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Why a Carbon Currency based on Carbon Allowances is Our Best Chance against Climate Change

Faced with ever more obvious signs of damaging climate change all around the world, a clear and effective way to reduce CO2 emissions and keep atmospheric warming to a minimum must be every government’s goal. Ecocore’s solution is for every individual to receive a carbon budget and keep to it. The Carbon Allowances policy we are working on sets that up – it creates a carbon currency which is distributed fairly to every citizen on a regular basis. As people spend the carbon tokens from their carbon allowance, they flow through the economy like a second monetary system, so there are dual transactions involved for all goods and services – one in cash and one in carbon.[1]For the complete explanation of the framework, see https://ecocore.org/proposal/

The carbon allowance system would need a major initial investment of time and money, but once underway offers considerable advantages over other climate solutions that pay a price for their convenience (principally the significant risks that they are over-complex and just won’t be enough). Key features are:

  • Fair shares for all – the beauty of the allowance mechanism is that it’s per capita, so chief executives and office cleaners, royalty and the unemployed, all receive the same quota. It offers an economic policy with real advantages to employment, welfare and social equality.
  • Freedom of choice – No one dictates how you use your tokens. People make their own choices and will soon learn to be as canny about carbon use as they are about their money. Just as you are free to spend your allowance on holidays, clothes or charities, you can also sell it or buy more. Personal carbon trading benefits those who have no need of or desire for a high-carbon lifestyle, sets up a flow of funds from the rich to the poor, and creates a huge incentive to find low carbon options first.
  • Real-time carbon labelling – Every kind of good or service will be priced in the carbon tokens according to its total cost in terms of emissions. The carbon price is cumulative and starts with the initial carbon cost of energy production, e.g. natural gas or solar, required for manufacture and supply, building up along the supply chain. In modern supply chains, a product’s carbon price will always be right up-to-date, including packaging, freight, and storage as every business in the supply chain adds their carbon costs to the cumulative price. The final carbon price to the end consumer is simply the accumulation of all carbon costs as they are added on at each step in the supply chain. It is very similar to normal cash with the exception of where the carbon currency originated, and where it ends up. It results in a dynamic, responsive carbon price for everything with no requirement for official carbon price settings.
  • Competitive advantage – customers are in the driving seat. Just as price wars bring down the monetary cost of goods, a lower carbon price will make goods more attractive to buyers. The commercial push to reduce emissions will lead to faster innovation and disruption in business practice.
  • Inclusive yet simple – this comprehensive system should be more effective, acting more quickly than any piecemeal legislation, carbon taxes, emissions trading schemes or pricing policies. Even contentious sectors like aviation, shipping, inbuilt or imported emissions, as well as every government service, will be required to pay in carbon tokens as well as money. It is designed to block significant loopholes or exclusions.
  • Equitable payment for carbon drawdown – it pays for carbon drawdown (AKA carbon capture, CO2 removal, negative emissions, direct air capture (DAC)). This allows schemes such as tree planting, reforestation, restoring peat bogs, or mechanical CO2 sequestration to be funded in carbon tokens from a single, central authority, circumventing the argument of who has to pay for CO2 removal. We all pay. For example, the government could pay in carbon tokens from the national carbon budget for the sequestration of carbon in soils via sustainable farming practices or rewilding, the protection of ocean carbon sinks, etc. If the world adopted carbon allowances, then the protection and reforestation of the world’s major forest blocks could be funded from the global carbon budget before it is divided up into national budgets.
  • One regulatory body – such a carbon drawdown payments facility establishes a single point of governance, a clear path to financing projects, improving and regulating today’s over-complex and sometimes questionable carbon offsetting industry.
  • Control of future emissions – demand-side taxes and emissions trading schemes are a pretty blunt instrument. In the carbon allowances framework, government-issued carbon tokens flow back from consumers through the supply chain to the original producer of the fossil fuels, directly relating to the amount of fossil fuels extracted from the ground by the oil, gas and coal industry and thereby providing a guarantee of the amount of emissions reduction taking place.
  • Market-based mechanism promotes trade – since carbon tokens will be designated in tonnes and kilos of carbon released as CO2, the system sets a standard that can be easily integrated across industries and trade borders.
  • Popularity – surveys in a number of industrialised countries show that the public finds per capita quota-based systems such this to be fair, so are likely to support such a policy, especially if the introduction is well managed and only the most profligate carbon emitters are impacted at the start.
  • Covering all the bases – because carbon is not the only cause of climate change, the system can cover methane and other greenhouse gases via licences priced in carbon tokens. So for example, a dairy farmer will need to purchase a licence for each of his cows, the cost dependent on the emission of methane in his particular farming system, or a cement manufacturer can obtain a license to produce cement with a price dependent on the quantity of emissions produced.

We all know there are no quick fixes. But the carbon allowances system will work if we set it up properly and stick with it. Actually the gains would start pretty much straight away and that’s great because we cannot afford to hang around. Please look at the rest of the website for further information on the detailed proposal.

More about Carbon Allowances

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This concept stems originally from a combination of several sources:



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References

References
1 For the complete explanation of the framework, see https://ecocore.org/proposal/

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