numbers, not adjectives — D. J. C. MacKay

11 Who owns the atmosphere — and why does it matter?

Carl Edward Rasmussen, April 28, 2024

Who owns the atmosphere? This is meant as a moral and ethical question, not a legal one. It is not a whimsical, bizare or frivolous question, but one whose answer will be a critical to figuring out what to do about climate change. It is striking that most people tend to overwhelmingly agree about the answer, but paradoxically, the world is governed in a way that violates this consensus.

Who owns the atmosphere? Before answering, we need to clarify the question. By "own" I mean simply who should have a say in how it is managed. In other words, the rights and responsibilities of its governance. Of course, the atmosphere has a myriad of properties, many of which are essential to life on earth. Here, I am primarily concerned with the aspect of the atmosphere related to post industrial climate change associated with the human-made increase of atmospheric greenhouse gas concentrations.

Who owns the atmosphere? In what sense can the atmosphere in relation to climate change be owned? We should think of the relative absence of greenhouse gases in the atmosphere as being a resource. The difference between the amount of greenhouse gases in the atmosphere at a point in the future where these peak, and the amount present now, is a resource. It's a slightly unconventional resource, because it is the absence of something that represents the value. But it bears all the hallmarks of a resource, it is valuable and it is limited in supply. In the following, I will call this simply the atmospheric resource.

Who owns the atmosphere? The overwhelming majority of people I've discussed this with, favour the equitable answer that the atmosphere belongs to all of us. Ownership of a resource is usually determined by location, for example a mine is owned by the country where it is located. But the atmosphere doesn't have a location; if carbon dioxide is emitted at some location, it quickly (for practical climate related purposes, instantaneously) spreads out and mixes into the global atmosphere. So, location can't be applied. Most people find it difficult to rationalise any other answer than: all of us. So, let's proceed to examine the consequences of this answer.

How do we currently govern the atmospheric resource? Sadly, the answer is that we don't. Despite our knowledge that overexploitation of the atmospheric resource (or equivalently, continued growth of atmospheric greenhouse gases) causes climate change which globally disrupts living conditions, we don't have an effective system of governance. Currently, every country can and do emit greenhouse gases as they find convenient.

But, surely, we have the Paris Agreement? True, but the agreement is ineffectual. The global rate of increase of greenhouse gases in the atmosphere has continued unchanged since the agreement came into effect in 2016. Also, the Paris Agreement doesn't start from a fundamental premise, as this page does, but from status quo. According to the agreement, countries are encouraged to submit Nationally Determined Contributions, NDCs, which are voluntary, non-binding aspirations. NDCs from most industrialised countries represent small relative reductions: this language embraces the idea, that a nation's large historical emissions legitimises its future emissions (that's what a small relative decrease means). And this assumes that the NDCs will be honoured, which is unlikely. Accordingly, the nations from the global south are generally highly sceptical of the agreement. Without going into details, it is clear that the Paris Agreement is a far cry from what equitable governance might look like.

The principle that you cannot just take what belongs to others forms the bedrock of civilisation. This should apply to our common atmospheric resource. You cannot just take from people of other nations, or from future generations, our children and theirs.

11.1 What would equitable governance look like?

Our equitable principle is worth nothing until we turn it into a practical framework for governance. This is challenging because we don't have a global organisation which can legally compel nations to comply. Instead, we have collection of sovereign countries who must cooperate to share our common atmospheric resource. Therefore, effectively addressing climate change requires deployment of mechanisms for international cooperation.

Fortunately, we know a lot about the necessary conditions for cooperation¹. Participants must share

objectives
commitment
mutual trust
transparency
reciprocity

And there must be a mechanism to dissuade free-riding, passing on obligation but reaping the benefits of the efforts of others. The necessity of these properties should be self-evident. The challenge is to build an international system which incorporates them.

