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Pitch

Carbon management in the US will require the appropriate economic incentives to enable our economy to efficiently mitigate climate change.


Description

Summary

The US economy is the most powerful, effective, and efficient engine to drive any challenge such as climate change. The key factors to drive such an engine include an appropriate economic construct, and incentives in place that enable all entities in the economy to participate to the fullest extent possible.

There are two areas of concern with any carbon price construct that are not appropriately addressed by the current cap-and-trade carbon pricing schemes. The first is how to measure changes in carbon flux due to any and all anthropogenic activity. The second is how to encourage domestic participation in carbon management while not exposing domestic industries to imports from jurisdictions with few or no carbon management fees.

Our proposal for a metric to measure anthropogenic changes in carbon flux represents a broader view of the factors leading to climate change, versus a narrow focus on gaseous atmospheric climate emissions. The reason for the broader perspective is to provide an overall comprehensive metric for carbon-induced climate change that addresses both spatial and temporal displacement of carbon emissions.

Such displacements of carbon emissions are a means to reduce fees normally assessed on gaseous carbon emissions, either spatially by relocating carbon emissions to jurisdictions with lower carbon fees; or temporally by converting gaseous emissions into some other form of carbon detritus such as biomass, which only delays the eventual gaseous carbon emissions by as little as weeks to years.

Such displacements can reduce or even reverse efforts to reduce climate change by hiding the true cost of anthropogenic activity, and by using more carbon to transport finished products long distances back to the consuming country. Spatial displacement of carbon emissions from consumer to producer countries is ever increasing, and temporal carbon emissions will emerge once the opportunities for spatial displacement of carbon emissions diminish.

 


Category of the action

Mitigation - Helping U.S. enact carbon price legislation


What actions do you propose?

Two basic concepts are at the heart of our US carbon management proposal. The first concept is a comprehensive metric to measure the change in carbon flux due to any and all anthropogenic activity. The second concept is to ensure carbon parity on trade between the US and other countries that have lower levels of carbon pricing by assessing appropriate fees on imports to ensure carbon parity with our domestic markets.  These fees ensure that our domestic producers are not disadvantaged by imports from countries that have lower carbon prices within their own domestic markets.


Who will take these actions?

The government will assess a change in carbon value, defined as carbon quality or CQ, per the following metric:

CQ = ƒ ( log10 [mean carbon residence time] )

on all activities in the economy. For example, with the extraction and eventual combustion of crude oil, the mean carbon residence time of the oil in the ground can be assumed to be 1 billion years; that is, the expected time it will take for tectonic activity to expose the oil, and for biological activity to oxidize and release the carbon in the oil to the atmosphere as carbon dioxide. To determine the fee assessment on such activity, we would need to calculate the change in carbon quality, or ΔCQ:

ΔCQ = ƒ ( log10 [change in mean carbon residence time] )

so with the log10 [mean carbon residence time] for carbon dioxide  defined as 1, the change in carbon quality for the extraction and combustion of crude oil would be:

ΔCQ = ƒ ( log10 [crude oil mean carbon residence time] - 1 )

ΔCQ = ƒ ( log10 [1 billion] - 1 ) =  ƒ ( 9 - 1 ) =  ƒ ( 8 )

 

 


Where will these actions be taken?

The government will assess the fees associated with changes in carbon quality at any time when anthropogenic activity affects carbon quality, including at all points of carbon extraction, any combustion of carbon based fuels, any type of carbon biomass harvesting such as crop harvesting or tree cutting, etc.

The carbon quality of all imports will also be assessed at the points of entry into the US economy to bring such imports into carbon parity with the domestic equivalent carbon fees that would apply at the time of import.


How much will emissions be reduced or sequestered vs. business as usual levels?

The assessing of fees at the time and place of any and all changes in carbon quality is the most direct, efficient and effective temporal and spatial means to affect changes in human behavior regarding the use of carbon and thus reduce climate change. Delayed application of carbon fees reduces the impact such fees can have on the decisions as to the use of carbon fuels versus possible alternatives. Our proposal will ensure that all downstream activities see the full impact of the carbon fees.


What are other key benefits?

The application of carbon fees at the time and place of the change in carbon quality affords the greatest opportunity for competing forms of non-carbon energy to be assessed, side by side with the full cost of carbon. Such application helps to minimize opportunities to externalize or hide the climate related costs of carbon, giving alternative, more sustainable energy sources an equal opportunity for evaluation and review in all 'arms-length' transactions. 


What are the proposal’s costs?

Most of the changes would involve relatively minor adjustments and adding of cost fields to accommodate the fees to be assessed with each transaction. The major up-front cost would be to establish the database of changes in carbon quality. Other expenses would include a line item in all transactions that involve a change in carbon quality. Given the computerized state of the vast majority of transactions in today's economy, a small, ongoing effort would be needed to maintain the database of carbon quality and the occasional auditing of carbon values in a sample of transactions. 


Time line

The proposed actions are designed to be implemented carefully and gradually, but steadily, beginning as soon as implementation can be agreed to, and remain in place for as long as anthropogenic activity requires carbon fees to mitigate climate change. The carbon avidity factor for the US can be adjusted up or down periodically as the progress of the economy in reducing climate change progresses or lags, or in response to changes in the domestic market or climate that allow for or require such changes.

We envision that our proposal, if implemented fully, would create an immediate and verifiable response in carbon induced climate change. As such, given the deep, complex, and intense integration of carbon in the economy, we propose a small but steady increase in the carbon avidity factor each month, amounting to no more than 2% per year, accompanied with a published schedule of the annual increase extending out a minimum of a decade, preferably 20 years, so that future increases can be efficiently and effectively taken into account in all future long-term investment decisions, particularly those involving large carbon process facilities such as refineries, drilling operations, housing, commercial construction, etc.

The long-term goal will be to achieve minimal levels of anthropogenic climate change within a half-century.


Related proposals

See "Global Carbon Management in the Post-Cap-and-Trade Carbon Economy" under the Global plan Contest at https://www.climatecolab.org/web/guest/plans/-/plans/contestId/1300701/planId/1309323


References