What does it take to get the US on the carbon program?

U.S. House of Representatives Committee on Energy and Commerce staff has published a "Climate Change Legislation Design White Paper" in February 2008.

The baseline for the paper is that any US commitment to a climate change program would require incentives for developing nations specifically China and India to curb their emissions. The rational behind this twofold:

1. There is only impact of such a program if the developing countries do their part

2. Creating a level playing field for the US economy

The white paper discusses policy options in the following three categories:

1. Border adjustments such as tariffs

2. Performance standards such as emissions standards or carbon intensity based regulations

3. Carbon Market Design imposing conditions on other countries' access to a US carbon market

I think the key success factor for such policies is the creation of win-win situation which satisfy the US concerns and also help the developing nations to curb their emissions. The combination of tariffs with the re-investment in carbon reduction activities in the source countries I have been proposing may be just such a solution.