The Foundation for the Economics of Sustainability (FEASTA) established the cap-and-share policy as an alternative to Carbon Pricing mechanisms. The policy aims to address two critical frameworks. First, it aims to achieve a total reduction in carbon emissions according to the promises made in international agreements. Second, it focuses on decreased inequality and a transition to renewable energy. This approach is particularly relevant for countries like Pakistan, where climate change exacerbates socio-economic inequalities and threatens livelihoods.
The Cap and Share or CapGlobalCarbon policy was mentioned in the 2022 Intergovernmental Panel on Climate Change (IPCC)’s Working Group II report, highlighting the growing consideration for Cap and Share to be implemented internationally.
Therefore, in this paper, I will argue for the application of the Cap and Share policy as a solution to the effects of climate change worldwide and how vulnerable communities will benefit from the implementation of such a policy. This paper will first establish the basis for the Cap and Share policy framework. Secondly, it will focus on the structure and implementation of the policy. Lastly, it will focus on the potential benefits to vulnerable communities across Pakistan in implementing the policy framework.
Cap and Share Policy
The Cap and Share policy results from the current trajectory of the world’s climate crisis. To limit the global warming temperatures by 1.5 to 2°C above pre-industrial levels, the United States and other major historic polluters must cut their emissions by 10% by the middle of the century. The Paris Agreement’s framework argues for the limit of 2°C, an agreement signed by countries all over the world. Over the next 28 years, emissions must be cut by 90%, with 8% reductions per year.
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Therefore, fossil fuel extraction and usage must gradually decrease to achieve net zero by 2050 and induce emission reductions in a warming planet. The Cap and Share policy addresses the gaps in achieving this objective, as current trajectories depict the increase of fossil fuel extraction in 2025 and beyond. For example, in 2024, crude oil production in the US reached a record of 13.2 million barrels per day, which is expected to increase to 13.5 million barrels per day.
Moreover, fossil fuels are projected to reach 37.4 billion tonnes in 2023. Any projected decline in the usage of fossil fuels is not enough to limit warming to 1.5 °C. With no significant policy implementation to decrease the usage of fossil fuels, Cap and Share proposes a structural foundation to help countries and societies tackle climate change.
Cap and Share aims to gradually decrease global emissions to zero with two significant steps. Firstly, the “Cap” requires fossil fuel suppliers and importers to buy permits for their activity. This would gradually decrease fossil fuel extraction, allowing less fossil fuels to be emitted. The number of permits being sold would decrease with time, bringing fossil fuel extraction to a complete halt.
Secondly, the “Share” policy requires that when these permits are bought, the revenue earned be distributed to the population in that locality or country. With this wealth distribution, communities can focus on building, for example, renewable energy projects and education schemes. The money earned through the permits would enable local communities to be empowered and invest in their well-being and futures.
This is a form of “revenue-recycling,” where communities most affected by climate change will not have to rely completely on private and public climate funds. The funds would be distributed equally per capita, and the permits would be sold through an auction. With international climate funds, countries most affected by climate change, such as Pakistan, have to compete on a global scale to receive relief, oftentimes in the form of loans. However, with the Cap and Share policy, Pakistan can receive funds to adapt to the climate crisis locally and globally.
Therefore, the cap-and-share policy provides an opportunity to look beyond carbon pricing and international climate funds to a more localized, equity-based system that centres the people over fossil fuels. Vulnerable communities on the frontlines of the climate crisis will benefit from investment in their localities. The cap-and-share policy addresses the impacts of climate change on vulnerable communities.
CapGlobalCarbon Structure
The cap-and-share policy framework has not yet been implemented in the world or specific countries. However, the policy is gaining recognition through the Cap-and-Share Climate Alliance. The Alliance has twenty-three countries from various regions, including Latin America, Africa, and Europe. Therefore, this provides evidence for the policy’s growing legitimacy and preparedness to address the climate crisis through its structure.
The policy structure indicates that a “Climate Commons Trust” should be established, which is the primary body responsible for implementing the Cap and Share. However, this Trust is dissimilar to bodies such as the United Nations. The Cap and Share proposes that the Trust function as small partnerships between majority-world and minority-world countries.
The partnership would include a country or countries with per capita emissions closer to the world’s average and a country with higher or lower per capita emissions. These countries would then pool together and support each other within the partnership. The example of the Beyond Oil and Gas Alliance (BOGA) is that Costa Rica, a majority-world country, and Denmark, a minority-world country, were two of the founding members of the BOGA. The Cap and Share Policy argues for a similar form of partnership for implementation. (Whyte)
Furthermore, the second stage of the CapGlobalCarbon policy is the decision on the total amount of fossil fuels that may be imported or extracted, reducing the extraction each year. This process will use the advice and recommendations of climate scientists. Then, the Trust will build a licensing scheme to ensure that imports or extraction does not exceed the annual amount of coal, oil, and gas that can be extracted in the participating countries.
The implantation of the licensing scheme would be the responsibility of the participating government within the Trust, which will ensure that any fossil fuel extraction and import does not occur without a license or permit. The license or permit is available through an auction by the Trust and is purchased by fossil fuel companies, and the cost is directed to consumers. A floor price is established at the auction to ensure a minimum amount is paid by fossil fuel companies and received by local communities. However, the revenue earned from selling permits would be redirected to people living in the countries involved in the program. Through this, they would be more than compensated in equal shares.
