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Impartial global incentive program catalyzing the industry and entrepreneurial capacity of private markets to execute the Great Transition.


Description

Summary

*Full global emissions and energy growth model with variable prongs of abatement and associated paper are available to download.

The Carbon-based Incentive Program is designed to deploy the industry and entrepreneurial capacity of private businesses to execute the greatest economic and technological transition in human history. This is catalyzed via the Great Incentive (GI) which is financed with the Great Funding (GF). The transition is termed the Great Transition (GT) and includes transforming our global energy system—deploying the technological ingenuity and scientific knowledge that we have accumulated over the past centuries. 

The Great Transition (GT) is comprised of five major prongs of economic activity to transform our fossil fuel based energy systems into renewable energy systems and simultaneously to scale CO2 sequestration, i.e. carbon capture. The scale and rate required by each prong is detailed in the paper.

  1. RDX: Lifestyle adjustments of 50.0% by the top 9.6% of the world's energy consumers per capita. 
  2. EFF: Efficiency improvements of 35.0% globally within 15 years by 2030, from current baseline energy-intensity of economic activity. 
  3. REN: Renewable or non-fossil production capacity construction within four decades by 2055 to replace 97.0% of current fossil fuel dependent energy generation. 
  4. SEQ: Sequestration from dryland restoration, degraded land restoration and/or other methods or technologies to capture 
  5. LAND: Current ecosystems - in particular forested land - preservation. 

 

The Great Incentive (GI) is the incentive program designed to compel businesses and nations to perform each prong of the GT rapidly. In short, instead of penalizing, the GI rewards businesses and countries for CO2 abatement. The GI is compelling and plausible for several major reasons. First, it aligns the profit motive of businesses with CO2 abatement. This aligns short term profit interests with our civilization’s long term interest of ensuring a prosperous future and rich history for humanity. Second, the proposed GI effectively internalizes the inherent value of CO2 emissions and abatement in our products and services. This corrects the mispricing of hydrocarbons—many real costs of which are currently being externalized—and renewables based on their inherent or true value. Third, tying incentives on a per unit basis to CO2 abatement is an impartial metric—it doesn’t pick winners. It lets industry and the entrepreneurial capacity of private markets, i.e. capitalism, pick and streamline the most cost-effective renewable and efficient technologies. Fourth, incentives will stimulate sustained private market reactions that support extensive global employment; it is projected that approximately 64.7% of incentive will be allocated towards efficiency improvements and renewable development projects that yield stable cash flows, high internal rates of return and extensive employment on a global scale.  

The Great Funding (GF) is the funding program designed to finance the GI. In short, funding contributions are sourced from nations annually in proportion with each nations’ trailing year CO2 emissions. This is plausible and compelling for several reasons. First, this method is equitable because wealthy nations that can contribute more funding are consistently also the largest emitters. It will not over-burden low or lower middle income nations with fiscally unfeasible funding contributions to participate. Second, by preserving their terrestrial ecosystems, low and lower middle income nations will earn incentive distributions in excess of their contributions. This net profit from participating in the GI/GF will provide said nations with the capital to develop their economies using clean technologies—rapidly improving the average lifestyle quality of billions of people currently living in poverty—without compromising natural resources.

*GT is catalyzed via the GI/GF synergy—stabilizing atmospheric CO2. Available to download at Energyweneed.


Which plan do you select for China?

China: Chemosynthetic Management of the Water/Energy/Nutrient Nexus (WENN)

Which plan do you select for India?

Massive campaign in India to create a network of Young Energy Ambassador

Which plan do you select for the United States?

2020 Cities By 2020: America's Mayors Taking Charge On Climate Change

Which plan do you select for Europe?

Unconventional Financing of Climate Change Mitigation + Adaptation

Which plan do you select for other developing countries?

Tree Product Value addition as a catalyst for Pro-poor Wealth Creation in Ghana

Which plan do you select for other developed countries?

Value not set.

What additional cross-regional proposals are included in your plan, if any?

See below re: solution-agnostic


How do the regional and cross-sectoral plans above fit together?

