from fossil fuels should be calculated that prevents an average global temperature rise of over 2 degrees Celsius. # That the right to emit such GHGs is a human right, and should be shared on an equal-per-capita basis, with permits going to each individual rather than to their governments. # That the permits would be salable through the post office and banking system to the importers and producers of fossil fuels who would need to acquire enough permits to cover the emissions from the fuels they introduce. # That any national or European Union scheme should be designed as a possible prototype for a global system that will also help set the conditions for the alleviation of poverty and the maintenance of biodiversity.


Economic assessment

If the future were known with certainty, then the economic implications of Cap and Share would equal the economic implications of a carbon tax with lump sum recycling—that is, the carbon tax revenue would be used to send every household a cheque in the post. Some argue that lump sum recycling is an inferior way to recycle the revenue of environmental taxes, and that this has been repeatedly confirmed for Ireland. The rationale is that with the carbon tax revenue coming into government coffers, it could be directly spent by the government rather than distributed to the population via cheques, and that other kinds of taxation, such as labour taxation, could be decreased correspondingly. It is argued that this would have a positive effect on GDP since there would be a greater incentive for firms to increase employment, and that it would also positively affect social equity, since labour taxes are regressive by nature. The NGO that developed Cap and Share, Feasta, argues that while it is definitely a good idea to shift the tax burden away from labour and towards capital, a carbon tax is not the optimal instrument for this purpose. Carbon taxes do not establish a predictable level of emissions cuts, unlike a cap, and can be vulnerable to short-term political pressures such as an increase in the price of oil, since a country's tax policy is usually adjusted each year in the annual Budget. Feasta suggests that if a carbon tax were to be introduced, it would work best in tandem with Cap and Share. The two policies could be used to help countries fine-tune their responses to climate change and
Peak Oil Peak oil is the hypothetical point in time when the maximum rate of global oil production is reached, after which it is argued that production will begin an irreversible decline. It is related to the distinct concept of oil depletion; while ...
. Feasta also advocates the introduction of a land-value-based tax, which they believe could be used as a substitute for taxation on labour and could therefore have a similar effect on the market to a carbon tax. As the future is not known with certainty, some argue that cap and share has all the drawbacks of quantity-based regulation for a stock pollutant. In the case of greenhouse gas emissions, the argument goes, price-based regulation (incl. a carbon tax with lump-sum recycling) is more robust to uncertainty and leads to lower welfare losses. Again, however, Cap and Share advocates argue that the problem of assuring that specific emissions targets are reached is not properly addressed by using a purely price-based mechanism for emissions reduction. From their perspective, a definite, substantial decrease in greenhouse gas emissions, carried out in an equitable way so that the poor are not adversely affected, is well worth a possible decrease in "welfare" as measured by GDP (a highly problematic instrument for measuring wellbeing).


Cap and Share and Renewable Energy

The policy options that are most likely to impact the electricity sector are economic policies focused on mitigating the threat of climate change. These options could include a cap and share program,
carbon tax A carbon tax is a tax levied on the carbon emissions required to produce goods and services. Carbon taxes are intended to make visible the "hidden" social costs of carbon emissions, which are otherwise felt only in indirect ways like more sev ...
, or
subsidies A subsidy or government incentive is a form of financial aid or support extended to an economic sector (business, or individual) generally with the aim of promoting economic and social policy. Although commonly extended from the government, the ter ...
.
Nuclear Nuclear may refer to: Physics Relating to the nucleus of the atom: * Nuclear engineering *Nuclear physics *Nuclear power *Nuclear reactor *Nuclear weapon *Nuclear medicine *Radiation therapy *Nuclear warfare Mathematics *Nuclear space *Nuclear ...
, solar,
wind Wind is the natural movement of air or other gases relative to a planet's surface. Winds occur on a range of scales, from thunderstorm flows lasting tens of minutes, to local breezes generated by heating of land surfaces and lasting a few hou ...
, and
hydroelectric Hydroelectricity, or hydroelectric power, is electricity generated from hydropower (water power). Hydropower supplies one sixth of the world's electricity, almost 4500 TWh in 2020, which is more than all other renewable sources combined and ...
power industries are all likely to become more attractive options if governments implemented economic consequences on utilizing fuel sources that expel carbon dioxide. To support innovation in renewable energy sectors, and nuclear power specifically, the process of development must be economically viable enough for countries to support the adoption of renewable energy for the long term.


See also

*
Cap and dividend Cap and dividend is a market-based trading system which retains the original capping method of cap and trade, but also includes compensation for energy consumers. This compensation is to offset the cost of products produced by companies that rais ...
*
Carbon tax A carbon tax is a tax levied on the carbon emissions required to produce goods and services. Carbon taxes are intended to make visible the "hidden" social costs of carbon emissions, which are otherwise felt only in indirect ways like more sev ...
*
Economics of global warming The economics of climate change concerns the economic aspects of climate change; this can inform policies that governments might consider in response. A number of factors make this and the politics of climate change a difficult problem: it is a l ...
*
Emissions Reduction Currency System Emissions Reduction Currency Systems (ERCS) are schemes that provide a positive economic and or social reward for reductions in greenhouse gas emissions, either through distribution or redistribution of national currency or through the publishing ...
*
Emissions trading Emissions trading is a market-based approach to controlling pollution by providing economic incentives for reducing the emissions of pollutants. The concept is also known as cap and trade (CAT) or emissions trading scheme (ETS). Carbon emission t ...
*
Georgism Georgism, also called in modern times Geoism, and known historically as the single tax movement, is an economic ideology holding that, although people should own the value they produce themselves, the economic rent derived from land—including ...
*
Greenhouse Development Rights Greenhouse Development Rights (GDRs) is a justice-based effort-sharing framework designed to show how the costs of rapid climate stabilization can be shared fairly, among all countries. More precisely, GDRs seeks to transparently calculate nationa ...
*
Personal carbon trading Carbon rationing, as a means of reducing CO2 emissions to contain climate change, could take any of several forms. One of them, personal carbon trading, is the generic term for a number of proposed emissions trading schemes under which emissions ...
, an alternative approach to allocating emissions rights directly to individuals *
Pigovian tax A Pigouvian tax (also spelled Pigovian tax) is a tax on any market activity that generates negative externalities (i.e., external costs incurred by the producer that are not included in the market price). The tax is normally set by the government ...


References


External links


The Climate Cooperation wiki

Cap and Share
website
Feasta
(The Foundation for the Economics of Sustainability)
nef
(the new economics foundation)
The Global Commons Institute
{{DEFAULTSORT:Cap And Share Emissions trading Climate change policy Irish inventions