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Executive summary

The carbon rights proposal is based on the simple principle that anyone who makes a mess should clean it up, or pay someone else to do so. It does not require making fossil fuels too expensive to use, or advocate unrealistically rapid changes in our energy and transportation infrastructure. Nevertheless it can manage rapid reductions in net carbon emissions, at an easily affordable price.

It does so by emphasizing removal of carbon from the atmosphere. Businesses that remove carbon would gain the right to emit an equivalent amount, and could sell those rights for profit. Others would purchase the right to emit carbon from those who removed it. Governments would audit both sides of this carbon economy and manage the transition to full carbon neutrality.

During the transitional period, we buy some time with a short-term program to cool the globe directly. This can be done safely and inexpensively.

Ultimately, developing the ability to sequester large amounts of carbon will give us a way to return CO2 concentrations to whatever level we desire.



Dennis B. Peterson, Charlotte NC


What: Actions and impacts

Begin with a study group to evaluate methods of atmospheric CO2 absorption, based on effectiveness and auditability. Approve any method that can be transparently and objectively audited for quantity of carbon absorbed, and which doesn't cause undue environmental harm. Evaluation should be via an open scientific process, and be ongoing as new methods are proposed.

Once each method is approved, hire and train auditors of that method. Upon audit of an absorber, issue carbon rights to the absorber. Audit reports should be public. No carbon rights should be issued for any cause other than verifiable sequestration of carbon.

Owners of carbon rights may sell them to the highest bidder.

Governments then require payment of carbon right certificates by major source emitters, such as coal mines and oil companies. Since there are only about a thousand major emitters, this minimizes collection costs and intrusive regulation, while reliably spreading the cost to everyone who burns fossil fuels.

Governments destroy all carbon certificates received in payment. This should be audited and publicly verifiable.

By auditing both absorbers and emitters, governments will know the ratio of absorption to emission, and can set the emission price accordingly. If 1000 times as much carbon is emitted as absorbed, the government should require a payment of a 1 ton carbon right (i.e., a certificate for 1 ton of absorbed atmospheric carbon) for every 1000 tons emitted, plus a little more to introduce scarcity, creating demand for additional absorption. By adjusting the ratio frequently as absorption capacity increases, carbon rights are gradually phased in with minimal disruption.

Source emitters unable to deliver the required emission certificates should be charged a penalty higher than the market price of the certificates. Governments hold that money in reserve, and use it to purchase carbon rights on the open market. The penalty should be adjusted periodically as the sequestration cost per ton decreases.

Initially of course there is no audited sequestration, but this is easily handled. Simply set the ratio to a small, arbitrary initial value. Emitters will be unable to provide the required certificates, so they are charged the penalty amount, which is set according to the highest estimates of sequestration costs. Governments use that money to purchase carbon rights when they become available, providing a guaranteed market for startup sequestration businesses.

To the extent that governments wish to engage in quantitative easing, purchasing and destroying additional carbon rights could be an effective and beneficial way to do so. 

As with any scheme for adding cost to carbon emissions, it will be important to consider indirect carbon sources such as deforestation, and charge carbon rights accordingly. Biofuels, for example, should not be given a free ride if their net effect is increased carbon emission due to deforestation. CO2 levels aside, biodiversity is an important consideration.

Carbon rights are a long-term solution that fixes all the problems of excess CO2, including non-climate effects such as ocean acidification. Due to the positive feedback loops of increased temperature, resulting in problems such as increased natural methane emissions, a short-term program to cool the planet directly may be important to buy a little time. Fortunately this can be done safely and economically by seeding clouds with seawater. (The method is detailed in the feasibility section.)


Of course, none of this will happen until governments take action. This has proven quite difficult for schemes requiring high carbon costs and the destruction of powerful industries. An inexpensive but effective plan that allows those industries to stay in business should be significantly easier to agree on. Initial costs would be quite low, increasing gradually over the course of multiple election cycles, and only with successful implementation. As costs increase, so does employment and business related to sequestration, building a constituency to continue the program.

In a perfect world, all governments would participate. But if it doesn't happen we can make do. Governments that implement carbon rights can apply them as an import duty on any fuels imported from countries that refrain. To facilitate this, it may be necessary to modify international trade agreements.