The Great Incentive rewards businesses and individuals instead of penalizing them—to promote the Great Transition which will further reward businesses and individuals by averting massive capital/wealth destruction and by preserving future GDP. Our accumulated innovation and ingenuity over the past few centuries has brought us to our current peak of technological capacity and knowledge. Not only do we have the technology, economy and knowledge to perform the GT successfully; the GT is by virtue of this inevitable. It follows in the sequence of revolutions that made us the dominant species on Earth.

We need the industry and entrepreneurial power of all players—private businesses, public agencies, civic leaders, schools, investors and the general public—to execute the Great Transition successfully. The GT must be immense and diverse; it cannot be performed in a piecemeal fashion or by ad hoc reactions or adjustment; or even by solely supplying all energy with renewable production capacity. Five prongs of abatement are necessary; diversification is critical to sufficiently mitigate the asymmetrical risk humanity faces. 

Only a grand and clear incentive program will steer businesses to rapidly perform the greatest transition in human history—that successfully averts severe climate disruptions. A global solution cannot be prescribed; solutions will be site-specific based on local demands and circumstances in communities, cities and nations. Therefore, on a global level, the impartial and equitable incentive structure of the GI/GF is designed to be solution-agnostic steering abatement by nations and businesses.

Our accumulated innovation and ingenuity over the past few centuries has brought us to our current peak of technological capacity and knowledge. Not only do we have the technology, economy and knowledge to perform the GT successfully; the GT is by virtue of this inevitable. We have the capacity now to go down in history as the generation of human civilization that saved our species.

The GI/GF program can catalyze a successful GT so that by 2055: We will have executed the greatest economic transition in our species’ history, saving civilization, preserving our accumulated wealth of productivity and putting us on a trajectory to flourish in future millennia while raising huge swaths of humanity out of poverty. Let this define our epoch. 


Explanation of the emissions scenario calculated in the Impact tab

Please refer to GT_Model_v2 for a global CO2 emissions and energy growth model available under a Creative Commons Share Alike license.

The resulting CO2 abatement modeled; resulting from assumptions presented in GT_Paper_v2; are summarized in the below figures:

 

400.0 ppm - Beginning atmospheric CO2 (YE 2014)

923.0 ppm - CO2 emissions without abatement

86.7 ppm - CO2-equivalent from other GHGs

35.4 ppm - CO2 emissions from land use change

(85.6 ppm) - CO2 abatement from lifestyle adjustments (RDX)

(281.4 ppm) - CO2 abatement from efficiency improvements (EFF)

(353.7 ppm) - CO2 abatement from non-fossil energy (REN)

(155.4 ppm) - CO2 abatement from seuqestration (SEQ)

(115.4 ppm) - CO2 absorbed by land

(103.5 ppm) - CO2 absorbed by oceans

350.0 ppm = ending i.e. net atmospheric CO2 by Year 2100.


What are the plan’s key benefits?

  1. Poverty reduction and supporting clean development: The GF/GI synergy ensures that low income nations will earn multiple times their annual funding contributions by performing prongs of the GT. The LAND, SEQ and RDX incentive distributions will give low and low middle income nations sizeable earnings in excess of their contributions, which they can use to develop efficient and renewably-based energy systems

  2. Lifestyle improvement for individuals in impoverished nations: This is critical given that low income nations account for 12.0% of our global population yet only 0.7% of global GDP. The GF would not price them out of participating in the GI; and the GF/GI synergy can result in them earning 2.1x their contribution through the RDX waterfall—equating to net earnings of approximately 4.9% of their global GDP each year.*

  3. Preservation; growth is not at expense of natural resources: The opportunity to win distributions through the GI will steer them to develop their economies and energy systems using efficient, non-fossil energy sources while preserving natural resources. This could reduce poverty, ensure access to electricity and significantly improve the lifestyle quality of billions of people. 

The above listed benefits are made possible because the GI makes the true value of CO2 abatement clear to private and public markets—thus utilizing the full industrial, innovative and entrepreneurial capacity of capitalism in a self-enlightened manner—guiding ourselves down the path of rapidly executing the GT to ensure our long term prosperity and history. And because impartial distributions reward businesses, individuals and governments for assembling and deploying optimal portfolios of products, technologies and processes all characterized by low energy demand, low emissions and/or high sequestration.

