Personal Carbon Trading
The LCF team, as part of its work within the UK Energy Research Centre (UKERC), is investigating personal carbon trading (PCT), a proposed quantity-based policy instrument for reducing the carbon emissions by individuals.
A PCT would operate as a "cap and trade" scheme, whereby a cap is set on personal carbon emissions. The carbon rights are allocated for free to individuals in the form of an allowance. Individuals are then required to surrender carbon units from their allowance when purchasing fossil-based fuel for home energy use or personal transport. Individuals have the ability to buy additional carbon units if needed or sell carbon units if they have a surplus.
Over time the cap will come down and with it the allowance. There would be advanced warning of any changes in the cap and the individual allowance as well as additional supportive policies. The aim of the scheme would be to deliver guaranteed levels of carbon savings in successive years until a sustainable emissions level is reached. A PCT scheme would be part of an economy-wide emissions trading scheme.
Key features of a PCT scheme as theoretically conceived:
- A long-term carbon budget is established at the national level to reduce emissions whereby there is a maximum quantity of carbon emissions.
- Each individual is given a free and equal allowance (quota) of carbon units. This allowance is adjusted over time as the carbon budget reduces.
- Individuals will need to surrender carbon units when purchasing fossil-fuel based energy for home energy use and personal transport (table 1 shows under two slightly different approaches what activities will require carbon units to be surrendered).
- All participants in the scheme have the ability to save, buy and sell carbon units.
- The scheme is mandatory and administer electronically.
Table 1: Emission coverage in a personal carbon trading scheme: 2 different approaches
| Personal Carbon Allowances | Domestic Tradable Quotas | |
|---|---|---|
| Home Energy | ||
| Gas, coal, oil, LPG | Yes | Yes |
| Electricity (fossil fuel derived) | Yes | Yes |
| Transport | ||
| Petrol/diesel for private vehicle use | Yes | Yes |
| Public transport (trains, light rail, underground, ferries, coaches, buses, taxis) | Yes (perhaps exclude in the initial stages) | No |
| Air travel | Yes | No |
To better understand the advantages and disadvantages of considering PCT as a policy approach for tackling climate change the LCF team is
- Analysing energy data on the distribution of household carbon emissions
- Examining the possible implications of the PCT scheme on different types of individuals and households
- Investigating the development of a workable PCT scheme
- Identifying additional policies and measures to support individuals and households if a PCT scheme were to be introduced
- Undertaking a scoping study of what would be involved in running a national PCT pilot scheme.
If you would like to know more about our PCT work please contact:Tina Fawcett