Personal carbon trading – an option worth considering

Personal carbon trading is an idea for climate change mitigation that has been gaining ground here in the UK. Although it is far from achieving mainstream acceptance, it has one particularly high-profile supporter in possible future prime minister David Miliband (see, for example, this speech in 2006).

I was recently turned on to the idea by this article by Polly Toynbee. She explains how it would work:

each year everyone gets equal carbon credits to spend on petrol, home heating or air travel. People exceeding their quota can buy more credits. People who use less can sell credits. It encourages home insulation, energy saving and less driving or flying. Since low earners use less – 20% have no car, 50% don’t fly – they can profit by selling to those with big houses, foreign holidays and gas-guzzling cars. It would be a powerful but voluntary agent for redistribution.

Personal carbon trading has all sorts of political and administrative obstacles to overcome, but there are some attractive elements. It’s fairer, more flexible and more progressive than either rationing or a carbon tax. For political reasons (according to Toynbee), the idea was squashed by the prime minister, and branded as being “ahead of its time”. But perhaps that time might come sooner than most people think.

For me, the administrative issues are the biggest concern, particularly if the system is implemented here in the UK. This country just doesn’t seem to be very good at managing these kinds of systems, with a habit of making them more painful than they should be. Here are a just a few examples I’ve noticed:

  • transfers between two UK bank accounts usually take 3 working days. WHY? I just cannot fathom why a process that requires no human intervention should take so incredibly long
  • the government regularly “loses” confidential personal data about its citizens
  • credit cards are very hard to get – I know plenty of well-paid professionals with flawless credit histories who have been refused for no apparent reason.

My worry is that a personal carbon trading system here could be the administrative straw that breaks the camel’s back. It is projected to cost £700 million – £2 billion to set up and £1 billion – £2 billion every year in running costs. That’s an incredible amount of new bureaucracy in a country that, to my mind, already has too much.

Overall, I’m undecided, but it is certainly something that warrants further consideration.

For those who are interested in the technical details of the system, here is a diagram of how it would work:

Update: The more I think about it, the less sense it makes. As Glenn points out in the comments:

Simple solution to overcome most administrative problems – impose carbon tax/trading scheme on business and use the money to provide an equal increase in income to all citizens.

The price of goods/services will increase in line with their use of carbon, with costs then passed on to consumers. People who use less of these goods/services (whether low income or not), will gain a net benefit while there will be a net cost for those who are more carbon-intensive

As far as I can tell, the main difference I can see between Glenn’s idea and the personal carbon trading option is that PCT would make people more immediately aware of the climate change impact of their actions (or at least, some of their actions). But does that matter? The essential goals are carbon reduction and fairness, and PCT seems like a very convoluted and expensive way of achieving those goals.

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2 Responses to “Personal carbon trading – an option worth considering”

  1. Glenn Miller Says:

    Simple solution to overcome most administrative problems – impose carbon tax/trading scheme on business and use the money to provide an equal increase in income to all citizens.

    The price of goods/services will increase in line with their use of carbon, with costs then passed on to consumers. People who use less of these goods/services (whether low income or not), will gain a net benefit while there will be a net cost for those who are more carbon-intensive

  2. Brett Robertson Says:

    Good point, thanks for your thoughts.


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