Global Carbon Tax and Dividend System Act

Global Carbon Tax and Dividend System Act

Preamble

Recognizing the existential threat posed by anthropogenic climate change, the rapid transgression of planetary boundaries, particularly concerning atmospheric carbon concentration and biodiversity loss;

Affirming the scientific consensus that urgent, transformative action is required to decarbonize the global economy and restore ecological integrity;

Emphasizing the principle of intergenerational equity and the 'polluter pays' principle, which dictates that those responsible for environmental damage must bear the costs of remediation and prevention;

Committed to fostering a just transition, economic stability, and shared prosperity for all global citizens;

Hereby establishes a comprehensive Global Carbon Tax and Dividend System to internalize the true cost of carbon emissions, drive innovation towards sustainable alternatives, and distribute the benefits of a decarbonized future equitably.

Article 1: Establishment of the Global Carbon Tax (GCT)

1.1. Scope: A tax shall be levied on all greenhouse gas (GHG) emissions, calculated in tonnes of carbon dioxide equivalent (CO2e), arising from:
a. The extraction, production, or import of fossil fuels (coal, oil, natural gas).
b. Industrial processes that directly release GHGs.
c. Significant land-use change activities, including deforestation and peatland degradation, as defined by robust international standards.

1.2. Point of Taxation: The GCT shall be applied as far upstream as administratively feasible, ideally at the point of first sale or import of fossil fuels, and at the point of emission for industrial processes or land-use change, to minimize administrative burden and maximize coverage.

1.3. Tax Rate and Escalation:
a. The initial GCT rate shall be set at USD $75 per tonne of CO2e, effective from January 1, 2026.
b. The GCT rate shall automatically escalate by 10% annually above inflation until global emissions trajectories are demonstrably aligned with the 1.5°C target, as verified by an independent scientific body designated by the World Parliament.
c. The World Parliament, advised by its scientific panel, shall have the authority to adjust the escalation rate based on comprehensive reviews of climate science, technological advancements, and socio-economic impacts.

1.4. Calculation: Emissions shall be calculated using methodologies consistent with the Intergovernmental Panel on Climate Change (IPCC) guidelines, ensuring accuracy and comparability across all jurisdictions.

Article 2: Administration and Collection

2.1. Global Carbon Fund (GCF): An independent Global Carbon Fund shall be established under the auspices of the World Parliament to oversee the collection, administration, and distribution of GCT revenues.

2.2. National Responsibility: Each Member State shall be responsible for collecting the GCT from entities within its jurisdiction and remitting the collected funds to the GCF on a quarterly basis.

2.3. Monitoring, Reporting, and Verification (MRV): A robust international MRV system shall be implemented to ensure accurate reporting of emissions and tax collection. Non-compliance by Member States or entities shall result in penalties, including financial sanctions and potential trade adjustments.

Article 3: Global Carbon Dividend (GCD)

3.1. Distribution: Eighty percent (80%) of the net revenue collected by the GCF shall be returned directly to global citizens as a Global Carbon Dividend.

3.2. Mechanism: The GCD shall be distributed on an equal per capita basis to every adult global citizen, via national payment systems, or through a globally accessible digital identity and payment platform, ensuring transparency and direct benefit.

3.3. Equity: This dividend mechanism is designed to be progressive, offsetting potential regressive impacts of the carbon tax on low-income populations and providing a strong incentive for individuals to support decarbonization efforts.

Article 4: Strategic Investment Fund (SIF)

4.1. Allocation: The remaining twenty percent (20%) of the net revenue collected by the GCF shall be allocated to a Strategic Investment Fund (SIF).

4.2. Purpose: The SIF shall be dedicated to:
a. Climate Adaptation and Resilience: Supporting vulnerable nations and communities in adapting to the impacts of climate change, including infrastructure upgrades, early warning systems, and climate-resilient agriculture.
b. Biodiversity Conservation and Ecosystem Restoration: Funding global initiatives for protecting critical habitats, restoring degraded ecosystems (forests, wetlands, oceans), and promoting sustainable land management practices.
c. Renewable Energy and Sustainable Technology: Investing in research, development, and deployment of renewable energy sources, energy storage, sustainable transport, and carbon removal technologies, particularly in developing nations.
d. Just Transition: Providing financial and technical support to communities and workers currently dependent on fossil fuel industries, facilitating retraining programs, economic diversification, and social safety nets.

Article 5: Border Carbon Adjustments (BCA)

5.1. To prevent carbon leakage and ensure a level playing field, a system of Border Carbon Adjustments shall be implemented:
a. Import Tariffs: Goods imported from countries not participating in the Global Carbon Tax and Dividend System, or whose domestic carbon pricing is deemed insufficient by the World Parliament, shall be subject to a tariff equivalent to the GCT on their embedded carbon content.
b. Export Rebates: Goods exported from countries participating in the Global Carbon Tax and Dividend System shall receive a rebate equivalent to the GCT paid on their embedded carbon content.

Article 6: Governance and Review

6.1. Oversight: The World Parliament shall provide ultimate oversight of the GCF and SIF, supported by an independent board of experts in climate science, economics, and finance.

6.2. Regular Review: The GCT rate, dividend distribution mechanism, SIF allocation priorities, and overall effectiveness of the system shall be subject to a comprehensive review every five (5) years to ensure alignment with global climate goals, planetary boundaries, and equitable outcomes.

Article 7: Entry into Force

7.1. This Act shall enter into force upon ratification by Member States representing at least two-thirds of the global population and three-quarters of global historical GHG emissions.