Flexible Carbon Pricing for
Steven E. Stoft
|“Hopes are fading that a strong treaty will emerge from next month’s negotiations in Copenhagen,” according to Nature Geoscience (2009/11). This short book starts from Nature’s critique of the “targets and timetables” approach to international agreement and describes an international policy structure that expands on the ideas of Joseph E. Stiglitz, William D. Nordhaus and James E. Hansen. The design reflects their two key objectives, first, to implement a global price for carbon, and second, to avoid the antagonisms and gaming opportunities engendered by attempts to impose national caps.
Chapter 10 provides a simplified example of an alternative treaty. It considers a global carbon-pricing target of $30/tonne and a Clean Development Incentive based on $2/tonne. The cost to the United States would be 25 cents per capita per day, with one third of that going toward the Green Fund. India would face abatement costs of one cent per capita per day, but Green Fund payments of two cents would more than cover those costs.
(A more recent treatement of these ideas can be found in a short article to be published in March, 2012: Global Climate Games.
Chapter 1. Strategies for Cooperation
Bonnie and Clyde have robbed a bank,
but the prosecutor has little evidence against them. In prison, they are kept
apart. Both know they will get only a one-year sentence for firearms possession
if they remain silent, and they will be given seven-year sentences if they both
confess. They know exactly what would be best for their small world—to
cooperate with each other and remain silent. But they won’t. Instead they will
betray each other and suffer the consequences, because there is one more rule
to this game. ...
|Beyond Kyoto is an updated selection of chapters from Carbonomics focusing on a flexible system of global carbon pricing designed to encourage international cooperation.
Praise for Carbonomics
"Exposes the hidden side of energy policies ... Stoft is a truly subtle and skilled economist ... makes a very important contribution to the solution of the world's most urgent problem."
—George Akerlof, 2001 Nobel Laureate in Economics
"Carbonomics provides a clear and compelling exposition of the key issues in an essential read for policy makers."
—William Hogan, Prof. of Global Energy Policy,
JFK School of Gov., Harvard
"Carbonomics gives us new recipes for policies that jointly cure two plagues: energy insecurity and climate change."
—Jean-Michel Glachant, Prof. of European Energy Policy,
"Insightful and engaging ... A must-read for all policy makers and voters."
—Peter Cramton, Professor of Economics,
University of Maryland
Review in Foreign Affairs
[Carbonomics] offers a clear and cogent argument for why a carbon tax—or, rather, a carbon untax—is likely to be greatly superior to a cap-and-trade system.
—Richard N. Cooper, Harvard University