After a Russian Oil Price Cap, How about a Quantity Cap on All Oil?

A few months ago, politicians’ rhetoric regarding Russian energy started to sound similar to policies that FEASTA has been promoting for years and decades.  For example, this March 2022 press release from U.S. Senator Mark Warner (D-VA) with the headline

“Warner Joins Bipartisan Effort to Ban Russian Energy Imports”

could be easily edited (intentionally mis-read?) to say

“Warner Joins Bipartisan Effort to Cap Fossil Energy Production and Imports”

A more recent example is the proposed oil price cap on Russian oil.  It’s not a global cap on carbon, but some of the thinking is similar, and that’s important.

The EU’s sanctions against Russia (due to its unprovoked war against Ukraine) are about to expand in December, but it could have major economic fallout. As the NYT article cited above notes, “a European Union oil embargo and a ban on financial insurance services for Russian oil transactions take effect on Dec. 5, the removal of millions of barrels of Russian oil from the market could send prices soaring.”

The desire to avoid a recession that also enriches Putin is causing economists to think outside the box, and the G7 countries to agree on the concept of a price cap for Russian oil.  The intended outcome is to reduce the amount of money Russia gets for selling oil.  The regulated entities would be banks and maritime insurers, and sanctions for violations would affect every major multinational business involved in financing, purchasing, trading, shipping, and insuring Russian oil.  Although the G7 will be the initial participants, the Biden Administration is hoping the downward price trend would provide incentive for China and India to negotiate lower prices with Russia.

Destruction of Russian tank by Ukrainian troops. Source:
The G7 proposal is “only” a price cap, but it could lead to future thinking about a quantity cap on oil, for climate not geopolitical reasons.  The same thinking that is concerned about preventing Russia (and Putin) from reaping windfall profits from supply shocks (note that “energy exports make up more than half of Russia’s total government budget”) could also lead to concern about the major fossil fuel corporations reaping windfalls on the “downslope” of the fossil fuel curve as we phase out their product in order to preserve a livable climate.

And just as the International Maritime Organisation is enmeshed in the complexities of the global oil market, and would need to be engaged in any attempts to influence that market, a new international organization such as a Global Climate Trust (or, in Kim Stanley Robinson’s framework, a Ministry for the Future) would have to be created to cap global fossil fuels and oversee the auctioning of permits under the cap and return the money to people on a per capita basis (“Cap & Dividend”).

FEASTA has been promoting a global cap on fossil fuels with revenues from permits sold under the cap returned back to people as a climate dividend.  We advocate for the global citizen’s movement for a Global Climate Trust that would implement this “Cap & Share” program under the banner of CapGlobalCarbon. We consider this proposal in alignment with other basic income proposals, from Peter Barnes’ Sky Trust to Robert Costanza’s Earth Atmospheric Trust, and to an exciting group World Basic Income’s proposals  (see our upcoming event on October 6 on phasing out fossil fuels and supporting climate justice).

A 2022 IPCC report (page 1-67) mentions Cap and Share and provides a reference to one of FEASTA Founder Richard Douthwaite’s final publications, ‘Degrowth and the supply of money in an energy-scarce world‘.  As far as we know, this is the first time that Cap and Share has been mentioned in an IPCC report.

Alongside the recent news that Canada’s climate tax credit has morphed into quarterly cash distributions it can be said that FEASTA’s ideas around capping carbon are starting to gain more traction in mainstream conversations in 2022.

Not long ago, the “free market” was sacrosanct, and proposals to change it to value, for example, life on Earth, or a stable climate for future generations, were seen as crazy socialist schemes.  The Russian war on Ukraine has revealed that actually some values are more important; indeed, after the pandemic, it is clear (even to economists and political leaders) that human lives are important, and markets can be shaped to help people.

Featured image: Oil tanker in San Pedro Harbour. Source:

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