Carbon Management in the Post Cap-and-Trade Carbon Economy

Carbon Management In the Post Cap-and-Trade Carbon Economy

In this paper, we discuss an economic model for comprehensive carbon management that focuses on changes in carbon flux in the biosphere due to anthropogenic activity. The two unique features of the model include:

1.    A shift in emphasis from primarily carbon emissions, toward changes in carbon flux, mainly carbon extraction, and

2.    A carbon price vector (CPV) to express the value of changes in carbon flux. The CPV is multidimensional, including one key element that measures the anthropogenic changes in carbon sequestration, or carbon residence time.

We introduce new concepts pertinent to the model, including Carbon Quality and Carbon Avidity, as elements of a broader construct that describes and defines the fundamentals of our economic model.

The key focus with the economic model is the degree to which carbon flux changes due to anthropogenic activity.

The economic model has three steps:

1.    The CPV metric is used to value all forms of carbon associated with any anthropogenic activity. In this paper, the CPV used is a logarithmic chronological scale to gauge expected carbon residence (or sequestration) time. In future economic models, the CPV may be expanded to include other factors to value carbon.

2.    Whenever carbon changes form (and CPV) due to anthropogenic activity, a carbon toll is assessed as determined by the change in the CPV. The standard monetary unit for carbon tolls is a carbon toll unit, or CTU. The CTUs multiplied by the quantity of carbon converted (QCC) provides the total carbon toll, or CT. For example, CT $ = (CTU $/mole carbon) x (QCC moles carbon).

3.    Whenever embodied carbon (EC) attributable to a good or service moves via trade to a jurisdiction with a different CPV metric, a carbon toll (CT) is assessed representing the CPV difference between the two jurisdictions.

This economic model has three clear advantages.

1.    The carbon pricing and cost scheme uses existing and generally accepted accounting methodologies to ensure the veracity and verifiability of carbon management efforts with minimal effort and expense using standard, existing auditing protocols. Implementing this economic model will not require any new, special, unique, or additional training, tools, or systems for any entity to achieve their minimum carbon target goals within their jurisdictional framework.

2.    Given the wide spectrum of carbon affinities across jurisdictions worldwide, the economic model recognizes and provides for flexible carbon pricing regimes, but does not undermine or penalize domestic carbon-consuming producers subject to imports from exporters in lower carbon pricing jurisdictions. Thus, the economic model avoids a key shortcoming of cap-and-trade carbon pricing, and eliminates any incentive to shift carbon consumption to jurisdictions with lower carbon tolls.

3.    The economic model is a comprehensive, efficient, and effective strategy that allows for the implementation of a carbon pricing structure without the complete, explicit agreement of carbon consumers worldwide.