Cap & Share

Cap and Share was developed to meet the twin challenges presented by climate change and the peak in the world supply of easily-extracted oil. It is a variant of cap and trade and would limit the use of coal, gas and oil. It can, however, be used to share the benefits from using any scarce natural resource. It works by placing a cap on the use of the scarce resource and charging the users whatever price is necessary to balance their demand with the capped supply. The receipts from the resource users are then shared on an equitable basis amongst all those with an interest in the resource involved.

If C&S were to deal with oil peak and climate change globally, it would cap world fossil fuel greenhouse emissions and then tighten the cap year by year at a faster rate than oil production was decreasing. This would make the emissions tonnage set by the cap a scarcer resource than the oil supply. As a result, the whole of the extra amount that users would have been forced to pay the producers for supplies of the scarce oil would be captured in the price paid for C&S emissions permits.
The captured money would then be shared amongst those with a claim on the capped scarce resource and, since that resource is the limited capacity of the sky to act as an emissions dump, everyone on Earth would have an equal claim and thus get an equal share. The emissions permits would also be scarcer than the supply of coal and gas, so C&S would capture the extra that people were prepared to pay to use them too.. This extra is what economists call the “scarcity rent”. After some deductions which are explained in this paper, C&S would then share the total rent from the three fossil fuels amongst everyone on the planet.

Research on Cap & Share

The full range of research on Cap & Share can be found here.

Cap and Share – A fair way to cut greenhouse emissions 29 May 2008
Drastic cuts in the world’s greenhouse gas emissions are required to avoid a climate catastrophe. A worldwide agreement to secure such cuts will be impossible to negotiate unless both the pain and the benefits are shared equitably around the world. Moreover, the sharing system must be robust enough to ensure that the cuts agreed actually happen. Cap & Share is both robust and equitable. This 32 page Feasta booklet explains how C&S could be used to halt climate change at a global level. Hardcopies are available for €5, postpaid. Paid-up Feasta members will be posted a copy free if they email a request.

A Study in Personal Carbon Allocation: Cap and Share 7 December 2008

This report was published by Comhar, the Irish Sustainable Development Council. It was launched by the Minister of the Environment, and contains two detailed studies about Cap and Share by AEA Energy & Environment and Cambridge Econometrics.