Permit to pollute sales should benefit households, not taxman

The new proposal from the Treasury to tax companies that introduce fossil fuels into the UK economy, which is at the heart of the current consultation on UK energy policy, has come under attack – by a group proposing that fuel supplier sales are controlled – but by a permit scheme that benefits the public, not the Treasury.

Under the Treasury's proposals, a single pensioner's fuel bill could rise by between 16% and 35% in 2020. Critics say that to compensate people for such bill increases, the cash should instead go to households.

The criticism comes from a group advocating Cap and Share, a policy measure which the Irish Government was giving consideration to trialling before that country's fiscal crisis. They call Cap and Share "a simple solution to climate change that is easy and relatively cheap to implement and puts cash in the hands of every citizen".

Just as with the Treasury's new proposal, Cap and Share argues that it's easier to cut down on the fossil fuels entering the economy than for each citizen to cut their individual use, and they think the 255 companies responsible should therefore pay for the right to pollute.

If they can be made to buy permits, as under the EU Emissions Trading Scheme, and the government issues only sufficient permits to match the country’s target CO2 emissions, reducing them year on year, this provides the cap.

The 'Share' part of 'Cap and Share' entails that all households would each receive an equal share of the permits which they may then sell to the fossil fuel companies. This would put cash in their pockets to compensate them for higher energy prices.

In other words the proceeds of the Fossil Fuel Levy - at a projected average £30/tCO2 - would come to households, not the Treasury.

Richard Douthwaite (author of The Growth Illu$ion: How Economic Growth Has Enriched the Few, Impoverished the Many and Endangered the Planet) says that Cap and Share is based on the Commons principle, and assumes that everyone has an equal share in the atmosphere.

As the Carbon Trust knows from experience, the most popular and successful climate-friendly policies are those which also save or give businesses and householders money.

By contrast, explains Cap and Share spokesperson Brian Davey, the EU Emissions Trading Scheme has seen allowances to pollute - carbon credits - given away to the big greenhouse gas-emitting companies, which they have been able to sell on and generate profits for themselves. In the case of the energy companies, they have also posted huge profits.

Davey and Douthwaite believe that on the other hand, if this benefit were split between every adult in the country, it would be both fair and popular.

Davey said, "With the perception that most climate change legislation is punitive and restricting freedom fuelling wider public scepticism of climate change, such a move by the Government could help swing public opinion back to favour the green economy."

Davey argues that the Treasury's proposal has not been thought through in its relationship to the EU ETS. "It is being made due to the failure of the ETS to provide sufficient stable incentives for the development of renewables. It's not just the low price of carbon but its volatility and unpredictability.

"However the criticism of the EU-ETS is muted and fudged. The result is that the proposal is to impose the scheme in addition to the ETS, but the interaction effects on an unreformed ETS are likely to be counterproductive.

"It is admitted in the Treasury document that the new scheme would likely lead to a fall in the demand for ETS permits and thus a fall in the ETS price but the implications of this are glossed over (in paragraph 5.24)," he continued. "Put bluntly, wWithout tackling the ETS, a rise in the UK carbon price may be matched by an offsetting fall in the European carbon price. What is needed is a revisit of the whole EU-ETS, which has been a complete disaster".

How to slash a nation's carbon emissions and compensate its citizens

This great video shows why Cap and Share makes more sense than cap-and-trade or a carbon tax!

Cap and Share meets Environment Minister Ruddock

Three members of the Cap and Share group met Environment Minister Joan Ruddock yesterday in the House of Commons.

Cap and Share is the most efficient way of cutting Greenhouse gas emissions at source while spreading the financial benefits of carbon trading throughout the population.

Her message was that she will think about Cap and Share but she believes that the government has all the policies that it needs to deliver on its climate mitigation commitments and she couldn't see that they needed any more - they have a whole department full of officials working on policies (DECC) so why did they need any more ideas?

Indeed, as she was the minister, if she felt they were not doing enough already then she would have felt obliged to resign...

No comment.

We said that so far they had merely gone for the "low hanging fruit" and it would soon get much tougher - especially when they had reduce emissions at a faster rate (5% or more per annum) so that, merely offering inducements to people to change behaviour would not be enough.

