Smoke, mirrors and carbon?

I have a bit of a problem with climate change. I am trying not to give too much weight to technology as an influence on possible futures. And especially when thinking about global change I am convinced that social technologies, as it were, will be as important as anything deriving from natural sciences or engineering in fashioning a response which is on the right scale. The problem is finding them harder to write about. Geo-engineering is so much more fun to think about than cap and trade. I am reasonably sure, for example, that some carefully contrived market will be needed to drive technological deployment in the right direction. But how to contrive that? Part of the problem may simply be my own economic illiteracy. But the stuff does really seem pretty mysterious.

Item: a talk in Bristol the other night from Graciela Chichilnisky, who takes credit for the carbon market built into the Kyoto Protocol. She is an extremely interesting woman, if not quite as good at explaining stuff as she seems to think. This may be deliberate – she is also obviously a wily politician, and does a good line in not quite hearing the question properly when taxed with something she has said which is arguably incorrect. But I left pleased that someone so smart, committed and optimistic is still deeply involved in the discussion in the run up to the Copenhagen meeting which will have to agree how to follow Kyoto. However, she left us with copies of her piece last week in Time magazine which explains how to break negotiating deadlock between the US and China over limiting the latter’s emissions. The crucial paragraph says:

“In the agreement — think of it as a financial trade — the U.S. would buy an option to require China to lower its emissions below a certain agreed level. At the same time, Beijing would take out what amounts to an insurance policy to establish a minimum amount that Washington would pay Beijing if or when the U.S. exercised its option. The cost of Beijing’s insurance policy and the cost to the U.S. of exercising its option on China’s emissions levels would be set at roughly the same price.”

I so don’t understand how that works. It might as well say, “smoke here”, and “mirrrors over here”. Can anyone point to a place where these things are explained intelligibly? Carbon futures for dummies: that kind of thing.

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