ACCOUNTING FOR DISADVANTAGED GROUPS
76. The question of 'fairness' will be central to
the public acceptance of a personal carbon scheme. Emissions from
the domestic sector will have to be reduced or constrained in
some way if we are to meet our emissions targets. The question
is whether personal carbon trading would create greater inequalities
than any other scheme used to do this. Professor Ekins was adamant
that there was little chance of finding a truly 'fair' scheme:
No one model is going to be perceived by everybody
to be fair. Fairness is something that is fought out in the political
process day by day. This will have to be too.[62]
77. Richard Starkey identified many groups who could
feel disadvantaged by an equal per capita allowance, most
notably those suffering from fuel poverty. He insisted that the
cause of such inequalities needed to be carefully assessed:
There is the specific issue of fuel poverty which
is well recognised, but again it is important to recognise that
it is an issue under personal carbon trading and it would also
be an issue under carbon tax and it would also be an issue under
an upstream carbon emissions scheme. So if it is a problem, it
is a problem that is not specific to this particular instrument.
I think it is important to distinguish between problems specific
to this particular instrument, for instance enrolling 45 million
people under the scheme and problems that are generic to the whole
gamut of these instruments.[63]
78. The memorandum from the Centre for Sustainable
Energy also recognised that the existing policy landscape was
unlikely to favour any instrument of this kind:
None of these situations [of inequality] are the
result of PCAs; they are simply the reality of a society and an
energy market—already blighted by inequalities and socially
regressive pricing practices. Indeed, these situations are the
reality within which any policy designed to constrain and cut
individual carbon emissions will have to act.[64]
79. Personal
carbon trading will inevitably highlight existing inequalities
of income and opportunity. Any instrument designed to restrict
and reduce domestic carbon emissions would raise the same concerns
and it would be wrong to reject the proposal of personal carbon
trading because of these difficulties. As with any other policy,
these inequalities will need to be identified, assessed and, where
appropriate, compensated for.
However, it must be remembered
that a personal carbon trading system could be much less onerous
for disadvantaged groups, including those suffering from fuel
poverty, than alternative policies designed to cut carbon emissions,
such as green taxes.
80. In all the proposals for personal carbon trading,
allowances are hypothetically distributed on an equal per capita
basis: every adult individual receives the same allowance, irrespective
of his or her circumstances. It is from this basis that allowances
are then bought or sold, to account for the inevitable inequalities
in carbon usage. Richard Starkey explained that an equal per
capita allowance, although not perfect, was perhaps the most
straightforward solution:
It really is not the case that it is done and dusted
by saying it is completely fair for everybody getting the same
amount of emissions rights. If you do not go down that route on
the other hand you get into the whole knotty problem of how do
we adjust everybody's equal share to take account of their particular
circumstances and one can imagine getting bogged down in lots
of disputes and lots of bureaucracy about that.[65]
However, while an equal per capita allowance
may be the fairest method in a philosophical sense, its failure
to account for individual circumstance may make it seem less appealing
from a political point of view.
81. Varying allowances would, however, create a raft
of difficulties. Firstly, there is the difficult decision of to
whom to award extra allowances, how much to give, and the bureaucratic
challenges of administering this. Secondly, there would be the
near impossible task of satisfying all parties that their interests
were being adequately taken into account, and thereby maintaining
support for the project. Thirdly, and most crucially for the success
of the scheme, there is the question of how individuals can be
encouraged to reduce their carbon emissions if they know that
there is a long list of exceptions. Dr Fawcett summed up the resentment
which might arise from such a set-up:
If you go round saying that a person who has ten
times higher emissions that me is allowed a lot more because there
are all these factors that are problematic for them, like they
have a big house and they live in the country or they simply have
to drive 100 miles a day or whatever, how am I as a low emitter
going to feel about that? Pretty irritated, I would think. There
are more low emitters than there are high emitters. There are
moral reasons for not varying the allowance, except perhaps in
a small number of cases. The practical reasons completely dwarf
the argument and principle about why you simply could not run
a system like that.[66]
Having said this, there could be simple allowances
(comparable to those used in the tax and benefits system) that
give extra credits to groups, such as parents with children, the
elderly, and disabled people, whose greater need for private transport
and warmer homes is unambiguous.
82. In
order to be effective, a personal carbon trading scheme will have
to impose a degree of inconvenience and additional cost. The urgency
with which we need to address climate change means the Government
should not be afraid of this. When accounting for distributional
impacts it will be essential to strike a balance between addressing
genuine difficulty and allowing the inconvenience that will encourage
change to persist. The groups in genuine need of support must
be identified.
