1. A global price target is fair to developing countries
It’s not completely fair, but it avoids treating India more stringently than the US. India can see that it could become equally rich, since both have the same price target. (This holds for all developing countries.)
2. A global price target is less risky politically
If a country grows faster than expected, it will not have to pay other countries for the right to emit more, it will only have to price the new emissions the same as its old emissions and keep the resulting carbon revenues.
3. A global price target is easier to negotiate
- There is only 1 target to negotiate, not 100
- No ambiguous fairness considerations are required to set targets
- With emission caps, these complexities include past emissions, income, per-capita emission, expected growth rate, and the carbon intensity of imports and exports.
- On average, self-interested countries want a price target that is just about right.
- While all self-interested countries want their emissions caps as weak as possible.
4. A global price target is easier to enforce
- It’s easier to comply with pricing, so countries like Canada will likely succeed—less enforcement is needed.
- End-of-year evaluations mean problems are caught before they are too big to manage.