Photo: James Emery/flickr/cc

This essay outlines the urgent need for a new multinational Institution to be formed for the purpose of orchestrating a world-wide increase in the price of carbon from its first moment of entry into the system through to its becoming a part of all derivative goods and services. Board Members must be of the stature and critical thinking skills of today’s Nobel Prize winners and UN Secretary Generals, skills that can identify human deficiencies and put in place measures that will eliminate global carbon dependency. And they must be given powers under their institutional authority well beyond those of existing global institutions today; powers of international law and enforcement.

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Our Extinction Possibility

The time has come for a Homo sapiens vs Planet earth reality check. That reality is a sixth planetary extinction. Unlike past extinctions this one will not be brought on by a random meteorite/asteroid strike or a convulsive planetary volcanic eruption. It will be Homo sapiens self-inflicted as the result of human Biosphere degradation.

Of immediate concern is the fact that as CO2 in the atmosphere is increasing the Arctic permafrost is warming. Excessive amounts of Arctic methane will be released. (already beginning to occur) Methane is much more potent as a heat-trapping greenhouse gas than carbon dioxide.

All past CO2 Treaties Have Failed

Here is the climate reality: From the Kyoto Protocol in 1977 to the Paris Accord in 2015 to the 2019 meeting all carbon reduction has been a failure. CO2 emissions continue to climb. Public response to the meetings has been mixed and largely ineffective.

Immediate Need for a New Multinational Institution

A carbon transition must immediately take place. It will require strong leadership throughout the world at the multinational level. That calls for a new multinational institution with powers well beyond the others now in existence. The COP meetings were a definitional starter for this call. They showed a unity of common purpose among many world leaders. But they also showed the immediate need for a new multinational institution able to enforce firm and binding commitments. The time has come for that need to be fulfilled.

Heads of State must come together and form a multinational body with powers well beyond those of the United Nations and other such multinational organizations. Member selection must cover all disciplines. Each must be of the stature of today’s Nobel Prize and UN Secretary General with proven critical thinking skills in their areas of expertise; thinking skills that can identify the current weaknesses controlling world society now leading to its demise.

Within the next 12 months such a multinational body needs to come together and outline a plan for the orchestration of a graduated increase in the price of carbon world-wide; from carbon’s first moment of entry into the system through to its becoming a part of derivative goods and services.

The international institution must have powers with the force of international law enforceable as necessary by way of joint national military action and/or other means.

First Move – A Universal Carbon Tax

The first move must be a gradually increasing universal carbon tax bringing into reality a world-wide turnover from fossil fuels to renewable energy.

Obstacles

This raises many questions. How much time do we have? How much fossil fuel energy will be needed for the conversion? Will that amount of fossil fuel energy requirement in itself put us over the CO2/CH4 Arctic feedback loop edge? Will industries such as air, automobiles, trucking, ocean shipping and metals now so reliant on fossil fuels be able to make the transition; and if so, what can be the alternative they employ? How will highly carbon consumptive basic industries such as concrete and steel make the transition? How will the citizens country by country, region by region, respond to such a state of economic disruption and reorganization?

And then there is the biggest obstacle, a major hurdle we have had addressing the climate issue. It lies at the heart of the failure to deal with climate change. It is called “free-riding” by countries that take advantage of the costly investments of other countries.

A Market Based Approach

Reduction in CO2 can be accomplished by a market based approach. National and international markets would serve as disciplinarian. They would force alternative forms of energy to be brought into the system up and down the production/consumption line. It would be achieved by Nations pricing in gradual increases in carbon beginning at its source. This would force higher prices of all derivative goods and services to be passed through internally and externally. Non-carbon derivative forms of energy would then be given an incentive to become increasingly competitive. They eventually would replace carbon. Many end products that are solely reliant on the burning of large amounts of carbon would be eliminated from the system by way of price appreciation.

There are far reaching social implications. Present consumers of carbon energy dependent goods and services will have to switch over to non carbon goods and services. Carbon producers will be forced out of the market. Carbon-reliant socio/economic activities too will be forced out of the market. Price will force change.

This approach is congruent within the currently established framework of existing capital market systems both within nations and internationally.

Negative Externality Tax

For producers of oil, gas and coal a national tax (Negative Externality Tax – let’s call it NET) will be levied at the point of extraction based on extraction cost. That national tax will bring the price up to an internationally agreed carbon equivalent figure. It will be increased year by year over a fifteen year period. It will therefore become integral to the pricing of all domestic goods and services in the producing country and the export pricing of those goods and services. That carbon tax figure would be increased year by year based on a graduated world-wide 15 year price increase.

