So when will US reduce total tonnage to match Vatican City? Is US and iceland going to have same carbon budget?

Total tonnage is all that matters when it comes to how much warming we will get. But when it comes to deciding how to limit the total to under that amount we have to come up with a limit for each country.

Why by country? Because that is how we've split the world up for regulating.

When deciding each country's share of that allowed global tonnage, per capita does matter. Other allocations, such as equal amounts per country, lead to absurd outcomes. Here's a comment giving an example [1].

[1] https://news.ycombinator.com/item?id=31935567

why would being born with the right passport allows you to pollute 5x more with impunity? the planet doesn't give a crap about our made up borders. What makes Europeans/Americans individuals so special that they get to consume wayyyyyy more than the rest of the planet?

If anything, Europe and the USA and Russia should get way less carbon credits per capita, since they've had a massive headstart at consuming fossil fuels compared to the rest of the world, which should really be priced in somehow if we're talking about fairness.

The carbon footprint of the major economies is shrinking, and given the technological development since the dawn of the industrial revolution, there is no reason for emerging economies to have the same emissions profile as they ramp up.

Their carbon footprint is shrinking, but it's still higher per capita then most other countries in the world except China (or, for the USA and Germany, including China).

And, while progress has been made, fossil fuels are still by far the cheapest source of energy around, especially if you don't have great expertise. So, in principle, we should be letting the developing nations of the world use much more fossil fuels to power their economies, while those that have been using it for centuries at this point should use far less.

Note that I'm not actually advocating for this, as stopping global warming is far more important than some abstract notion of historical fairness in international politics, which is even more idealistic than world peace.