Renew On Line (UK) 64

9. Carbon Rationing

In a speech to the Audit Commission in July, David Miliband, the Secretary of State for Environment, Food and Rural Affairs, floated the idea of introducing a credit card-style trading system based on the carbon emissions associated with consumers use of energy for air travel, as well as electricity, gas and petrol. Government estimates suggest that individuals’ use of gas, electricity and transport accounts for 44% of Britain’s carbon emissions, with the average Briton being responsible for around 4,000 kilograms of emissions a year. Under the proposals, all citizens would be given a personal carbon allowance, based on national targets for cutting CO2 emissions. Points would be deducted at point of sale for every purchase involving the use of non-renewable energy. To reduce total UK emissions, the overall number of points would shrink each year. People who can get below the limit could sell their surplus to those who couldn’t. So the carbon credits would have would a market price.
Miliband also suggested banning products such as inefficient light bulbs and electrical appliances which waste power while on standby. He said: ‘In the short term it is likely that a mixture of the above tools will be needed. But in the long term, we should look more radically at the option of tradable personal carbon allowances. Imagine a world where carbon becomes a new currency. We all carry carbon points on our bank cards in the same way as we carry pounds. We pay for electricity, gas and fuel not just with pounds but carbon points.’

The idea was mentioned in the governments energy review, which said a new cross-departmental group ‘will examine what new policy options, such as tradable personal carbon allowances, could be deployed to stimulate local action’. A pilot project is being considered.

Miliband commented: ‘It is easy to dismiss the idea as too complex administratively or too much of a burden for citizens. But in the long term there may be potential to make a system work effectively and in a way that is arguably more equitable, more empowering and more effective than the traditional tools of information, tax and regulation.’

Colin Challen, Labour chair of the all-party parliamentary group on climate change, which has called for carbon rationing, said: ‘it will inevitably have to be introduced so that consumers, along with other sectors, take responsibility for what they do’.

It certainly would lead to rapid education on your personal use of energy, but there could be problems. Milliband argued that ‘People on low incomes are likely to benefit as they will be able to sell their excess allowances’. But unless policed very tightly, it could be socially divisive, regressive and inequitable. The rich will presumably try to keep using as much energy as they think they need by buying credits off the poor. And since the value of the credits will presumably increase dramatically as the rich find they don’t have enough, there will be major incentives for the poor to sell every credit they can- and buy in energy for themselves from wherever they can, maybe illicitly outside the system- thus potentially increasing net emissions. Or they may just do without- thus increasing fuel poverty. The potential for corruption and black markets in dodgy high carbon fuel is certainly worrying.