A peer-reviewed paper describing the Global 4C policy is now available with Taylor & Francis Online. The paper explains how the policy was derived from an epistemological method of complementary relationships, and it introduces the Risk Cost of Carbon (RCC) as a complement to the Social Cost of Carbon (SCC). The paper highlights and a limited number of free copies are available through the links shown below.
Climate mitigation policy as a system solution: addressing the risk cost of carbon
by Delton B. Chen, Joel van der Beek and Jonathan Cloud.
Global 4C is a new international climate mitigation policy that adopts a risk management framework. Global 4C offers a financial reward for mitigation and aims to internalise a Risk Cost of Carbon (RCC) into the economy. Carbon taxes (i.e. carbon prices) are essential for internalising the Social Cost of Carbon (SCC), however a SCC-RCC duality is inferred with an epistemological method and is supported with a new hypothesis, called the Holistic Market Hypothesis. Based on the inferred SCC-RCC duality, a system of complementary market pricing is proposed as an effective response to emerging climate systemic risk and fat-tailed probability distributions for the Earth’s climate sensitivity.
The recommended policy instrument is a currency, called Complementary Currencies for Climate Change (4C). 4C should be priced in foreign exchange currency markets (Forex) to mirror the RCC and to incentivise a spectrum of mitigation services, including clean renewable energy and carbon sequestration. A public broadcast message for climate systemic risk should be made each year, in the form of a ‘100-year advance 4C price alert’, which is an assurance of reward prices for carbon mitigation (i.e. the 4C exchange rate) under a Carbon Exchange Standard (CES). The CES is a macro-prudential protocol for central banks to provide collective insurability against climate catastrophe and incentives for socio-ecological co-benefits.
Chen, D.B., van der Beek, J. and Cloud, J., 2017. Climate mitigation policy as a system solution: addressing the risk cost of carbon. Journal of Sustainable Finance & Investment, 7 (3): 1-42.