A modified GHG intensity indicator: Toward a sustainable global economy based on a carbon border tax andemissions trading

Significance Statement

The Kyoto Protocol can be considered the foremost international agreement on climate change. However, some countries have withdrawn from the Protocol, or will withdraw from it, in spite of their initial support. This can be seen as sourced in that fact that the Kyoto Protocol is based on the hypothesis that a nation’s economy is independent of the economies of other nations. This hypothesis is a reflection of the macro-canonical approach of the protocol’s designers, and led to a commitment to reduce emissions to 5.2% below 1990 levels between 2008 and 2012. However, in our highly interconnected global economy and with new economic heavy-weights now on the scene, a more pragmatic approach is required to achieve a strategic goal such as the reduction of global GHG emissions. Although several emissions indicators have been devised, such as greenhouse gas intensity (GHG-INT) and emissions per capita, there is no global agreement on any of them, as such measures can be very well received in one country and highly unpopular in others. In this work, a universal indicator and measure of emissions is introduced to resolve the issues of world-level dissolution and lack of agreement. This indicator, which we call the Modified GHG Intensity (MGHG-INT) measure, not only takes into account the global influence of a nation in terms of its productivity (external ‘‘activity’’), but also attempts to include its heretofore ignored internal ‘‘activity’’ to arrive at a universal emissions measure which can be used to evaluate a nation’s contribution to the unsustainability of the planet, and also to react to it. The absence of a universal indicator has resulted in the exclusion of developing countries from the Kyoto Protocol (and the same seems to be true of the successor agreements, like the Cancun Agreements and others). Not only has this resulted, and will result in high emissions leakage to developing countries, but it will also cause other countries to withdraw these mechanisms. In contrast, mechanisms built using our proposed universal indicator, or any other similar universal indicator, have the advantage of treating all countries equally and fairly. With their minimal administrative costs, these mechanisms could put achievable goals within the grasp of all nations, and give the policymakers of each country the freedom to draw their own roadmap, and the challenge of doing so, to reduce the environmental-related penalties, such as border tax or border tax adjustments, their nation faces.

 

A modified GHG intensity indicator: Toward a sustainable global economy based on a carbon border tax andemissions trading-Renewable Energy Global innovations

Journal Reference

Energy Policy, Volume 57, June 2013, Pages 363-380.
R. Farrahi Moghaddam, Fereydoun Farrahi Moghaddam, Mohamed Cheriet

Synchromedia Laboratory for Multimedia Communication in Telepresence, École de technologie supérieure, Montreal (Quebec), Canada H3C 1K3

Abstract

It will be difficult to gain the agreement of all the actors on any proposal for climate change management, if universality and fairness are not considered. In this work, a universal measure of emissions to be applied at the international level is proposed, based on a modification of the Greenhouse Gas Intensity (GHG-INT) measure. It is hoped that the generality and low administrative cost of this measure, which we call the Modified Greenhouse Gas Intensity measure (MGHG-INT), will eliminate any need to classify nations. The core of the MGHG-INT is what we call the IHDI-adjusted Gross Domestic Product (IDHIGDP), based on the Inequality-adjusted Human Development Index (IHDI). The IDHIGDP makes it possible to propose universal measures, such as MGHG-INT. We also propose a carbon border tax applicable at national borders, based on MGHG-INT and IDHIGDP. This carbon tax is supported by a proposed global Emissions Trading System (ETS). The proposed carbon tax is analyzed in a short-term scenario, where it is shown that it can result in a significant reduction in global emissions while keeping the economy growing at a positive rate. In addition to annual GHG emissions, cumulative GHG emissions over two decades are considered with almost the same results.

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