“Worldwide, less than 8% of folks are responsible for 50% of emissions”, according to Professor Stephen Pacala of Princeton, co-author of Stabilization Wedges.

This group has a higher annual income than even the average American. But the US has the highest per-capita energy consumption rate of any nation, out-consuming the five most populated nations combined. Quite recent studies have confirmed what many already knew: that more affluent people consume more energy, and generate more green house gas (ghg) emissions. Thus, making significant cuts in ghg (to slow warming trends and mitigate climate change) without big cuts in this group’s ghg emissions is a major challenge.

The impact of greenhouse gases on global warming in the short term, and the possibility of severe climate change in the medium to long term, promise to create significant and lasting hardships for everyone. But these hardships will fall hardest on the world’s poorest, who are the ones least responsible for ghg-induced climate change. Currently, all cap-and-trade and carbon taxing results in a flat tax on carbon usage. This will of course impact the poor the most. This reasoning has been used as a justification for not imposing carbon caps and taxes, as well as not implementing other environmental regulations–such as shifting to alternative forms of energy which, in the short term, may be more costly to low-income consumers (as opposed to cheap, but highly polluting, fuel sources like oil and coal). If you make energy more expensive to use, so the argument goes, this will inconvenience everyone to some extent, but it’ll be much less of a problem for more prosperous people.

However, environmental scientists, advocates for renewable energy, and many organizations working with developing nations point out that the price of inaction will also fall hardest on people of modest or little means. Leaving things as they are will lead to more severe outcomes, and greater hardship for the world’s poorest.

But simply taxing carbon usage won’t be enough to make a real impact on ghg levels. Consider a carbon tax of thirty dollars per metric ton of carbon used (e.g., in construction materials for a building or home), as has been proposed. If constructing a high end, upper income level house uses 100 tons of carbon (e.g., to make the concrete), this comes to an additional cost of 3000.00 for that home, which will not be a sufficient incentive for the rich to build smaller homes. It is thus no great incentive for any “transformative” (top-down) carbon-saving policy.

One suggestion to remedy this disparity is to implement a tiered carbon tax structure. According to Daphne Wysham, director of the Sustainable Energy and Economy Network (writing for Ecologicaldebt.org), “Unless we get carbon pricing dramatically tiered in a way that it impacts wealthy as much or more than the poor … [this policy will fail]… Without big ghg cuts by the wealthiest you can’t mathematically get cuts of the scale needed.” The goal of this policy work is to impact wealthy ghg levels while simultaneously alleviating much of the financial burden on those who can least shoulder it.

Matthew Iglesias, posting a comment to a Sightline.org blog series on Climate Fairness, has suggested the following: 1) cap carbon, 2) auction the permits, and 3) rebate all the revenue on a per capita basis. The bottom two income quintiles come out substantially ahead; the third quintile also does better, but just slightly; the fourth quintile does slightly worse; and the wealthiest income quintile takes a small hit.

Rich State / Poor State – Calculating Climate Debt

Regarding these quite possible environmental impacts on the world’s poorest, the preceding information is also relevant in the context of rich verses poor nations. In the same article for Ecologicaldebt.org, Ms. Wysham cites one recent, highly publicized study, the 2006 Stern Review (estimates revised upward in 2008), in which it was estimated that “stabilization of global warming gases at roughly 500-550 parts per million of carbon dioxide would cost about 2% of gross domestic product annually, if done over the next two decades. And 2% of GDP is roughly equivalent to $1.2 trillion per year.”

This reduction, according to many scientists, isn’t nearly ambitious enough. Some, like NASA’s Dr. James Hansen, recommend a target of 350 parts per million. But in either case, the economic cost would be more easily born by richer nations.

It is evident that if the rest of the developing world were to “catch up” to our standard of living, this global state of being would be entirely unsustainable. Thus, two things must happen pretty much in tandem: richer nations must decrease their rates of consumption, and poorer nations must only modestly increase their own rates, but within the context of adapting to climate change, which includes shifting to renewable, non ghg emitting energy sources.

The question then becomes: who should pay for this transition, in the developing world, to renewable, non-CO2 emitting energy sources? The greenhouse gases that endanger many developing nations’ futures are coming from the United States, China and Europe. People in poor nations like Bangladesh and Namibia emit almost no carbon, yet they are the ones who will bear the greatest risks of climate change–through devastating floods and droughts, according to many climate change predictions.

Clearly, a poorer nation’s ability to assist its people after such catastrophes, and its ability to remedy and restore damaged resources and ecosystems, is quite limited. Some experts have asserted that the damage the West does to poor countries from carbon emissions exceeds the benefit from aid programs.

As noted, the cost of climate change mitigation and adaptation will fall the hardest on these poorer nations. This is the basis of the globally emerging Climate Fairness movement. National governments, as well as non-governmental and civilian organizations around the world are now asserting that the first world owes a debt to the third world for enabling it to become so rich in the first place–but now at the additional price of tipping the world’s climate towards possible catastrophe.

Calls for a Global Climate Fund.

A global climate fund makes sense in that the money is already “in the pipeline”; even in the absence of a climate crisis, funding for infrastructure, agriculture, transportation, etc. would continue at home and abroad. The task would merely be rearranging priorities and setting new goals. But who would supervise this fund? One candidate is the World Bank, which is already administratively set up for this task and already heavily invests in poor nations. But many NGOs and civil organizations oppose using or allowing the World Bank (which invests nearly a quarter of it funds in carbon-heavy energy industries) to administer and distribute any such funds. These groups feel that there is a major conflict of interest here as the WB is home to a dozen or so carbon funds, and it makes a commission of 13% on its carbon trading (credit) transactions. Many of these credits are being applied to the industries that the WB is investing in.

As an alternative, there is a growing movement afoot to utilize the the United Nations-with strict adherence to human and indigenous rights declarations and laws–to distribute any such funds that accumulate. Currently, the UN is seeking to implement its REDD (Reduced Emission from Deforestation and Degradation) initiative which is designed as a “market driven” mechanism to control CO2 emissions. The World Bank also has begun developing its own REDD plan.

Some critics of these REDD plans complain that the initiatives are being controlled by financial and industrial interests and not by (in many cases) the indigenous peoples who will be responsible for protecting forests and other resources.

So far, these REDD initiatives are untested. So, in the absence of effective, market driven funding, where will the money for this fund come from?

Proposed sources of funding include: taxes on bunker fuels, aviation, fossil fuel exports, and other sources of greenhouse-gas emissions; levies on gross national product and historical responsibility; carbon debits — comparable to carbon credits — charged to investors in international financial institutions and export credit agencies for their contribution to greenhouse gas emissions; auctions of national and international ghg emissions permits, and currency transaction taxes.

Image/chart credits: US Dept. of Energy, Energy Information Administration on Mongabay.com