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TEQs (Tradable Energy Quotas) What they are How they work Why we need them. Context. 1. Climate change - PowerPoint PPT Presentation
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TEQs(Tradable Energy Quotas)
What they are
How they work
Why we need them
Context1. Climate change
IPCC (Sept 2007): “If warming is not kept below 2 degrees C, which will require the strongest of mitigation efforts, and
currently looks very unlikely to be achieved, then substantial global impacts will occur, such as: species extinctions and
millions of people at risk from drought, hunger and flooding, etc.” (my emphasis)
2. Resource depletion (Peak Oil)Global peak oil production around now. Extreme and
unprecedented price volatility. Not just oil – energy resources including gas, uranium and even coal.
“Large-scale problems require large-scale solutions”
?
What is needed?
"Large-scale problems do not require large-scale solutions; they require small-scale solutions within a large-scale framework."
~ David Fleming
What is needed?
Local Level – Transition Towns/Woking/Eigg/Fintry/…
---
National Level – Support
International Level – Collective responsibility (COP?)
Personal Level – Us
TEQs (Tradable Energy Quotas)
WHAT TEQs ARE FOR
1. Guaranteeing that our national carbon budget is achieved
2. Empowering communities and building a common purpose
3. Securing fair access to fuel at a time of deep scarcity
IN OUTLINEWhat are TEQs?
Tradable Energy Quotas arean electronic system for rationing
carbon-rated energy
for all energy users.at national level
,,
All other users obtain their units through the weekly Tender (auction).
Units are surrendered in addition to cash payment when fuel or energy is purchased.
Individuals who use less than their Entitlement may sell them and benefit from their energy-thrift.
Those who want more may buy them from those who are selling.
All individuals receive an unconditional Entitlement to TEQs units.
Tradable Energy Quotas
SURRENDER
Fuel wholesalers/ electricity
generators
Fuel/electricity retailers
Fuel extractors
£
MARKET
Organisations
Primary dealersCitizens
40% Entitlement
60% Tender
ISSUE
UNITS FLOW THROUGH THE ENERGY CYCLE
COMMITTEE ON CLIMATE
CHANGE
QuotaCo REGISTRAR
CARBON
BUDGET
Tradable Energy Quotas
COMMITTEE ON CLIMATE
CHANGE
CARBON
BUDGET
THE CARBON BUDGET
1. Establishes the total quantity of TEQs units (rations) that may be issued
2. Sets a long-term time-horizon
Year 1
0
100
To
tal
carb
on
un
its
(in
dex
)
0 5 10 15Years
Commitment
5 year
Intention
5 year
Forecast 10 years
Year 2
0
100
To
tal
carb
on
un
its
(in
dex
)
0 5 10 15Years
Commitment
5 year
Intention
5 yearForecast 10 years
THE CARBON BUDGET
1. Establishes the total quantity of TEQs units (rations) that may be issued
2. Sets a long-term time-horizon3. Set by the Committee on Climate
Change……which frees up the Government to
focus on achieving the Budget
(and TEQs provides money for this!)
Tradable Energy Quotas
COMMITTEE ON CLIMATE
CHANGE
QuotaCo REGISTRAR
CARBON
BUDGET
Tradable Energy Quotas
40% Entitlement
60% Tender
ISSUE
COMMITTEE ON CLIMATE
CHANGE
QuotaCo REGISTRAR
CARBON
BUDGET
THE ISSUE OF UNITS
1. By equal Entitlement to all adults (40%)2. By Tender to all other users (60%)
The Tender is a weekly auction at which organisations (industry, government etc.)
purchase the TEQs units they need
THE RATING SYSTEMCarbon units:
1 unit = 1kg CO2 (gwp)
(fuel rated by carbon content)
OR
Fuel units:
1 unit = 1 litre oil
1 unit = 1 metre3 gas
1 unit = 1 kWh electricity (etc)
Tradable Energy Quotas
MARKET
Organisations
Primary dealersCitizens
40% Entitlement
60% Tender
ISSUE
COMMITTEE ON CLIMATE
CHANGE
QuotaCo REGISTRAR
CARBON
BUDGET
THE MARKET FOR UNITS
Everyone has access to the same market.
The market price is set by the Tender.
