Memorandum submitted by the Sustainable
Development Commission
1. The SDC first raised the issue of personal
carbon allowances in 2005, drawing on the important work done
on this subject by David Fleming, Mayer Hillman, and the Tyndall
Centre.[1]
Since then, interest in the idea has grown considerably, and it
is currently the subject of a new Defra-led study (see below),
along with a two-year project led by the Royal Society for the
Encouragement of Arts, Manufacture and Commerce (RSA)[2].
In addition, work continues at the Tyndall Centre[3]
and the Environmental Change Institute.[4]
A good description of the different forms of personal carbon allowances,
and the possible costs and benefits of such an approach, was published
by Defra in 2006.[5]
2. The SDC welcomes the UK Government's
commitment to further explore personal carbon allowances as a
long-term policy option, as set out in the 2007 Energy White Paper.[6]
We also welcome the extensive programme of research that has recently
been announced by Government, to be led by Defra. The SDC has
been asked to contribute to this work as a member of the Project
Board and we look forward to working with the Defra team to take
forward this important area of work.
3. On climate change, we strongly support
the conclusions of the Stern Review[7],
which identified three important policy elements for reducing
emissions:
— Carbon pricing, through some combination
of tax, trading and regulation.
— Technology policy, in order to support
the development of a range of low carbon and high efficiency technologies.
— Removal of barriers to behavioural
change, which is particularly important in ensuring take-up of
opportunities for energy efficiency.
4. Personal carbon allowances could be introduced
in a wide variety of forms, ranging from an economy-wide emissions
trading scheme (covering both businesses and individuals) to one
focussed simply on individual emissions, or a scheme to limit
emissions from a single sector (eg personal allowances for aviation).
Some of these options may link into existing or planned policies,
whereas others would require radical changes to be made.
5. In their generic form, personal carbon
allowances have the potential to engage individuals with climate
change mitigation in a way that is harder to achieve under upstream
emissions trading schemes. By providing a fixed quantity of carbon
credits to each individual, information on carbon consumption
can be provided alongside a price for carbon. This could raise
carbon awareness, helping to drive behavioural change through
lifestyle and purchasing decisions, as well as stimulating take-up
of energy efficiency measures and low carbon technologies.
6. There may be net economic benefits to
this bottom-up approach (after allowing for higher transaction
costs) if individuals were to find it easier to identify and reduce
their carbon emissions than under an upstream scheme. This may
be a key factor in determining the viability of personal carbon
allowances. However, accurately estimating the costs and benefits
of a personal carbon allowances scheme would be extremely challenging
as there is limited real-life data to draw on.
7. In addition to the issue above, there
are a large number of unanswered questions on the viability of
personal carbon trading, including: the impact on fuel poverty,
public acceptability, the fair allocation of allowances, and setup
and operational issues.
8. The SDC continues to recommend that more
research is carried out on the issue of personal carbon allowances.
This should include a more detailed analysis of the costs and
benefits of such a scheme; its fit within the current and future
policy landscape; and how it might be introduced and run.
July 2007
1 SDC (2005). Climate Change Programme Review: SDC
submission. Available at: http://www.sdcommission.org.uk/publications.php?id=256 Back
2
Further information available at: http://www.rsacarbonlimited.org Back
3
Further information available at: http://www.tyndall.ac.uk/research/theme2/summary_t3_22.shtml Back
4
Further information available at: http://www.eci.ox.ac.uk/research/energy/pct.php Back
5
(2006). A Rough Guide to Individual Carbon Trading. Available
at: http://www.defra.gov.uk/environment/climatechange/uk/individual/pca/pdf/pca-scopingstudy.pdf Back
6
HM Government (2007). Meeting the Energy Challenge. Energy White
Paper 2007. http://www.dti.gov.uk/energy/whitepaper/page39534.html Back
7
HM Treasury (2006). Stern Review on the Economics of Climate Change.
http://www.hmtreasury.gov.uk/independent_reviews/stern_review_economics_climate_change/stern_review_report.cfm Back
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