What price 'comparable effort' on emissions trading?

Globally, the same emissions reduction would be delivered. However, these “carbon arbitrage” developments will shuffle agreed emissions reduction burdens from rich to poor countries, destroying the carefully negotiated pattern of national emissions reductions comprising the global deal. This will probably end up destroying the deal itself.

If this outcome is foreseeable, assuming success in Copenhagen is unrealistic.

By definition, ETS supporters believe in market forces. If so, we’d better focus on how policies like the ETS and carbon taxes aim to reduce emissions: by increasing their price. Emissions prices tend to equilibrate under market forces.

Emissions prices have another advantage. National emissions prices are more easily discovered, making assessment of “comparable effort” easier.

There’s a better way to benchmark “comparable efforts” and reduce impediments to a global deal. Focus on emissions prices and on national emissions consumption, not production.

Sharing the adjustment burden between rich and poor countries (the former having higher per capita consumption “carbon footprints” and therefore higher per capita adjustment costs) would be easier.

Differences in national comparative advantage based on energy sources with high greenhouse gas emissions would be covered fairly. If there’s a global deal, reduced comparative advantage associated with large greenhouse gas emissions is greatest for countries well endowed with such resources.

For countries like Australia, adjustment burden and resource allocation effects would follow one of two paths.

Without a global deal, Australia’s trade comparative advantage is minimally affected.

With a global deal, Australians face two above-average adjustment burdens. We have high per capita emissions consumption. Our comparative advantage is based partly on endowments of emissions-intensive energy. A global deal ensures Australians, per capita, pay substantially for emissions. Fair enough. To suggest Australians should pay without such a global deal is nationally irresponsible.

Why pursue the current targets-based model? Success via agreement on the national distribution of emissions permits immediately produces failure via “carbon arbitrage”.

Want a good, practical, reasonably objective, pretty fair, indicator of national emissions abatement “comparable effort”?

It’s the price paid for national emissions consumption in each country