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FOREWORDDr James E. Hansen, Head of the NASA Goddard Institute for Space Studies Adjunct Professor, Columbia University's Earth Institute If we are to preserve a planet resembling the one on which civilisation developed, a world that avoids the economic devastation of continually receding shorelines and the moral nightmare of having exterminated a large fraction of Earth's species, we need to act now. The science is clear: burning most fossil fuels would invoke dire consequences. There is a basis for optimism, though, as phase out of fossil fuel emissions would have many other benefits. However, the next policy approach must not repeat the basic mistakes that doomed the Kyoto Protocol. Wasting another 15 years on an ineffectual approach would sentence today's young people to a catastrophic future.Kyoto ProtocolThe Kyoto Protocol was ineffectual in reducing global fossil fuel CO2 emi ssions. Indeed, the emissions growth rate doubled, from 1.5 to 3 per cent per year, following its adoption. A fundamental flaw of the Kyoto approach was its "cap" mechanism, which embodies two ineluctable problems. First, it is impossible to find a formula for emission caps that is equitable among nations and also reduces emissions at the rate required to stabilise climate. Second, it fails to provide clear price signals that would reward businesses, individuals and nations that led the way in reducing emissions. Validity of the first assertion is proved by comparing national responsibilities for climate change, which are proportional to cumulative historical emissions. The United Kingdom, United States, and Germany have per capita responsibilities exceeding those of China and India by almost a factor of ten. Even if the UK, US and Germany terminated emissions tomorrow, by the time China, India and other developing nations reached comparable responsibility for climate change the world would be headed to certain climate disasters.Fe and DividendFee and dividend has a flat fee (per ton of CO2) collected from fossil fuel companies on domestic sales of all fossil fuels. Collection cost is trivial at the small number of collection points: the first sale at domestic mines and the port-of-entry for imported fossil fuels. All funds collected are distributed electronically (to bank account or debit card) monthly to legal residents of the country in equal per capita amounts. Citizens using less than average fossil fuels (more than sixty per cent of the public with current distribution of energy use) receive more in their monthly dividend than they pay in increased prices. All people have an incentive to reduce their carbon footprint to stay on the positive side of the ledger.The carbon fee should rise at a rate that sows benefits of economic stimulation while minimising economic disruptions from sudden change. Economic efficiency will improve as the price of fossil fuels rises toward a level that matches their cost to society. Fossil fuels are the dominant energy today, and are used wastefully, because the human health and environmental costs are externalised onto society as a whole rather than being internalised into their prices.As the urgency of the climate threat grows, the international community must recognise that all nations are in the same boat. As long as fossil fuels 014 Foreword

" There is a crying need for political leaders who can see through special financial interests and understand the actions required to achieve a bright future for young people and the planet "are subsidised and fail to pay their costs to society, they will be burned. Even ostensibly successful caps simply reduce demand for the fuel, lowering its price so it is burned somewhere else. What is needed is an approach that results in economically efficient phase-out of fossil fuels, with replacement by energy efficiency and carbon-free energy sources such as renewable energy and nuclear power.Fee-and-dividend allows the market place to choose technologies. Subsidies should be eliminated for all energies. This approach spurs innovation and stimulates the economy as price signals encourage the public to adopt energy efficiency and clean energies. All materials and services naturally incorporate fossil fuel costs. For example, sustainable food products from nearby farms gain an advantage over highly fertilised products from halfway around the world.A carbon fee (tax) approach can be made global more readily than cap-and-trade. Say a substantial economic block, such as Europe and the US or Europe and China, agrees to a carbon tax. They would place border duties on products from nations without an equivalent carbon tax, based initially on standard, but appealable, estimates of fossil fuels used in making the product. Border duties create a strong incentive for exporting nations to impose their own carbon tax, so they can collect the funds rather than have them collected by the importing country.Advantages of being an early adopter of fee-and-dividend include improved economic efficiency of honest energy pricing and a head-start in development of energy-efficient and low-carbon products. Potential economic gains to middle and lower income citizens who minimise their carbon footprint will address concerns in many nations where citizens are becoming restive about growing wealth disparities. An added social benefit of fee-and-dividend is its impact on illegal immigration - by providing a strong economic incentive for immigrants to become legal.Barriers and International ImplementationSolution of fossil fuel addiction must overcome the barriers of the fossil fuel industry's influence on politicians and the media and the short-term view of politicians. There is a crying need for political leaders who can see through special financial interests and understand the actions required to achieve a bright future for young people and the planet. China, a nation with leaders rich in scientific training and a history of taking the long view, is a candidate for leadership. China has several hundred million people living within 25 meter elevation of sea level, and the country stands to suffer grievously from intensification of droughts, floods, and storms that will accompany continued global warming. China also recognises the merits of avoiding a fossil fuel addiction comparable to that of the United States. The United States might be spurred into action by the threat of impending second-class economic status. Fee-and-dividend was praised by the policy director of Republicans for Environmental Protection as: "Transparent. Market-based. Does not enlarge government. Leaves energy decisions to individual choices. Sounds like a conservative climate plan." However, the public's conscience must be stirred to the point of action to overcome powerful forces for fossil fuel business-as-usual.European citizens and political leaders are perhaps most aware of the climate crisis. Yet Europe continues to push the feckless cap-and-trade approach, perhaps because of bureaucratic inertia and vested interests. Thus the world continues to wait for real leadership. nAbout the AuthorDr James Hansen heads the NASA Goddard Institute for Space Studies and is Adjunct Professor at Columbia University's Earth Institute. Dr Hansen is best known for his testimony on climate change in the 1980s that helped raise broad awareness of global warming. He is a member of the United States National Academy of Sciences and has received numerous awards including the Sophie and Blue Planet Prizes. Dr Hansen is recognised for speaking truth to power and for outlining actions needed to protect the future of young people and all species on the planet.Pictured: Dr James E. HansenForeword 015