ideas

Carbon: Will That Be Credit or Debit?

Last week, the Guardian reported that the British government is creating a “radical plan to curb greenhouse gas emissions by rationing the carbon use of individuals.” The plan includes what sounds to be a debit card, in which every citizen is allocated an annual carbon allowance. Writes David Adam:

…Points would be deducted at point of sale for every purchase of non-renewable energy. People who did not use their full allocation, such as families who do not own a car, would be able to sell their surplus carbon points into a central bank.

High energy users could then buy them – motorists who had used their allocation would still be able to buy petrol, with the carbon points drawn from the bank and the cost added to their fuel bills. To reduce total UK emissions, the overall number of points would shrink each year.

When polluters–large-scale polluters–face regulations on emissions or effluent, they often try to pass any new compliance costs down to the consumers (raising electricity rates, for example). But a carbon card offers a different perspective on combating pollution, one that not only aims to decrease carbon emissions, but also emphasizes how individual choices can have a measurable effect on the environment.

The idea itself is not a new one (though the application is). The British government appears to be setting up a pollution trading regime for its citizens. Many companies engage in that now, trading things like sulfur dioxide allowances in the United States as part of the EPA’s “cap and trade” program, which sets a limit for emissions which are then divvied up into salable allowances–pollution credits. (One way to get those credits is by shutting down your coal-fired power plant or improving its emissions controls. You can then be awarded a number of allowances equivalent to what your old plant would have emitted; one allowance per ton, in the case of sulfur dioxide. You can then sell those credits–the reward for not polluting–to other polluters, such as older power plants who choose to pay for more allowances to keep polluting rather than upgrading their pollution controls. Or you can just buy a bunch of credits from the EPA with the aim of making money off of them in a kind of pollution commodities market, as Enron tried to do.)

Environmental groups like the Sierra Club oppose trading programs, contending that a market like this (it isn’t a truly “free” market by any stretch) isn’t the best solution. They point, for example, to the way trading creates “hotspots,” where pollution is concentrated because facilities buy more allowances, exposing area residents to more harmful emissions than if those plants were upgraded. (Sulfur dioxide, the pollutant that keeps popping up in this discussion, is an air toxic. It creates sulfurous and then sulfuric acid in the environment–remember acid rain?–and can cause a variety of respiratory ailments.) But the overall aim of a government-regulated trading regime is, ostensibly, to lower the cap and reduce the number of available allowances and total pollution.

The British carbon card plan does the same: sets allowances for carbon for each individual per year, with those allowances decreasing over time.

Could we do something like this in the United States? Technically, yes.

My California driver’s license has a magnetic strip. When I get carded at certain bars, the bouncer will swipe my card in a hand-held reader before letting me in (at Blue Light, for example, which, I believe, instituted the card-reader after getting busted for serving minors). According to a 2002 New York Times article by Jennifer 8. Lee, “Under current standards, the magnetic stripe and bar codes essentially contain the same information that is on the front of the driver’s licenses. In addition to name, address and birth date, the machine-readable data includes physical attributes like sex, height, weight, hair color, eye color and whether corrective lenses are required. Some states that put the driver’s Social Security number on the license also store it on the data strip.” The reporter notes that, “Already, about 40 states issue driver’s licenses with bar codes or magnetic stripes that carry standardized data, and most of the others plan to issue them within the next few years.”

However, that kind of technology may not be enough to track carbon allowance accounts if, say, a California driver happens to fill up at a Nevada gas station. Instead, a federal standard would be necessary to tap into a central database, identify individuals, and record their carbon usage. But wouldn’t that have the civil liberty and privacy advocates up in arms?

Of course. And, it turns out, they already are. A federal standard for identification is just over the horizon. In 2008, the Real ID Act takes effect. At that point, all drivers will have to get new licenses. To get them, each will need to provide at least three different documents–which must then be checked for veracity–to prove their identities. Proponents say the act will help in combating terrorism, and despite a great deal of opposition–many critics say this will effectively be a national identity card–it was slipped into a spending bill (tsunami relief, Iraq) and signed by the president last year. States can opt out of the program, but if they do, their citizens can’t use their license as identification for federal purposes, like entering government buildings or getting Social Security, or to get on airplanes.

An article by Kim Zetter in Wired last year says the card will contain standard identifying information, “[b]ut the Department of Homeland Security could add more data, such as digital fingerprints.”

Let’s forget, for a moment, the privacy issues associated with a program like this. (And those issues won’t go away, as business writer David Lazarus writes in his column today that the Department of Homeland Security’s “privacy czar” has no experience in that area. My colleague Phil, who alerted me to the Guardian article and once lived in London, says the British don’t get quite as worked up about the privacy issues when it comes to these things.) Look at the potential: a card that can be read nationwide, connected to a database, capable of holding any kind of information that its administrators wish. A carbon-concerned administration might decide that the card would be a convenient way for citizens to track their carbon use.

Technically, an American carbon allowance program could be just over the horizon. Politically, not as likely. But you never know. Function creep happens.

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One thought on “Carbon: Will That Be Credit or Debit?

  1. Christian says:

    Seems like an awareness campaign more than an efficient carbon-management strategy, which is good. How would personal carbon accounts be more/less effective/efficient than simple carbon taxes, i.e. something like a VAT as opposed to a flat tax? It’s quite socially progressive. I’m curious about the economics vs. the psychology, though…probably can get some analysis online. Gotta go water my houseplants so I can build my carbon credits 😉

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