Personal Carbon Trading – Is it time for the idea ‘ahead of its time’?

Benedict Robinson for Distilled Post

The climate crisis is no longer legend, it’s reality. Rising seas and extreme weather events are no longer clichés of dystopian fiction, but frequent news stories in the real world. We are seeing the effects of our warming planet, and now people have woken up to the threat we are facing. Though politicians may be reluctant, the majority of people worldwide are now in favour of a more drastic climate policy.

Many have been suggested, but one more radical proposal is that of Personal Carbon Trading (PCT). This scheme generated substantial support in the late 2000’s and the UK Government commissioned a report into the suitability of introducing a PCT or PCT-like scheme in 2008. While they concluded the CO2 reducing benefits were compelling, the costs to implement were too great and the public acceptance of it too weak to enact it. But with changing public attitudes and the wider societal costs of climate inaction laid bare, is it time to revisit this proposal?



What is Personal Carbon Trading?

 Personal Carbon Trading is a scheme that “requires individuals to manage their own CO2 emissions” by giving them a ‘Personal Carbon Allowance’, a yearly allocation of CO2 emissions each person can consume each year. This amount would be the same for every individual and subtly reduced over time to meet “internationally adopted agreements”. People would use up their allowance, in the form of carbon credits, upon intensive carbon consumption, such as fuel, gas and electricity usage.

The ‘Trading’ aspect comes from the fact that those who lead low-emissions lifestyles or have made a conscious effort to live more sustainably can sell their surplus energy to those who require or can afford it. This adds an economic incentive to live more sustainably as people could earn money from their carbon-reducing lifestyle changes. As lower income people are both less likely to lead carbon intensive lifestyles, with the poorer half of the UK accounting for less than 20% of the total carbon emissions, this factor will disproportionately aid lower and middle income individuals, a notable benefit of the system, especially in the midst of a severe cost of living crisis.

A system of equally allocated carbon allowances has other net benefits for society. The increased visibility of an individual’s carbon usage would raise their cognitive awareness of their carbon footprint. As a society, we would all be more aware of how much we are contributing to the problem and steps we could take to counter it. There are also social benefits as it would set a new benchmark for an appropriate amount of annual carbon consumption. Equality in carbon emissions would become a social norm; even though higher income earners could pay for more emissions, they would be paying those on lower incomes who lead a less carbon intensive lives.




 The idea is not without its pitfalls, however. Firstly, the sheer complexity and difficulty in implementing the scheme are often brought up. The 2008 financial cost-benefit analysis estimated it could be anywhere between £700 million and £2 billion to carry out at a national level, an amount so vast they ultimately decided it was not worth opting for such an elaborate system over a simple and proven policy such as a Carbon Tax.

Additionally, while it can offer economic aid to low income, low carbon households, there are some it can disproportionately burden. Rural families, families with many children, and those with inefficient central heating systems would suffer most from receiving a limited carbon allowance and would struggle to purchase more. Yet there are proposed methods of countering this. A means-tested “modified allowance allocation” would see these families receive a higher allowance to accommodate their circumstances, but this has been subject to criticism too for violating the equal allocation principle. This parrots how deeply unpopular means testing policies have been in the past, such as the 1931 decision to means-test the ‘dole’ and deny vital provisions to some due to uncontrollable circumstances.



Would it Work?

 Short answer: we don’t know. It is hard to say without sufficient evidence, and providing sufficient evidence would come at a huge risk for whichever government rises to the challenge. Hence, research into it is scarce and states are hesitant to change that. While the EU Emissions Trading System, the first large scale trading system of a similar kind, has shown positive results, it does not put the onus on the individual and instead operates on a macro scale, auctioning off the rights to emit pollutants directly to companies who can trade these with each other. The first trial of an actual PCT scheme is currently being carried out on Norfolk Island, Australia. The effectiveness of the scheme is currently unclear, but it seems the future of PCT could depend on its outcomes.


What can be said for certain is that global climate goals are not being achieved using current emission reduction methods. The UK is committed to, among other climate goals, reaching net-zero emissions by 2050. Though this is distant, the UK is currently off-track to meet its 2030 targets with its current policies alone.


Furthermore, attitudes towards the climate crisis have changed remarkably since initial evaluations of the scheme, with the issue being more visible and more salient in people’s minds than ever before.


Fundamentally, PCT was probably ‘ahead of its time’ in 2008. But now is not 2008. Now is a time for action, and we may need to consider all options.