Individual Carbon Saving: Collective Carbon Trading

All policy prescriptions, public debates, climate discussions, and political jockeying have been ignoring the huge potential of individual contributions to carbon reduction initiatives. The broad assumption behind all such debates is based on the notion that individuals are the final consumers and thereby should bear ultimately responsibility for all carbon emissions. And any carbon reduction initiative has to transfer the burden to them whether directly (reducing consumption and lifestyle) or indirectly (via increased cost or taxation). While this is a fact there is no recognition of individual’s effort to rein in carbon consumption without dislocating everyday life or commerce too much.

Maybe it is too difficult. For how do you account for the fact that some one has started carpooling or driving less or rides a train or bikes to work a few days in a month, or has switched over to energy efficient appliances or switches off electrical devices when not in use or curbs consumption to reduce waste? There is no system at present that computes and track the day to day carbon savings by each one of us that can be accrued, or carbon savings that can be collected over the entire economy.

Now imagine a bank where a person opens a carbon account. Every time this account holder engages in any activity that saves on carbon, the amount of savings (however fractional) gets credited to this account. The bank then accumulates the carbon savings into tradable Carbon Units and starts participating in Carbon markets. The proceeds from sale of these units go back into individual accounts…and voila! the individual starts getting direct benefit (in the form of cash) from her daily carbon saving initiatives.

This would bypass the trickle down effect of the benefit from carbon saving businesses to individual (too remote and indirect).

Cannot be done? Too difficult? Think again!

Implications? Many...and far reaching...but that is a topic for another day!

Climate Bill: Not ready for a change?

The Climate Bill has gone dead in waters in the Senate. While the post-mortem continues throwing up interesting perspectives, the cap and trade part of the Bill has been characterized as "the biggest corporate welfare program". With economy still shivering and job recovery beyond the horizon any big change will not necessarily be accepted as the one everyone will believe in...

Notice that lack of widespread support for cap and trade is also due to a perception that polluting plants (coal fired power plants) will pass the cost to consumers and an individual family will have to fork out additional $15 in their energy bill.

This highlights the fact that we are not yet ready for a cap and trade that is asking individuals for sacrifices...

Before we look for any alternative approaches to garnering general acceptance to a Personal Carbon Trading system, it will be useful to list some individual actions in support of clean environment:

1. Energy saver bulbs: driven by saving on energy bill and long life
2. Energy Star or energy efficient appliances: saving on energy bill, local regulations
3. Energy efficient houses: savings on energy bill, local regulations
4. Hybrid cars: Feel good; takes over 5 years to generate ROI, concessions and rebates
5. Solar panels: Feel good and savings. However it takes longer to get ROI. Needs funding support
6. Garbage and packaging recycle: feel good
7. Carbon offset on travel: feel good
8. Car pooling: Commute convenience

I am sure I missed a few. Fell free to suggest...

Then there are other tax elements like plastic disposal charge levied at point of sale or oil disposal tax when you change the oil in your car.

There is no mechanism to recognize individual contributions in carbon saving initiatives beyond some diffused savings accrued on energy bills. No system exists today that looks towards rewarding people via market mechanism for their participation.

Clearly feel good cannot trump fear of job loss or bearing the economic burden of carbon saving programs.

We need a new approach.