Personal carbon trading is based on the concept that each citizen should be allocated with an equal ‘carbon allowance’ as part of a ‘cap and trade’ scheme designed to control carbon emissions. The ‘cap’ (the total body of emissions allowed under the scheme) would initially be set at current emissions levels and gradually be reduce to meet the long-term carbon emission reduction goals. These carbon allowances, more likely to be called ’carbon credits’ would be issued at no cost to individuals and surrendered electronically when purchasing fuel and electricity. People using less than their share could sell the surplus to people or businesses using more than their allotted share, via a market. In this way, it would provide an incentive for every individual to take steps to reduce their ‘personal emissions’, in other words, the emissions for which they are directly responsible.
Personal carbon trading would provide continued choice, but within a restricted budget which stops us from consuming energy at unsustainable levels. It is an exciting idea which could enhance quality of life by stimulating a low carbon economy which would bring about positive social and economic changes. It has the potential to be redistributive, reward innovation and creativity and encourage social cohesion.
It would also be a powerful vehicle for learning about the climate change impacts of different behaviours and understanding how to live with and adapt to environmental change. It may provide the UK with an opportunity to take the lead on a market mechanism to reduce global carbon emissions.
Personal carbon trading takes as its starting point David Fleming’s description of Domestic Tradeable Quotas (DTQs), which was originally proposed as a fair solution to the scarcity of oil. DTQs are an economy-wide ‘cap and trade’ system in which individuals take their place alongside business in the national allocation of emission permits. The Tyndall Centre for Climate Change Research analysed the feasibility and appropriateness of this as a policy instrument in terms of equity, effectiveness and efficiency.
CarbonLimited’s work has so far been analysing the number of varient models of the DTQ and similar approaches. We feel that personal carbon trading could be introduced in isolation from the ‘upstream’ portion of the economy whilst maintaining strong ‘behavioural change’ impacts. This may be necessary due to the existence of the EU Emissions Trading Scheme and other related policy measures for industry and business. Also, to ensure equity and fairness, the personal carbon market which supports the scheme may need to be isolated from other carbon markets. The personal carbon market may interact with other carbon markets, but it may not be conditional for its successful implementation. This question is under scrutiny at the current time and we will be publishing an interim report in July 07 which will provide further analysis on this issue.
Your views are always welcome through our CarbonLimited blog or by emailing carbon@rsa.org.uk.