Before we do that, it is worth examining the Paris Agreement in the light of properties necessary for cooperation. The first problem is the lack of commitments. The Nationally Determined Contributions, or NDCs, are aspirational, not legally binding, nations are free to change them at will, and there are no consequences of non-compliance. The second problem is the lack of mutual trust and lack of transparency. The mechanism of the Paris Agreement actually fosters mistrust. That's because the time-frame for the NDCs is too long, and there is no transparency allowing partners to verify the likelihood of compliance. For example, the UKs NDC from 2021 promised a 68% reduction in CO₂e by 2030 compared to 1990, or annual emissions of 3.8 tons of CO₂e per person by 2030 in absolute terms. It is highly unlikely, according to the UK government's independent advisor, the Climate Change Committee, that this goal will be met. What are our international partners going to make of that? That there is no need to either stregthen or live up to their own NDCs. Which is consistent with what we are seeing: the so-called ratcheting up of committments is not happening on a meaningful scale. Of course, we'll have to wait until 2030 to know for sure, whether the UK NDC will be honoured. The problem is that we don't have 10 years to wait and see whether it works; if not, the climate crisis will have worsened dramatically while we were waiting. Finally, all of the above compounds the lack of reciprocity: there is no way of agreeing bold action on the condition that others act too. Sadly, this brief overview shows that the Paris Agreement is devoid of the properties necessary for cooperation, and indeed these are the reasons that it is going to fail. The problem is not that we need a little more patience with the agreement, the problem is that the agreement is structurally fundamentally flawed.

How should the framework for cooperation be organised? Since cooperation takes place between free, sovereign nations, necessarily on a voluntary basis, the framework will have to be a club, alliance or coalition of the willing. This contrasts the UNFCCC COP process, which relies heavily on unanimity, but suffers from slow progress and is susceptible to veto by small minorities. This is not appropriate for climate change, where rapid action by some is preferable to stagnation by all. In the following I will refer to the organisation as a cooperative.

What will entice nations be become members of a climate cooperative? Membership will necessarily bring commitments when implementing the equitable principle that the atmospheric resource belongs to us all. These commitments will be in excess of what a country might do if they weren't members, and decarbonising economies is difficult and expensive. What is going to be the return on this significant investment? The payout is obviously going to be that the worst aspects of climate change can be avoided. It so happens, that almost every country in the world will be negatively impacted by climate change. Either through flooding, or drought, melting, storms, wildfires, sea-level rise, etc. Unchecked climate change will have drastic consequences, far exceeding the inconveniences of cooperating to address the problem. This analysis of the investment vs payoff shows that in order to be attractive, the commitments of cooperative members must, as far as at all possible, guarantee an effect on the climate, in other words is must directly impact the concentration of greenhouse gases.

How do you build trust between cooperative partners? There is a fundamental difficulty related to timing: changing a nation's energy systems takes on the order of decades, but we don't have that much time to establish the sincerity of our partners. We need something that we can turn over much more quickly, eg on an annual basis: money. Currently, we act as if the value of the atmospheric resource doesn't have a price, or equivalently, that its price is zero. This is what economists call an unpriced externality. And this artificial nil price is precisely the root of the problem. Instead, cooperative members would accept the consequence of equitable ownership, and pay a non-zero price for the use of this resource, to its owners. Such a scheme would immediately put economic pressure on all users to reduce their utilisation of the common atmospheric resource. It would eliminate the problem of verifying that you can trust your partners, by separating the timing of reduction from the timing of reconning.

11.2 A concrete proposal

Let's switch from discussing principles, to a concrete proposal honouring them. I call this the Equitable Atmosphere Climate Cooperative, or EACC. The cooperative would work purely on a annual basis, requiring no up-front long term commitment. The club is governed by a single number, the price p per ton of CO₂e emitted. In the inaugural year, the price is set to zero (reflecting the status quo). Every yearly cycle contains four steps:

At the start of the year, every country is invited to join the cooperative for the year at the pre-specified price p.
At the end of the year, members report their CO₂e emissions (using UNFCCC rules), and pays their contribution: their emissions times the price p.
The cooperative immediately redistributes all the funds in proportion to the population in member countries.
Finally, members vote on next year's price p, by open ballot median vote, one vote per nation.

