Canvassing for Opinion - aka "Blairs Brain on Cannabis"

IMHO prohibition sentiment requires inherent addiction to status quo, an incapacity to visualise beyond the here and now and a desperate desire to know others might feel the same... Reform is not revolutionary, rather it is evolutionary. Having survived banging your head against a brick wall the evolutionist relishes having stopped. / Blair

Friday, February 09, 2007

What do we need to know about individual carbon trading?

Centre for Sustainable Energy
4.1 The questions that need answers
[ I have copied this extract to my blog in response to concerns about the shallowness of understanding on Climate Change as evident at the Greens Party Meeting on Climate Change, with MP Co-Leader, J Fitsimonds in Christchurch, NZ / Blair ]

This section provides a critical examination of the state of knowledge about individual carbon trading required to make a reasonable assessment of its credibility as a future policy tool. As such it endeavours to cover the full range of issues relevant to the practicalities of introducing individual carbon trading in the UK. These include providing answers either now or in the future to the following interconnected questions.

Political acceptability
• Are there adequate and credible answers to all the other questions here?
• Will politicians be able to believe the public will wear it (whatever the polls & focus groups say)?
• What constituency of support needs to be in place to make this credible?
• Can all the conditions for success be put in place simultaneously and the down-side risks covered? (or ‘how much of a gamble is this?’)
• Is there an alternative – particularly one with greater benefit and/or less political risk?
• How fraud-proof does it have to be (i.e. is there a linkage to biometric ID cards?)
• What are the stories the objectors will use to attack the proposals and can these be convincingly countered?
Political/institutional viability
• Can we commit to it beyond our term of office and/or on a sufficiently long lead time to enable it to happen?
• Is cross-party agreement a necessary condition for public acceptance (and is it feasible)?
• Does its control and the ‘cap-setting’ need to sit outside the political process to protect it from any short-term instability in political commitment if, for example, carbon prices rose dramatically (à la Monetary Policy Committee)?
• How would carbon accounting for individual carbon trading interact with other carbon trading systems (eg energy supplier cap-and-trade or EUETS etc) – i.e. who ultimately owns and ‘cashes in’ the carbon savings?
Public reaction and ‘acceptability’
• On what basis would the public consider individual carbon trading ‘acceptable’? How would they conceive it (eg rationing?) and what might shape that conception?
• Would they understand it and react appropriately to it (or can it be designed so that they will with some education and support?)?
• How will the public react [in terms of their energy using and travelling behaviour, carbon-related purchasing habits (eg appliances and vehicles), and home energy performance]? Will they trade?
• What factors will influence their opinions and determine their willing involvement (or stimulate their active rejection)?
• What are the important differences between different segments of the population?
• How could the issue be ‘framed’ in communication terms to maximise acceptance and effective reaction?
Market reaction
• How would the markets in energy, housing, energy using equipment, micro-renewables, vehicles, public transport and aviation markets react to such a scheme?
• What secondary financial products might emerge to take advantage of the new carbon currency (eg carbon allowance loans, futures in carbon allowances, etc)?
• Do we know (or can we guess) all the games, scams and rip-offs the less scrupulous will design to take advantage of an individual carbon trading system? (the carbon allowance loan shark?)

Technical and operational feasibility
• Will it work and be sufficiently stable and meet politically acceptable standards of resilience to fraud?
• How long will it take to set up systems to work?
• Who would set up, control the process and run the systems?
• What accounting period would be most suitable?
Set up and operational cost
• What will it cost to set up and run?
• How reliable are these estimates?
• Who will pay?
Economic impact
• What is the economic impact of introducing such a scheme (cf constraining carbon emissions in other ways)?
• What do the Marginal Abatement Cost Curves for carbon emissions look like for different segments of the domestic sector?
• What level of trading is likely to take place and what factors will influence this and the price of carbon?
Equity, justice and distributional impacts – both socially and geographically
• Who will win and who will lose financially (depending on cost of carbon)? (household income, rural vs urban, housing condition etc)
• Beyond financial impacts, what other issues are there in terms of access to opportunities to reduce emissions (information and advice, products, services, capital etc)?
• Are there ‘crunch points’ where, after some emission reductions, the cost of cutting carbon emissions increases dramatically for certain types of people (eg with particularly housing types or travel needs etc) which may alter the distributional impacts?
• What are the implications of extreme weather conditions (eg particularly cold winter) on overall demand for carbon (and how might the system handle these)?
• Are there mechanisms for avoiding or correcting these inequities within or outside the system?
• How do these impacts compare with those caused by other ways of curbing carbon emissions?

There are clearly many important relationships between these questions. Many of them have a direct influence on each other.
Blair Anderson
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