We also said that if the EU ETS and other policies went pear shaped and failed to deliver then, with a cap and share policy in place they could extend it to the rest of the economy at that point and would have a plan B in place already.

Predictably she didn't think there were any problems with the EU ETS which couldn't be fixed - we didn't pursue that argument as it would clearly have been futile.

She appeared to enjoy the discussion and said that our viewpoint was very clear - three officials were present, listened and took notes but said nothing - just smiled enigmatically now and then.

Cap and Share has many benefits to offer it as a policy, not least of which is its efficiency, it is cheaper to introduce and fairer than a carbon tax or other carbon credits systems, and helps to engender behaviour change and wider awareness.

The Wave

The climate change march in London on December 5 -- "the Wave" - was inspiring -- 40,000 people, and we encircled the Houses of Parliament.

I met Peter Capaldi from The Thick Of It, as we were walking near the front with the group I was with, Cap and Share.


Two of our group were amongst those selected to go and meet Environment Secretary Ed Miliband afterwards.

But it was quiet! The first march I've ever been on where a policeman said to me "you're not making enough noise!"

The police kept a low profile, and perhaps the reason that the march did not achieve more prominence in the news was that there was no trouble.

The British government knows that it has to go to Copenhagen to secure the best possible legally binding deal to secure a result that will keep global warming below 2°C. The problem is that this is virtually impossible and the slogan that we shall be uniting up around of we are totally serious about addressing the problem is zero carbon-equivalent emissions from now on.

This is because the emissions already in the atmosphere will result in a temperature rise over 2°C.

Breakthough ideas for this century

At the SDC Breakthroughs event.

There were 19 brilliant ideas for how to save the planet - or at least the UK. It's a shame to single out just a few, but apart from Cap and Share (www.capandshare.org), there were biochar and algae - with a working model - ways of financing eco-refurb and educating kids about SD, and ideas for building communities and gardening.

Ed Miliband made a speech supporting CCS and growth. Boo, hiss.

HRH Charles made a speech which I've forgotten.

Porritt, in his swan song speech (he's retiring this month), criticised this and really laid into the Treasury. I mean REALLY - what has he got to lose now?

The new head of the SDC, Will Day, made a speech that didn't yet give a flavour of what his tenure will be like.

I nobbled Hilary Benn (to whom I got an intro from Welsh Evironment Minister Jane Davidson), and spieled him on Cap n Share, which he'd never heard of! He seemed to take it in and went off with the Feasta brochure.

Jane Davidson made an inspiring speech (I wish she had Benn's position and worked for Westminser instead of Cardiff). However, although Wales now has loads of inspiring targets like getting to a ecological fotprint of on plaet from he curret 2.77 in 20 years, the Welsh Assembly Gov's latest document on open cast coal mining basically has so many holes in it, it is not going to stop anyone open cast mining.

So, lots of hopeful and inspiring ideas and fabulously creative wannabe policies. All we need is joined-up government and strong leadership. Is that all?

The Commons debates personal carbon trading

This took place on 18.6.09: debating the Goernment's response to the Environmental Audit Commission's report. David Fleming was present at this debate.

Many of the objections to PCT put here, simply don't apply to Cap & Share, which is not mentioned in the whole debate... or the AEA report. It seems most parliamentarians are still unaware of Cap and Share despite the Irish Government's interest.

Joan Ruddock says on PCT "a significant number of low-income households would lose out, and we cannot ignore that. More than 2 million low- income households could be doubly disadvantaged. Not only would they pay the cost of the scheme, which could be around £40 to £80 per household per year, but if they lived in a rural area and had to use their car regularly, for example, they would exceed their free allocation and incur the cost of buying additional allowances. We cannot find a way of overcoming that."

The EAC wants to see a pilot. Ruddock wants it funded by the private sector. She puts faith in the 'upstream' ETS (C&S is also upstream - capping emissions where they enter the economy): "With regard to the upstream schemes, we estimate that it would cost about £50 million to cover a few dozen fuel companies, compared with the £1 billion to £2 billion to introduce a trading scheme that would have to involve 50 million participants. So what additional benefit could be gained by the downstream approach?". But as Yeo observes, the ETS doesn't deliver, and is not value for money.

