Comment Text:
CFTC Voluntary Carbon Markets Convening
The National Oceanic and Atmospheric Administration's (“NOAA”) Annual Greenhouse Gas ("GHG") Index has increased over 40% from 1990 to 2022 despite modest declines in carbon dioxide, methane, and nitrous oxide.
This is due to the 90% increase in the 100-year Global Warming Potential (“GWP”) weighted F-gases, specifically due to the 284% increase in emissions of hydrofluorocarbons since 1990, as a substitute for ozone depleting substances. [Please see Attachment]
This underscores the necessity of measuring GHG, calibrating GWPs, and permitting GHG emissions while certifying GHG offsets systematically, modifying the underlying law and economics Coase Theorem used to establish voluntary GHG markets decades ago.
Certified GHG Emission Allowance Permits and Offsets are translated, as per the EU Emissions Trading System (“ETS”), to a Standard Allowance:
One Standard Allowance = One Ton of Carbon Dioxide or Equivalent Weighted- GHG, [with GHGs weighted by their internationally calibrated GWP factor].
The rising cost from the declining supply of net certified GHG Emission Allowance Permits will be counterbalanced by the rising supply of certified GHG Emission Allowance Offsets, as the revenue from the former funds investment in rejuvenation, innovation, and technology for the latter.
Internalizing the cost of pollution in a GHG Permit Allowance Trading System (“GHG- PATS”) directs those funds to preserve natural resources and rejuvenate global ecosystems, sequestering GHG while restoring biodiversity; funds technology and innovation in building high-productivity, closed-loop industrial processes with zero-waste; and pays for biotechnology processes to quickly biodegrade plastics in oceans and landfills, and transforms waste to valuable products.
A Paris Agreement ratified legal framework and pricing mechanism, stimulating a cohesive and systematic market for greenhouse gas (“GHG”) offsets, will methodically decarbonize the planet with requisite speed and certainty. Global Sustainable Finance in international capital markets provides flexible structuring and hedging to unlock access to optimal positive internal rates of returns on transitional and perpetual greenhouse gas ("GHG") reduction project financings with global blockchain transparency.
Certified fungible GHG Emission Allowance Permits and Offsets in OTC and exchange- traded markets in international capital markets will transform ad hoc, fragmented regional markets into a robust, liquid global market to structure and hedge Global Sustainable Finance transitional and perpetual GHG Permit and Offset projects.
Structuring provides financial flexibility and accessibility, while hedging abates uncertainty by locking in GHG Emission Allowance Permit and Offset returns on investments (ROI) and returns on assets (ROA), over various extended maturities.
GHG-PATS uses the Coase Theorem modified to reflect reality, with the historical analysis illustrating the necessity of adopting an official legal framework and decarbonization pricing mechanism for the Paris Agreement to meet and beat targets that will not otherwise be realistically met.
The voluntary Coase Theorem premise was an expressly idealized worldview to clarify a simple situation of conflicting property rights that could be settled with perfect information, rationally, and without costs and monitoring.
Clearly, the complexity of remediating Climate Change and the short timeframe for meaningful action require a conceptual adaption of the Coase Theorem for its application to Climate Change remediation.
A permit system that internalizes both positive and negative externalities methodically and precisely, drives the underlying economics of resource allocation to higher productivity closed-loop industrial processes; funds the transformation of planet waste into valuable products; and rejuvenates global ecosystems to reverse the loss of biodiversity, fresh water, flooding, and other destructive extreme weather conditions.
Voluntary Carbon Markets based on the Coase Theorem are conceptually flawed as they lack the pre-conditions for successful application to global markets and have empirically been proven not to work for decades. There is no sensible hope that Voluntary Carbon Markets can suddenly work by 2030. Wasting valuable time and resources on such an endeavor is truly a plan designed to fail.
Some nations, industries and companies believe win-win Pareto-optimality is either impossible or improbable, so they will support the status quo believing they will not be amongst the dispossessed people, or those lost to famine, war, drought, hurricanes, or other foreseeable Climate Change related losses – or it will be too costly to avert the foreseeable dystopian future. Such odious and/or myopic thinking is erroneous.
GHG pollution is a classic “Tragedy of the Commons” problem: overconsumption, under investment, and ultimately a depletion of a common pool resource – the atmosphere. A voluntary response would have worked if it could have worked by now. Yet the problem has accelerated instead.
Climate Change is far too complex and dynamic for a regulatory response. GHG- PATS merges climate science, economics, finance, technology, innovation, and law to instill both rigor (emission permits and global GWP calibrations) and flexibility (natural and technological emission offsets, structuring and hedging) as necessary to be effective, systematic, and opportune.
GHG-PATS would garner the support of nations, industries, entities, and populations around the world that will all benefit from the flexible, accessible incentive structure and methodical, dynamic cost-benefit approach to unleash productivity, expand sustainability, and rejuvenate global ecosystems and biodiversity.
Best regards,
Tony S. Hamer
1955 Broadway
San Francisco, CA 94109-2210
415.601.9444
https://www.linkedin.com/in/tonyhamer/
