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The progressive approach to
curbing greenhouse gas
emissions
What are domestic tradable carbon quotas?
• Domestic tradable carbon quotas (“DTQs”) or personal carbon trading is a “cap and trade” system for the reduction of greenhouse gas emissions from individual consumers.– It is similar to the EU emissions trading scheme for
corporations or the voluntary Chicago Climate Exchange.
How does it works?
• A federal agency will set an annual carbon budget based upon an international treaty.– global problem = global solution
• Individuals receive a free and equal per capita annual carbon allowance loaded onto debit cards.
Using carbon creditsUsing carbon credits• Carbon credits are subtracted from the debit
card when the individual makes a carbon energy purchase.1. at the pump 2. when purchasing airline tickets (public
ground transport is excluded)
3. when paying 4. and for any other activity which involves
utility bills fossil fuels
Power and fuel created by fossil fuels are assigned a carbon rating.
– Fuel that creates less quantities of ghg emissions will require less carbon credits.• Promotes clean coal technology• Promotes natural gas, biodiesel and ethanol
– In addition, companies which off set their carbon emissions can sell a less carbon costly product to consumers. • Promotes carbon sequestration• Promotes reforestation
Selling carbon credits
• Individuals who exceed their carbon credits must purchase additional credits on the carbon market.– Carbon cutter can sell unused credits to carbon
guzzler.
Purchasing Carbon Credits
• Carbon credits can be purchased directly at the point of sale.– The cost-per-credit is determined by the going
per credit rate on the carbon market.• Similar to exchange rates for foreign currencies.
– Allowing customers to purchase carbon credits at the point of sale allows visitors to the U.S., who do not have a carbon debit card, to purchase airline tickets, and fuel.
Trading carbon credits
• Individuals who have excess carbon credits may trade them on the carbon market.– Carbon credits may be
traded:• Online• Over the phone• Automated trading at
the point of sale
Questions?• Is it necessary to implement a
personal carbon trading system?– Are there other less intrusive options?
• Is it possible to implement a personal carbon trading system?– Political problems– Practical problems
Can technology solve the problem?
• Is this really an economic problem?– Is it foolish to focus on carbon trading or carbon tax
schemes?– Can we solve this problem through technology?
• Are people simply unwilling to cut-back on carbon usage?– Why should they if technology can make the
necessary carbon cuts for us.
Ari Fleischer's words in May 2001, explaining the president's view that our energy needs
should be addressed by expanding supply, not by managing demand:
“The president believes that high energy consumption is an American way of life, and that it should be the goal of policy makers to protect the American way of life. The American way of life is a blessed one,” he said.
Technology alone cannot solve the climate change problem it created?
• “In contradiction to what environmental skeptics often say, technology alone will not solve all problems.” says Prof. Jacqueline McGlade, Executive Director of the European Environment Agency
– Are there technologies that we can implement in the near term to power our cars, and fuel our jets?
– Will these technologies be cost prohibitive for consumers?
Why should we implement a carbon trading system?
• Effective–Guarantees necessary carbon
emission cuts.
• Equity–Everyone is given an equal carbon
share.–Those who have a small carbon foot
prints can benefit financially. –Appeals to people not only as
consumers but as citizens as well.
• Efficiency
–Promotes efficient energy consumption through market pressures.
–Promotes “carbon literacy” among the population and a demand for low carbon alternatives.
–Gives incentives to creative ways to reduce carbon emissions.
A personal carbon trading system is needed now!
• World energy demand is rising.
U.S. energy demand is high and continuing to rise.
Oil consumption per capita per barrel of oil each day (darker color = more oil consumption)
The majority of ghg emissions come from residential energy use
and personal transportation.
The number of households in the U.S. is increasing.
• The size of U.S. homes is growing.– New construction of single family homes has grown consistently
since WWII– The size, in square footage terms, of home in the U.S. in
growing.
• Americans are using more air conditioning.– The number of homes in the U.S. with air conditioning has tripled
in the past 25 years.
• Americans are using more and larger appliances.
Personal carbon use is the main factor in causing global warming.
•Personal carbon use makes up over half of all Personal carbon use makes up over half of all ghg emissionsghg emissions
•Personal carbon consumption is outpacing Personal carbon consumption is outpacing industrial carbon consumption 2 to 1. industrial carbon consumption 2 to 1.
Global warming is causing major environmental problems.
The proof is indisputable
85% of Americans believe global 85% of Americans believe global warming is occurringwarming is occurring
High carbon usage is causing other major environmental problems
besides global warming.
– Air pollution• Air pollution from
electric generation and automobile emissions
– Water pollution• Acid rain from electric
generation
High carbon usage is leading to a lower quality of life.
– Traffic congestion– Urban sprawl and leap frog
development – Loss of wildlife habitat
High carbon consumption and reliance on the automobile is leading to a loss of community
and destroying scenic areas.
Energy dependence is forcing us to look for energy in pristine
environmentally sensitive locations.
Artic National Wildlife RefugeArtic National Wildlife Refuge
Reliance on fossil fuels supports countries which fund terrorists!
The U.S. has strained relations with almost all the countries which control
international oil prices.
OPEC MEMBERSHIP COUNTRIESOPEC MEMBERSHIP COUNTRIES
High carbon dependence is leading the U.S. into wars we can’t win.
Barriers to implementing a personal carbon trading
program
Is there the political will to implement any carbon
reduction scheme? • Participation in the Kyoto Protocol (non
participating countries are in red).
Is there the political will to implement a personal carbon
trading scheme in the U.S.?
