Introduction And Aim
There is impending ecological disaster from climate change due to carbon emissions; humanity is not taking the sufficient and effective policies and actions needed to reverse carbon emissions. Countries will not achieve their internationally agreed emissions targets and the absence of such policies will also result in economically damaging and politically divisive emergency action as environmental damage leads to demands for emergency precipitate responses.
This paper outlines a scheme for nations significantly to reduce carbon emissions. The scheme is practical and consists of a single set of tools that will cause rapid and substantial shifts in consumer behaviour through creating a market that seriously incentivises “green” behaviour throughout every part of the economy. The advantages of this scheme over any others are:-
• Politically popular • Minimal state regulation required • Government funding needed is essentially nil • Economically stimulating • Wealth redistribution
The Problem And The Need – Sustainable Global Consumption
Rapid and substantial reductions in carbon emissions require global industry to adopt complex, interrelated, vast, wholesale changes in sourcing, supplier management, raw material usage, fuel usage, transportation and production/manufacturing. Such changes will only happen when global consumers demand them through their buying behaviour. Buying behaviour is not changing because of a number of seemingly intractable barriers:-
• Lack of alternatives (or they are perceived as inadequate or too expensive) • Lack of incentive • Lack of precise knowledge • Perceived unfairness (to individual sacrifice when others do not do the same)
Only overcoming these barriers will lead to the required massive change in attitudes of consumers so they consciously make pro-environmental decisions every time they purchase any good or service. This needs a paradigm shift for billions of people.
Elements Of Shifting Consumer Behaviour – Changing Attitudes
Any mechanism to overcome the barriers must recognise all the following:-
• Self-interest guides behaviour; relying on altruism is insufficient • The self-interest basis is determined by each individual, not the state. • Sacrifice is insufficient as an incentive to change behaviour • People want a real choice if they are to be able to choose greener options • Information is needed so people can make considered decisions in their own interest • People may make different choices – and not be vilified or penalised for doing so
Any mechanism that acknowledges these realities will have the following 4 features:-
• “Environmental Price Tag” (EP) for every product/good/service – providing succinct yet precise knowledge about their environmental impact
• Incentives to not make the purchase OR to buy a greener alternative (ie lower EP).
• An Effective Choice of alternative(s) for every purchase.
• No Perceived Unfairness if someone else makes a different choice.
A Unified Market Mechanism To Reward Consumers For Making The Green Choice And Lowering Carbon Emissions
Concept:- Based on national CO2 emissions targets, every citizen has the right to cause a certain amount (and no more) of CO2 emissions (their “allowance”). If they wish, they could cause fewer emissions and trade/sell part of their allowance to someone who wanted to emit more. Every year, an individual’s allowance decreases in line with the national target; even allowing for trading, overall emissions must decrease. If markets responded to this concept, then businesses would strive to produce low emissions goods and services in order to gain/retain market share and consumers would find ways to reduce emissions in order to trade their allowance for something they find more valuable.
The Market Mechanism is based on making entire economies totally responsive to this concept of allowing individuals to only buy that which their emissions allowance permits unless they buy more emissions allowance from those who choose to pollute significantly less.
• Governments create a unique “crypto-currency” denominated in grams CO2 (“CCreds”). Use current blockchain and payments technology to establish “banking”, accounts and related transactions.
• Governments calculate a “Personal Environmental Allowance” (PEA) for every eligible citizen based on the total annual target for national carbon emissions divided by the number of eligible citizens.
o PEA denominated in CCreds or g CO2
o Government will credit individual CCred accounts with their PEA once per year
o Every individual’s PEA will reduce year on year.
• Governments collect CCreds from all primary producers and importers of fossil fuels; the value collected to equal the carbon emissions (in g CO2) of the fuel/oils.
o In order for them to collect the CCreds they must surrender to the state, the businesses will be forced to dual price all their sales with both Environmental Price (CCreds) and cash price.
• All subsequent sales by all businesses in the onward supply chain will be dual priced as each business in the chain collects the CCreds it needs to pay its own suppliers. This “pull” effect will drag the new currency through the economy
o Government feeds the crypto-currency into the economy at one end (consumers) and requires primary producers to surrender them back at the other end.
• Consumers may trade unused CCreds for cash money in an open market place, increasing the incentive to “go green” whilst allowing those, who need/wish to emit more, to do so
• The Mechanism will bear down on carbon emissions by:-
o enabling consumers to make informed choices (the dual price – the Environmental Price Tag) o providing more low carbon choice as business seek to minimise the EP of their products in order to remain attractive
o reducing the available PEA every year
o incentives – making it very attractive to forgo some carbon intensive activities and selling the saved PEA; thus reducing perceived unfairness
• Requires minimal state expenditure or regulation and control because the EP behaves like “real-world currency”, making it almost impossible for business to evade the system. Allows natural human/consumer behaviour to flourish whilst pervading every economic interaction between organisations and individuals.
o If implemented in full and without caveat will possibly incentivise consumer behavioural change, with minimal resistance, quickly enough to prevent catastrophic climate change.