【Watch Dark Fantasies (2010)】

At around 3 a.m. on Watch Dark Fantasies (2010)Dec. 12, 2015 — essentially the very last minute — U.N. negotiators added a critical element to the historic Paris climate accords, the agreement aimed to dramatically reduce civilization's emissions of heat-trapping greenhouse gases.

This late-night addition, called "Article 6," proposes a plan for putting a price on carbon, which would make burning oil, gas, and coal increasingly expensive, and less attractive. But four years later, the U.N.'s 193 members have yet to agree on how to make this carbon-pricing scheme work.

It's a glaring piece of unfinished, ruthlessly complex business — but it will now be completed. At least, that's the plan.

Between Dec. 2 and Dec. 11, global nations big and small will convene in Madrid, Spain at the 25th U.N. Climate Change Conference, or COP 25 for short. Because there are no global laws with punishments for emitting carbon, the U.N. instead hopes to create a voluntary carbon trading system. In short, nations that have slashed their emissions below what they've pledged can then sell their remaining carbon budget to other nations — nations that burn too many fossil fuels and exceed their carbon-cutting commitments. This carbon market is a tool intended to mobilize international cooperation to stabilize the warming climate, by both openly showing how much carbon countries are emitting while encouraging a rapid adoption of renewable energies.

Finding a palatable way to encourage momentous carbon reductions is now paramount. On Earth, 18 of the 19 warmest years on record have occurred since 2000. As of now, Earth is relentlessly warming.

"There is no international policeman that is going to come around and force countries to meet their climate agreements," said Alex Hanafi, the lead counsel in the Environmental Defense Fund's Global Climate Program, who is attending COP 25.

Each country's present commitments to cutting carbon emissions, known as nationally determined contributions (NDCs), are woefully lacking.

"We know they’re all inadequate," said Kelly Levin, a climate policy expert at the World Resources Institute who specializes in global climate commitments. (Levin, too, will attend COP 25.)

Just how inadequate? An annual and increasingly sour U.N. analysis, called the Emissions Gap Report, recently concluded that if current climate pledges are kept, Earth will warm by a whopping 3.2 degrees Celsius (5.7 degrees Fahrenheit) above pre-Industrial Revolution temperatures by the century's end. To avoid the ever-worsening consequences of extreme drought, deluges, wildfires, and melting ice sheets, U.N. scientists recommend curbing Earth's warming at an extremely ambitious 1.5 C.

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Right now, for example, the U.S. — the largest historic carbon emitter — has committed to cut carbon emissions by 26 to 28 percent below 2005 levels by 2025, but it will need to commit to increasingly more ambitious cuts (eventually reaching net-zero emissions). Yet, the U.S. might not even achieve its current 2025 pledges. The world's richest nation is on track to just achieve about half of these cuts, according to Climate Action Tracker, an independent climate analysis group.

If a market for carbon existed, like Article 6 proposes, the U.S. could buy carbon credits from another nation that has allowances to spare. But simply emitting carbon (and not reducing emissions) while buying carbon credits will grow increasingly expensive as other nations commit to emit less carbon (NDCs), meaning an ever-dwindling supply of available carbon credits. That reduced supply leads to higher demand which bumps the price up. What's more, as nations make deeper and significantly more expensive carbon cuts, such as building out electricity-powered public transit, developing futuristic nuclear fusion technologies, and investing in innovations to slash carbon emissions from industrial sectors (like steel, concrete, and plastic), the cost of meeting ever-more-ambitious carbon pledges will go up — and, consequently, so will the price of buying up these carbon credits since it'll cost countries more and more to arrive under their carbon budget, explained the Environmental Defense Fund's Hanafi.

A truly global carbon market could be similar to the most successful carbon market in existence, the European Union's Emissions Trading System, which turned 14 this year.

Although imperfect, the system put a cap, or limit, on the volume of greenhouse gases EU companies can emit from power plants and industrial plants. Critically, "the cap is reduced over time so that total emissions fall," says the EU.

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Nations and companies have big incentives to slash carbon emissions, beyond the potential of selling carbon credits to over-polluting countries, explained Hanafi.

Perhaps most appetizing to governments is that there's a ton of money to be made from renewable energy. An arm of the World Bank, called the International Finance Corporation, estimated that national commitments to slash carbon emissions would "open up nearly $23 trillion" in climate investment opportunities by 2030.  

China, with its surging production of solar panels, wants that money. "China sees the advantages of being a leader in the clean air economy," noted Hanafi.

And for the many nations beleaguered with poor air quality, renewables and electric transportation don't spew pollution into the air — a problem so hideous even many of America's acclaimed national parks often have harmful to terrible breathing conditions.

Any credible carbon market, though, must solve a terribly difficult question that arises when counting up a nation's emission reductions. It is, appropriately, called the matter of "double counting."

"Double counting must be avoided," emphasized the World Resources Institute's Levin.

If, hypothetically, France sells the U.S. carbon credits, both nations can't put those emission reductions in their carbon piggy bank even though the U.S. technically reduced their carbon emissions through that purchase: France achievedthem, but the U.S. boughtthem. Importantly, if both nations' counted these credits they would grossly inflate, or in fact, double the amount of actual carbon cuts. One solution, then, is for carbon sellers (like France) to transparently add these emissions back to into their carbon account. If there aren't rules for doing this reliably and accurately, there's a giant problem.

"It is the equivalent of paying your bills, but not deducting the amounts from your bank balance," the Environmental Defense Fund wrote. "That would be dangerous for your financial well-being, just as failing to account for transfers of emissions reductions is dangerous for the health of our climate."

Though creating a carbon market system will be flush with wonky, technical rules, it's superior to a flat carbon tax, said Hanafi. (A carbon tax is a price for the amount of carbon emitted into the atmosphere, which would often be passed down to consumers. For example, a $40 tax per ton of carbon emitted would "add about 36 cents to the price of a gallon of gasoline," according to the Tax Policy Center.)

A carbon tax would certainly make fossils fuels more expensive and less inviting, but they won't create a system that allows for everyone in the world to see what everyone else is emitting, or not emitting. With a carbon market, "[countries] need to be transparent about what emissions are," said Hanafi. "Everyone can see with transparency."

Unfortunately, a somewhat weird presence at the COP 25 meeting is the United States, which, at the Trump administration's behest, will soon be the only nation on Earth to leave the Paris climate agreement: The U.S. departure becomes official in November 2020, to climate scientists' profound dismay.

But the United States' imminent departure likely won't derail efforts to wrap up Article 6. President Trump has threatened to leave the Paris agreement for the last few years; the world is well aware of his contrarian diplomatic antics, but continues to advance critical climate policy.

"Given Trump’s previous announcements, [officially leaving Paris] wasn’t really different than the signal all along," said Levin, who noted veteran U.S. policymakers will still be at the COP 25 meeting.

"There are some tremendously seasoned and dedicated officials in the State Department that have been negotiating this for years," she said. "They are still engaged."