Flashback: The Kyoto Chip and Carbon Currency

Kyoto Chip

Velo Mondial
August 8, 2006

Awareness raising of personal CO2 emissions

Preface

Velo Mondial’s Think Tank Product the ’Kyoto Chip’ has found more support. The ’Kyoto Chip’ is about CO2 rationing on a personal level and - doing so - raising more awareness about personal CO2 use. Dr Richard Starkey in England has done quite some research on the same idea. You can read about his ideas in: http://news.bbc.co.uk/1/hi/sci/tech/4479226.stm. We will now discuss Dr. Starkey how to make further progress.

Now David Miliband, the UK environment secretary, is keen to set up a pilot scheme to test the idea, and has asked officials from four government departments to report on how it could be done. The move marks the first serious step towards state-enforced limits on the carbon use of individuals, which scientists say may be necessary in the fight against climate change.

It extends the principle of carbon trading - already in place between heavy polluters such as power companies and steel makers - to consumers, with heavy carbon users forced to buy unused allowances from people with greener lifestyles.

We will keep you posted with progress here.

Summary

This proposal document is aimed at making every individual European citizen even more aware of their personal CO2 emissions than instruments already in place will achieve. Now that CO2 emission trading has started there will be a greater awareness in the industrial and business sectors of this issue. We believe that this awareness should be replicated at the individual level, as once citizens are made aware of this, that they will be able to make better choices about their travel and help save on CO2 emissions as well. We seek funding to start a feasibility study on this in a big European city such as Brussels, or an Island.

Introduction

· On 1 January 2005 a new system of CO2 emissions trading has come into effect in the European Union. This means that companies in industry and the electricity-production sector that fall within the scope of the EU directive for the trade in greenhouse gas emission allowances must have a CO2 permit in order to emit CO2.

· Each of these participating companies will be allocated a quantity of CO2 allowances. At the end of each calendar year, a company must cover its emissions by surrendering allowances. By purchasing allowances, a company is allowed to emit more CO2. The CO2 allowances may also be sold.

· The EU directive for this trade in CO2 emissions compels European Union Member States to draw up a national allocation plan. This plan must state allowances how many CO2 are available in total for the first trading period 2005–2007 and how many allowances the government is proposing to allocate to each company.

· The principles underlying the allocation of the CO2 allowances are based on the criteria contained in the EU directive and on existing policy. The directive includes a number of criteria that the allocation plan must meet.

· One important criterion is that the allowances are linked in principle to the direct emissions, in other words the owner of the chimney holds the CO2 allowances.

· Domestic CO2 emission allowance can be divided across the following sectors: agriculture, industry, traffic and transport, and the built environment.

· European Union Member States are implementing the Kyoto Agreement with a focus on industrial emission. While this is very important, an approach to also focus on traffic and transport by European Citizens is lacking. This is very much needed if any reductions in overall levels of CO2 are to be realized.

· While all other sectors are static or dropping, the transport sector is responsible for a large increase in emissions. Unless something is done about this sector, the EU cannot be expected to make the desired level of reductions in emissions.

· The built environment is not the focus of this document.

It is the EU’s aim to reach - by 2010 at the latest - an average CO2 emission figure of 120 g/km for all new passenger cars marketed in the Union. The objective is to be achieved by three instruments:

1) Agreements committing the automobile manufacturers to reduce CO2 emissions from passenger cars mainly by means of improved vehicle technology:

2) Market-orientated measures to influence motorists’ choice towards more fuel-efficient cars: Work on fiscal framework measures

3) Improvements of consumer information on the fuel-economy of cars:

Objective of the Directive relating to the availability of consumer information on fuel economy and CO2 emissions in respect of the marketing of new passenger cars

Proposal

There is no easy technical way to deal with CO₂. The best way to reduce it and the other emissions is to use the car only when it is necessary and to cycle, walk or use public transport where possible. Personal awareness is the other path to follow.

