From Greenhouse to Green House

The threats of climate change
CO2 emissions and savings


Tradable quotas are the best way to tackle domestic CO2 emissions, write Richard Starkey and Kevin Anderson

Thursday April 29, 2004

The Guardian

It's 2025 and you've just filled the car with unleaded petrol and handed over your credit card. Nothing unusual so far. Now imagine you also hand over a second piece of plastic - let's call it a "carbon card" - for the attendant to swipe. It's not cash being debited this time, but "carbon units" from your personal allowance. Welcome to life under carbon rationing.

We believe that carbon rations - or to use our preferred term, domestic tradable quotas - are the fairest and most practical way to cut emissions of the greenhouse gas carbon dioxide. The government has pledged that the UK will cut CO2 emissions by 60% by 2050. That's a hugely ambitious target achievable only if each of us limits the CO2 emitted in our name.

Climate change is "more serious even than the threat of terrorism", according to David King, the government's chief scientific adviser. The Royal Commission on Environmental Pollution says curbing the threat requires a reduction in global greenhouse gas emissions of about 70% by the 22nd century.

There is substantial disagreement about how this should be done. The commission took the view that "every human is entitled to release into the atmosphere the same quantity of greenhouse gases" and endorsed a policy of "contraction and convergence" under which nations gradually move towards sharing emissions. The commission says this would require a cut in our CO2 emissions of 60% by 2050 - government policy since the 2003 energy white paper.

Much thought has been given to applying the per capita principle to the allocation of emissions between nations, but almost none to applying it within nations.

Here's how our scheme works. First, the government sets an annual carbon budget - the maximum quantity of emissions permitted from energy use - which reduces year on year until the 2050 target is reached.

Each year's budget is broken down into carbon units (say 1 unit = 1 kg of CO2). Households are responsible for about 40% of energy emissions, so this proportion of units is allocated equally and without charge to every citizen over 18. The remaining units are auctioned to organisations.

Then, when citizens or organisations purchase fuel or electricity they surrender corresponding units from their carbon card.

Now comes the clever bit. Each card links to a national database allowing individuals to trade their carbon units. Say, for example, you need to drive to work, but have no carbon units left. No problem, the garage simply goes into the national market and buys the number of units needed. The cost is added to your bill.

Or perhaps you don't own a car? Then you can sell your surplus units into the market for hard cash. And because the size of the cake is fixed, these trades will not affect the overall emissions produced.

How does carbon rationing measure up as a mechanism for emissions reduction? The standard test for a proposed environmental policy measure is to assess it against the three Es: equity (is it fair?), effectiveness (will it achieve its target?) and efficiency (will it be cost-effective?).

If the atmosphere is viewed as a common resource then it seems fair that people have equal shares. Allocating emissions on this basis is surely fairer than by ability to pay, as, for example, under a carbon tax. According to government figures, there are about three million households in fuel poverty, that is without sufficient income to heat their homes adequately. Fuel-poor households generally use less energy and so, as below-average emitters, most would be better off because they could sell their surplus units.

To be effective, the scheme would need to be technically and administratively feasible and acceptable to the public. Clearly it requires a central database to hold the carbon accounts and record transactions. Computer experts say such a database is not a problem using current technology, and neither is linking our 11,000 garages to it in real-time.

There is one obvious sticking point: the government would need a list of individuals entitled to carbon units. In other words, it would need a population register: but one would be created for the proposed ID card scheme. In fact, the ID card could act as the carbon card.

Finally, the scheme scores well for efficiency. According to economists, its market approach is the most cost-effective route to reduce emissions.

Richard Starkey and Kevin Anderson are scientists at the Tyndall Centre for Climate Change Research, Umist.

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