83. Identifying this genuine need is not as simple
as assuming that those with lower incomes will inevitably be worse
off under such a scheme. It is important to remember that individuals
will not incur any cost for carbon provided they remain within
their allowance, and could even gain money if they have excess
allowances to sell. The RSA reflected that:
There is received wisdom and some research to show
that carbon emissions and socioeconomic status have a positive
correlation—those on higher incomes and in more stable social
conditions are responsible for higher carbon emissions. They are
more likely to live in a larger house, have more than one car
and travel frequently by air. Those in lower socioeconomic groups
use less carbon. This is one of the attractive elements of the
scheme—it is progressive and largely redistributive. It
would be socially fairer than a flat tax on carbon, which would
penalise those causing fewer emissions in the same way as those
causing high levels. However, there are some who are the exception
to the rule, and it is important to distinguish between those
who choose to use more carbon, due to lifestyle choices, status
and luxury, and those who have few or no relevant choices to make
due to housing condition or lack of public transport.[67]
84. It is essential this general redistributive trend
is emphasised if personal carbon trading is to gain public acceptance.
The Centre for Sustainable Energy encountered a number of negative
reactions to the idea of a scheme, of which the two most fervently
held were: 'the poor would be trading their deprivation for cash'
and 'this is just another scheme/scam/rip-off where the rich can
pay to pollute and the poor suffer'. The CSE countered this reactions
as follows:
Such reactions, usually driven by well-meaning social
consciences, unfortunately ignore the facts that at present the
poor receive no cash for their deprivation and the rich currently
pollute without paying anyone. Under a system of PCAs, at least
the poor would, on average, be paid for their deprivation. And,
on average, it would be the rich who would be paying the poor
in order to sustain their carbon-intensive lifestyles. […]
These facts do not make such a system perfect and PCAs will certainly
not create an 'equal society'. But by starting from an equitable
distribution of rights to emit carbon dioxide amongst the population,
it is undoubtedly socially progressive.[68]
One way to persuade the public of the generally progressive
nature of PCT would be to publicise, at the outset, examples of
a range of typical households whose lifestyles in terms of travel
choices and home heating, etc., are commonplace, and who can be
shown to be net gainers from the scheme.
85. It would be wrong to assume, nonetheless, that
there will be no need for additional support. Some poor people
will require further assistance, most notably to make the capital
investments (in, for instance, home insulation) that will allow
them to cut their carbon emissions. This would be the case under
any carbon pricing mechanism. Groups at risk will include not
only those on low incomes, or suffering in fuel poverty, but also
those who are financially excluded and unable to budget successfully
even without the additional demands of a carbon allowance. These
groups could also be unable to access or understand the financial
services that will help them make the most of their allowance.
Although the 'pay as you go' option could go some way to accommodating
the financially excluded, it could also entail a number of difficulties:
the opportunity to gain money by managing allowances would be
less visible, and there would be a particular risk of disadvantaged
households 'cashing in' their allowances upon receipt, and then
struggling to meet the cost of carbon purchases. It will be essential
to provide guidance and support to help bring people inside the
system and to avoid situations where the personal carbon allowance
actually results in greater deprivation.
86. Public acceptance
of personal carbon trading will depend on the success of the scheme
in engaging and protecting disadvantaged groups. These groups
will require reassurance and assistance, both to help them meet
the cost of their carbon allowances, and also to make the capital
investments or lifestyle changes that will remove them from this
category. Assistance should focus on helping households to reduce
emissions, rather than rely on providing exemptions. Support programmes
should be carefully targeted to provide appropriate assistance
to those who genuinely need it, including the financially excluded.
87. The inclusion or otherwise of children under
a personal carbon trading scheme presents a similar dilemma. The
presence of children in a household will clearly contribute to
some increase in carbon emissions, both through household energy
use and transport patterns. Any failure to accommodate this additional
energy use would disadvantage families (especially those on low
incomes) and would have severe implications for the popular acceptance
of the scheme. Again, the crucial question is that of how
parents should be compensated, and this is dependent on a proper
assessment of the contribution of children to a household's carbon
footprint. The answer, in this case, is far from clear. The Energy
Saving Trust told us:
'We do not have the research to tell you what the
marginal energy and carbon impact of having children is. Clearly,
there is a positive one. Households with children use more energy
and carbon than similar households without children, but we do
not know by how much'.[69]
It seems unlikely that the average child would contribute
enough to a household's carbon footprint to merit a full adult
allowance. If children received a full adult allowance (a notion
dismissed by David Fleming as 'bizarre'[70])
childless households would be doubly disadvantaged: not only
would families be receiving extra allowances, which would likely
exceed the additional energy use, but the national allowance cap
would be divided not between the UK's 49m adults but between 61m
adults and children, meaning smaller allowances for all.
88. The alternative would be to offer either financial
compensation (essentially as an extension of child benefit) or
additional, partial allowances (although this would still lead
to a reduced personal allowance, overall). The Environmental Change
Institute (ECI) confirmed that early research has favoured the
latter option: 'preliminary research by UKERC, which has included
a number of workshops with teenagers, suggests that a partial
allowance for children, which is allocated to their parents (as
in the case of child benefit), would be the most socially acceptable
option.' However, this conclusion is a tentative one, with ECI
insisting that further research is required.
89. Any personal
carbon trading scheme must take account of children; to allocate
no further allowance for children risks severely punishing family
households, especially low-income and single parent families.
On the other hand, childless households could be unfairly disadvantaged
if full allocations were given to children. Significant further
research is required to determine the likely impact of children
on their household's carbon footprint. Until this research has
been carried out, it is not possible to determine the best method
of accommodating children in the scheme.
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