1. TEQs (Tradable Energy Quotas) What they are How they work Why we need them

2. Context 1. Climate change IPCC (Sept 2007): “If warming is not kept below 2 degrees C, which will require the strongest of mitigation efforts, and currently looks very unlikely to be achieved, then substantial global impacts will occur, such as: species extinctions and millions of people at risk from drought, hunger and flooding, etc.” (my emphasis) 2. Resource depletion (Peak Oil) Global peak oil production around now. Extreme and unprecedented price volatility. Not just oil – energy resources including gas, uranium and even coal.

3. “Large-scale problems require large- scale solutions” ? What is needed?

4. "Large-scale problems do not require large-scale solutions; they require small-scale solutions within a large-scale framework." ~ David Fleming

5. What is needed? Local Level – Transition Towns/Woking/Eigg/Fintry/… --- National Level – Support International Level – Collective responsibility (COP?) Personal Level – Us TEQs (Tradable Energy Quotas)

6. WHAT TEQs ARE FOR 1.Guaranteeing that our national carbon budget is achieved 2.Empowering communities and building a common purpose 3.Securing fair access to fuel at a time of deep scarcity

7. IN OUTLINE What are TEQs? Tradable Energy Quotas are an electronic system for rationing carbon-rated energy for all energy users. at national level,,

8. All other users obtain their units through the weekly Tender (auction). Units are surrendered in addition to cash payment when fuel or energy is purchased. Individuals who use less than their Entitlement may sell them and benefit from their energy-thrift. Those who want more may buy them from those who are selling. All individuals receive an unconditional Entitlement to TEQs units.

9. Tradable Energy Quotas SURRENDER Fuel wholesalers/ electricity generators Fuel/electricity retailers Fuel extractors £ MARKET Organisations Primary dealers Citizens 40% Entitlement 60% Tender ISSUE UNITS FLOW THROUGH THE ENERGY CYCLE COMMITTEE ON CLIMATE CHANGE QuotaCo REGISTRAR CARBON BUDGET

10. Tradable Energy Quotas COMMITTEE ON CLIMATE CHANGE CARBON BUDGET

11. THE CARBON BUDGET 1. Establishes the total quantity of TEQs units (rations) that may be issued 2. Sets a long-term time-horizon

12. Year 1 0 100 Total carbon units (index) 051015 Years Commitment 5 year Intention 5 year Forecast 10 years

13. Year 2 0 100 Total carbon units (index) 051015 Years Commitment 5 year Intention 5 year Forecast 10 years

14. THE CARBON BUDGET 1. Establishes the total quantity of TEQs units (rations) that may be issued 2. Sets a long-term time-horizon 3. Set by the Committee on Climate Change… …which frees up the Government to focus on achieving the Budget (and TEQs provides money for this!)

15. Tradable Energy Quotas COMMITTEE ON CLIMATE CHANGE QuotaCo REGISTRAR CARBON BUDGET

16. Tradable Energy Quotas 40% Entitlement 60% Tender ISSUE COMMITTEE ON CLIMATE CHANGE QuotaCo REGISTRAR CARBON BUDGET

17. THE ISSUE OF UNITS 1.By equal Entitlement to all adults (40%) 2.By Tender to all other users (60%) The Tender is a weekly auction at which organisations (industry, government etc.) purchase the TEQs units they need

18. THE RATING SYSTEM Carbon units: 1 unit = 1kg CO 2 (gwp) (fuel rated by carbon content) OR Fuel units: 1 unit = 1 litre oil 1 unit = 1 metre 3 gas 1 unit = 1 kWh electricity (etc)

19. Tradable Energy Quotas MARKET Organisations Primary dealers Citizens 40% Entitlement 60% Tender ISSUE COMMITTEE ON CLIMATE CHANGE QuotaCo REGISTRAR CARBON BUDGET

20. THE MARKET FOR UNITS Everyone has access to the same market. The market price is set by the Tender.

21. Tradable Energy Quotas £ MARKET Organisations Primary dealers Citizens 40% Entitlement 60% Tender ISSUE COMMITTEE ON CLIMATE CHANGE QuotaCo REGISTRAR CARBON BUDGET

