"Global Refunding Scheme" as a possible replacement for Kyoto

From Vox ("Research-based policy analysis and commentary from leading economists"), a plan by Hans Gerbach of the Center of Economic Research at ETH in Zurich. The idea is to replace the Kyoto Protocol with a more effective and flexible agreement. Would it work? Take a look: ...I propose an alternative international framework called the Global Refunding Scheme (referred to hereafter as GRS) that would enable countries to determine their climate policy at a national level while simultaneously creating powerful incentives for abatement by means of global refunding, which would work as follows:

• Countries decide whether they want to join the GRS. A country can join the GRS if it accepts the rules and levies a minimal carbon emission tax. Industrial countries pay an initial fee.
• In each period, every country belonging to the GRS independently determines its level of taxes on CO2 emissions. Emission taxes are the sole policy instrument a country is allowed to adopt.² All tax revenues are collected in a global fund.
• In each period, the GRS refunds a share of the accumulated wealth to the participating countries.³ Each participating country receives an annual refund in proportion to the share of total CO2 emission reductions it achieves in the period under consideration.⁴
• Non-refunded wealth of the GRS is invested in order to maintain funds for future refunding activities.
• In each period a country is allowed to exit. If a country leaves the GRS, it loses its right to refund.
• Decisions within the GRS are governed by majority rule.

Photo of Hans Gerbach from Vox website