Azara Blog: Some group of MPs plugs "personal carbon credits"

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Date published: 2008/05/26

The BBC says:

The government should go ahead with a system of personal "carbon credits" to meet emissions targets, MPs have said.

The Environmental Audit Committee said the scheme would be more effective than taxes for cutting carbon emissions.

Under the scheme people would be given an annual carbon limit for fuel and energy use - which they could exceed by buying credits from those who use less.

Environment minister Hilary Benn said there were practical drawbacks to the plan although it did have "potential".
...
Committee chairman Tim Yeo said it found that personal carbon trading had "real potential to engage the population in the fight against climate change and to achieve significant emissions reductions in a progressive way".

He said "green" taxes, such as a petrol tax, cost poor people more because everyone - "billionaires and paupers" - paid the same amount.

"Under the personal carbon trading, someone who perhaps doesn't have an enormous house or swimming pool, someone who doesn't take several holidays in the Caribbean every year, will actually get a cash benefit if they keep a low carbon footprint."

He said it could be administered by the private sector, following the model of supermarket loyalty schemes in which a complex computer system is accessed by a "single plastic card".

But Mr Benn said there were problems with the plan: "It's got potential but, in essence, it's ahead of its time, the cost of implementing it would be quite high, and there are a lot of practical problems to overcome."

Mr Benn said that the report found the cost of introducing the scheme would be between £700 million and £2 billion, and would cost £1bn-£2bn a year to run.

There would also be difficulties in deciding how to set the rations, taking into account a person's age, location and health.

It is unbelievable that Yeo (who, along with many other MPs, is one of the biggest carbon emitters in Britain, much of it paid for by the taxpayer), can put his name to such a report. In effect this proposal for "personal carbon credits" is just a very expensive, impractical and second-rate version of a carbon tax.

And to directly contradict one of Yeo's remarks, the whole point of a carbon tax should be that everyone (and this includes companies, not just individuals) pays the same amount. Otherwise there is every incentive for some people (e.g. the rich citizens of the EU) to pay other people (e.g. the poor citizens of China) to produce emissions on their behalf, while pretending that their own emissions have been reduced.

Even the committee itself mentions many major problems with their proposal (and leaves out many others, e.g. cost):

Any system they come up with will be fairly arbitrary and therefore rightly deemed to be unfair by millions of people.

A straight-forward carbon tax makes much more sense than this proposal. You can easily change the tax and benefit system so that poorer people end up no worse off under a carbon tax (e.g. by raising personal allowance thresholds). It is just that some theoreticians insist on doing something complicated and expensive rather than simple and cheap. Needless to say, it keeps them employed, but it is not much use to anyone else.

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