To me that seems to be condoning the emitting of greenhouse gases, and paying developing countries off in the process. Surely it closes the window on developing countries to effectively develop? I should say the much simpler and fairer strategy would be a direct tax, at the cost of mitigation, then EVERYONE would face the same penalties. We would be on the road to achieving a lowering of emissions.
There could be other ways of dealing with emissions, and how to lower them. Fossil fuel subsidies were $400 billion in 2010. This makes renewables less competitive, and there is an argument to transfer subsidies gradually over to renewables. There is a lot of political pressure in certain countries, from fossil fuel lobbies, which have leached over into multilateral institutions and agreements such as the UN and UNFCCC. If all countries could sign off a global agreement to reduce and eventually eliminate subsidies, then surely no single country would be worse off that others?
As always, it is a case of solving the problem of a race to the bottom, and competitive advantage.