Cap and Share: a proposal for achieving a fair fossil fuel phase-out

In advance of the highly anticipated 2023 Beyond Growth Conference, this piece is the third in a weekly series to be published together on 8 May in the special issue magazine “Imagining Europe Beyond Growth”, developed in partnership with Belgian de-growth think tank Oikos. The magazine, curated by our Senior Policy Officer for Systemic Change Nick Meynen, will feature 18 articles from diverse actors in the “beyond growth” sphere: from thought leaders such as Kate Raworth and Timothée Parrique to political figures and a variety of civil society allies and EEB staff passionate about system change. Stay tuned for 1 article every week for the next 8 weeks!

As implied in the previous article on the fossil fuel non-proliferation treaty, we need to cap and phase out the fossil fuel supply to guarantee sufficient CO2 emissions reductions worldwide by 2050. Cap and Share is a framework for fossil fuel phase-out and climate justice. It could therefore help achieve the objectives of the Fossil Fuel Non-Proliferation Treaty. 

Cap and Share takes an “upstream” approach to capping fossil fuels. The cap operates by requiring fossil fuel suppliers to buy permits. The number of available permits would diminish over time, ensuring that fossil fuel production would also diminish, thus guaranteeing reductions in emissions from fossil fuel use throughout the economy. 

How is Cap and Share different from carbon taxation?

When based on price alone with no direct regulation of the fossil fuel supply, carbon taxation relies heavily on market forces to bring about the energy transition. But, as suggested in the previous article, real-world evidence indicates that it is extremely difficult, if not impossible, to determine the “correct” level of tax that will achieve a substantial enough reduction of actual greenhouse gas emissions. The wealthiest 10 percent of the global population consumes 20 times as much final energy as the bottom 10 percent, and the rich are the very people who are least sensitive to price increases.

In addition – as environmental justice advocates point out – stand-alone carbon taxation programmes, or “Cap and Trade” programmes, can also exacerbate “hotspots” of fossil-fuel pollution, which tend to affect low-income communities and communities of colour mainly

On the other hand, a cap and phase-out of the fossil fuel supply would absolutely guarantee the badly needed substantive cuts in emissions from fossil fuels. At the same time, hotspots can be prevented by including requirements on the monitoring and reducing co-pollutants when imposing the cap.

But Cap and Share still puts a price on carbon, doesn’t it? Won’t that hurt the poor?

Yes, it creates a carbon price – and no, it won’t hurt the poor. This brings us to the Share. 

Fossil fuel suppliers would have to pay a fee for their permits under the cap. This fee has an important social purpose, since the proceeds would form the Share. Suppose the revenue from the permits is distributed on a per-capita basis. In that case, this will ensure that those who use more than the average amount of fossil fuels will be obliged to compensate everyone else, with no loopholes – supporting the ‘polluter pays’ principle – while those whose emissions are lower than average will benefit financially. So even though the fossil fuel suppliers would raise their prices to cover the costs of buying permits, the overall effect on wealth distribution will be progressive. In layperson’s language: the poor will be the winners of the transaction.

The Cap and Share, or Cap and Dividend, model has been proposed at the national level, but since the climate is global and knows no borders – and since there are vast disparities in carbon footprints around the world – a strong case can be made for scaling the shares to the global level. This would enable them to support international climate justice and contribute significantly to poverty reduction in lower-income countries. The world would not only become more stable in climate terms, but also considerably fairer.

This infographic shows how a global Cap and Share system – which we call CapGlobalCarbon – could work.

That sounds nice, but how could such a thing possibly be implemented in the real world?

The mechanics of a Cap and Share system would not be hard to implement. The permit-allocation system required for imposing the cap and the share distribution can draw on abundant research and experience. 

An initial partnership could be formed between the EU and a bloc of low-income countries to kick-start the process. This could then be expanded to include other countries. The system could be administered by a Global Climate Commons Trust, which would administer the permit system and the distribution of the proceeds from the permit sales. The Trust’s activity would be overseen by a group of trustees from around the world, who could be chosen through a process similar to that used for the recent Global Citizens’ Assembly.

To make Cap and Share happen, we need public awareness that such a system is possible, and allies to join us in advocating for this bold vision. As Einstein knew: “imagination is more important than knowledge”. For more information on how you or your organisation could get involved, contact us at