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Executive summary

This is an initial attempt at combining the three winning proposals of the 2010 contest.


So far: Dennis Peterson, author of the Carbon Rights proposal, with input from members of the Realistic and North-South teams (who are invited to join the fun!)

What: Actions and impacts

Rather than cap-and-trade, use a fee-and-dividend system, applying a fee per ton of emitted carbon and distributing the revenue to citizens on an equal per-capita basis.

Aim for a modest target of 600 to 650 ppm in 2100, using a carbon fee of $38 per ton of carbon initially, increasing to about $300/ton by 2100. (This schedule is based on William Nordhaus' work with the DICE model, in A Question of Balance, p. 83).

Issue tradeable emission rights to entities absorbing carbon from the ambient atmosphere (by means such as biochar). Absorbing one ton grants the right to emit one ton without paying the fee.

Rather than waiting for global agreement, negotiate in regional groups. Each group collectively decides on an exact fee schedule, and methods to monitor compliance and approve sequestration methods. Emission rights can be traded between countries within the group.

Apply tariffs to imports from countries outside the group which have lower carbon prices. To promote goodwill, it may be helpful to grant a grace period before applying tariffs.

Keep in place the global adaptation fund agreed upon at Cancun. Countries may use carbon fees to meet their Cancun commitments. Regional groups may negotiate further adaptation funds, redirecting a portion of the carbon fees in developed nations to adaptation efforts in developing nations. 

To buy some time, use a geoengineering method to cool the planet directly.

Why: Rationale for the proposal

Cap-and-trade presents significant practical difficulties. Developed nations tend to negotiate for high caps, since they can sell their excess credits. Developing nations don't want to be capped at all. To slow their emissions growth, developing nations are allowed earn credits based on claims that, in the absence of credits, they would have increased emissions even more...a system rife with opportunity for abuse.

A simple fee on carbon emissions avoids these difficulties. For economic efficiency and political palatability, distribute the fees to citizens. Everyone will have incentive to reduce fossil-fuel use, but a citizen with average emissions won't lose any net money.  Lower-income citizens tend to emit less carbon, and will turn a profit. These factors allow for a higher carbon price than would otherwise be feasible.

However, citizens will not really recapture all of their higher energy payments. Energy companies may choose to convert to higher-price technologies with lower emissions, if doing so is cheaper than paying the fee. The resulting higher energy prices will be paid by consumers, without being balanced by dividends.

In some cases, it may be cheaper to absorb carbon from the atmosphere, rather than converting to lower-emitting technologies or paying the carbon fee. Awarding emission rights based on verifiable carbon absorption allows this to happen. 

Modest initial targets make agreement easier to reach. Once frameworks are in place, further negotiations can make adjustments.

Getting global agreement has proven to be difficult. Negotiating in smaller groups should prove to be more feasible, both for the initial agreement, and for negotiating more ambitious targets later.

At the same time, global participation is critical to lowering global emissions efficiently. If only some countries participate, major emitters can relocate to countries with lower or nonexistent carbon fees. This not only allows emissions to continue, but punishes countries that attempt to reduce emissions. Tariffs change the game. Emitters wishing to sell to a market with a carbon price can no longer avoid that price by relocating.

Given the modest initial target, positive feedback loops in the climate could be a problem. To head off icecap melt and methane release, we can cheaply increase the planet's albedo. For safety, use a method currently being researched by the Gates Foundation: build a fleet of wind-powered ships that seed clouds with small droplets of seawater. The advantage of this method is that if it causes unacceptable problems, it can be turned off, the effects dissipating in five days. Total cost is estimated at $9 billion.

How: Feasibility of proposal

Explanation of how the proposed actions will be achieved. Teams are encouraged, but not required, to use subheadings in this section, such as:

  • Future energy technology mix
  • New policies and political mobilization that will lead to their enactment
  • Social and behavioral change

Vision of the future under this proposal

Depictions of the future that will result from this plan. This section can include artistic representations of what life will be like later this century, using such media as videos, images, or narratives.