What are the properties of this proposal? Firstly, it is important to realise that the size of member nations is irrelevant. More populous nations will tend to have larger emissions because they have more people eg using fossil fuels, but they also get a proportionally larger rebate. It is only the emissions per capita that plays any role at all, reflecting the equitable ownership of the atmospheric resource. Membership for nations with per capita emissions equal to the cooperative average will be cost neutral; their contribution equals their rebate. Nations with above average per capita emissions will be net contributors, and nations with below average per capita emissions will be net beneficiaries. But every member will immediately feel an economic pressure to reduce emissions.

The world today has a very strong correlation between national wealth and per capita CO₂e emissions. This means that the EACC would automatically imply a net transfer of wealth to the global south. In the Paris Agreement, this transfer is sought through a separate process, the so-called Green Climate Fund, which has been notoriously slow and way behind schedule in raising funds. In the EACC beneficiaries in the global south would naturally be incentivised to invest in a way that avoids fossil fuels.

How does the EACC stack up against the necessary conditions for cooperation?

commitment members commit to paying for their use of a common resource. This immediately creates an economic incentive to emit less CO₂e
mutual trust the cooperative builds mutual trust, because you can verify on an annual basis that your partners live up to their commitments
transparency everything about the cooperative is fully transparent. The price p is known before you decide on membership for the next year. The price open ballot votes in the previous year are fully transparent
reciprocity reciprocity, or "I will if you will", can be implemented by conditional membership; for example, the UK could say we will join only if France and Germany join

This verifies good alignment with the main traits necessary for cooperation to work. Below I discuss some further properties of EACC and answer some common questions:

The EACC is designed to coexist with, not replace other schemes. Nations' NDCs under the Paris Agreement could be maintained, EACC membership would likely improve their prospects of fulfilment. Similarly, internal trading mechanisms like the EU ETS could also coexist.
The EACC is designed for simplicity and transparency. It is governed by a single number, p, the price for emitting one ton of CO₂e. There is nothing to negotiable. This is very important. It was endless negotiations about national limits which killed off the Kyoto Protocol. In a world composed of 200 very different nations, simple transparent principles are required.
The EACC affords maximal freedom of implementation; both the actions taken and economic choices are considered internal affairs to each country. Wether to invest in renewables or try to save energy; how to raise funds through taxing carbon or raising general taxes; and whether to spend the EACC rebates on renewables, oilfields or healthcare are all entirely up to national preferences.
We must be careful that unilateral emission goals (which nations face) must imply global emission reductions (which drive climate change). Within the EACC one would not be able to export carbon intensive processes, because the price p is the same in all countries. But see the section below about non-members.
Is it not politically impractical to have an annual cycle? No, nations are free to plan internally on being long term members, indeed this would be rational. But nations have the option to change their mind depending on future developments.
The EACC belongs to a wider class of carbon pricing proposals, variously known as carbon tax, fee and dividend, or feebate systems. The specific unique features of EACC is that payments are made between (not within) countries, the rapid annual cycle, and the concrete voting system to fix the price p.
Should trading of emissions between contries be allowed? Within the EACC trading emissions would be pointless, because the price of emission is the same everywhere.
Are carbon offsets allowed? No, the speculative nature of the effect of offsets would make them ineligible. The credibility of the cooperative requires guarantees that emissions go down.
Would green investments allow contries to pay lower contribution? No, every member needs to pay according to actual emissions. Green investments is still encouraged, but the payoff will materialise when the emissions drop. Of course national governments may temporarily subsidise green investments in anticipation of the reduced future contributions.

11.2.1 Evolution

How will the EACC likely evolve? In the inaugural year, the price p is set to zero, so membership is guaranteed to be free. If you decide to become a member, you will get the right to vote for the price p in the second year, otherwise not. Participating in the vote does not compel you to become a member the following year. So, there can be no rational reason not to be a member in the inaugural year.

In the following years, low per capita emitters will gain immediate economic benefit from joining. Nations with larger than the average member per capita emissions would pay a net price to join, but they would be joining an effective cooperative which is guaranteed to help lessen the climate change impact in a just an equitable way. Once a nation has joined, it's in its interest to get other larger per capita emitters to join too.

