Let's make the best estimate of what everyone's 2010-2020 emissions would be without a treaty. Subtract desired percentage. That's how much permits everyone gets, now go and trade.
Yes, it means rich countries get to emit a lot more than poor countries. And less efficient countries like Australia get to emit more than more efficient counties like Japan. And countries which were going to cut anyway like EU get to emit less than countries which weren't that committed like USA. It really sucks. But do you think you can have them agree to such limits otherwise? If poor countries want to increase their emissions - and they'd all love to do that, they will have to buy emission permits, with hard money. By the way targeting 2020's emissions or such is necessary as there's no way to get India to agree to 2010's emissions, let alone EU's favourite 1990's level - well we could bribe them, but then we can as well give them emission permits as a bribe.
The man has a point. It's an ugly solution, but it might be the only way to get a real treaty, agreed by the USA, China, India and the EU.