Tradable Energy Quotas
£
MARKET
Organisations
Primary dealersCitizens
40% Entitlement
60% Tender
ISSUE
COMMITTEE ON CLIMATE
CHANGE
QuotaCo REGISTRAR
CARBON
BUDGET
Tradable Energy Quotas
£
MARKET
Organisations
Primary dealersCitizens
40% Entitlement
60% Tender
ISSUE
UNITS FLOW THROUGH THE ENERGY CYCLE
COMMITTEE ON CLIMATE
CHANGE
QuotaCo REGISTRAR
CARBON
BUDGET
Tradable Energy Quotas
SURRENDER
Fuel wholesalers/ electricity
generators
Fuel/electricity retailers
Extractors/importers
£
MARKET
Organisations
Primary dealersCitizens
40% Entitlement
60% Tender
ISSUE
UNITS FLOW THROUGH THE ENERGY CYCLE
COMMITTEE ON CLIMATE
CHANGE
QuotaCo REGISTRAR
CARBON
BUDGET
THE SURRENDER OF UNITS
1. Utility bills: direct debit2. Petrol: by card3. The cash option
Embodied energy in other goods
A hands-free scheme
Tradable Energy Quotas
SURRENDER
Fuel wholesalers/ electricity
generators
Fuel/electricity retailers
Extractors /importers
£
MARKET
Organisations
Primary dealersCitizens
40% Entitlement
60% Tender
ISSUE
UNITS FLOW THROUGH THE ENERGY CYCLE
COMMITTEE ON CLIMATE
CHANGE
QuotaCo REGISTRAR
CARBON
BUDGET
TEQS: THE CRITICAL FEATURES
TEQS: THE CRITICAL FEATURES
THE GUARANTEE
What is the Guarantee?
Assurance that the carbon reductions defined by the Budget will actually be
delivered
TEQS: THE CRITICAL FEATURES
THE GUARANTEE
TIME TO PLAN AHEAD
Why the need to plan ahead?
1. The long lead-times needed by conservation and renewables
2. Structural change - the proximity principle - means a deep transformation in our
lives Changing infrastructure and lifestyles
takes time
TEQS: THE CRITICAL FEATURES
THE GUARANTEE
TIME TO PLAN AHEAD
LEAVES MONEY WITH THE USER
Why leave money with the energy user?
1. The transition to Lean Energy will be costly
2. Economic prosperity cannot be assumed
TEQS: THE CRITICAL FEATURES
THE GUARANTEE
TIME TO PLAN AHEAD
LEAVES MONEY WITH THE USER
PROGRESSIVE
Progressive
1. Benefits poorer households
3. Equity redefined in the light of climate change and peak oil
2. An equal allocation to every adult
TEQS: THE CRITICAL FEATURES
THE GUARANTEE
TIME TO PLAN AHEAD
LEAVES MONEY WITH THE USER
PROGRESSIVE AN ASSURED RATION
Why is an assured ration needed?
1. Without an assured ration, defined in terms of quantity - not money - the poor
could be out-bid for energy
2. This is especially a risk if the Government has to intervene in the energy market, selling at a lower price than that of
the international market
TEQS: THE CRITICAL FEATURES
THE GUARANTEE
TIME TO PLAN AHEAD
LEAVES MONEY WITH THE USER
PROGRESSIVE AN ASSURED RATION
SPECIFIED IN TERMS OF ENERGY
Why does it need to be specified in terms of energy?
1. The problem is an energy problem, and will call for imaginative energy solutions
2. If it were seen as a money problem, it would be just one more charge on the
household budget
TEQS: THE CRITICAL FEATURES
THE GUARANTEE
TIME TO PLAN AHEAD
LEAVES MONEY WITH THE USER
PROGRESSIVE AN ASSURED RATION
SPECIFIED IN TERMS OF ENERGY
BOTH FOR FUEL SCARCITY AND CLIMATE
Why set up an instrument for both fuel scarcity and the
climate?
The solutions to each aspect of the problem need to be mutually
consistent
TEQS: THE CRITICAL FEATURES
THE GUARANTEE
TIME TO PLAN AHEAD
LEAVES MONEY WITH THE USER
PROGRESSIVE AN ASSURED RATION
SPECIFIED IN TERMS OF ENERGY
BOTH FOR FUEL SCARCITY AND CLIMATE
HANDS-FREE
Why is “hands-free” so important?
