Global Carbon Pricing We Will If You Will

This paper makes the case for negotiating a common international charge on greenhouse gas emissions (“carbon”) as opposed to global cap-andtrade. All countries would be covered in principle, but a much smaller number that covered most of the emissions would suffice. The charge would be internationally adjusted from time to time, and each country would collect and keep the revenue it generated by imposition of national taxes on fossil fuels, cap-and-trade schemes or any combination. The paper first discusses the likely impossibility of negotiating a global cap-and-trade scheme, because the global “caps” would be too high, and because the allocation of permits to domestic agents would invite corruption. It then discusses the advantages of agreeing on a uniform international carbon charge. Finally the question of compliance is considered and the paper concludes that a uniform carbon charge with all revenues kept at home, is far superior to cap-and-trade as a global arrangement for mitigating climate change.