Cap and Share Questions from Germany

[mbuchs]

Hi all,

last week I gave a presentation on Cap and Share to the Federal Working Group on Economic and Financial Affairs of the Green Party (Bündnis 90/Die Grünen) in Germany.

Overall they seemed to be sympathetic to the idea and we had a really lively and intense discussion. During that discussion a number of questions came up that I would like to put to the list, any feedback would be welcome, will then also feed this back to the Green Party working group.

Here are the main issues that we discussed:

- Some people expressed concerns about Cap and Share's feasibility, particularly as some of the companies that introduce fossil fuels into the world economy are owned or at least strongly controlled by states that are not very democratic/difficult to deal with. There is the argument that in the long run C&S would keep oil prices up as it would prevent a more dramatic economic downturn plus it would feed money back to the citizens of these countries, but would that really be enough to convince these countries to take part in the scheme?

- We know that within a global scheme, C&S would be regressive in all those countries in which even the people in the lowest income quantiles havehigher CO2 emissions than the world per capita average (which currently lies somewhere between 3.5 and 4 tonnes). How could these regressive effects be dealt with?

- It was also questioned whether the "independent" commission that sets the cap would really be independent, the argument was that with such a high profile decision any scientific advice would already be influenced/politicised. Obviously, any serious scheme would have to deal with this problem but still the question is how the decision making process can be "rescued" from powerful lobby influence and short-sighted political thinking AND be democratically legitimate.

- We also discussed whether an equal per capita allocation is fair, one participant felt strongly that due to different climatic conditions peopleare differently able to adapt/emit different amounts of CO2 so he said amuch more regionalised approach would be needed.

- There was also some interest in and discussion about a more regionalised scheme, e.g. how this would affect permit prices (depends on how it's constructed, i.e. if trading still takes place at the global level then the price would be the same, if trade is regionalised, prices would differ,right?)

- The usual argument also came up that complementary policies are required that help people to adapt to this new era of fossil fuel scarcity, rising prices and the requirement to lead zero or even "negative" carbon lifestyles. Here I made clear that we don't see C&S as sufficient solution initself and that it needs to be complemented with other schemes that address these issues.

However, I also received many positive comments, e.g. that it is good to be so serious about climate change and ambitious in terms of reduction targets; some said they liked the idea that it would be redistributive globally; whilst some others were particularly interested in the question of whether C&S could be introduced it in just one Bundesland (constituent country in Germany) or local authority. Here we discussed about border effects, an interesting point here was that possible border effects didn't prevent the "eco-tax" to be introduced in Germany in 1999. This is a tax onelectricity and oil, the revenue of which was used to decrease the employer and employee contributions to the pensions fund. It has indeed generated such border effects - apparently quite a few petrol stations across the borders went bust. However, within a tax scheme, border effects don't affect the price as it would do in a local/regional C&S scheme ...

What they will now do with all this, I'm not sure. One has to wait what position the Green Party will be in after the federal election in September. Anyway, we said we would keep each other informed.

Thanks for any feedback
Milena


P.S. Here's their website, in case you can read German: http://www.gruene-bag.de/cms/default/ru ... nanzen.htm

Including their proposal for an "eco-bonus" which is a tax and share scheme:
http://www.gruene-bag.de/cms/default/do ... imasch.pdf.