With a common carbon rights currency (denominated in tons of carbon), developing countries will be able to earn income by sequestering carbon. Replacing slash-and-burn agriculture with topsoil-restoring agricultural methods and biochar could provide substantial income to developing countries while helping to preserve biodiversity. To earn this income, they would of course have to agree to buy carbon rights for their own emissions and deforestation. If developed countries wish to assist, they could invest in or subsidize sequestration businesses and renewable energy sources in developing countries, or provide separate inducements to participate. Directly subsidizing carbon right purchases by developing countries could be counterproductive. 

To the extent that we go beyond neutrality to reduce global CO2, it makes sense for developed countries to pay the bulk of that cost, since they were the ones who put most of that CO2 there in the first place.

In general, it is not necessary to get all countries involved right away. Early adopters will have slightly higher energy costs than competitors, but will get a head start on sequestration. As the international sequestration market picks up, other countries will gain interest in participating. (The Midwestern United States could make enormous profits from carbon rights.)

The most contentious aspect of the plan could be the cloud seeding, since it could be blamed (justifiably or not) for practically any adverse weather event. Matters could be improved with careful modeling to place the ships where they are least likely to do harm, along with prior agreement on a framework for ongoing adjustment and dispute resolution.


This proposal does not set particular emissions targets, preferring to simply provide market incentives to sequester carbon as as fast as physically possible. Beyond the initial startup, governments should require just a little more carbon rights than the market is able to provide, neither accumulating large reserves of penalty payments, nor allowing the penalties to disappear. 

An accurate model of this proposal would need to account for multiple sequestration methods, each with its own development speed, capital requirements, total capacity, and cost curve. Similar handling of renewable power sources would also play a part. For accurate temperature projection, it would need to account for direct cooling by cloud seeding, which can have surprisingly dramatic effects at low cost.

Consequently, the MIT Composite Model doesn't handle this proposal very well. Estimates of cooling are too low initially. Net carbon emissions will ultimately be neutralized, but initially will increase until sequestration overtakes new emissions. The model is also unable to estimate costs for this proposal, assuming that aggressive net reductions will be very expensive. This is only true in the absence of large-scale sequestration, which gets cheaper at scale.

Since the Composite Model does not account for large-scale engineered sequestration, this proposal's model leaves it out as well, estimating modestly increased emissions. The mitigation costs of this model can be added to the sequestration costs described in this proposal. (This may be somewhat pessimistic, since the cost of sequestration is in effect an upper limit on CO2 reduction costs. Any emitter may either reduce emissions, or pay for their sequestration. If the sequestration is cheaper, that's what will usually happen. However, it seems reasonable to assume that decreasing emissions directly will often be most economical approach.)

Taking sequestration into account gives much better physical results. As described below, it seems feasible to completely neutralize CO2 emissions. If we assume 95% reduced net emissions from 2017 to 2060, plus maximum sequestration from tree growth and deforestation at 0.5, CO2 stabilizes at approximately 400ppm, temperature increases a little over one degree, and sea level rises a little over half a meter, with damage cost estimated at under one percent GDP.

Even this scenario ignores the effects of geoengineered cooling. which while having no effect on CO2 levels, would significantly improve temperature results.

The feasibility section contains justifications for this proposal's optimistic projections, with cost estimates for carbon neutrality and initial implementation.


Why: Rationale for the proposal

This proposal is somewhat similar to cap-and-trade proposals, but with much less opportunity for political favoritism. Cap-and-trade is most effective when carbon credits are sold strictly at auction, but this is seldom done. In Europe, some heavy polluters were granted so many credits they were able to sell the excess at a profit. Carbon offsets are also rife with abuses and distortions, with entities being granted credits for actions they would have taken in any case.

Under this proposal, carbon rights will be granted only for verifiable sequestration, and sold by private for-profit entities for the best price they can get. There will be no grandfathering or offsets.

A carbon cap requires politicians to determine what the cap should be. If they set it too aggressively, they either cause havoc in the marketplace, or they let things slide and lose credibility. At the same time, lobbyists for emitting industries will pressure them to be overly conservative. It's unlikely that the cap will be lowered at the maximum feasible rate. The failure of Kyoto signatories to meet their emissions targets illustrates the difficulties in attempting to set targets from the top down. With the carbon rights proposal, there is no cap, just a strong, self-adjusting market incentive to increase sequestration efforts as quickly as possible.

