Conclusions and recommendations
Evaluating personal carbon trading as a policy
option
1. It
is quite clear that if the Government is to stand the slightest
chance of meeting its 2050 target it cannot afford to neglect
the domestic and personal sector. Reductions in carbon emissions
from business and industry will be meaningless unless accompanied
by significant and equal reductions from households and individuals.
(Paragraph 16)
2. Existing initiatives
are unlikely to bring about behavioural change on the scale required,
with many individuals choosing to disregard the connection between
their own emissions and the larger challenge. We conclude that
more radical measures must be introduced if emissions reductions
from the individual and household sector are ever to make a meaningful
contribution to UK targets. Personal carbon trading might be the
kind of measure needed to bring about behavioural
change. (Paragraph 19)
3. Personal carbon
trading could guarantee a reduction in emissions because it places
a ceiling on the carbon available for consumption, rather than
seeking solely to reduce demand. (Paragraph 20)
4. We believe that
personal carbon trading has the potential to drive greater emissions
reductions than green taxation. A carbon allowance could be more
effective at incentivising behavioural change and engaging individuals
in reducing their emissions than the price signals resulting from
green taxation. (Paragraph 29)
5. We acknowledge
that personal carbon trading could be complex administratively
and more challenging to implement than green taxation and other
alternative proposals. However, its potential to change behaviours
and engage individuals means the Government should seriously and
urgently assess how to take personal carbon trading forward. (Paragraph
31)
6. We acknowledge
the many difficulties that will have to be overcome in the development
and implementation of personal carbon trading, not least work
to bring about the public and political acceptance of such a concept;
considerable further research is required on many aspects of personal
carbon trading. However, we believe that, by designing and implementing
a sensitive and moderate scheme, these obstacles could be overcome.
(Paragraph 33)
Towards a practical personal carbon trading scheme
7. We
believe that trying to solve all the problems involved in introducing
an economy-wide system would unacceptably delay the introduction
of a personal carbon trading scheme. The most realistic option
is to introduce a scheme with restricted participation. Companies
and other aspects of the economy could be covered by different
trading schemes, with the consolidation of schemes considered
at a later date once the principle of personal carbon trading
had been satisfactorily established. (Paragraph 35)
8. We do not believe
that double counting is a serious handicap. However, we recognise
that concerns over double counting of carbon emissions do exist
and need to be addressed. In the meantime they must not be a barrier
to investigating and developing the concept of personal carbon
trading. (Paragraph 37)
9. We agree with the
Government that the introduction of a personal carbon trading
scheme should be a matter for primary legislation, rather than
using the delegated powers contained in the Climate Change Bill.
(Paragraph 38)
10. We believe that
the setting and managing of caps for personal carbon trading would
be wholly consistent with the provisions for emissions budgets
and targets as set out under the draft Climate Change Bill. (Paragraph
39)
11. We are confident
that the technical and operational challenges of implementing
personal carbon trading can be overcome. Suitable technology and
systems already exist. Although a personal carbon scheme would
operate on a larger scale than most existing schemes, the concept
has been successfully demonstrated. (Paragraph 45)
12. The private sector
could play a vital role in operating a personal carbon trading
scheme. Further research and consultation is required in order
to determine precisely what the most appropriate role for business
would be. (Paragraph 46)
13. We agree with
the Centre for Sustainable Energy that it is crucial to shift
the debate away from ever-deeper and more detailed consideration
of how any personal carbon trading scheme could operate towards
the prior questions of how it could be made publicly and politically
acceptable. It is these questions that will ultimately decide
the viability of personal carbon trading, and until they have
been fully analysed and properly answered, further work on the
operational details of schemes adds little value to the main debate.
