Personal Carbon Allowances (PCAs) Rachel Howell

What are we talking about? A ‘cap and trade’ scheme to reduce carbon emissions from energy use – for individuals as well as organisations Rationing of emissions, with trading of the ration allowed

Terminology Domestic Tradable Quotas (DTQs) – David Fleming – now Tradable Energy Quotas (TEQs) Carbon rationing/Personal Carbon Allowances – Hillman & Fawcett Personal Carbon Trading (PCT) – RSA, IPPR, DEFRA

Key features A national annual limit on CO 2 emissions from energy use would be set (the carbon budget) Every eligible citizen would receive a free, equal share of permitted emissions – their personal carbon allowance The allowance would cover all direct energy use by individuals – home energy and personal transport use The allowances would be tradable The allowances would decrease over time, in order to meet stated emissions reduction targets

The carbon budget Set by an independent body Long-term Firm commitments in near term; possible to revise longer term Reduced year-on-year Total budget divided up into ‘carbon units’

Acquiring carbon units All eligible individuals would receive an equal, free allowance regularly, paid into their carbon account = 40-50% of total emissions from energy use Remaining 60-50% would be auctioned to organisations Individuals/organisations could buy more units from those who have spare to sell

Using carbon units Fuel and electricity would be assigned a carbon rating You would pay units (as well as money) to a retailer when purchasing fuel/electricity/travel tickets If you didn’t have units you would pay the retailer for the necessary units on top of cost of the goods

Trading carbon units Legally tradable on a regulated market Check carbon account & buy/sell units at post offices, banks, by phone, online Why allow trading?  Individuals’ needs very different  Economically efficient  Incentive to reduce below allowance  Prevents black market

Why should we do it? Effective: Sets a definite cap on emissions Equitable Efficient Gives a long-term signal for action Promotes ingenuity, co-operation, carbon literacy, sense of common purpose

PCAs are broadly progressive because poorer people tend to have lower emissions so would be able to sell part of allowance But some poor households would be worse off (rural poor & those in fuel poverty) Carbon taxation or upstream measures, without compensation, would have much worse impacts – basically regressive Distributional effects

Issues Costs & complexity Some equity issues Regulating trading Difficult to understand – but don’t need to Civil liberties Need to go global

Will it ever happen? Technically & financially feasible – Starkey & Anderson (Tyndall Centre) Domestic Tradable Quotas (Carbon Emissions) Bill – Colin Challen Endorsed by then-Environment Secretary, David Miliband But DEFRA has mothballed it for now

Acceptability – DEFRA 12 focus groups, divided into DEFRA’s population segments – 96 people 2 hours each PCT presented along with carbon taxation & upstream trading during discussion Questionnaire at end of discussion “…an idea currently ahead of its time in terms of public acceptability…”

DEFRA results

Acceptability v. acceptance

Not The End… All Party Parliamentary Group on Peak Oil report on TEQs Climate Change Act of 2008 allows UK government to implement a PCT scheme without further primary legislation Trial of PCT (3 years, voluntary) on Norfolk Island (part of the Commonwealth of Australia). See

* * Fawcett, T. (2004) ‘Carbon Rationing and Personal Energy Use’. Energy & Environment 15(6): * Hillman, M & Fawcett, T (2004) How We Can Save the Planet. Penguin Books * David Fleming's Tradable Energy Quotas website * Roberts, S., and Thumim, J. (2006) A Rough Guide to Individual Carbon Trading: The ideas, the issues and the next steps. * DEFRA’s synthesis report on its pre-feasibility study is at ual/carbontrading/pdf/pct-synthesis-%20report.pdf * Climate Policy journal special issue on Personal Carbon Trading volume 10, No. 4, September 2010 References

PCAs would be fair PCAs would be too costly and/or complex to implement PCAs would be the most effective way of capping individuals’ emissions Trading in PCAs wouldn’t work well Your own statements… Statements to discuss

What do you see as the main advantages and disadvantages of PCAs? How important are these factors? (e.g. critical/very/less) Would you like to see such a scheme implemented in your country, and do you think it’s possible? Questions to consider