Carbon taxes leave open the question of how much the tax needs to be. It's difficult to know how much increased cost is required, to incentivize change without excessively burdening society. Carbon rights solve the problem elegantly; the added cost is simply the price of absorbing carbon. 

Carbon taxes and cap-and-trade could also give bad incentives to governments, if they become dependent on revenue from carbon emissions. 

Carbon emitters who take a long-term view should welcome the carbon rights proposal compared to others, since it emphasizes absorbing emitted carbon rather than avoiding emissions in the first place. Emitters can continue to profit in a carbon rights society, even one that is completely carbon neutral.

For the consumer, the problem is solved at the cheapest possible price. Other solutions work best when the most cost is added to the consumer. Carbon rights do not rely on reducing demand with high prices; they rely on cheaply absorbing CO2. The lower the cost, the better.

It's not surprising that consumers resist schemes that rely on increasing prices, or that source emitters resist schemes that rely on reducing their output. Carbon rights allow emitters to stay in business, minimize impact on consumers, and introduce a dramatic new entrepreneurial opportunity for everyone. 

Philosophically, cap-and-trade could be seen as giving governments the exclusive right to emit carbon, which they then sell to others. Carbon rights allow emission rights to be gained by anyone who first absorbs carbon.

While geoengineering is controversial, unhappily we have been doing it inadvertently for the past century. We are already well above the "safe" CO2 level of 350ppm, and if just our current fossil-fueled power plants live out their expected lifespan, we are committed to CO2 levels of 430ppm in the absence of sequestration.

The question we face is not whether we'll do geoengineering, but what form of it will be least harmful.


How: Feasibility of proposal

There are several technologies available for economically absorbing CO2 from the atmosphere.

1) Restore topsoil

Topsoil can be rapidly restored with appropriate farming techniques, such as subsoil plowing, planned grazing on perennial grasslands, pasture cropping, and composting. Vast quantities of carbon can be sequestered this way. Increasing the carbon content of the area of the Earth we actively control (8.5%) by 1.6% (i.e., from 5% carbon to 6.5%) would return atmospheric CO2 to pre-industrial levels. This amount of topsoil improvement can be accomplished in ten years. Side benefits include more productive soil with less need for chemicals.

Farms can be audited by direct measurement of carbon levels in soil. Carbon Farmers of America currently charges $25 per ton of sequestered CO2, equating to $83 per ton of carbon.

Biologically active topsoil also acts as a methane sink.

However there is concern that carbon sequestered in topsoil won't necessarily be permanent.

One factor is that farmers could earn carbon rights then revert to conventional practices. Consequently, an award of carbon rights for topsoil should be coupled with a contract or covenant requiring purchase of carbon rights if soil carbon levels decrease.

2) Biochar

Burn biomass in a low-oxygen environment to produce charcoal, then pulverize it and work it into soil. Biochar is believed to sequester carbon for several thousand years. Since it generally beneficial to soil, it could economically be worked into vast areas of farmland. Happily, farms tend to produce plenty of waste biomass that could be converted.

Biochar does have potential drawbacks. If incentives aren't carefully constructed, extensive use of biochar could result in the large-scale destruction of old-growth forests for the sake of carbon sequestration; it would be important to consider forest preservation when determining who could earn carbon rights for biochar production. On the other hand, biochar can improve matters compared to slash-and-burn agriculture; in fact, the Biochar Fund is currently involved in a project to protect rainforest in the Congo.

Biochar is a well-known idea with a number of books examining it, and has been advocated by James Hansen and James Lovelock. While there are many factors affecting costs, biochar has the potential to be very economical; between the benefit to soil, the production of usable heat, and the production of flammable gas from modern pyrolysis systems, it is not far from profitability even in the absence of a carbon rights system.

3) Artificial trees

Based on research by Klaus Lackner of Columbia University, these would use a resin that absorbs CO2 when dry and releases it when wet. CO2 would then be sequestered underground. Not counting sequestration, the cost is estimated at $150/ton initially, dropping to $20/ton at scale, with a single tree-size device absorbing a thousand times as much carbon as a natural tree.