(Paragraph 47)
14. Public opinion
may be hostile to any policy instrument designed radically to
reduce emissions from individuals. The Government must be courageous
on this point. Widespread public acceptance, while desirable,
should not be a pre-condition for a personal carbon trading scheme;
the need to reduce emissions is simply too urgent. However, significant
opposition could undermine any proposal. Further research is required
in order to obtain a more detailed picture of the extent of public
resistance to personal carbon trading and in what ways this opposition
could be tackled. (Paragraph 50)
15. Opposition to
personal carbon trading could be reduced if the public could be
convinced of three things. First, that it is absolutely essential
to reduce emissions; second, that this can only be achieved if
individuals take personal responsibility for reducing their own
emissions; and third, that personal carbon trading is a fairer
and more effective way of reducing personal emissions than alternatives
such as higher taxes. The public must be persuaded of the first
two parts of this argument as soon as possible if the Government
is ever to convince them of the third. Persuading the public depends
on perceptions of the Government's own commitment to reducing
emissions, and of the priority given to climate change in its
own decision making. (Paragraph 52)
16. If a personal
carbon trading scheme is ever to see the light of day then the
first stages of the scheme, at least, will need to focus on gaining
public and political acceptance. Any scheme must limit emissions,
but we must accept that initially caps might be more lenient than
is ideal, in order to achieve public acceptance. Once the scheme
is better established, more demanding caps could be set. This
approach will have to be carefully balanced against the need to
ensure the scheme effectively reduces emissions in line with national
targets. (Paragraph 55)
17. We believe that
personal carbon trading could be made workable if it was acknowledged
that it may not be possible to cover all eventualities from the
very beginning. A basic programme covering certain emissions could
be a useful stepping stone to a more comprehensive scheme. We
recommend that the Government investigate the possibility of a
phased initial implementation, including all individuals, but
concentrating on certain basic areas of carbon use, such as household
energy. The scheme could then be developed, expanded, and integrated
with other schemes over time, as appropriate. (Paragraph 61)
18. Personal carbon
trading will pose particular difficulties in accommodating and
engaging the financially excluded. It is unrealistic to ask those
who find it difficult, or even impossible, to manage their standard
finances, to also understand and manage a carbon account. While
the possibility of a 'pay as you go' option goes some way to relieving
these difficulties, it is imperative that any personal carbon
trading scheme includes a detailed and determined strategy for
assisting the financially excluded. Research is required to assess
the likely proportion of people who would choose this type of
option, and whether they would face any significant disadvantage
as a result. It would be important to make the scheme sufficiently
simple and accessible that remaining involved seemed as easy,
or indeed easier, than opting out. (Paragraph 67)
19. Personal carbon
trading provides only the incentive to reduce emissions, not the
means. It is clear that a personal carbon trading scheme would
need to be accompanied (and, indeed, preceded) by a raft of other
policies. The Government would need to make sure that the opportunities
and resources to help people reduce emissions were readily available
and well publicised. (Paragraph 71)
20. We commend Defra's
Act on CO2 calculator. It is accessible, engaging,
and simple to use. Under a personal carbon trading scheme it could
be adapted to provide further information related to personal
carbon allowances, and link to personalised advice on how to save
carbon units. (Paragraph 72)
21. We firmly support
the introduction of smart metering in households. This would be
an essential supporting measure of a personal carbon trading scheme.
At any rate, smart metering should be introduced as soon as possible
in order to raise carbon consciousness and thereby lay the ground
for carbon restricting measures. (Paragraph 72)
22. 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. (Paragraph 79)
23. 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. (Paragraph 82)
24. 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.
(Paragraph 86)
25. 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. (Paragraph 89)
The way forward
26. Witnesses
told us repeatedly that existing research data is too sparse to
allow meaningful decisions in vital politically-sensitive areas
such as public acceptance, distributional impacts, and operational
costs. Crucially, a lack of comprehensive profiling data on current
energy use and transport patterns is restricting the accuracy
of predictions of the effect on personal carbon trading on different
groups. These research gaps are preventing not only the development
of personal carbon trading as a viable policy, but also its fair
comparison against other policy instruments. Without more extensive
data, the merits of personal carbon trading cannot be fully assessed.
(Paragraph 93)
27. Shortly before
publication of our Report, Defra released the results of their
preliminary study into personal carbon trading. We welcome the
level of work and analysis that has gone into this study, and
we hope that it serves to progress the case for personal carbon
trading. We note that Defra's study agrees with our findings in
a number of crucial areas: firstly, that personal carbon trading
is fiscally progressive, and secondly, that there are no insurmountable
technical barriers to such a scheme. We recognise the extent of
the Government's concern over public resistance to personal carbon
trading and the potentially high cost of implementing it. These
are undeniably difficult areas. However, we regret that, as a
result of this, the Government is indicating that it will wind
down its work on personal carbon trading. Public acceptance of
personal carbon trading may seem a distant or unlikely prospect
to the Government, but without some leadership and co-ordination
it is unlikely to move beyond the realm of academic study. Although
we commend the Government for its intention to maintain engagement
in the academic debate, we urge it to do more. Work needs to be
done now if we are to ever reach the point when the concept becomes
acceptable to the public and we would like to see the Government
leading and shaping debate and co-ordinating activity and research.
Without action of this kind it is unlikely that personal carbon
trading could become a viable policy in the foreseeable future.
(Paragraph 95)
28. Personal carbon
trading does not lend itself easily to a pilot or comprehensive
trial. The conditions required accurately to simulate behaviour
and transactions under a full personal carbon trading scheme would
be difficult to replicate in a pilot with limited participation.
We do not believe that it is feasible to address all aspects of
personal carbon trading under a single pilot. An alternative approach
involving smaller, separately targeted activities focused on particular
aspects of the proposed scheme may be preferable. (Paragraph 98)
29. Personal carbon
trading could be essential in helping to reduce our national carbon
footprint. Further work is needed before personal carbon trading
can be a viable policy option and this must be started urgently,
and in earnest. In the meantime there is no barrier to the Government
developing and deploying the policies that will not only prepare
the ground for personal carbon trading, but which will ensure
its effectiveness and acceptance once implemented. (Paragraph
99)
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