Simon Hughes (North Southwark & Bermondsey, Liberal Democrat) does say: "One of our proposals is to switch from the climate change levy to a carbon tax, which would apply to "primary fuels as they enter the economy, once our energy efficiency measures have become effective in tackling fuel poverty, using revenues to cut other taxes."" Then he says: "I have decided that my party has an obligation to respond formally to the proposition in the report, and that we need to do so quickly, so I have decided that we will have a short period of formal but open consultation, picking up on what has come from the Committee's report and from the Government response, which makes arguments against it. We will complete that process by September, by the time of our conference."

Gregory Barker (Shadow Minister, Energy and Climate Change; Bexhill & Battle, Conservative) is against PCT on the grounds it is too Big Brother.

> http://www.theyworkforyou.com/whall/?id=2009-06-18a.141.0

Energy and climate change department's first tasks

The creation of a new Department for Energy and Climate Change is welcomed in all quarters: by environmental campaigners, CBI, oil and gas industry and the renewable energy industry.

Ed Miliband (38) - previously Cabinet Office Minister - is now the 10th minister in 11 years to hold the energy portfolio.

The energy team from BERR and the climate change and energy efficiency teams from Defra are now united.

The fact that the two areas of responsibility have been separated ever since Tony Blair split up John Prescott's humungous organisation the DETR, has resulted in a lack of joined-up thinking for many years, often lamented by commentators such as Andrew Warren of the Association for the Conservation of Energy.

Philip Wolfe of the Renewable Energy Association commented that "This will require Mr Miliband to extend the policy portfolio way beyond the narrow range considered by his predecessors."

This is absolutely right, and the Low Carbon Kid says that there is one relatively inexpensive and relatively easy to introduce a measure which it could champion that would have a highly cost-effective impact on fairly and equitably reducing year-on-year the carbon budget of the whole of the EU, not just the area of pollution covered by the ETS.

This is in addition to auctioning off ALL ETS permits to pollute, championing renewable energy end energy efficiency, stopping new coal burning power stations and nuclear new build.

This Tuesday afternoon, European parliamentarians gathering to finalise their proposals for a climate and energy plan for our continent should also adopt this policy.

We're talking Cap and Share.

Cap and Share is not a variant of personal carbon trading - it is an alternative to personal carbon trading because it is not based on individuals needing to surrender carbon credits upon the purchase of fuel or electricity.

The public is issued year on year with their own individual carbon allowance. They then sell it to the people who import carbon-based fuels into the country - the energy companies -- there must only be around 10 of these.

The public then gets money in their pockets. Year on year the allowances are reduced.

The suppliers of fossil-based energy can only sell the amount of fuel that they have permits to sell. The onus is on them to make the reductions, not on the public to make lots of complicated decisions about how they run their lives based on carbon accounting.

Instead they trust the government and the companies to do this for them and they receive in their pockets the financial benefit of the saving of this carbon. At the moment this benefit is given to the large energy users and accounts for some of the huge profit that oil companies have been making.

So, in Cap and Share it is the fossil fuel suppliers who would have to surrender carbon credits on their SALE (not purchase) of fossil fuels based on the emissions associated with the supplied fuel.

Indirect emissions can be covered by cap and share but not (in a simple way) in personal carbon trading.

Emissions have an indirect character when they are, so to speak, "embedded" in products - i.e. given off during the production of a good or a service that an individual or household purchases. Examples: flying or food. It would be hugely complicated and therefore expensive to calculate the embedded carbon for each purchase and make that part of a downstream system - however, with the Cap and Share upstream arrangement it is possible to design a scheme which covers these embedded carbon costs and compensates the public for them.

Another way of putting this is that Cap and Share could be designed to cover ALL non ETS emissions - not just the emissions associated directly with fuel sales to the public. This is about 50% of UK emissions. This should be compared with most presentations of personal carbon trading which cover 40% of UK emissions.

Cost? According to a report by AEA Energy and Environment the costs of administering an Irish scheme (The Irish government is seriously considering this policy) comes to the equivalent of about 40p a head for each time a permit is issued - probably once a year.

