What financial strategy for a climate agreement in Paris 2015?

Summary The Paris Climate 2015 meeting is the deadline for laying the foundations for a universal agreement. An ambitious climate agreement rests on three pillars: a commitment from governments, an independent monitoring, reporting and verification (MRV) system and the establishment of an international carbon price. In this article, we propose a method that combines taxation and permit markets. The first step is to introduce an international carbon bonus-malus, with a tax of about $7 per ton of CO2, calculated on the basis of the gap between a country's average per capita emission level and the world average. This pricing would have the dual objective of encouraging low-emission countries to join the common MRV system and facilitating the fulfillment of the promise to transfer $100 billion annually to the least developed countries. Secondly, a transcontinental carbon market must be created, based on the CO2 trading systems in Europe, China and the United States. Interconnecting these different markets requires the establishment of a common governance to ensure that the major emitters commit to trajectories compatible with the objective of limiting global warming to 2°C.