Individual Carbon Credit Schemes

Some people in the Greens are doing some research on the appropriate response to Climate Change. The Government has proposed a dodgy 'Global Trading Scheme', of which the Greens reject as unworkable.

Essentially, two proposals are been suggested around the world. The first is a carbon tax on polluters. The second is an individual carbon credit scheme. For more information on these proposals see here.

To summarise:

1. Carbon Tax:

The carbon tax essentially places a cost on polluters in industry thereby raising the price of those goods to consumers. The effect would be that consumers would start looking for cheaper alternatives from non-polluting products. It is also assumed that the money raised from the Carbon Tax would be used to offset the inequities of the tax or further encourage non-polluting industries.

2. Individual Carbon Credit Schemes:

This is scheme is both impressive in its scope and sophistication. An independent board is set up to determine what the safest level of pollution is for the country. This total is then split between individuals and industry. For individuals, each adult is given an equal share (per capita) of credit they can pollute (from the purchasing of energy, petrol, air travel etc). Not everyone will use the exact amount of credits that they pollute. Those who have leftover (surplus) credits can sell their credits on the market to those who use more credits than they are allocated (deficit). This systm is similar to the fly-buys system we have up and running at the moment.

Industry have to buy their credits in an auction style system from the government. This therefore become like a tax on those who feel the need to pollute.


Obviously there is a lot more detail to both these systems. There are two reasons why I like the second option. Unlike the carbon tax, the Credit Scheme sets the limit on what a country pollutes, giving us certainty to deal with climate change. Second, the credit scheme more effectively uses the market on the demand (consumer) side of the issue. People can actually make money from not polluting, now thats incentive.