22. Tradable Energy Quotas £ MARKET Organisations Primary dealers Citizens 40% Entitlement 60% Tender ISSUE UNITS FLOW THROUGH THE ENERGY CYCLE COMMITTEE ON CLIMATE CHANGE QuotaCo REGISTRAR CARBON BUDGET

23. Tradable Energy Quotas SURRENDER Fuel wholesalers/ electricity generators Fuel/electricity retailers Extractors /importers £ MARKET Organisations Primary dealers Citizens 40% Entitlement 60% Tender ISSUE UNITS FLOW THROUGH THE ENERGY CYCLE COMMITTEE ON CLIMATE CHANGE QuotaCo REGISTRAR CARBON BUDGET

24. THE SURRENDER OF UNITS 1.Utility bills: direct debit 2.Petrol: by card 3.The cash option Embodied energy in other goods A hands-free scheme

25. Tradable Energy Quotas SURRENDER Fuel wholesalers/ electricity generators Fuel/electricity retailers Extractors /importers £ MARKET Organisations Primary dealers Citizens 40% Entitlement 60% Tender ISSUE UNITS FLOW THROUGH THE ENERGY CYCLE COMMITTEE ON CLIMATE CHANGE QuotaCo REGISTRAR CARBON BUDGET

26. TEQS: THE CRITICAL FEATURES

27. THE GUARANTEE

28. What is the Guarantee? Assurance that the carbon reductions defined by the Budget will actually be delivered

29. TEQS: THE CRITICAL FEATURES THE GUARANTEE TIME TO PLAN AHEAD

30. Why the need to plan ahead? 1. The long lead-times needed by conservation and renewables 2.Structural change - the proximity principle - means a deep transformation in our lives Changing infrastructure and lifestyles takes time

31. TEQS: THE CRITICAL FEATURES THE GUARANTEE TIME TO PLAN AHEAD LEAVES MONEY WITH THE USER

32. Why leave money with the energy user? 1. The transition to Lean Energy will be costly 2. Economic prosperity cannot be assumed

33. TEQS: THE CRITICAL FEATURES THE GUARANTEE TIME TO PLAN AHEAD LEAVES MONEY WITH THE USER PROGRESSIVE

34. Progressive 1. Benefits poorer households 3. Equity redefined in the light of climate change and peak oil 2. An equal allocation to every adult

35. TEQS: THE CRITICAL FEATURES THE GUARANTEE TIME TO PLAN AHEAD LEAVES MONEY WITH THE USER PROGRESSIVEAN ASSURED RATION

36. Why is an assured ration needed? 1. Without an assured ration, defined in terms of quantity - not money - the poor could be out-bid for energy 2. This is especially a risk if the Government has to intervene in the energy market, selling at a lower price than that of the international market

37. TEQS: THE CRITICAL FEATURES THE GUARANTEE TIME TO PLAN AHEAD LEAVES MONEY WITH THE USER PROGRESSIVEAN ASSURED RATION SPECIFIED IN TERMS OF ENERGY

38. Why does it need to be specified in terms of energy? 1.The problem is an energy problem, and will call for imaginative energy solutions 2. If it were seen as a money problem, it would be just one more charge on the household budget

39. TEQS: THE CRITICAL FEATURES THE GUARANTEE TIME TO PLAN AHEAD LEAVES MONEY WITH THE USER PROGRESSIVEAN ASSURED RATION SPECIFIED IN TERMS OF ENERGY BOTH FOR FUEL SCARCITY AND CLIMATE

40. Why set up an instrument for both fuel scarcity and the climate? The solutions to each aspect of the problem need to be mutually consistent

41. TEQS: THE CRITICAL FEATURES THE GUARANTEE TIME TO PLAN AHEAD LEAVES MONEY WITH THE USER PROGRESSIVEAN ASSURED RATION SPECIFIED IN TERMS OF ENERGY BOTH FOR FUEL SCARCITY AND CLIMATE HANDS-FREE

