Cap and Trade Vs. Carbon Tax as False Choices

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* Interest Rates and Climate Change: Realigning our Incentives through the Power of the Commons. By James Bernard Quilligan. Kosmos Journal, FALL | WINTER 2010



"During the past several decades, humanity has emerged as a perilous force of nature. Through its technological, economic and political choices and activities, modern civilization has produced destructive economies of scale, powered by exponential growth and fossil fuels. Our consumption of vital resources is already exceeding the carrying capacity of the planet. By 2030, as world population increases to 8 billion, we will witness dramatic new increases in global demand for food, water, land and energy and the right to release greenhouse gases through industry, transportation and deforestation. From our petrol-guzzling urban economies to our tree-burning subsistence economies, world society is rapidly changing the physical, chemical and biological systems of Earth, creating widespread pollution and global heating. The science of climate change is daunting, but the facts are clear. “If humanity wishes to preserve a planet similar to that on which civilization developed and to which life on Earth is adapted,” says James Hansen of NASA, “paleoclimate evidence and ongoing climate change suggest that CO2 will need to be reduced from its current 385 ppm to at most 350 ppm.” To make this radical adjustment, the world must decrease global emissions significantly over the next 5–20 years to limit temperature increases to 2°C (3.6°F). An increase above that would lead to a cascade of disasters.

Although global heating is the result of both natural and human causes, it is the human sources that are critical since they are largely preventable. Anthropogenic climate change poses a classic tragedy of the commons: without restraints on the use of the atmosphere, civilization captures the benefits of industrial emissions while the producers and consumers of oil, coal and natural gas use the sky commons as an open sewer. Every day, industry disposes 90 million tons of waste products into our shared atmosphere at no cost. This is an enormous collective action problem. Yet the world has a long and varied experience in meeting similar challenges of smaller scale. Many local communities collaborate in sharing the burden of resource protection. Whether their commons are traditional (rivers, forests, indigenous culture) or emerging (energy, intellectual property, internet), people are successfully managing these common resources. But the failure of the 2009 Intergovernmental Panel on Climate Change (IPCC) discussions underscores the need for a global framework that allocates the use of the atmosphere and introduces incentives necessary to sustain our natural life support systems. In searching for answers, society is trapped in a false dichotomy: we believe that only markets and governments are capable of providing solutions for climate change, even though these institutions were never designed to internalize the costs of negative externalities like carbon emissions." (