1. It won’t happen without
2. The focus of interest has to be on the energy descent, not on the
scheme put in place to support that descent
TEQS: THE CRITICAL FEATURES
THE GUARANTEE
TIME TO PLAN AHEAD
LEAVES MONEY WITH THE USER
PROGRESSIVE AN ASSURED RATION
SPECIFIED IN TERMS OF ENERGY
BOTH FOR FUEL SCARCITY AND CLIMATE
HANDS-FREE GOVERNMENT THERE TO HELP
What is the role of Government?
1. In it together
2. There to help the energy descent happen in the context of the common purpose
3. Budget decisions are made by an independent agency - the Carbon/Energy Policy Committee
TEQS: THE CRITICAL FEATURES
THE GUARANTEE
TIME TO PLAN AHEAD
LEAVES MONEY WITH THE USER
PROGRESSIVE AN ASSURED RATION
SPECIFIED IN TERMS OF ENERGY
BOTH FOR FUEL SCARCITY AND CLIMATE
HANDS-FREE GOVERNMENT THERE TO HELP
COMPETITIVE ADVANTAGE
What Competitive Advantage?
1. Energy-efficient technology2. Lower energy costs (energy volumes
lower)3. An orderly rationing system
4. Moral leadership
TEQS: THE CRITICAL FEATURES
THE GUARANTEE
TIME TO PLAN AHEAD
LEAVES MONEY WITH THE USER
PROGRESSIVE AN ASSURED RATION
SPECIFIED IN TERMS OF ENERGY
BOTH FOR FUEL SCARCITY AND CLIMATE
HANDS-FREE GOVERNMENT THERE TO HELP
COMPETITIVE ADVANTAGE
PULL
What is Pull?
It is the opposite of push!
A system which empowers people to think for themselves, cooperate and bring in only those
resources which are needed
TEQS: THE CRITICAL FEATURES
THE GUARANTEE
TIME TO PLAN AHEAD
LEAVES MONEY WITH THE USER
PROGRESSIVE AN ASSURED RATION
SPECIFIED IN TERMS OF ENERGY
BOTH FOR FUEL SCARCITY AND CLIMATE
HANDS-FREE GOVERNMENT THERE TO HELP
COMPETITIVE ADVANTAGE
PULL COMMON PURPOSE
What is Common Purpose?
There is a common and clear objective for the whole society
With TEQs, price is under the nation’s control, unlike internationally traded energy
resources
Shared effort towards a shared goal.
TEQS: THE CRITICAL FEATURES
THE GUARANTEE
TIME TO PLAN AHEAD
LEAVES MONEY WITH THE USER
PROGRESSIVE AN ASSURED RATION
SPECIFIED IN TERMS OF ENERGY
BOTH FOR FUEL SCARCITY AND CLIMATE
HANDS-FREE GOVERNMENT THERE TO HELP
COMPETITIVE ADVANTAGE
PULL THE COMMON PURPOSE
Carbon tax?
TEQS vs TAX
NO GUARANTEE
NO TIME TO PLAN AHEAD
TAKES MONEY FROM THE USER
REGRESSIVE NO ASSURED RATION
SPECIFIED IN TERMS OF MONEY
WHOLLY UNSUITED FOR FUEL SCARCITY
HANDS-ON GOVERNMENT THERE TO PUNISH
COMPETITIVE DISADVANTAGE
PUSH NO COMMON PURPOSE
TEQS vs TAX
NO GUARANTEE
NO TIME TO PLAN AHEAD
TAKES MONEY FROM THE USER
REGRESSIVE NO ASSURED RATION
SPECIFIED IN TERMS OF MONEY
WHOLLY UNSUITED FOR FUEL SCARCITY
HANDS-ON GOVERNMENT THERE TO PUNISH
COMPETITIVE DISADVANTAGE
PUSH NO COMMON PURPOSE
An equitable, effective and efficient way of managing our country’s energy descent - guaranteeing
emissions reductions, empowering individuals and communities and ensuring fair access to fuel and
energy for all.
www.teqs.net