 

* Refer to GT_Paper_v2 for a more detailed explication of benefits, and for references.  


What are the plan’s costs?

Refer to sub-section: Avoided GDP loss will cover the GI many times over in GT_Paper_v2

  1. Loss avoidance will more than cover incentive costs: Avoiding the expected decline in GDP due to climate disruptions or opportunity costs, by performing the GT could fund all nations’ cumulative funding contributions many times over. The loss can be assessed using either the expected cost to the U.S., China and India in 2030, 2.1% of GDP, or the opportunity cost of not executing energy efficiency, waste management and public transportation—expected to be 2.2% of GDP in 2030.[1, 2] Using the latter, assuming zero loss prior to 2030 and then 2.2% starting in 2030 held constant through 2100, we will be giving up 58.1% of cumulative future GDP. On a per capita basis, $212,896 billion global GDP will be approximately $20,000 per capita versus $90,000 per capita with $986,080 global GDP.
  2. Distributions will catalyze and sustain private market reactions: The technologies and projects being incentivized through the EFF and REN distributions, which are projected to account for 64.7% of the Great Incentive, will yield stable returns and future savings will compensate for upfront investments. They will stimulate economy and thereby create jobs for the growing global labor pool of approximately 3.2 billion in 2015 and relieve unemployment for 200 million in that pool.

 

[1] DARA Climate Vulnerable Forum 2012. Note that future GDP growth is estimated here and throughout the GT_Model_v2 to be 3.0% year-over-year as per an OECD Economic Policy Paper (Johansson, et al. 2012). Note that a World Bank report estimates that implementing policies to mitigate climate disruptions would raise global economic output by as much as 2.2% in 2030 (Chestney 2014).

[2] Chestney, Nina. n.d. "Climate policies could lift global GDP by $2.6 trillion per year - World Bank." Reuters Business News. Reuters. London. Accessed July 4, 2015.


What are the key challenges to enacting this plan?

The key challenge is realizing a paradigm shift in cooperation. Countries have historically through the Kyoto protocol and in the up-coming Paris COP21 relied on individual commitments. This approach entrenches countries in self-interest rather than focusing on common goals. 

 


Timeline

  1. Lifestyle adjustments (RDX) to reduce energy use 50.0% by the 667 million people worldwide who consume on average 200 kWh/capita/day will reduce cumulative global primary energy demand through the century by 9.3%. These high energy users are assumed to achieve this RDX of 50.0% in 2015 and maintain it through the century. 
  2. Efficiency improvements (EFF) of 35.0% achieved in 15 years by 2030 would lower cumulative global primary energy demand through the century by 30.5%. We will derive the same utility or economic product that currently requires 100 kWh, with 35.0% less energy. 
  3. Non-fossil production capacity (REN) will replace 97.0% of primary fossil fuel energy within forty (40) years. Constructing renewables and new infrastructure is projected to emit 91.3 and 34.3 ppm CO2 respectively. In addition, 76.7 ppm is expected from fossil fuel energy used until non-fossil production capacity is fully constructed and from unreplaceable fossil fuel energy used through the century. The net abated CO2 emissions is 353.7 ppm.
  4. Sequestration (SEQ) or carbon capture is projected to contribute, i.e. absorb 155.4 ppm CO2 over this century. The model projects this based on increasing dryland and degraded land sequestration respectively by 3.71 and 1.85 metric tons (Mt) per hectare per year. Other land management techniques, agricultural practices or carbon capture technologies can contribute to this cumulative projected amount. 
  5. Lands (LAND) are assumed to absorb 1.34 ppm atmospheric CO2 annually, i.e. 115.4 ppm through the century. This is accomplished by preserving all currently forrested acreage globally.
  6. Oceans are assumed to absorb 1.20 ppm atmospheric CO2 annually, i.e. 103.2 ppm through the century.

 

Refer to section: Great Transition (GT) in GT_Paper_v2


References

Please refer to Endnotes (p. 75-82) and References (p. 83-94) in GT_Paper_v2 for all sources.