Geoscience Reference
In-Depth Information
their commitment using a cap-and-trade mechanism such as was envi-
sioned by the Kyoto Protocol and embedded in U.S. legislation. Yet an-
other approach would be a hybrid cap and trade with a minimum price
fl oor (perhaps by using an auction with a reservation price).
From an economic and environmental point of view, the com-
parison between an international cap-and-trade system and a harmo-
nized carbon tax system parallels the discussion above about domestic
variants. Many of the advantages and disadvantages are the same.
However, the real issues are not technical ones of design but funda-
mental political ones. Any treaty will need to tread softly on country
sovereignty and domestic prerogatives. Countries will need to believe
that they have wide latitude to shape their climate policies under an
international agreement. The minimum-price regime is a friendly ap-
proach, more like agreements on tariffs or tax treaties that countries
already engage in. It is less likely to trigger nationalistic jealousies and
taboos than the highly intrusive cap-and-trade approach of the Kyoto
Protocol.
OBLIGATIONS FOR RICH AND POOR
International agreements often differentiate the responsibilities
of poor and rich nations. Under the Kyoto Protocol, for example, rich
countries had binding emissions limitations, while middle-income and
poor countries had no binding emissions limits and were required only
to report their emissions. In a future and more comprehensive arrange-
ment, rich countries would take immediate steps to curb emissions;
middle-income countries would need to join the agreement and reduce
emissions in the near term; and, as is discussed shortly, poorer coun-
tries could postpone participation or would receive assistance for their
emissions reductions.
What is the distribution of emissions among countries by different
income groups? Table 11 shows CO
2
emissions by country groups. I have
taken 167 countries for which the World Bank provides data and divided
countries (per capita income of $20,000 or more) are responsible for
