www.teqs.net

1. www.teqs.net

2. Purpose of TEQs • Allow us to meet given cap • Guarantee fair(er) access • Engage ordinary people and create ‘common purpose’

3. HOW TEQS WORK!!! Auction Free entitlement

4. Carbon Rating • 2 kg CO2 / litre • 0.43 kg CO2 / kWh • 2.2 kg CO2 / m3

5. HOW TEQS WORK!!! Auction Free Entitlement

6. Potential to motivate behaviour change and innovation • Increased visibility (Anderson and Simester 2008) • Feedback -> ‘energy consciousness’ (Capstick and Lewis 2008) • Useful mental accounting effects (e.g. Thaler 1999, Kahneman et al 1990) • Spur to innovation and long-term investment • Conditional cooperation (Biel et al., 1999): Overcoming the ‘free-rider effect’ (Ockwell, 2009) • Shift norms: fair share / common interest (e.g. Fehr and Schmidt 1999, Camerer and Loewenstein 2003) • Risk of ‘crowding out’ intrinsic motivation (see Bowles 2007)

7. Barriers to implementation “while personal carbon trading remains a potentially important way to engage individuals, and there are no insurmountable technical obstacles to its introduction, it would nonetheless seem that it is an idea currently ahead of its time in terms of its public acceptability and the technology to bring down the cost” Defra’s Pre-feasibility study (May 2008)

8. TEQs: public perception Source: IPPR (Bird et al., 2008)

9. TEQs: public perception Source: IPPR (Bird et al., 2008)

10. TEQs: lack of policy space policy space

11. TEQS: For & Against Fairer than taxes, upstream cap Fairer than doing nothing But still be perceived as unfair, and more visible than both taxes and upstream cap Potential to motivate rapid behaviour and attitude change, and create spur to innovation But could ‘crowd’ out intrinsic motivation Lack of policy space Guarantee of emissions reductions – assuming there’s a hard cap More costly than upstream Political difficulties around need for tariffs Guaranteed rations in context of scarcity Regulation to prevent speculation

12. TEQs: fairness Source: Centre for Sustainable Energy

13. Two Graohs Global Production ofConventional Fossil Fuels Global Emissions Pathway for stabilizing at 450ppm Carbon dioxide emissions from energy and industry Assuming • The mid-range cumulative emissions value from the IPCC’s Fourth Assessment • Stringent curtailment of deforestation and non CO2 GHG emissions (Sources: Tyndall / Anderson and Bows, 2008; pre-2000 figures from CDIAC)

14. Part I The trouble with carrots and sticks • Carbon price rises are regressive: CCC estimate an extra 2.4 m in fuel poverty by 2022 • Energy demand is inelastic: 2002-7 domestic gas prices rose by around 100% but demand fell by just 7% • We are not donkeys

15. Brief History First published 1996 Ten Minute Rule Bill 2004 Government funded research 2006 Pre-feasibility study 2008 APPGOPO report 2011 Expressions of interest from successive Labour Secretaries of State for the Environment, and from senior Conservative politicians.

16. Defra’s Pre-feasibility study “while personal carbon trading remains a potentially important way to engage individuals, and there are no insurmountable technical obstacles to its introduction, it would nonetheless seem that it is an idea currently ahead of its time in terms of its public acceptability and the technology to bring down the cost”

17. TEQs: costs Defra’s CBA concluded that costs outweighed benefits • Shadow Price of Carbon of £30/tCO2 • IPPR estimate costs that are almost half • Overlooked a number of benefits (inc. rationing) (Scheme mis-specified)

18. TEQs: public perception Source: Defra (Owen et al., 2008)

19. TEQs: public perception Source: Defra (Owen et al., 2008)

20. TEQs: public perception • Source: Wallace et al., (2010), Public attitudes to personal carbon allowances, Climate Policy