Although the need for carbon storage is a complication, the CO2 can be captured near the storage site, rather than at the point of emission, potentially lowering costs. There are several options for safely storing CO2.

Injecting CO2 into basalt formations should be quite permanent, since the CO2 would convert into limestone.

Another idea is to hydrate the CO2 with water to produce a carbonic acid solution, then mix it with crushed limestone producing bicarbonate, which can be injected into the ocean without increasing its acidity. The same process occurs naturally, but at a much slower pace.

Instead of storing the collected CO2, it could be used as a product. With the application of energy from non-emitting sources, it could be turned into a carbon-neutral fuel. Having some of this infrastructure in place could be particularly convenient when peak oil begins to have more of an impact.

4) Add calcium oxide to oceans

Thermally decompose limestone into CO2 and calcium oxide (quicklime), react the quicklime with water to produce calcium hydroxide, and add that to the oceans. Although this process results in the release of CO2, it increases the ability of the ocean to absorb CO2 by almost twice as much, while also decreasing the acidity of seawater. 

One major deposit of limestone is the Nullarbor Plain in Australia. Consuming five percent of that deposit would be sufficient to return CO2 to pre-industrial levels. Offsetting all current emissions would take about 2.5 terawatts. Since the process simply requires heat, solar thermal or nuclear power without a steam cycle could be cheaper than the same amount of electric power.

Possibly this energy requirement could be reduced by using the energy from the exothermic reaction of quicklime with water. Instead of releasing CO2 it could be captured and stored, or converted to fuel. Conveniently, one of the methods mentioned above for storing captured CO2 also uses limestone.

The largest providers of commercial quicklime are China and the United States. Quicklime is available for $84/ton. This would put our price per ton of carbon sequestered at around $150 to $300.

Commercial quicklime would not of course be the way to go, since it's likely produced using fossil fuels. Doing everything on site should be significantly cheaper as well. Developing a CO2 capture process for quicklime production could be beneficial to commercial quicklime producers under a carbon rights regime.

Injecting the calcium hydroxide into seawater would need to be done carefully, to ensure effectiveness and prevent large negative impacts on sea life. Costs will increase accordingly.

There is evidence that the oceans' ability to absorb CO2 is decreasing.

Geological formations of limestone are among the best petroleum reservoirs. This could be an inducement for some oil-producing countries to participate in a carbon rights program.

CQuestrate has received research funding from Shell.

5) Remove hydrochloric acid from oceans

"Remove hydrochloric acid from the ocean by electrolysis and neutralize the acid through reactions with silicate minerals or rocks. The reaction increases the alkalinity of the ocean and its ability to absorb carbon dioxide from the atmosphere. The process is similar to the natural weathering reactions that occur among silicate rocks but works at a much faster rate. About 700 plants could offset all CO2 emissions."

6) Carbon-negative cement

Cement production is a significant CO2 source, generating nearly a ton of CO2 for every ton of cement and accounting for five percent of world CO2 emissions. New forms of cement can reverse this, permanently sequestering half a ton of CO2 per ton of cement. Governments can facilitate this technology by making sure this cement is approved under building codes, and doing necessary testing to be sure of safety.

All of these ideas, and perhaps more, could play a part in the overall solution, and in a dynamic new economy. None of them will be implemented unless there is a market for them.

Putting a price on carbon emissions will of course improve the competitiveness of technologies that don't emit carbon at all. This proposal takes no position on the particular technologies used to reduce net emissions. It simply provides a rational economic incentive to find the cheapest ways to do so.


Assume, somewhat conservatively, that absorbing carbon will cost $100 per ton. Since a gallon of gasoline contains 5.5 pounds of carbon, that would add 28 cents per gallon, not counting the fossil-fueled energy expenditures of producing and transporting the fuel.

Global CO2 emission in 2007 was 30 billion tons, or 10 billion tons of carbon. This gives a global cost of $1 trillion/year at $100/ton. Per capita emissions in the U.S. were 19.3 tons of CO2 in 2007, giving a cost of $579 per person.

Global GDP was $61 trillion in 2008, which puts the cost at 1.6 percent global GDP to completely neutralize emissions.