.
VS
Attitudes are changing, people want action on climate change from
their elected officials.
• Al Gore’s documentary the Inconvenient Truth was widely popular and spurred public debate.
• Evangelical Christians, which form a significant part of the Republican base are demanding government action to protect the environment.
• Democrats are poised to take back the White House in 2008.
Does it even matter?Developing countries are increasing their carbon output and unwilling to cut back on carbon usage.
It may be too late to reverse the damage already done.
Should we give up now?Should we give up now?
Why we need DTQs
• To tackle climate change we need a major transformation in the way we think about energy.
• There are limitations in the ability of renewable energy sources to make needed CO² cuts.
Guarantee • A Carbon tax does not give
a guarantee that a particular reduction will occur, a carbon quota does. – To avoid catastrophic climate change ghg
emissions must be reduced between 60% - 80%
The domino effect through the supply chain
• Carbon quotas forces consumers to make needed changes– Hybrid cars– Public transportation– Green roofs– Better insulation– Energy efficient appliances– Renewable power– Car pooling
A carbon quota will promote reliance on mass transit, hybrid cars, and renewable
energy.
Are the people with the largest carbon footprints really paying for the damage they are inflicting on the environment?
• Heated parking garages• Outdoor heated swimming pools• Large powerful cars• Private jets• Large yachts • Multiple homes
Discourage wasteful consumption
High carbon usage will be frowned upon with a carbon quota.
Personal Carbon Trading is not a gimmick Problems with Problems with carbon-offsetcarbon-offset programs:programs: 1.1. unregulatedunregulated 2.2. do not require any do not require any
meaningful sacrificemeaningful sacrifice 3.3. allow wealthy allow wealthy consumers to consumers to “sacrifice “sacrifice dollars for dollars for deeds”deeds” 4.4. do not guarantee do not guarantee
actual carbon cutsactual carbon cuts
5.5. unregulated unregulated
Practical problems with personal carbon trading.
Problems The rural population is poorer and needs more
carbon credits.– Should the rural population receive carbon
subsidizes?
• States with extreme climates need greater carbon allowances.– Should citizens of Alaska receive a larger carbon
allowance?– Will carbon quotas discourage growth and harm the
economies of Las Vegas and Phoenix?
• Public resentment to the program.– Scheme must be simple to use and understand, and
be perceived as fair and necessary.
Problems
• Costs to implement the system.Who is going to pay for?
» Carbon debit card readers» Carbon statements» Carbon gas pumps
• Will retailers and consumers except higher transaction costs to comply with the carbon quota system?
– Smart receipts - carbon advertising– Smart bills - carbon-rated homes– Carbon labels - Carbon-ometers
• Are countries without quota systems going to be at a competitive advantage?
And more problems
Is Personal Carbon Trading too difficult to understand?– Over time people will learn-by-doing.– Those that find the system too difficult, frustrating, or
simply do not want to take part can sell all their carbon credits immediately upon receipt and purchase all carbon units at the point of sale.
– Will people make a genuine effort to learn and participate in the system because they feel empowered by a system that gives them autonomy, and appreciate a system that places the onus on the person best situated to act?
Is it legal?
• Do carbon quotas infringe upon civil liberties?– Is there a disparate impact on carbon hungry consumers?
• Rural vs. Urban– Do DTQs infringe on people’s privacy – Will the quota scheme be successfully challenged in court?– Is the quota scheme any different than a carbon tax?– Is the quota scheme “un-American”?
Is personal carbon trading fair?
Equity• Personal carbon trading is fair.
– Everyone gets an equal share.– Children get their own share to start thinking about
climate change early and so that families are not carbon poor.
– Not everyone can afford to pay a carbon tax.
• People with higher incomes tend to use more energy, so they can afford to pay for it.
• People in rural areas have more access to alternative sources of energy.
• Older people can sell credits they don’t use – source of retirement income.
Additional practical problems
• Technical feasibility– Is it possible to enroll 300 million people into personal carbon
trading system?– Is it cost prohibitive to maintain a central data base that holds
carbon accounts and tracks carbon unit transactions?
• Potential for carbon debit card fraud
• What to do when foreign visitors (who do not have a carbon debit card) wish to purchase gas in the U.S.
• What happens to people who go over their carbon allowance and cannot afford to purchase carbon credits at the market rate? Do they go without heat?
Danger of carbon speculation on the carbon market lead?
Will individuals and corporations Will individuals and corporations manipulate the fledging carbon manipulate the fledging carbon trading market?trading market?
The future of personal carbon trading?
Is personal carbon trading a genuine Is personal carbon trading a genuine possibility?possibility?
The future of personal carbon trading.
• British Secretary of the Environment David Miliband has endorsed a carbon trading program.
• The European Union has started a mandatory cap and trade carbon cutting scheme for corporations.
• The Chicago Climate Exchange has started a voluntary cap and trade system for corporations.
What do you think?
?
Is there any other way?
Further reading
• "How We Can Save the Planet" by Mayer Hillman, with Tina Fawcett, Penguin Books, 2004
• Domestic Tradable Quotas: A policy instrument for reducing greenhouse gas emissions from energy use, Tyndall Centre for Climate Change Research, Richard Starkey and Dr. Kevin Anderson
• Taxing and Trading: Debating Options for Carbon Reductions (2005) http://www.ukerc.ac.uk/content/view/110/57
• The Suicidal Planet: our last chance to prevent climate catastrophe. Thomas Dunne, St. Martin’s Press
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