In a capitalist system of unregulated commerce, the market will adjust to environmental factors – but it will adjust too late.  When we run out of oil, the market will replace it with something else – but it will be too late.  In other regards of climate change, such as pollution, water and soil degradation, shortages, drought, hunger, loss of fisheries and forests: externalities for which an unimpeded capitalist system has no mechanism to combat. Furthermore, efforts to regulate economies in the interest of combatting climate change and reversing or preventing its detrimental effects must be a global one.

The Kyoto Protocol of 1997 attempted to do this, but lacked strict enforcement and universal inclusion.  The United States refused to sign the treaty, and achieving the emission reductions were mostly left to national discretions.  This is why the United Nations must be empowered to implement a cap and trade scheme – one that is international, and removes the possibility of “safe havens” for corporations to pollute.

The idea of cap and trade is less burdensome than a flat tax on carbon, and far more effective.  Businesses that emit more will have to pay more, and those that reduce their emissions will be financially rewarded.

The difficulty in implementing regulation lies in the still developing countries, who are going through the process of industrialization, and at the same time are being asked to participate in emission-reduction and other climate change-related initiatives.  These countries include China, India, Brazil, Indonesia, and to a certain extent, Russia.  The argument is that Europe and the U.S. created the climate problems that we had today, and that it is only fair that China and India have their turn to create Pittsburghs and Manchesters of their own as they industrialize.

Unfortunately, such equity is not possible in addressing climate change.  All countries must come together for meaningful work to be done.  It is fair, however, that industrialized countries contribute more, financially, than those who are still in the process of developing.

Sources:

http://unfccc.int/kyoto_protocol/items/2830.php
https://www.edf.org/climate/how-cap-and-trade-works
https://www3.epa.gov/captrade/