The price p is set by voting. How would nations vote? It is clear that it would be in the interest of low per capita emitters that the price is high, since that would increase their net economic benefit. But, at the same time low per capita emitters would want to keep the price low enough, not to dissuade large emitters' membership. Conversely, large per capita emitters may favour a low price of membership, although not too low, which would undermine the climate effect. These seem to be entirely healthy considerations, each nation will express their own view. A reasonable ball park figure could be the price of CO₂ in the EU Emissions Trading Scheme (ETS) which is currently around 70 € per ton (although this is not directly comparable because EU ETS only covers about half of emissions, and the funds stay within the EU). The price is adjusted annually through voting, adapting to the development. Note that the proposal stipulates a median vote (median means middle value), thus individual nations cannot unduly influence the price by voting for an extremely low or high price.

11.2.2 Non-members

What would happen if some nations prefer not to join? Firstly, it's important to note that the EACC doesn't require universal membership to be effective, limited numbers of non-members could at least temporarily be tolerated. But non-members would generally be detrimental to the cooperative. That is because the benefit of the cooperative, ie the avoidance of the most drastic effects of climate change will necessarily be shared globally, but the burden for achieving it is shared only between members. Although the cooperative builds on equitable principles, there is a risk that countries could free-ride, to obtain short term economic advantage.

In the long term, members and non-members won't be able to coexist on an equal footing. This is because membership would create a price differential eg in energy intensive manufactoring sectors, creating an economic pressure to relocate these activities to non-member countries. Which would of course be both absurd and unacceptable: it would be detrimental to members and do nothing for the climate. Therefore, with time, EACC members would probably put up trade barriers or tariffs against non-members, to level the playing field. In this scenario, non-members wouldn't distort trade across the cooperative boundary, but they would still enjoy lower domestic costs; a further increase of tariffs might be necessary to further encourage membership.

11.2.3 Necessary tweaks

The basic mechanism has already been explained above. But in practice we would have to apply two minor alterations to make EACC work well.

A major advantage of the scheme is the rapid annual turnover crucial to transparency and trust. However, gathering emission data takes time, and cannot practically be completed within the calendar year. Therefore, in practice, emission data from the previous year is used instead. Since emissions are unlikely to change very drastically between consecutive years, the difference will be small, a price worth paying.
If a nation, which was in previous years a non-member, wants to become a member, then they will have to pay their contributions all the way back to the inaugural year. There are two reasons for this rule. Firstly, we need a mechanism to avoid that indecisive nations postpone joining. Secondly, we cannot allow nations to accumulate historical "climate debt", which gets written off by membership. You may think that this mechanism may effectively prevent once non-members from ever joining, but equally it can be understood as a strong incentive to join from the beginning. The absence of this rule would allow creation of another instance of historical climate debt, similar to the one predating the EACC, see the discussion in the section below on weaknesses.

11.2.4 Weaknesses

Two properties of the EACC proposal contain weaknesses:

The EACC mechanism is solely based on demand. This means that nations wouldn't be impacted by supplying large quantities of fossil fuels. It could certainly be argued that extracting fossil fuels also contributes to climate change. But in practice there aren't many nations who extract fossil fuels, but don't burn them. And of course, if CO₂ emissions were eliminated, there wouldn't be a market for fossil fuels (or in the case that carbon capture was widely utilised, fossil fuel extraction wouldn't have a climate impact).
The EACC doesn't address widely varying historical emissions. That is true. But large historical emitters also tend to have large current emissions. And the EACC would cause large current emitters to pay more than in the current state of affairs. Therefore the EACC proposal is an improvement, even if historical emissions are outside of its scope.

Let's not make the perfect the enemy of the good.

11.3 Conclusions

Who do you think should own the atmosphere? We've outlined how equitable sharing of our common atmospheric resource can form a principled foundation for effective international cooperative action against climate change. The question remains, would enough high per capita emitters join? This question can more effectively be answered in the concrete, than in the abstract. Establishing the EACC would be easy. Once it exists, it would force every nation to transparently show their hand. Would your country join, and what price would they vote for? The EACC's mere existence would eliminate governments' hiding behind long term promises, whose sincerity are difficult to verify.

You might have thought, that the climate change problem was inherently intractable. By invoking mechanisms of cooperation, we can certainly do much better than presently. Will humanity be able to rise to the challenge? The stakes are high.

^{1. Elinor Ostrom: Governing the Commons, CUP (1990).}