Moreover, additional measures would be introduced to protect communities affected by climate change and help countries transition to energy. These measures would be funded by increases in taxation of the wealthy, including a “commons-based taxation” system that would tax, for example, financial transactions, land value tax, and levies on the use of high-CO2 luxury products.
Examples of the additional measures that may be funded by revenue from taxation on the wealthy include improved public transport systems, community heating installations, and localized food production initiatives. (“CapGlobalCarbon”) All of these projects would invest in community well-being and development. Therefore, the CapGlobalCarbon policy would ensure social justice by providing jeopardised communities a fair share of compensation and investing in projects that would ultimately aid their community’s development and growth.
Communities Vulnerable to Climate Change
Marginalized communities, such as the poor, elderly, women, children, and indigenous people, are the ones who face the brunt of the climate crisis. The crisis exacerbates the already existing inequality within societies. This can be highlighted through a report by Oxfam, which found that the wealthiest 1% of the global population is responsible for more than twice the carbon emissions of the poorest 50%. According to the United Nations, climate disasters have affected 4.2 billion people over the last two decades and increased climate migration. These climate disasters have affected developing countries the hardest. Therefore, Cap and Share aims to address this inequality locally and internationally.
Cap and Share does this by providing an effective way to tackle the injustices caused by climate change in the long term. Citizens of countries will have to face higher prices for carbon-based products, but investment in their futures and the added consequences of climate change will be addressed in the long term. Moreover, the Cap and Share addresses the wealth inequality between Majority World and Minority world countries through a proposed “Contraction and Convergence” model developed by the Global Commons Institute. Within this model, low-emitting countries will “converge,” and high-emitting countries that reap the benefits of the climate crisis will “contract.”
This will occur as every country will be assigned a portion of the global cap based on their population size and per capita emissions. This system would ensure that low-emitting countries would receive much more income and be able to continue their fossil fuel usage in the short term while still gradually reducing their fossil fuel usage to zero. Therefore, the Cap and Share policy would address the historical inequalities between Global North and South countries and ensure that richer areas of the world subsidize the energy transition of the poorer areas of the world.
Pakistan, a country that would come under the “poorer areas of the world,” would benefit from such a policy. Pakistan is the fifth most vulnerable country to climate change. It is located in South Asia and bears the brunt of the climate crisis. More than thirty million people were affected during the 2022 catastrophic floods, and more than a thousand died as a direct result. Pakistan is a country that regularly faces droughts, heatwaves, a lack of water and food security, and flooding due to climate change. The Cap and Share policy would help Pakistan rehabilitate the twelve million people still located in shelters and provide relief to Pakistan’s economy, which has experienced a 15 billion dollar loss as a result of this climate catastrophe.
Although international funds exist, such as the Loss and Damage Fund or the Green Climate Fund, Pakistan needs an estimated 348 billion dollars in climate finance by 2030 to build climate-resilient infrastructure.
A policy like Cap and Share would help systematically bear this burden by building partnerships with Minority World countries to implement Cap and Share. Pakistan accounts for 0.59% of global CO2 emissions, but in terms of total greenhouse gas emissions, including methane and nitrous oxide, it is the 18th largest emitter in the world. Therefore, the Pakistan Government has pledged to decrease its total greenhouse gas emissions by 50% by 2030, with 35% contingent upon international support.
This provides further evidence for the need for Cap and Share in countries such as Pakistan, which depend heavily upon international support to recover and adapt to the climate crisis and mitigate their emissions. Therefore, a partnership with the Cap and Share system through a “Climate Commons Trust” would lead to multiple countries supporting each other in establishing the Cap and Share, implementing it, and simultaneously reducing their greenhouse gas emissions.
In the long term, this would help Pakistan’s at-risk communities, decrease its emissions, and help develop its climate-resilient infrastructure.
Conclusion
In conclusion, the Cap and Share policy would help communities affected by climate change. With the case study of Pakistan, implementing a Cap and Share policy could be developed through a high-emitting country partnership, such as the US or China. Both may collaborate to develop the Cap and Share within their countries and establish accountability mechanisms. Cap and Share would ultimately benefit countries of the Majority World and gradually reduce the CO2 emissions of the Minority world whilst benefiting the helpless communities in both the Global South and Global North.
Cap and Share has not been implemented in any country but is gaining recognition for its effectiveness, such as in the second edition of the IPCC Working Group report in 2022. Therefore, countries that may implement the model now will have a strategic advantage in the long run, with a better, well-established model of Cap and Share that the rest of the world can follow.
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Hania Imran is a Climate Justice Activist and the founder of Youth Climate Activists Pakistan (YCAPK), a youth-led collective dedicated to empowering young people through climate education and resource curation. Hania has represented Pakistan on prestigious global platforms, including COP27 and COP28, and served as the country’s sole child delegate at the South Asia Initiative to End Violence Against Children in the Maldives. She also participated in Women Deliver 2023, the largest global conference on gender equality.