National Cap and Share Pledge

Cap and Share is a necessarily ambitious and comprehensive policy framework to address the climate crisis and generate climate finance. Now more than ever we need costed, feasible solutions to achieve the goals of the Paris Agreement and meet the quantum of the NCQG. All countries have a responsibility to explore new mechanisms to do this, and by being a first signatory to the Cap and Share pledge, your country can enhance its status as a climate justice champion.

The pledge itself does not commit any country to action legally, financially or otherwise. What it does is solidify their support for the core principles of Cap and Share, and establishes a commitment to raising awareness and exploring ways to advance Cap and Share globally. 

Signing the pledge itself is a significant step towards this. Other examples might include mentioning Cap and Share in speeches and international negotiations, or encouraging ministerial counterparts in other countries to sign the pledge. Equal Right will provide all signatories with a list of ideas to advance Cap and Share and, where possible, will provide resources to support countries in taking them forward. 

Despite the similar name, Cap and Share is very different from cap and trade schemes, and other market-based or emissions trading schemes. These differences include:

• Applying a cap on the extraction of fossil fuel, rather than emissions;

• Charging polluters for every single tonne extracted - not just for what they emit over the cap;

• The cap would be legally binding, anyone going over the cap would face severe penalties;

• No offsets, trades or swaps that would put us over the cap are allowed, and the cap would progressively reduce to zero;

• Cap and Share has a redistributive element, giving money back directly to the people of the world.

It is more effective, and easier, to enforce a charge or tax on extraction. Just 100 companies account for nearly ¾ of all fossil fuel extraction, and by addressing the problem upstream, it becomes much simpler to accurately gauge CO2e when compared with emissions-based systems. A cap is also an effective and clear way to limit fossil fuel extraction to a level necessary to keep us within planetary boundaries.

There are two main considerations here: first, ensuring developed countries are not able to use an unfair share of the new carbon budget under the cap, and second, that developing countries receive their fair share of climate finance.

To ensure equitable access to the remaining fossil fuel allowance under the cap, each country would receive a national allowance based on their historic per capita emissions, which would favour the vast majority of low-income and climate vulnerable nations. These nations would be able to sell their allowances to other countries if they don’t need them (creating a revenue stream), or keep them for their own national use.

Equal Right has set out a Cap and Share model in which all proceeds raised by the charge would be placed in a ‘Global Commons Fund’. This fund would invest in a Green New Deal and pay out climate grants. The share of climate grants should be proportional to countries’ historic climate emissions and respect the principle of Common But Differentiated Responsibilities (CBDR). As such, developing countries with high levels of climate vulnerability would receive the lion’s share of climate grants. Developed countries would receive some funding for things like ‘leave it in the ground’ compensation for fossil fuel reserves they don’t extract, and support for public sector energy costs. 

Our figures suggest Cap and Share could raise at least $5 trillion in its first year alone. We have suggested $1 trillion of this amount be set aside annually for non-debt-creating climate grants, £200bn invested in a Global Green New Deal, and the rest distributed as unconditional cash payments to every citizen of the world.

There are many reasons why the dividend from Cap and Share, which can also be called a Universal Basic Income, is a good idea:

• It helps tackle world poverty, especially in the poorest countries;

• It recognises that the climate crisis is a universal and global issue, and that everyone should be included in finding solutions; 

• It helps compensate people for any cost of living losses as a result of energy price inflation from the charge; 

• It reflects that fact that everyone has an equal right to a share of the world’s wealth and resources.

The GCF is an innovation added to Cap and Share (which has been around since the early 2000s) by Equal Right. We recognise that the climate crisis (and other crises like poverty and inequality) will not be fixed in a matter of years - we need big, structural and sustainable financing solutions that can turn private wealth into public wealth, benefitting people now and in future generations. 

By placing revenues into a fund, which would in turn invest in public goods like renewable energy and green infrastructure, we can create a powerful mechanism for redistribution of wealth, and not be permanently reliant on diminishing returns from carbon revenues. As carbon usage declines, as it must, so will revenues for climate finance. To ensure we are not reliant on carbon usage forever, we must replace these revenues with a more sustainable financing solution - this is where the fund comes in.

Only if we make it possible!

The climate crisis will not be solved through incremental policy change or business-as-usual financial mechanisms. We need radical and suitably ambitious policies, and national governments are best placed, as the highest legal authority globally, to push for these policies. 

It certainly won’t happen overnight, but the best we can do is start now. The most feasible route to Cap and Share implementation would be a group of countries coming together to plurilaterally implement Cap and Share, based on their own fair share of extraction licenses, and pooling resources collectively in a Commons Fund. Equal Right is actively working to make this happen in places like Malawi, and maybe your country can be the next to join us!

Cap and Share complements and reflects the same principles and aims of these and other initiatives - we also want to see a just phase out of fossil fuel and policies to make polluters pay. We see Cap and Share as a vehicle, or operating system, to help make them happen.