Personal Carbon Trading

Seminar- Cambridge University 4CMR 16th May 2008-05-17

Chaired by Prof. Terry Barker of 4CMR with introduction by Dr Philip Sargeant of Camb. Energy Forum

Main conclusion: Personal carbon allowances give responsibility to the individual and bring home to them the importance of their role in carbon reduction and an ability to track the effect and cost of their actions. However, is the cost of setting up such programmes (estimated at 10x that of top down Cap and Trade) justified by this extra utility?

Dr Richard Starkey; Univ. Manchester, Tyndall Institute

Gave overview of Domestic Tradable Quota programme where individuals given quota to meet average Home Energy and Travel needs. These are given us using a card system whenever such services are purchased. If you exceed quota then can purchase extra or can sell unused quotas at going rate.

Other goods – food, household goods, leisure – area not covered but carbon cost of these would be accounted for by a top down system of permits purchased by the energy companies and therefore reflected in their price. Otherwise would be too costly to calculate carbon value of all these other goods and include them in the DTQ scheme. MR comment: This may mean that the high energy user/traveller is paying more per kg Carbon than high use food/goods/leisure user since the former is paying twice – in extra DTQ’s plus higher energy costs.

Such a system would only be worthwhile if it provided some extra value over the simpler top down permit approach. It would cost 20x (£1-2 billion per year) more to set up and run. The question is would it offset these costs by giving people personal responsibility, awareness and control of their carbon usage. I am not convinced especially as it requires considerable public education and expertise to optimise their use of the system.

Dr Adrian Wrigley – Entrepreneur/researcher

He challenged the current tax system looking at the cost of collection and the opportunity cost arguing that above about a 45% tax rate it cost more to run than was brought in. He developed a triangle graphic showing three types of taxes: income at the top, land at bottom right and resources bottom left. The current mix is close to the top. He argued that we should progressively move down the triangle to achieve a position near the base (i.e. no income tax) but slightly towards the land tax. While politically contentious to achieve such a radical change it was economically appealing. It also addresses the issue of climate change since the resource component will influence individuals and companies decisions on resource and therefore carbon use.

Dr Douglas Crawford Brown – Univ’s North Carolina/Cambridge

He argued that we should be focused on total energy use and reduction rather than increased energy efficiency since the latter can lead to increased use because of the feel good factor and lower cost of use. He gave the example of his 3,500 sq ft US home which is far more energy efficient than homes of twenty years ago but because of its size consumes far more energy. His 1,600 sq ft UK home uses far less and adequately meets his needs but UK people should not feel so smug, the reason we have smaller homes is cost. This reinforces the fact that price is a key disincentive for energy use.

Note also that we sneer at people with large SUV’s but not at the large house behind which may well consume far more energy.

He also noted that in Charlotte N.C. he used the bus because it is free. In Cambridge, he does not because it is it costs so much. So he cycles. We should use the Cambridge congestion charges to make bus use free or certainly very low cost.

In the US moves to tele-working caused increase in car use as the kids then used the car to get to school rather than being dropped off, so beware of the consequences of change as people may not do what you think.