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We all face a global warming emergency. Climate change science tells us that feedback mechanisms are driving us towards catastrophic cimate change, requiring rapid cuts in carbon emissions. The idea of carbon rationing is a better response than carbon taxes, and here's how it will work.

The idea of carbon rationing

The notion of establishing a maximum permissible amount of emissions (an emissions budget) and dividing a right to a portion of that budget to each citizen (a ration or carbon quota) is under serious study by the British government.

The ideas was developed by David Fleming in "Energy and the Common purpose: Descending the Energy Staircase with Tradable Energy Quotas" and subsequently studied by the Tyndall Centre in "Domestic Tradable Quotas: A policy instrument for reducing greenhouse gas emissions from energy use" .

In December 2006 a new report for the British environment department was released, "A Rough Guide to Individual Carbon Trading: The ideas, the issues and the next steps: Report to Defra" (Roberts and Thumim 2006). It is also the focus of George Monbiot's book, "Heat: how to stop the planet burning".

The British Environment minister David Miliband says "the challenge we face is not about the science or the economic ... it is about politics". Carbon credits, he says, "limit the carbon emissions by end users based on the science, and then use financial incentives to drive efficiency and innovation" and are necessary because "essentially, by 2050 we need all activities outside agriculture to be near zero carbon emitting if we are to stop carbon dioxide levels in the atmosphere growing". Currently reports are being prepared for the British government on how carbon rationing might be implemented.

So will the general public accept rationing? Miliband, one of the few senior politicians who seems to "get it" on climate change, suggests they will, and floated the idea of carbon rationing at a major speech to the Audit Commission on 19 July (Miliband 2006). In part Miliband said:

"A variety of models of tradeable personal carbon allowances have been proposed. But the basic elements are easy to describe. It is a compelling thought experiment – limit the carbon emissions by end users based on the science, and then use financial incentives to drive efficiency and innovation. Imagine a country where carbon becomes a new currency. We carry bank cards that store both pounds and carbon points. When we buy electricity, gas and fuel, we use our carbon points, as well as pounds. To help reduce carbon emissions, the Government would set limits on the amount of carbon that could be used.

"Imagine your neighbourhood. Each neighbour receives the same free entitlement to a certain number of carbon points. The family next door has an SUV and realise they are going to have to buy more carbon points. So instead they decide to trade in the SUV for a hybrid car. They save 2.2 tonnes of carbon each year. They then sell their carbon points back to the bank and share the dividends of environmental growth. The granny next door doesn’t drive and doesn’t do much air travel. So she has spare carbon points that she can sell. But she doesn’t want to be handling two currencies so she cashes in all her carbon permits as soon as she receives them. When she pays her electricity bill, her energy company builds in the price of carbon to her total bill. She simply pays carbon as she uses it. At the end of the year she finds herself better off.

"It is easy to dismiss the idea as too complex administratively, too utopian or too much of a burden for citizens. Do we really want another Government IT programme? Are there not simpler ways of achieving the same objective by focusing on business to change their behaviour not citizens? And will it ever be politically acceptable? But, as the Tyndall Centre’s work shows, in the long term, there may be potential to make a system work, and in a way that is arguably more equitable, more empowering and more effective than the traditional tools of information, tax, and regulation.

"It could be more equitable because instead of tax increases which hit all consumers of products, personal carbon allowances provide free entitlements and only offer financial penalties for those who go above their entitlement. People on higher incomes tend to have higher carbon emissions due to higher car ownership and usage, air travel and tourism, and larger homes. People on low incomes are likely to benefit as they will be able to sell their excess allowances.

"It could be more empowering than many forms of regulation because instead of banning particular products, services or activities, or taxing them heavily, a personal carbon allowance enables citizens to make trade-offs. It is also empowering because many citizens want to be able to do their bit for the environment, but there is no measurable way of guiding their decisions.

"It could be more effective because unlike taxes or attempts to ban products, personal carbon allowances regulate the outcome to be achieved, not the means of achieving it. Carbon trading fixes the outcome to be achieved, and leaves the price of carbon to adjust to the necessary level to change behaviour. By intervening downstream, it enables each part of the supply chain to adapt – consumers change their preferences which has a domino effect throughout the system. By focusing on just the energy a citizen buys – their electricity, gas, petrol and air travel – not the energy used already to make food, cars or domestic appliances – the complexity is reduced. However, vast majority of individual emissions are captured which in turn make up 44 per cent of the economy’s total emissions."

"This is no lunatic proposal from the eco-radical fringe," reported Gwynne Dyer in January 2007. "It is on the verge of becoming British government policy, and environment secretary David Miliband is behind it one hundred per cent. In fact, he is hoping to launch a pilot scheme quite soon, with the goal of moving to a comprehensive national scheme of carbon rationing within five years" (Dyer 2007).

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