The Pros & Cons of Carbon Allowances

Let’s bash out the positive and negative aspects of carbon allowances. Could they solve the problem of man’s ever increasing CO2 emissions or are they just an excuse for new taxes? Personal carbon allowances for you, me and everybody are crucial to our safe landing from runaway climate change, but could this just be utopian thinking?

The Fears of a Carbon Allowance

1)      Nanny State knows what you’re up to!

Someone is tracking every carbon transaction that you make. That road trip last weekend with that old flame? Yes they’ve got it on tape.  Of course your data could be encoded and impersonalised, but such a scheme will always be tainted as a system designed by the socialists so that they know where we consume the most fuel so that they know where to attack.  It may work in Europe and Japan but America’s overzealous fear of big state may cause a massive stumbling block.

2)      Complexity means the birth of a bureaucratic monster

We currently lack carbon labels that give every product a carbon footprint allowing such a system to function properly. I will never know whether an apple cold stored in Europe over the winter is a bad apple compared to one shipped all the way from New Zealand.  Which apple is worse?  Instead of the annoying little apple stickers that says this apple is a pink lady you could replace it with a little CO2 footprint label.  Eco freaks like me would then probably choose smaller apples as the CO2 label tells me that it will save 0.002 g of carbon. Other consumers that don’t know that the New Zealand apple is better at certain times of the year will be able to see at a glance.

A lady pays the true cost of that petrol from her personal allowance. Image Courtesy of Greenlaunch.com

There would also be massive disagreement about the calculations. A product produced in China may release pollution in China but that pollution will need to paid for by the consumer and not the producer.  The producer could then also argue that the workers food should make up at least part of the carbon foot print of that product.  Sounds ridiculous, but it is such arguments that start trade wars that cause stalemate, and then result in inaction.

The bureaucratic infrastructure if we were not just to include fuel but all products would be massive.  The cost of such a scheme would also be huge.

3)      I’m just one person what difference can I make?

This is quite a weak argument as the exact opposite is true.  You as a consumer can change the world simply by being a little bit savvy.  The argument relies on the idea that I am only one individual and do not sit on the board of an electricity company and therefore cannot change the world. The reality is that our carbon allowances will force change as it becomes apparent that the consumer only really liked their product when they did not have to absorb the CO2 costs.

4)      World not united enough

As the trade talks have shown when it comes to global rules our system of nation-states finds it hard to agree.  It is a major hurdle not only for persistent trade wars and UN peace missions, but also a global response to climate warming.

Nation-states with their vested interests, namely the way they extract wealth from the planet, cannot unite. Australia is coal exporter number one.  Does it really want carbon allowances to force china to stop importing its coal?

Countries face different scenarios through global warming. Africa and the Indian sub-continent look likely to be devastated by climate change. Russia (even with this summer’s bush fires), Canada or Scandinavia look likely to benefit. Countries are therefore like last minute Christmas shoppers.  They don’t care that someone else’s little Jane must go without because they have just snapped up the last super ranger for their little Tommy.  It takes true leaders to rise above this type of vested interest.  Unfortunately the world will have to be amazingly lucky if all countries are to have such leaders at the same time.

5)      Just another Tax?

Another opportunity for the state to tax?  In the UK such an argument only exists because governments have labelled taxes as green (when they are not) and not reduced tax elsewhere.  The result is an increasing tax burden and weakening of the green tax label.

The Opportunities

1)      Socially Just

This wipes out most of negatives because it is such a great opportunity to change the world as it is socially just on so many levels:

The eco-conscious cyclist no longer has to choke on the fumes of that gas guzzlers CO2 knowing that although he is helping the environment he is getting no incentive apart from a good feeling inside (that quickly gets wiped out when viewing the actions of others).  With carbon allowances he will see his allowance grow and will sell it at the end of every year to you know who: a direct transfer of wealth.  If he was really green he could hamster CO2 increasing the price yet further and forcing society to green itself yet quicker. I would do exactly that or give my saved carbon as Christmas presents.  I bet my family is thrilled about that idea!

The poor world will carry on being able to increase their per capita emissions while the west will be forced to change quicker.  This “transfer” of wealth to the south will make adaption easier and encourage development. (It is not really a transfer, but rather just creates a fair framework so that the South can also become wealthy).

The poor in the rich world will not be unduly burdened because they have relatively low carbon footprints. They will be able to cash in just how the cyclist will.

2)      Total coverage of pollution sources

The market could slowly be rolled out to every product resulting in finally fair competition.  The price of electricity produced by coal would sore and the price of wind energy would plummet. Air travel will finally be properly taxed; currently it’s tax burden is less than trains or buses which are both better for the environment.

3)      Adaptable

Maybe advances in science show that the feedback effects are resulting in stronger than expected climate change.  The central organisation body would then have to readapt the allowances resulting in a few years of more savage cuts. Maybe the science shows the opposite. The point is the system follows and adapts to the science.

4)      Improves the market

Carbon markets may fail because the market is heavily speculative.  Now the speculation of carbon may not sound bad, but when it is done in such a way as to drive up the cost so massively that poor countries find it hard to get their hands on any carbon for industrial development just because the market wants to sell the CO2 to four-by-four drivers in the USA then it will fail.  Carbon allowances on the other advance the market so that instead of greedy bankers doing the trading, the people are deciding personally what they want to do

Why do we need the personal carbon allowances and why may they never materialise?

Fully implemented and supported this would be the most powerful tool for bringing about change between man and nature. By directly placing the costs on the polluter it is also the fairest method.

The biggest problem is international agreement.  We have set the target, but we need to now bash out a system that will fully incorporate every gram of manmade CO2.  This will take massive political will.  We may need the first major natural disasters to hit western cities before the will is there.

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