Foxnews seems surprised that global carbon pricing would result in changes in the allocation of carbon based production.
Fox's concern seems to be over competitive disadvantages caused for high-carbon economies. There's nothing surprising in a UN report that says that if carbon is priced globally there will be world-wide distributional adjustments. The real question is, what sorts of policies will need to be enacted to ensure efficient (fair?) outcomes for the countries involved?
Here's how Fox sees it (and then I'll interpret)...
Among the tools that are considered are the cap-and-trade system for controlling carbon emissions that has been espoused by the Obama administration; "carbon taxes" on imported fuels and energy-intensive goods and industries, including airline transportation; and lower subsidies for those same goods, as well as new or higher subsidies for goods that are considered "environmentally sound."
Other tools are referred to only vaguely, including "energy policy reform," which the report indicates could affect "large-scale transportation infrastructure such as roads, rail and airports." When it comes to the results of such reform, the note says only that it could have "positive consequences for alternative transportation providers and producers of alternative fuels."
In the same bland manner, the note informs negotiators without going into details that cap-and-trade schemes "may induce some industrial relocation" to "less regulated host countries." Cap-and-trade functions by creating decreasing numbers of pollution-emission permits to be traded by industrial users, and thus pay more for each unit of carbon-based pollution, a market-driven system that aims to drive manufacturers toward less polluting technologies.
The note adds only that industrial relocation "would involve negative consequences for the implementing country, which loses employment and investment." But at the same time it "would involve indeterminate consequences for the countries that would host the relocated industries."
There are also entirely new kinds of tariffs and trade protectionist barriers such as those termed in the note as "border carbon adjustment"— which, the note says, can impose "a levy on imported goods equal to that which would have been imposed had they been produced domestically" under more strict environmental regimes.
Another form of "adjustment" would require exporters to "buy [carbon] offsets at the border equal to that which the producer would have been forced to purchase had the good been produced domestically."
My interpretation: Cap'n Trade, if implemented, will only be implemented in developed countries. This will raise the price of carbon intensive products produced in developed countries. This give developing countries a competitive advantage in carbon intensive production. To counter this and remain fair and to maintain competitive balance, developed countries will need to adjust prices of products for their carbon content when they enter the country
Fair and balanced.
The point of the UN discussion is to figure out a way to make sure the price of carbon is globally effective and the relative adjustments are between carbon intensive and carbon tensive (or whatever the opposite of intensive is) production: Not between carbon intensive production in developed countries and carbon intensive production in developing countries.
World changing? Probably.
Horrifying? Maybe to some.
Stultifying? Not so much.
*Sarc
**I'm stupid, so I had to look up 'stultify'. Here you go--Stultify: to make, or cause to appear, foolish or ridiculous (Dictionary.com). Apparently FoxNews knows something about this.
