Carbon Rationing Action Groups

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How national carbon rationing works

• An authority independent of government, like the Reserve Bank, sets a national carbon emissions budget each year, which is decreased by thee or four percent each year in a series of downward steps; in a decade emissions can be cut by 30 or 40 per cent, aided by national energy efficiency programs.

• Because households are directly responsible for about 34 per cent of emissions, 34 per cent of the carbon budget is made available free of charge as an equal “carbon credit” (or ration) for each citizen on an electronic swipe “carbon card” which would be used to draw on an individual carbon credit balance each time household gas and electricity, petrol and air tickets are paid for. Unused credits can be sold.

• For minor amounts of energy embedded in commodities purchased such as food and personal services, the carbon ration will already have been paid by the manufacturer, and its cost built into the end price for the consumer.

• If a person lacks the carbon credits to cover a purchase or is an overseas visitor without a carbon credit, he or she could buy on the “spot” market at the point of sale.

• The balance of 66 per cent would be auctioned to business and government in an “emissions trading” market where the price would rise and fall such that the business and government demand for carbon emissions would not exceed the budget target for business and government carbon emissions.

THE EFFECT: The change would be rapid and effective: suddenly renewable electricity would be cheaper than coal-fired power, everyone would want solar hot water and better insulated houses, the madness of excessive use of private cars would be rationalised, stores and offices would be lit by natural light and skylights rather than floodlights. We might even slow down a little and reduce our madly stressed lives, planning our movements for the day before we leave home. We would be more likely to consume what we need, rather than what we want.

INCENTIVE TO ACT: Because both individuals and businesses can trade their carbon credit within the overall national carbon emission target, there is a financial incentive to switch rapidly to low-carbon technologies and for low-carbon innovation. If a new technology needs less of your ration, it will become more attractive, and business has an incentive to make long-term, low-carbon investment decisions.