Carbon rationing: good intentions, poor politics

March 9, 2007

In Green Left Weekly #693, we published an article broadly in favour of George Monbiot's call for carbon rationing. Below, Gar Lipow critiques this as a strategy for reducing greenhouse gas emissions. Lipow is an Olympia-based environmental activist and can be contacted at

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George Monbiot, in his new book Heat: How to Stop the Planet from Burning, makes what I think is the "Camel's nose error". He supports a plan where half a loaf is worse than none, where an opponent could dilute his proposal only slightly and come up with alternative that would against the goals that Monbiot supports.

Based on the work of Meyer Hillman and David Fleming, Monbiot advocates that each person receive a "carbon credit card". Allocate each nation a carbon limit based upon population (Britain would need to reduce per capita emissions by 90% under this proposal, the US by 95% and the developing world by much less). Nations in turn divide these rights into rations, distribute some rations to individuals, keep some for government use and auction the rest off to whoever wishes to buy them.

Rations would be needed only for direct energy purchases. Consumers would mostly pay indirectly for their carbon use in the form of higher prices, which businesses would charge to cover their own ration purchases. Working- and middle-class consumers would have surplus rations they could sell to pay these costs. Everyone would have incentives to save fuel — to reduce the number of rations they bought, or increase the number they sold. This is a form of emission trading.

In general, emission trading works against solving the greenhouse problem. False credits are generated in nations without emissions caps as offsets that let rich nations continue to burn fossil fuels. Real credits, instead of being auctioned, are granted free to major polluters, often in overly large quantities that drive down permit prices, and increase emissions allowed.

In addition, both real and counterfeit credits slow the rate of technical innovation and long-term capability for emissions reduction. (The last happens because polluters, who otherwise would need to use technical means to reduce emissions, can buy credits from polluters with cheap reduction opportunities. Later on, when the cap tightens and everybody needs to buy the technology, it is not as far advanced. Thus technology is more expensive than it would be if some polluters had been forced by the lack of a trading system to become early adapters and likely to be less mature.)

Monbiot's system lacks most of these flaws. All credits are created within a cap; most are auctioned. Because it lacks the things that artificially deflate prices, the problem of slowing technical innovation, while still real, is not as great as under the Kyoto system.

The problem is that most of the flaws Monbiot avoids could be easily sold as part of a compromise version of his proposal. Why give so many credits to individuals and governments? Slip a few wee credits to big polluters, just as a concession to a political reality that we need their support. Why not accept credits based on the Enron-style accounting of the CDM (Clean Development Mechanism) market — holding them to the strictest standards of course. Why, we will hire auditors, just like Enron did. Don't you want to support the poor nations in making their transition?

All the hard work Monbiot has done framing the proposal — calling the credits "icecaps", and comparing it to the WWII rationing system, can easily be tapped by far less honourable people. And they can dismiss any complaint he makes: "Oh, he is just a journalist. What does he know of the practical compromises needed to make his proposal work?"

It is not as though his proposal is the best that could be made. Even if you insist on an emission trading system, why issue credits so far downstream? Require permits for the first production or importation of fossil fuel, or other greenhouse source. Consumers, for the most part, won't have to buy credits at all; the cost of permits will be included in the electricity, fuel, goods and services they buy.

For air travel, airlines can be forced to buy additional credits, above the cost of fossil fuel and include them in ticket prices. The same applies to other emissions such as nitric oxide, methane and so on. Make the upstream producer responsible for the permits, let the price of the permit be included in the price the downstream user pays, and most individuals and business people will never have to see a carbon credit.

Then, after you have sold all these permits, divide any portion of the revenue you think fair among the citizens of the issuing nation. Better yet, instead of auctioning permits, reduce the red tape a bit more, and simply charge a carbon (equivalent) tax.

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