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Personal Carbon Trading: An Overview

Personal Carbon Trading: An Overview. Richard Starkey Tyndall Centre for Climate Change Research The University of Manchester 16 May 2008. Outline. Define personal carbon trading (PCT) Summarize place within policy debate Outline PCT Assess PCT. Outline.

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Personal Carbon Trading: An Overview

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  1. Personal Carbon Trading:An Overview Richard Starkey Tyndall Centre for Climate Change Research The University of Manchester 16 May 2008

  2. Outline • Define personal carbon trading (PCT) • Summarize place within policy debate • Outline PCT • Assess PCT

  3. Outline • Define personal carbon trading (PCT) • Summarize place within policy debate • Outline PCT • Assess PCT

  4. Definition Personal carbon trading (PCT) schemes are… proposed greenhouse gas emissions trading schemes under which individuals are allocated some/all available emissions rights

  5. Outline • Define personal carbon trading (PCT) • Summarize place within policy debate • Outline PCT • Assess PCT

  6. PCT and policy #1 Research • Royal Society of Arts £0.5m research programme • Research at Environmental Change Institute + ippr Government • PCT has “a simplicity and beauty” - David Miliband • Defra completed pre-feasibility study Parliament • Call for evidence by EFRACOM and Env Audit Ctte

  7. PCT and policy #2 Political parties • Adopted as Green Party policy • Awareness/discussion of PCT within 3 main parties • Even discussed by British National Party!?! Other • Formation of carbon rationing action groups (CRAGs) PCT now well known within the policy community

  8. Outline • Define personal carbon trading (PCT) • Summarize place within policy debate • Outline PCT • Assess PCT

  9. A particular form of PCT… • …Domestic Tradable Quotas (DTQs) • Proposed by David Fleming in 1996 • Since July 2003 assessed by Tyndall for – feasibility – appropriateness

  10. What are DTQs? • PCT scheme covering emissions from energy use • Rights allocated to end purchasers of fuel and electricity ‒individuals ‒ firms ‒ other organizations

  11. 3 elements • Setting the carbon budget • Allocating carbon units • Surrendering carbon units

  12. 3 elements • Setting the carbon budget • Allocating carbon units • Surrendering carbon units CAP + TRADE

  13. 3 elements • Setting the carbon budget • Allocating carbon units • Surrendering carbon units

  14. Carbon budget annual emissions from energy use 175 Budgets set several years ahead Long-term signal to society MtC Reduction of >60% 2010 2050 Year

  15. 3 elements • Setting the carbon budget • Allocating carbon units • Surrendering carbon units

  16. 3 elements • Setting the carbon budget • Allocating carbon units #1 • Surrendering carbon units

  17. Carbon units • Carbon units are emissions rights • 1 carbon unit = right to emit 1kg CO2 (equivalent)

  18. How are carbon units allocated? Carbon units equal to carbon budget divided between ADULTINDIVIDUALS and ORGANIZATIONS

  19. Individuals % carbon units to individuals equal to % energy emissions from their fuel + electricity use

  20. Energy emissions 40% 60% Organizations Individuals

  21. 40% Individuals emissions

  22. 40% Individuals units

  23. Free and on an Equal per capita basis

  24. Carbon account • Units deposited in an electronic carbon account • Carbon account similar to bank account

  25. 5 Individual carbon unit allocation tCO2 Reduction of >60% 2010 2050 Year

  26. 40% Individuals units

  27. Auctioned by government on the… 40% 60% Individuals units units

  28. …National carbon market All organizations must purchase units on market …more on the carbon market later

  29. 3 elements • Setting the carbon budget • Allocating carbon units #1 • Surrendering carbon units

  30. 3 elements • Setting the carbon budget • Allocating carbon units • Surrendering carbon units

  31. Surrendering • Units surrendered whenever fuel/electricity purchased • N.B. No surrender when purchasing e.g. train ticket • Quantity surrendered covers carbon content of purchase

  32. Surrender must be easy and convenient When paying • gas and electricity bills surrender by direct debit from carbon account • for petrol/diesel surrender by…

  33. …carbon card Carbon Card Bjorn Lomberg

  34. Government Primary Suppliers/ Importers Individuals Energy Supply Chain Energy Retailers Units Surrendered Organizations Units surrendered Units surrendered

  35. 3 elements • Setting the carbon budget • Allocating carbon units • Surrendering carbon units

  36. 3 elements • Setting the carbon budget • Allocating carbon units #2 • Surrendering carbon units …More on the national carbon market

  37. National carbon market Sellers Government (60% at auction) Below-allocation individuals Buyers

  38. Below-allocation individuals • Emit at level below that permitted by their allocation • Have surplus units • Surplus can be saved...

  39. 5 Individual carbon unit allocation tCO2 Reduction of >60% 2010 2050 Year

  40. Below-allocation individuals • Emit at level below that permitted by their allocation • Have surplus units • Surplus can be saved... • …gifted, retired or sold

  41. National carbon market Sellers Government (60% at auction) Below-allocation individuals Buyers Organizations Above-allocation individuals

  42. Below-allocation individuals emit at level below that permitted by their allocation Above-allocation individuals emit at level above that permitted by their allocation

  43. Buy at auction Sell Buy National carbon market Sellers Government (60% at auction) Below-allocation individuals Buyers Organizations Above-allocation individuals Market makers E.g. banks, post office Profit on “bid and offer” spread Trading made easy – online, by phone or over-the-counter

  44. Government Primary Suppliers/ Importers Individuals Energy Supply Chain Energy Retailers Organizations Units surrendered Units Surrendered

  45. Primary Suppliers/ Importers Market Makers Individuals Energy Supply Chain Energy Retailers Organizations Units surrendered Carbon Budget 40% 60% Free/equal per capita Auction Auction Below allocation Above allocation Units Surrendered

  46. Question What if customer has no units at point of sale? (e.g. forgotten carbon card, overseas visitor, run out of units) Answer They buy units at the point of sale (1) Retailer buys units required by customer on market (2) Cost added to customer’s bill

  47. Primary Suppliers/ Importers Auction Market Makers Energy Supply Chain Units Surrendered Units surrendered Carbon Budget 40% 60% Free/equal per capita Auction Below allocation Individuals Organizations Above allocation Energy Retailers

  48. Auction Market Makers Carbon Budget 40% 60% Free/equal per capita Auction Below allocation Individuals Organizations Above allocation Energy Retailers

  49. Auction Market Makers Carbon Budget 40% 60% Free/equal per capita Auction Below allocation Individuals Organizations Above allocation Units purchased at point of sale Energy Retailers £ £

  50. Primary Suppliers/ Importers Auction Market Makers Energy Supply Chain Units surrendered Carbon Budget 40% 60% Free/equal per capita Auction Below allocation Individuals Organizations Above allocation Units purchased at point of sale Energy Retailers £ £

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