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Are Personal Carbon Allowances (PCAs) ahead of their time or are they the answer to equity in our sustainability ambitions?

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By Alex Hong

· 7 min read

Personal carbon allowances (PCAs), also referred to as personal carbon quotas, are becoming more popular as a potential climate change mitigation strategy. Personal carbon allowances are designed to offer people a cap on how much carbon they are allowed to emit over a specific period and enable them to exchange those allowances in a market. With this strategy, people are encouraged to lessen their carbon footprint and are rewarded for doing so. I will examine the background, advantages, difficulties, and prospects for personal carbon allowances in this post.

The idea of personal carbon allowances was first put forth as an alternative to conventional carbon taxation in the early 2000s. Every person is granted a certain amount of carbon credits and if they use more than that, they must purchase additional credits from the market. This strategy tries to put a price on carbon emissions and motivate people to lessen their carbon impact.

By offering a clear and equitable framework for decreasing carbon emissions, personal carbon allowances have the potential to improve global sustainability. Everyone has an equal stake in lowering carbon emissions because each person is given a carbon allowance, regardless of their income. Also, this strategy rewards people for reducing their carbon footprint, which could result in large emissions reductions.

PCAs have a wide range of advantages. They might offer a clear and equitable mechanism for cutting carbon emissions and encourage people to lessen their carbon footprint. Additionally, this strategy can assist governments in achieving their carbon emission targets and offer a strong incentive for companies to create and implement low-carbon technologies. Furthermore, by guaranteeing that everyone has an equal stake in decreasing carbon emissions, personal carbon allowances may aid in the reduction of inequality.

But, PCAs will face a number of difficulties in the future. The political viability of this strategy is one of its main obstacles. Individuals and businesses that largely rely on fossil fuels may oppose personal carbon allowances because they see it as a restriction on their personal freedom. A personal carbon allowance system must also overcome technical obstacles, such as the creation of a strong market for trading carbon allowances.

Attempts to pilot PCAs 

As was already indicated, PCAs normally function by allowing individuals to consume a certain amount of carbon emissions - if they use less, they can sell their excess to others. Around the world, there have been numerous early attempts to test PCA and trading, therefore I will try to give four pilot cases with varied degrees of success.

  1. China: In 2020, China declared that it would test a system for pricing carbon emissions in a number of its regions. The plan involves giving manufacturers, electricity producers, and other high-emitting companies carbon permits so they may trade and buy credits depending on their carbon emissions. Despite not being aimed at individuals specifically, this plan's effect on industrial emissions could indirectly affect people's carbon emissions.
  2. Finland: A Personal Carbon Trading (PCT) Scheme for mobility called CitiCAP was created by the Finnish city of Lahti and was piloted in 2019 before going live in 2020. It is the first city-wide PCT mobility plan in the EU. CitiCAP's goal is to persuade users to cut back on their transportation-related greenhouse gas emissions through financial incentives, education on such emissions, and peer pressure. The app has roughly 3,000 downloads in 2019 and 350 weekly active users at its peak. The initiative encouraged Lahti inhabitants to push their boundaries, and the app forced Lahti citizens to re-evaluate their mobility choices and cut back on emissions. According to a PCT programme research, low-income individuals had reduced mobile greenhouse gas emissions, and personal carbon trading may have beneficial distributional impacts on mobility. The CitiCAP project is a component of Lahti's overall attempt to make the urban region more ecologically friendly, which is to become carbon-neutral by 2025.
  3. France: Via the Budget Air-Climat-Energie (BACE) programme, which was put into place in 2014, France has also experimented with PCAs. The programme is intended to cover 40% of the carbon emissions caused by energy consumption in high-income nations, including personal carbon emissions from travel, space heating, and hot water use. The plan hasn't yet been put into action on a large scale, so it's unclear how successful it will be.
  4. The United Kingdom: In 2008, the UK carried out a sizable personal carbon trading (PCT) pilot programme. About 300 homes in the town of Swindon participated in the experiment, and each household received a starting carbon allowance that could be swapped. Although the study was effective in showing that PCAs are a workable policy instrument for decreasing carbon emissions, there were reservations about how feasible it would be to put PCAs into place on a nationwide level.

Ultimately, a number of variables, such as the scheme's design, the level of public support, and the practicality of execution, affect how effective PCAs are as a tool for policymaking. Although PCAs have undergone successful trial programmes in certain nations, it is still unclear if they will be useful on a broader scale. It will be crucial to keep experimenting with various PCA models to ascertain whether they have the capacity to cut carbon emissions at the individual and societal levels.

Tackling Equity

A personal carbon allowance (PCA) may be viewed as "ahead of its time," according to some media reports because a really equitable allocation of carbon would close the carbon gap between the rich and the poor. The wealthy may be able to buy more allowances, but it's crucial to remember that they often have greater carbon footprints and would need to buy more allowances to balance their emissions.

According to one study, PCAs might be created to cover a variety of emissions sources, such as those connected to industry and agriculture, in addition to personal emissions, to address concerns about equity. This would make it more difficult for richer people to just buy their way out of lowering their carbon footprint.

Allocating more allowances to individuals with lower earnings is another remedy suggested by the same study, which would assist to guarantee that PCAs are not disproportionately harsh on those with fewer means. The creation of a just and transparent allocation mechanism would be necessary for this strategy, as well as a careful evaluation of the numerous socioeconomic elements that may have an impact on carbon emissions.

Finally, by offering a just and open method for lowering carbon emissions, personal carbon allowances have the potential to improve global sustainability. Personal carbon allowances are gaining momentum and could play a key role in reducing carbon emissions in the future, despite the significant obstacles that still need to be overcome, such as political viability and technical execution. To fully reap the benefits of personal carbon allowances, policymakers and stakeholders will need to collaborate to overcome these issues and provide a solid framework for their implementation.

The effectiveness of PCAs as a tool for policymaking depends on a number of variables, including the scheme's design, the level of public support, and the practicality of implementation. Although PCAs have undergone successful trial programmes in certain nations, it is still unclear if they will be useful on a broader scale. It will be crucial to keep experimenting with various PCA models to ascertain whether they have the capacity to cut carbon emissions at the individual and societal levels.

However, by creating a system that considers the numerous variables that affect carbon emissions and making sure that allowances are allocated equitably, it may be possible to lessen some of the opposition that wealthy people may express.

It is my personal belief that PCAs can enhance personal responsibilities toward the environment and the protection of our biosphere. The ability to create a system for PCAs to operate efficiently while providing equity across socioeconomic boundaries will be challenging and requires global collaboration. With the need to create greater advocacy towards sustainability and the environment, there would be much optimism for more use cases and implementation of PCAs in the near future.

illuminem Voices is a democratic space presenting the thoughts and opinions of leading Sustainability & Energy writers, their opinions do not necessarily represent those of illuminem.

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About the author

Alex Hong has over 20 years of experience in executive and tertiary education. He has led cross-tertiary teams in development, curation, faculty/programme management, and business development in education and eLearning projects. He is actively involved in Climate/Biodiversity/ESG-related business matchmaking and conferences regionally. Alex is LinkedIn’s Top Voices (Green) in Singapore 2022 and represents the Global Blockchain Business Council (GBBC) as the Ambassador of Southeast Asia. He is also part of the Youth Networking Business Committee of Asia (YNBC) and contributes to his community by volunteering as a mentor for a Singapore-based start-up incubator.

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