It seems likely that a mature market in carbon remediation will bring the price down, one way or another.  The U.S. Department of Energy estimates carbon capture cost at $100 to $300 per ton, but is targeting $10/ton for the near future, at least for point sources. If we manage to do half that well, achieving the projected cost of artificial trees at scale, then the average U.S. citizen will pay a mere $116/year to achieve complete carbon neutrality (at least with regard to CO2).

Costs would be lower prior to achieving neutrality. For the sake of argument, let's assume all countries participate, and select an initial target of absorbing 0.1 percent of emissions, with an initial penalty of $300 for each ton of required carbon rights that aren't provided by emitters. Given 10 billion tons of annual emissions, this would require 10 million tons of carbon sequestration. Since initially no carbon rights would be available, this would amount to an annual tax of $3 billion on emissions worldwide, or a price on carbon of 30 cents per ton. The money would be used to purchase sequestration as it becomes available, providing a $3 billion/year market for sequestration businesses, with the promise of 1000-fold growth over the next several decades (less replacement of emitting technologies with alternatives). As business picks up, the penalty amount can be lowered to something closer to the actual market price of sequestration. As sequestration approaches 0.1 percent of emissions, governments increase the absorb/emit ratio, keeping it perhaps ten percent higher than the actual level of sequestration.  When the desired level of atmospheric carbon is attained, the ratio is set to 1:1 permanently.

Although this proposal has focused so far on CO2, other greenhouse gases are also important, particularly methane. Although it may be best to begin with CO2, extending carbon rights to other gases, weighting the rights awarded and charged according to the gases' global warming potential and their impact on ocean acidification would be a more complete system, and perhaps provide opportunities for economical remediation that we would otherwise miss.

Cloud Seeding

For short-term cooling, the cheapest and safest proposal appears to be seeding clouds with seawater, using 1500 to 1900 specially-designed wind-powered ships. This would be sufficient to cancel out the warming effect of our current level of CO2. The cost of the program is estimated at $9 billion. If unacceptable side effects emerge, the program can be halted, its effects dissipating within five days.

Some news reports have indicated that the cloud seeding program would take 25 years to implement. If we have to wait that long, the problem may have already gotten well past us. Given the low cost and reversibility of this method, excessive caution seems misguided. Initial testing for effectiveness would of course be important, as described here:

The development of this program would be inexpensive and could be accomplished in five years:

A crash course to get these ships operating quickly would give us a little breathing room. Seeding ships could be developed and built directly by cooperating governments. On the other hand, it may be faster to simply provide legal protections for private entities wishing to perform the task, and government payment for verifiable seeding. In the latter case, governments should incentivize investment by guaranteeing payment, even in the event that governments halt the actual seeding due to unforeseen effects. 

As promising as cloud seeding appears, it's not a permanent solution. It does nothing for ocean acidification or other adverse effects of elevated CO2. If used alone, it would force us to rely on an ever-increasing armada to keep temperatures stable. Getting CO2 levels in check is a much better solution for the long term. But in the short term, putting a stop to ice melt and methane outgassing from permafrost could be invaluable, and reduce the amount of sequestration required later.


Vision of the future under this proposal

A fully carbon-neutral carbon rights society will not look that different from society today. Fossil fuels will be a bit more expensive, but not enough to notice much; we've already experienced, in the past several years, greater swings in the price of gas than we'll see with carbon rights. Organic food will be cheaper than it is now, as more farmers convert to topsoil-healthy farming methods. Renewable energy sources will be a bit more competitive. We'll still drive SUVs and crank the thermostat, but we'll do it without guilt, knowing that the world is back in balance.

Meanwhile, there will be a lot of people making money by sequestering carbon. Coastlines will be dotted with seawater processing plants. There will be vast mining operations on the Nullarbor Plain and other limestone deposits, and artificial tree farms much like the wind farms we have today. Farmers will restore our lost topsoil, growing all the food we need with a lot less chemical runoff into the sea. Our fleet of cloud seeding ships will gradually be retired.

Ultimately, so will our fossil fuel industry, as peak oil and new technologies make it obsolete. The industry will leave the planet the same as it found it, fresh, cool, and alive. In the meantime, it will continue to profit in a healthy world.

We can stop global warming, without oppressive regulation, without restricting economic growth or imposing onerous costs, and without relying on breakthrough technologies. All we need to do is start cleaning up our mess.