Here is an example for equivalent grade diesel: Given today’s $10 $20 $30 cost the NET would bring the cost up to say $70 per barrel at its source of extraction and then internationally when exported. Then the NET would raise the cost incrementally over a 15 year period to $ 250 per barrel – or whatever end price brings about global carbon emissions down to an ecologically acceptable level.

In the case above; revenue from the domestic tax will first be the difference between the internal extraction/production cost and $70, then year by year the increasing formulaic amount. That revenue will be retained by the producing nation where it can be used for needed internal investment and social adjustments arising from higher prices for carbon consumptive consumer and industrial products. It can also be used to encourage non carbon activities and to develop non carbon sources of energy.

Universalism

This will be the first of other calls for change away from our singular tribal partisan nationalism and religion-ism and toward a world-wide human universalism leading to a framework for a universal cooperative societal order. That framework must consist of mutually coordinated decision networks. The grand strategy we now have of decentralism and incrementalism will not suffice.

Countries That Refuse to Comply

For those countries that refuse to comply, each and every export to a compliant country will be evaluated by the compliant as to its non internally taxed NET content. Such imports will be import duty taxed – let’s call it IDT. Such IDT funds will be turned over to the World Body described below.

Countries that import from non-compliant countries and refuse to comply with this repricing formula and then re-export to compliant countries will also have their exports to compliant countries taxed based on missing NET content.

Can this be accomplished? Some of the finest mathematical minds on our planet now spend their time devising algorithms for computerized trading of securities in order to exploit the weaknesses of other algorithms. The time has come for the economics profession to give these minds a new challenge, one that will benefit human civilization – and save it from the possibility of extinction.

Import duty revenues (let’s call them IDR’s) collected by compliant countries from non-compliant country imports can be turned over to a body such as the World Bank to be used to assist compliant nations with their difficulty in making necessary economic/social adjustments. These adjustments will fall into two categories; one the decline nationally in fossil fuel export revenues and the other climate change ocean rise.

Countries That Will Suffer

Immediate examples of the second category are a number of Island nations being inundated by rising waters and Arctic settlements being affected by global warming. Most will be without internal resources to resettle population. Many other nations with low land areas being inundated by rising oceans will also need assistance.

Populations in many areas of the planet will be severely affected as revenues from fossil fuels are eliminated. Russia, Australia and the Middle Eastern countries are examples. Many Middle Eastern countries are almost totally reliant on oil revenues to pay for food imports. Such revenues will decline to the point where they will be insufficient for feeding the population. This also will have an impact on Middle Eastern oil and gas non-producers and minimal producers, those countries that have relied on grants from their wealthy neighbor producers. Egypt, reliant on neighbor contributions for food imports is a prime example. The future for Egypt will look bleak. Although extrapolating from present trends to make predictions is always problematic, current projections are a population there that will have increased from 90 million to 138 million by 2050. The Nigerian situation will be even more bleak. Its petroleum industry is the largest in Africa. Its population of 186 million is expected to grow to 390 million by 2050.

Time will be needed to allow many of these countries to restructure and rebalance their economies – as well as population levels relative to available resources. Some in need of assistance will be countries like India with pockets of poverty, minimal originating carbon revenue and low lying city populations. Many such countries will need massive injections of capital in order to restructure their industries and feed their populations. As a general rule, all nations that are unable to fund societal adjustments will need assistance.

A pricing/costing methodology needs to be implemented that will allow the world within a critical 10/15 year period to turn to carbon free sources of energy. Nation states at all levels of technological development must be given time to adjust. As they do, high carbon input products and services will leave the market and be replaced by products with low or no carbon energy input. Societally, this will force nations at all ends of the planet to adopt a different social political economic energy structural logic from that which exists today.

Our Problem Goes Well Beyond Carbon

It must be understood: This is just the first step toward human planetary resource control – and human survival. Pricing in of other negative externalities harmful to humanity and all other life on the planet can come next. All nations need to acknowledge that our planetary problems can only be solved multi-nationally. The future of human civilization hangs in the balance.

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David Anderson brings together a wide range of interests in his writings, namely; theology, history, evolutionary anthropology, philosophy, geopolitics, and economics. He has written four books. The fourth is about a necessary geo political, social, religious, economic paradigm shift for human survival. Go to:  http://inquiryabraham.com/new-book.html


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