An Effective Pricing and Financial Method to Significantly Reduce CO2 Emissions from Electricity Production - An Application of the Third Way Economic System of Unity-in-Diversity

This paper presents the concept called "unity in diversity" or UDI-ism in short. The hypothesis is that if an individual\´s selfish incentive can be made to align more with the socially optimal objective, then the creative energy of individuals\´ diversity would become more unified in achieving the social objective. The key is to make that incentive market-based and monetary in nature. This paper will first outline the concept of UDI-ism and discuss how it will benefit the economy in general It will then apply this concept to the problem of global warming and show how it will enable market principles to manage the effect of CO₂ emitted by the electricity sector. Instead of using a CO₂ tax to penalize power production sources which emit CO₂, this approach considers air as the common asset of all human inhabitants of the Earth. The price of CO₂ is a means for the collection of money paid by electricity consumers into a trust fund That trust fund is owned jointly by residents of a country or a region. That money is managed and used for environment benefits according to the wish of the residents. This method is more effective than tax credits or other tax incentives to promote green technologies, because it is a market method Preliminary analysis in this paper shows that this method can significantly reduce the global CO₂ emissions without increasing the cost of electricity by an unreasonable amount. With the effect of CO₂ on global warming becoming more urgent, this method may offer the best solution for the most effective way to solve the problem With the power system as an example application, it is hoped that this paper will stimulate discussions among researchers to further explore these ideas so that a more robust and more optimal economic system will become reality.