While the three EU aims above are all necessary, it is obvious that not only the choice of which vehicle and its fuel efficiency is important, but also how much use is made of the vehicle. The approach suggested in this document aims at creating even greater awareness and an active personal involvement by individual European citizens in their personal level of CO2 emission. Once every driver knows their annual allowance, and how much their vehicle uses, then they can make much better choices about the trips they make and which mode they choose to make them.

Part of this is already done in the UK where the annual ‘road tax’ is based on the CO2 emissions of the vehicle you own. We believe that the next logical step is to empower citizens by giving them the knowledge and possibility to make a real change based on their choices and behavior.

Allocation and use of allowance

• National governments will decide on the level of emission rights, expressed in Megatons CO2, they wish to make available for personal transport in any given year.
• This amount will be divided by the number of inhabitants who are over 16 year of age and therefore are qualified to decide to use a mode of personal transport that runs non petrol.
• In order to be able to buy petrol individual citizens will need an amount of emission rights that will be granted to them by the government.
• When buying petrol the equivalent of purchased CO2 emission rights will be transferred from the account of the purchaser to the account of the seller / petrol station.
• Petrol Companies will have an account with the government where the government will advance them a working level of emission rights.
• Petrol Companies can sell the equivalent of petrol related to the amount of emission rights the government will allow.
• These emission rights will be balanced by the individuals who purchase petrol and transfer the equivalent emission rights to the Petrol Company.
• Banks will have an account with the government for setting up a market for emission rights on a personal level.
• Banks are allowed to sell emission rights to individuals whose emission rights are used up and whose chip card is therefore empty;
• Banks can buy from individuals who do not need those rights and want to make them available to other citizens.
• The market thus created will be connected to any other Emission Trading market, thus influencing the price.
• When clients have no more credit, forgot to bring their card or come from abroad, they can pay for the necessary emission rights with a surcharge on the petrol price

Practicalities

• For this purpose existing technology will be implemented: the Kyoto Chip Card that is charged with allocated Emission Rights.
• This allocation can be transferred to the account of a Petrol Company when purchasing petrol for personal transport or transferred to the Bank when selling the allocation.
• In a later phase ‘purchase’ of kerosene can be added to complement the scheme.
• A dramatized documentary of the implementation of this Kyoto Chip Card is part of the approach.

Advantages

• Individual citizens will become part of CO2 emission trading, thus realizing the value of CO2 emission
• Short unnecessary trips will be limited
• Trips in potential queues will be limited, because people will be aware how much of their allowance they emit standing still
• Traffic congestion can be limited, through changing the modal split in favor of walking, cycling and public transport
• Health of citizens will be improved by less polluted air

Project

Find partners:

· European Commission
· Bank
· Petrol Company
· Auditing Firm
· National Government(s)
· Participating city

Make implementation plan:

· Technology plan
· Administrative plan
· Emission trading market on personal bases
· Publicity plan including documentary

Set up test site – Brussels or an Island

Impact on & role of local governments

In towns and cities traffic is the most important source of air pollution. Traffic is not only a problem due to the pollution it creates, but also due to related issues such as traffic congestion, noise pollution, traffic accidents etc. Using public transport more, cycling and walking the short journeys we might normally drive can all help to reduce the environmental impact of traffic.

The discussion on CO2 emission / trading has been between governments, scientists and the industry.

· Is there a role and responsibility for cities here as well?

The aim is to curb car usage, by keeping a counter on individual CO2 emission. This will have a positive effect on air pollution, traffic accidents, health problems, congestion and many other problems that European cities are faced with today.

· Is the city level a proper level to execute CO2 policy?

There has until now been no methodical way for keeping track on an individual’s personal pollution level. This proposal document is aimed at making every individual European citizen more aware of their level of pollution, by keeping track of the one indicator which is easiest to keep track of, in a quantitative manner: CO2.

· Central question here is: will the introduction of the ‘Kyoto Chip’ enhance walking and cycling as well as the increased use of public transport and if so, what would be the conditions to optimize the result.

CO2 emission trading has started, awareness on this issue will grow within the industrial and business sectors.

Can this awareness be replicated at the individual level, as once citizens are made aware of this; they will make better choices about their travel and help save on CO2 emissions as well.