We need to get prepared for four degrees of global warming, Bob Watson told the Guardian last week. At first sight this looks like wise counsel from the climate science adviser to Defra. But the idea that we could adapt to a 4C rise is absurd and dangerous. Global warming on this scale would be a catastrophe that would mean, in the immortal words that Chief Seattle probably never spoke, "the end of living and the beginning of survival" for humankind. Or perhaps the beginning of our extinction.

The collapse of the polar ice caps would become inevitable, bringing long-term sea level rises of 70-80 metres. All the world's coastal plains would be lost, complete with ports, cities, transport and industrial infrastructure, and much of the world's most productive farmland. The world's geography would be transformed much as it was at the end of the last ice age, when sea levels rose by about 120 metres to create the Channel, the North Sea and Cardigan Bay out of dry land. Weather would become extreme and unpredictable, with more frequent and severe droughts, floods and hurricanes. The Earth's carrying capacity would be hugely reduced. Billions would undoubtedly die.

Watson's call was supported by the government's former chief scientific adviser, Sir David King, who warned that "if we get to a four-degree rise it is quite possible that we would begin to see a runaway increase". This is a remarkable understatement. The climate system is already experiencing significant feedbacks, notably the summer melting of the Arctic sea ice. The more the ice melts, the more sunshine is absorbed by the sea, and the more the Arctic warms. And as the Arctic warms, the release of billions of tonnes of methane – a greenhouse gas 70 times stronger than carbon dioxide over 20 years – captured under melting permafrost is already under way.

To see how far this process could go, look 55.5m years to the Palaeocene-Eocene Thermal Maximum, when a global temperature increase of 6C coincided with the release of about 5,000 gigatonnes of carbon into the atmosphere, both as CO2 and as methane from bogs and seabed sediments. Lush subtropical forests grew in polar regions, and sea levels rose to 100m higher than today. It appears that an initial warming pulse triggered other warming processes. Many scientists warn that this historical event may be analogous to the present: the warming caused by human emissions could propel us towards a similar hothouse Earth.

But what are we to do? All our policies to date to tackle global warming have been miserable failures. The Kyoto protocol has created a vast carbon market but done little to reduce emissions. The main effect of the EU's emissions trading scheme has been to transfer about €30bn or more from consumers to Europe's biggest polluters, the power companies. The EU and US foray into biofuels has, at huge cost, increased greenhouse gas emissions and created a world food crisis, causing starvation in many poor countries.

So are all our efforts doomed to failure? Yes, so long as our governments remain craven to special interests, whether carbon traders or fossil fuel companies. The carbon market is a valuable tool, but must be subordinate to climatic imperatives. The truth is that to prevent runaway greenhouse warming, we will have to leave most of the world's fossil fuels in the ground, especially carbon-heavy coal, oil shales and tar sands. The fossil fuel and power companies must be faced down.

Global problems need global solutions, and we also need an effective replacement for the failed Kyoto protocol. The entire Kyoto system of national allocations is obsolete because of the huge volumes of energy embodied in products traded across national boundaries. It also presents a major obstacle to any new agreement – as demonstrated by the 2008 G8 meeting in Japan that degenerated into a squabble over national emission rights.

The answer? Scrap national allocations and place a single global cap on greenhouse gas emissions, applied "upstream" – for instance, at the oil refinery, coal-washing station and cement factory. Sell permits up to that cap in a global auction, and use the proceeds to finance solutions to climate change – accelerating the use of renewable energy, raising energy efficiency, protecting forests, promoting climate-friendly farming, and researching geoengineering technologies. And commit hundreds of billions of dollars per year to finance adaptation to climate change, especially in poor countries.

Such a package of measures would allow us to achieve zero net greenhouse gas emissions by 2050, and long-term stabilisation at 350 parts per million of CO2 equivalent. This avoids the economic pain that a cap-and-trade system alone would cause, and targets assistance at the poor, who are least to blame and most need help. The permit auction would raise about $1 trillion per year, enough to finance a spread of solutions. At a quarter of the world's annual oil spending, it is a price well worth paying.

· Oliver Tickell's book Kyoto2 has just been published kyoto2.org

· To read Björn Lomborg's response to this article, go here