Pope Francis's recently released Encyclical "Laudato Si" makes a strong moral case for climate action. It is a powerfully-written, wide-ranging document, and is already influencing decision makers and observers preparing for the U.N. climate conference taking place in December. For those interested in how carbon pricing can contribute to alleviating global poverty, here are a few excerpts from the Encyclical (in italics) and comments below.
The Pope is skeptical of relying on market mechanisms such as Cap & Trade to reduce emissions, citing the failures of the European Emissions Trading System for encouraging some companies to game the system rather than make real changes.
171. The strategy of buying and selling "carbon credits" can lead to a new form of speculation which would not help reduce the emission of polluting gases worldwide. This system seems to provide a quick and easy solution under the guise of a certain commitment to the environment, but in no way does it allow for the radical change which present circumstances require. Rather, it may simply become a ploy which permits maintaining the excessive consumption of some countries and sectors.
He also emphasizes the importance of helping the poor rise out of poverty.
172. For poor countries, the priorities must be to eliminate extreme poverty and to promote the social development of their people.
The Pope calls for "an agreement on systems of governance for the whole range of "global commons".
175. The same mindset which stands in the way of making radical decisions to reverse the trend of global warming also stands in the way of achieving the goal of eliminating poverty. A more responsible overall approach is needed to deal with both problems: the reduction of pollution and the development of poorer countries and regions. The twenty-first century, while maintaining systems of governance inherited from the past, is witnessing a weakening of the power of nation states, chiefly because the economic and financial sectors, being transnational, tends to prevail over the political. Given this situation, it is essential to devise stronger and more efficiently organized international institutions, with functionaries who are appointed fairly by agreement among national governments, and empowered to impose sanctions.
The Pope's call for international institutions to step forward to address the governance of the global commons, and tackle the combined issues of climate and poverty brings to mind the work of the late Elinor Ostrom. Dr. Ostrom received a Nobel Prize in Economics in 2009, the first time a woman had received the honor. Ostrom's book "Governing the Commons" decries the same overuse of common pool resources that the Pope does, and using empirical research, concludes that there are indeed solutions to the so-called "tragedy of the commons." Ostrom suggests bypassing centralized government and so-called "free market" privatization efforts, and instead engaging the users of the resource to develop fair rules to share ownership. In the case of climate change, an international institution could implement an upstream global carbon price that returns revenues to everyone equitably. In 2008 Dr. Ostrom and several other visionaries including Paul Hawken, Peter Barnes, and Robert Costanza called for the creation of an Earth Atmospheric Trust.
Around that same time, members of the Foundation for the Economics of Sustainability in Ireland and the UK came up with similar approach called Cap & Share. Most recently under the banner CapGlobalCarbon, they are seeking partners to become affiliates in a citizen's initiative to create a Global Climate Trust, and are planning to make an appearance at the UN Climate Conference in Paris this December.
Unfortunately, the major players at the UNFCCC have abandoned the "top-down" strategy in the aftermath of the failed 2009 Copenhagen conference. Instead, countries are volunteering "bottom-up contributions", which presumably will later be strengthened. As the Pope implies with the urgency of his tone, it is likely that these contributions will fall short on emissions reduction as well as on poverty alleviation and equity.
If the Pope wants to build linkages between climate policy and fighting poverty, one way to make that connection would be a global upstream carbon price returned directly to people as a "climate dividend" connecting climate, poverty, and international development. This type of carbon price, unlike Cap & Trade, would outlaw market speculation and gaming. Instead, a carbon price that rebates money to everyone equally can act as a new sector of the economy, one based on a recognition of energy resource limits and universal equality.
The climate dividend concept can be a bridge to global anti-poverty movements, which have begun to coalesce around the concept of "basic income," and international development scholars are using compatible terms such as "unconditional cash transfers."
The Pope's Encyclical raises the possibility that in the coming months leading up to the UN Climate Conference in Paris, a project could emerge to link protection of the climate commons and battling global poverty. As those planning to attend Paris prepare to assess the equity components of their Parties' contributions, and consider how to ratchet up their ambition, they should pause, think of the Pope's Encyclical, and remember to advocate for a global institution that can implement a carbon price and return revenues back to people.