UK and Irish governments told to implement personal carbon trading

The British government should reconsider its decision to put on the backburner the idea of personal carbon trading, especially since the Irish government has now been advised to roll out a pilot for the transport sector.

Britain should consider giving individuals a personal carbon emissions allowance that they can use or trade, in order to help the country meet its CO2 emissions target, the Environmental Audit Committee (EAC) told the government last week. The government had earlier in the month dismissed the idea.

Hilary Benn, the environment minister, told me at a climate change conference (Think 08) that the scheme was too early (meaning that people weren't ready for it), too expensive and too complicated to explain and to administer. Additionally, he argued that there was a danger of inequity in the system, disproportionately affecting the elderly, rural and poor who would have to be compensated.

However, the Irish government has just received a recommendation to trial a form of Cap & Share in the transport sector.

The Defra report deliberately underplayed the carbon benefits and admitted to a low level of research quality citing a "reduction in personal emissions of 0-10% - although these figures have been drawn from research on metering and energy displays rather than trials of personal carbon trading... a low range of 0-5% reduction is assumed. Though [even] a 10% reduction would still not be sufficient to balance the cost-benefit assessment more favourably."

The Environmental Audit Committee disagreed. "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," the EAC said. "Personal carbon trading might be the kind of radical measure needed to bring about behavioural change." It would be more effective and fairer than bringing in "green" taxes.

Hilary Benn said the cost of introducing PCAs would be between £700m and £2bn.

However, Tim Yeo, the Conservative EAC chairman, strongly disagreed, saying difficulties of implementing the scheme could be overcome and calling for more feasibility work. He said that if the private sector were to administer it, it could be done a lot cheaper, along the lines of supermarket loyalty cards. "It engages people at all levels in their decisions, about whether they heat their house to a slightly lower temperature, whether they really need to put air conditioning in their flat, whether they really need to take that flight," he said.

Meanwhile, Ireland forges ahead

But PCAs are not the only such scheme on the table. At the end of May, British consultants AEA Energy and Environment released their interim final report, commissioned by Comhar, the Irish national sustainable development council, into Cap & Share, which the coalition government is seriously considering. Their conclusion was that Cap & Share is much fairer, cheaper, and more cost-effective.

Under Cap & Share, permits for the right to emit carbon are given to the population, who can then choose whether or not to sell them to companies introducing fossil fuels to the national economy. (Currently of course permits are given away under the EU emissions trading scheme, which boosts the energy companies’ profits at consumers’ expense.) As only a small number of firms are importing or producing energy, this makes C&S easy to administer. Each fuel company is required to purchase permits to match the eventual emissions from the fossil fuels they extract or import, with the total number being reduced year on year to promote the transition to a low carbon society.

Of course companies have to add the cost of the permits to their prices and this puts up the cost of everything sold because all goods and services have an energy content. But the Irish environment organization Feasta comments: "it's just as fair as any other scheme. Under the proposal lower income households, on average, would benefit since they have lower than average energy consumption and would receive emissions certificates worth more than the increased fuel costs they incur. "

How much would it cost?

AEA compares 10 different ways of rationing carbon currently being considered around the world, including carbon taxes. Their report is far more detailed than that produced by Hillary Benn’s department.


The AEA report compares the various carbon reducing schemes on offer. The green colour symbolizes the most benefit and the redder shade the least benefit.

They say the cost of "the Cap and Share scheme... would be lower than the more complex personal carbon allocation options but higher than introducing a carbon tax. For the Cap and Share scheme the cost of administering the fuel suppliers is likely to be secondary to the costs associated with issuing certificates to the general public. Our simple bottom up estimate... puts the transaction costs for a system where certificates are cashed in remotely in the range 8-11% of the value of the certificates. This range depends on income and assumes an allowance price of €20/tCO2 and a bank direct transaction charge of 5%. At higher carbon prices the cost effectiveness would be better, with transaction costs around 6-7% for a price of €50/tCO2."

AEA therefore recommends the system to be introduced on a trial basis first of all in the transport sector in the Republic of Ireland "with subsequent consideration to sectoral and geographical expansion" in the North. This would also combat the fuel tourism which currently goes on, as fuel is cheaper south of the border – which I witnessed first hand recently. Measures would be needed to shield the vulnerable from increased costs. AEA suggests not allocating to children, "although again consideration will be needed for increasing support to families".

