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would ensure that the prices were equalized across different countries,
and this would lead to equalizing marginal costs of abatement across
countries and to a global minimum cost.
A second approach would be a regime in which countries agree
upon a harmonized minimum carbon price; countries then undertake
to penalize carbon emissions at this minimum price. I describe the sys-
tem in the next section and then compare the two approaches.
A CARBON PRICE REGIME
While the structure of a cap-and-trade system is relatively familiar
to those who have followed climate-change negotiations, the structure
of a carbon price regime is a novel idea and requires some explanation.
The basic idea is that countries would agree on a carbon price rather
than an emissions limitation. The actual implementation would be un-
der the control of individual countries subject to agreed-upon norms of
monitoring, verifi cation, and enforcement.
The fi rst step is to agree upon a target carbon price. There is a sub-
stantial literature on carbon prices that countries could draw upon. For
this discussion, I have chosen a price path that would be consistent
with a temperature limit of 2
1
⁄
2
°C. While other targets might be cho-
sen, this range is suggested by the cost-benefi t analysis in Chapter 18 as
well as more complete integrated assessment models. Look back to Fig-
ure 33 to see the path of carbon prices that were generated from several
economic models under the idealized situation of universal participa-
tion and effi cient implementation. For this discussion, I use as an ex-
ample the midpoint of the estimates in Figure 33, which is $25 per ton
of CO
2
in 2015 and rises sharply after that. Note however that there is a
wide range of estimates of the carbon prices necessary to attain that
target, that changing the target would also change the carbon price,
and fi nally that the target path would change with changing economic
and scientifi c information.
The next question is the obligation that countries would undertake
in a carbon price treaty. At a minimum, all countries should agree to
penalize carbon and other GHG emissions by the agreed-upon mini-
