Climate change & energy

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Personal carbon trading

The Government has carried out a study into personal carbon trading, as just one of a number of potential long term options being explored for making individuals better informed about, and involved in, tackling climate change. The aim was to try and understand the issues surrounding personal carbon trading better.

What is personal carbon trading?

Personal carbon trading requires individuals to manage their own carbon dioxide emissions; a national emissions cap would be set, and emissions rights (in the form of carbon credits) would be allocated across the population as a whole. Individuals would surrender their carbon credits upon the purchase of, for example, electricity, gas or transport fuel. Those who need or want to emit more than their allowance would have to buy allowances from those who emit less. Over time, the overall emissions cap (and hence individual allocations) could be reduced in line with internationally or nationally adopted agreements.

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The Government’s personal carbon trading study

The Government has conducted a pre-feasibility analysis of personal carbon trading, exploring some key issues highlighted by an initial scoping study produced for Defra by the Centre for Sustainable Energy in November 2006. The study aimed to deliver an initial view on the value of personal carbon trading compared to other approaches to reduce individuals' carbon dioxide emissions. The issues explored included:

  • the proportionality, efficiency and effectiveness of personal carbon trading compared or combined with existing policies and other ways of achieving the same emission reductions;
  • potential equity and distributional impacts, in order to understand how personal carbon trading might affect different groups in society and to consider the impact of different scheme designs (e.g. inclusion/ exclusion of public transport);
  • the technical feasibility of such a scheme, how it could be operated in the simplest way, and what supporting systems and IT might be required, as well as what it might cost;
  • whether it would avoid placing undue burdens on individuals, and if so how it could be designed in a way that would be most acceptable to the general public.

The above analysis has been brought together to review the potential value of personal carbon trading compared with other approaches to reduce individuals’ carbon dioxide emissions. An inter-departmental Project Board oversaw, and provide strategic steer, to this pre-feasibility analysis.

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The findings

The Government’s pre-feasibility study into personal carbon trading has revealed some important challenges to its potential as an effective measure for reducing individuals’ emissions. Whilst Defra remains interested in the concept of personal carbon trading, the findings of this initial study mean that we will not be pursuing this option further at this stage.

Further research is being taken forward by academics and research institutions outside of Government, and Defra will keep a watching brief on their progress. Defra remains committed to the challenge of reducing emissions associated with individuals’ activities, and will continue to explore further ways to reduce these and encourage emission-saving behaviours.

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More information

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Page last modified: 5 November 2008
Page published: 11 December 2006

Department for Environment, Food and Rural Affairs