Select Committee on Environmental Audit Written Evidence

Memorandum submitted by Defra


  1.  The concept of a personal carbon allowance is one of a number of potential long term ideas being explored by Government that could help to make individuals better informed about, and involved in, tackling climate change. David Miliband (then Secretary of State for Environment, Food and Rural Affairs) made a speech[20] to the Audit Commission on 19 July 2006 outlining his interest in considering personal carbon trading as a potential policy option, building on the Energy Review's commitment to undertake a study looking at the role of "community level" approaches to mobilising individuals. The Government remains committed to exploring the potential of personal carbon trading.


  2.  The UK has a target to reduce its CO2 emissions by 60% by 2050, and the new Climate Change Bill will make this a statutory target. All sectors of the economy must contribute to meeting this target, including the domestic sector, which is responsible for 40% of CO2 emissions (from domestic energy use and transport).

  3.  Following the Government's Energy Review in 2006, Government commissioned a scoping study from the Centre for Sustainable Energy[21] (CSE) providing an initial analysis of the ideas and issues involved in the concept of individual carbon trading. CSE's main findings were that:

    a.  by having an overall cap on carbon, a personal carbon allowance could guarantee a certain reduction in domestic carbon emissions,

    b.  it is unlikely that such an allowance could work in isolation,

    c.  such a scheme might have the potential to achieve emissions savings in a fairer way than a carbon tax; and

    d.  there is little evidence currently available about key wider issues critical to the success of a personal carbon allowance such as public and political feasibility, technical feasibility, cost, and relative effectiveness.

  4.  The Government believes that the current system of taxation strikes the right balance between protecting the environment, protecting the most vulnerable in society and maintaining sound public finances. There remain many high-level questions about whether a personal carbon allowance scheme could be a proportionate, effective, socially equitable and financially viable policy option, particularly when compared or combined with existing policies and other options for controlling carbon emissions; whether it could be a practical and feasible option; how such a scheme might work in practice; and whether it would avoid placing undue burdens on individuals.


  5.  Building on CSE's scoping study, Defra has developed an initial work programme designed to look further at personal carbon trading. The work programme is looking at similar areas and issues as those being addressed by the EAC Inquiry, and consists of four work strands focusing on:

    a.  the value of personal carbon trading—eg its pros and cons when compared to other means of seeking to achieve the same end; their interaction with the rest of the policy framework;

    b.  equity issues—eg the equity and distributional impacts of a personal carbon trading system depending on factors such as income, household type, and geographical location;

    c.  public acceptability—eg on what basis would the public consider personal carbon trading acceptable, whether they would actually interact with such a scheme, and whether it would change behaviour;

    d.  technical and cost issues—eg how a personal carbon trading system could be run, by which sector and type of organisation, and how much it might cost.

  6.  The work programme is being run in a way designed to complement the work being undertaken by researchers and academics such as The Tyndall Centre for Climate Change, the Environmental Change Institute and the Royal Society for the Encouragement of Arts, Manufactures and Commerce. The work programme reports to a project board made up of representatives from across a number of government departments.


  7.  The Government welcomes the Environmental Audit Committee's Inquiry into Personal Carbon Allowances, and the additional analysis that the Inquiry will bring to this area. The Government looks forward to seeing the Committee's conclusions and recommendations and will use these to help inform its own analysis.

July 2007

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