42. Why is “hands-free” so important? 1. It won’t happen without 2. The focus of interest has to be on the energy descent, not on the scheme put in place to support that descent

43. TEQS: THE CRITICAL FEATURES THE GUARANTEE TIME TO PLAN AHEAD LEAVES MONEY WITH THE USER PROGRESSIVEAN ASSURED RATION SPECIFIED IN TERMS OF ENERGY BOTH FOR FUEL SCARCITY AND CLIMATE HANDS-FREEGOVERNMENT THERE TO HELP

44. What is the role of Government? 1.In it together 2.There to help the energy descent happen in the context of the common purpose 3. Budget decisions are made by an independent agency - the Carbon/Energy Policy Committee

45. TEQS: THE CRITICAL FEATURES THE GUARANTEE TIME TO PLAN AHEAD LEAVES MONEY WITH THE USER PROGRESSIVEAN ASSURED RATION SPECIFIED IN TERMS OF ENERGY BOTH FOR FUEL SCARCITY AND CLIMATE HANDS-FREEGOVERNMENT THERE TO HELP COMPETITIVE ADVANTAGE

46. What Competitive Advantage? 1.Energy-efficient technology 2.Lower energy costs (energy volumes lower) 3. An orderly rationing system 4. Moral leadership

47. TEQS: THE CRITICAL FEATURES THE GUARANTEE TIME TO PLAN AHEAD LEAVES MONEY WITH THE USER PROGRESSIVEAN ASSURED RATION SPECIFIED IN TERMS OF ENERGY BOTH FOR FUEL SCARCITY AND CLIMATE HANDS-FREEGOVERNMENT THERE TO HELP COMPETITIVE ADVANTAGE PULL

48. What is Pull? It is the opposite of push! A system which empowers people to think for themselves, cooperate and bring in only those resources which are needed

49. TEQS: THE CRITICAL FEATURES THE GUARANTEE TIME TO PLAN AHEAD LEAVES MONEY WITH THE USER PROGRESSIVEAN ASSURED RATION SPECIFIED IN TERMS OF ENERGY BOTH FOR FUEL SCARCITY AND CLIMATE HANDS-FREEGOVERNMENT THERE TO HELP COMPETITIVE ADVANTAGE PULLCOMMON PURPOSE

50. What is Common Purpose? There is a common and clear objective for the whole society With TEQs, price is under the nation’s control, unlike internationally traded energy resources Shared effort towards a shared goal.

51. TEQS: THE CRITICAL FEATURES THE GUARANTEE TIME TO PLAN AHEAD LEAVES MONEY WITH THE USER PROGRESSIVEAN ASSURED RATION SPECIFIED IN TERMS OF ENERGY BOTH FOR FUEL SCARCITY AND CLIMATE HANDS-FREEGOVERNMENT THERE TO HELP COMPETITIVE ADVANTAGE PULLTHE COMMON PURPOSE Carbon tax?

52. TEQS vs TAX NO GUARANTEE NO TIME TO PLAN AHEAD TAKES MONEY FROM THE USER REGRESSIVENO ASSURED RATION SPECIFIED IN TERMS OF MONEY WHOLLY UNSUITED FOR FUEL SCARCITY HANDS-ONGOVERNMENT THERE TO PUNISH COMPETITIVE DISADVANTAGE PUSHNO COMMON PURPOSE

53. TEQS vs TAX NO GUARANTEE NO TIME TO PLAN AHEAD TAKES MONEY FROM THE USER REGRESSIVENO ASSURED RATION SPECIFIED IN TERMS OF MONEY WHOLLY UNSUITED FOR FUEL SCARCITY HANDS-ONGOVERNMENT THERE TO PUNISH COMPETITIVE DISADVANTAGE PUSHNO COMMON PURPOSE

54. An equitable, effective and efficient way of managing our country’s energy descent - guaranteeing emissions reductions, empowering individuals and communities and ensuring fair access to fuel and energy for all. www.teqs.net