Transcript Domestic Tradable Quotas - Chicago

Domestic
by Kurt Rempe
[email protected]
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 credits
• Carbon credits are subtracted from the debit
card when the individual makes a carbon energy
purchase.
1. at the pump
3. when paying
utility bills
2. when purchasing airline tickets (public
ground transport is excluded)
4. and for any other activity which involves
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
ghg emissions
•Personal carbon consumption is outpacing
industrial carbon consumption 2 to 1.
Global warming is causing major
environmental problems.
The proof is indisputable
85% of Americans believe global
warming 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 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 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?
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 carbon-offset
programs:
1.
unregulated
2.
do not require any
meaningful sacrifice
3.
allow wealthy
consumers to
“sacrifice dollars for
deeds”
4.
do not guarantee
actual carbon cuts
5.
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
manipulate the fledging carbon
trading market?
The future of personal carbon
trading?
Is personal carbon trading a genuine
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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