Individuals could trade carbon currency – Miliband

This was the vision outlined by Environment Secretary David Miliband during a speech at the Audit Commission’s annual lecture this week.

In the future individuals could each receive fixed carbon allowances, in much the same way as industry is currently assigned them under the EU’s Emissions Trading Scheme.

And much like the ETS, those who manage to keep within their allowance would be able to trade their surplus carbon for cash, while those who miss their targets would be forced to buy in extra credits.

So those who drive large, gas-guzzling cars, live in energy-hungry houses and take regular holidays travelling by plane would find themselves paying a green tax for the jet-setting lifestyle, while those who use public transport or have installed fuel-saving measures like wind turbines or solar panels would be rewarded.

“Individuals’ electricity, gas and transport decisions make up 44 per cent of total emissions. Our decisions – the home we buy; what we eat and drink; how we travel and where we holiday – can have a major impact,” said Miliband.

“Numerous small measures – from turning your TV off rather than leaving it on standby to turning your heating down a couple of degrees can have some impact, which if aggregated across a whole population would be significant.

“But if individuals are to make a major impact on their carbon footprint, they need to focus on a few major changes.

“If they did four major things, they would be able to reduce their carbon footprint by nearly a third. Changing to a hybrid car, installing cavity wall insulation, fitting a wind turbine and solar panels can save over 3 tonnes of Carbon for each household.

“Each of these investments offer financial returns for the consumer through lower energy bills, and well as environmental returns for society.”

The Secretary acknowledged there was a balancing act needed to avoid nanny-state criticisms often levelled at New Labour and to allow people their right to retain individual choices and argued financial incentives could help, with carbon allowances giving people the opportunity to choose but rewarding the choices thjat benefited society – and the environment – as a whole.

“A variety of models of tradeable personal carbon allowances have been proposed. But the basic elements are easy to describe,” he said.

“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 asks her bank to sell 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.

“But…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.”

Miliband’s vision of a society driven by carbon credit cards has left commentators with some reservations.

There are fears that, when push comes to shove, it is simply making energy more expensive to buy and those already facing fuel poverty will be given further incentive not to turn the heating on when it gets cold or flick on a fan when temperatures soar.

Those who have the money to drive the symbol of ecological irresponsibility, the SUV, will absorb the extra cost and have their conscience cleared of guilt as they are paying for their emissions.

And those in most need of the extra cash from carbon credits will be those least able to install micro-generators.

Others, such as Friends of the Earth, have also pointed out that while it is worth having a vision for the future, immediate action needs to be taken now and carbon credit cards are not going to be appearing in people’s wallets any time soon.

Sam Bond