AEA concludes its comparison thus: "Cap and Share and the Sky Trust currently appear the most favourable [schemes]. The schemes that treat individuals as an emitting entity (Tradable Energy Quotas, Personal Carbon Rationing, Rate All Products and Services and the Ayres Scheme) look the least appealing, because of their complexity and the resulting costs. Furthermore, the lack of public engagement, uncertainty over environmental outcome and no direct compensation for individuals mean non-traded options such as a carbon tax and direct regulation score less well in our analysis than Cap and Share and Sky Trust."

[The Sky Trust is an American idea whereby permits to pollute are auctioned and the revenue generated given to households in order to "lock in public support for emission reductions, no matter how high fuel prices would rise." The dividends could be used by residents to subsidize the price of energy-efficient appliances and/or renewable energy generation.]

The Irish Environmental Protection Agency is currently considering the recommendations. If the Irish government goes ahead it will be another case of the Republic courageously going first where its neighbours in the British Isles later follow – as with banning plastic bags and smoking in pubs. The ‘Celtic Tiger’ can certainly teach us a thing or two about looking after our health and the environment. How surprising is that?

Further illustrations of how the different schemes work:

In Memoriam Will Howard

My good friend Will Howard has just died, following a long and brave battle with cancer.

Will has been in recent years a passionate advocate of the form of personal carbon trading known as Cap and Share [link to the web site he set up].

Unbelievably, on the day he died, Environment Secretary Hilary Benn announced that the UK would set up what Reuters' press release called "Domestic Carbon Emissions Trading". This represents a fantastic achievement for the whole movement to get such a trading scheme established.

Despite his cancer Will cycled to Brussels from his home in west Wales near Machynlleth last summer as part of this campaign.

It's to his great credit, that as the main UK campaigner for this simplified form of carbon trading, it is now firmly on the UK political agenda.

A lifelong campaigner

I will try to summarise what I know of his life. Will was a brave man who cared deeply about the state of the planet and its people.

I met him in 1997 when we began collaboration on two projects: a Green Solutions CD-Rom for the Centre for ALternative Technoogy, featuring the then new technology of Quicktime virtual reality, and the Palace of Amnesia, a prototype computer game I wrote and he directed.

At that time he was living on the Gower Peninsula near Swansea, running an Apple Mac design company.

With his wife Lyn and boys Sam and Dougie they had moved there from Bristol, where Will, who held a PhD in biology and was an ornithologist, had been a campaign officer for Amnesty International.

This was an early example of the strength of his campaigning zeal.

When my wife Zoe was severely ill in 1998 with a heart tumour, they put us up in their Swansea flat and took care of our own boys.

Their boys were and are home-educated, another example of Will's do-it-yourself approach to life - he and Lyn believe the education system lets children down.

The track of their life eventually led them to Machynlleth where I live, and where Will pioneered a campaign to have the Dyfi Valley becme a Fair Trade Valley - and he succeeded.

As a multimedia author he programmed the Carbon Gym for CAT, and designed the multimedia version of Peter Lord's The Visual Culture of Wales - three CD-Roms for the University of Wales.

This was not enough - he moved on to the most pressing matter of our time - mitigating climate change.

Will was not good at putting himself first. This was part of his selflessness.

In 2004 he had lower back ache which he attributed to poor computer use. In fact it was cancer but because he delayed seeing a doctor about it, so it was at stage 4 before being diagnosed.

He was given just about three months to live.

But he refused to give in, a mark of his courage.

He spent a year trying alternative methods of treatment believing the NHS way to be deeply flawed. They almost worked. But cancer is a persistent enemy.

With stubborn determination he survived a further three years - with the help of his wife, Lyn, and boys, always trying the latest remedies and treatments, from Switzerland and the States, supported by his GP Simon Morpeth. Latterly these included chemo and radiotherapy.

Perhaps he should not have made the bike ride to Brussels. But you couldn't have stopped him. He was determined to do it, because he loved the planet and believed this to be the best thing he could do with his life.

You couldn't ask for more.

The best tribute for him is that his work be carried on to its successful completion.

This is an inadequate memorial. I hope others will add to it.