The upcoming Copenhagen World Meet 2009 (COP15) is perhaps the most sought after global, environmental forum that is touted to lay down the blueprint for how world economies will individually deal with their carbon emission levels. There has been an increasing buzz about this event, most of it concentrated about how environmental strategies will be structured across nations with diverse economical and social challenges. In the rising crescendo of opinions leading up to Copenhagen 2009, one very important aspect has not been comprehensively presented — what are the core methodologies through which COP15 plans to exercise control over carbon emission levels. The following is a detailed account, explaining the concept of one such green functionality that has already gained a lot of momentum.
A number of theories have been put forth to address the issue of reducing carbon emissions in a more precise manner. It seems that merely tracking the carbon footprints and making people aware about the related drastic effects on the environment hasn’t been able to provide any impetus to the cause of adopting a greener lifestyle, i.e. from an overall, global perspective. Further, it is being increasingly realized that curbing the carbon emissions is no longer an exclusive environment-based requirement but a problem that is increasing its span in terms of upsetting regional climatic patterns, resulting in huge losses to human lives, thereby exerting an incredible pressure on many national economies. As a result, the idea of regulating carbon emission levels through government-controlled measures has been proposed. All the suggestions put forth in this niche can be broadly categorized into two groups — those related to Carbon Rationing and those that recommend Carbon Taxation.
Understanding Carbon Footprinting
It is vital to understand this carbon emission measurability to understand either of the two measures mentioned above. Those who aren't familiar with the concept of a carbon footprint can understand it as an approximation of the amount of carbon or its equivalent in the form of emissions associated with an entity. The source of carbon emissions, i.e. the entity, could be person, a mechanical device or an industrial activity.
Carbon Footprinting is done continuously by many of the leading organizations to help them decipher the strain they are exerting on the environment. Here, Footprints are measured across the employees, the workplace lighting system, the parking areas and even the flushing system of the toilets. There are many aspects across human life and manufacturing processes where carbon performance cannot be decoded at once, i.e. its needs to be continuously analyzed. Such entities and other such products that are vulnerable to generate substantial emissions throughout their lifecycle are put under sustained carbon footprinting in the form of a lifecycle carbon analysis or LCA.
What is Carbon Taxation?
It isn't difficult to comprehend that this concept is focused upon limiting the per capita carbon emission by introducing taxes across different levels of carbon-contributing activities. Through this method, being ecologically conscious would become an intrinsic part of maintaining the household budget. With carbon taxes in place, most folks would realize that graduating towards a lifestyle with lower carbon footprints isn't a choice but a sensible decision to ensure that their monthly budgets don’t go haywire — this is the biggest supporting argument put forth by those who endorse such taxes. This essentially means that each activity deemed to have a certain, basic level of carbon footprints would be taxed and ideally, the taxes should be uniform across all sectors — however, this is also the biggest argument against the viability of carbon taxation being accepted by people.
Issues with Carbon Taxation — it is nearly impossible to equalize the carbon footprinting benchmarks for manufacturers with that of average households. There would always be a tendency to provide some laxity to the manufacturing sector. Setting-up carbon–reducing processes on an industrial scale entails enormous expenditures and taxing it at par with a household could mean raising the price of goods beyond general acceptance. Even if this institutional difference is overcome, i.e. even if higher and stricter carbon taxes are accepted by the people, there are bound to be regional differences.
Nearly every industrialized nation has certain areas that haven’t been able to employ energy-efficient resources. If the tax slabs were to judge every regional manufacturing unit in a uniform manner, those that have traditionally lagged behind would be at a distinct disadvantage. Wind power or solar panel installations aren’t the cheapest to procure and for industrial application, they seem to be unreasonable for most small-to-mid-scale industries. Even if the local industries were ready to move ahead and adopt newer, greener technologies, they would need a substantial cash inflow, eventually raising their expectations towards receiving government-sponsored incentives. Further, some industries just cannot reduce their carbon footprints in a significant manner due to the inherent nature of the technologies they utilize. An easy-to-understand example in this regard is the aviation industry. There is a scarcity of economically feasible, aviation sector substitutes having appreciably low carbon emissions.
Does this mean that some sectors would enjoy a carbon conscience-free existence while others pay taxes? These arguments suggest that carbon taxing might seem like an effective solution but it could give rise to many complications.
Another major issue is the concept of universal carbon taxing. In contemporary trade trends, nations like China have been able to compete due to the substantially cheaper prices they offer. If carbon taxes are implemented universally, is their any guarantee that every nation would adhere to the policy of taxing even its most productive (and polluting) units? If the example of China is to be taken further — making the competing brands adhere strictly to carbon taxation would mean hiking the market price of their goods to some extent. If China’s assurance to impose carbon taxation cannot be guaranteed, wouldn’t its international trade prospects gain an undue advantage?
What is Carbon Rationing?
The other solution that has had some very positive responses is Carbon Rationing. It works in a unique manner wherein it is implemented by a central, authoritative figure like the central government which in turn makes the state governments responsible for ensuring that state populations are limited to their set of carbon quota through a carbon emission budget. This budget is prepared in a manner similar to a nation’s financial budget. This includes defining acceptable carbon emission levels for conventional household and industrial activities. Based upon these calculations, a carbon ration list is prepared. Every individual, each household and eventually any carbon-emitting entity is allotted carbon rations, i.e. the carbon emission extent that is permissible from the government’s perspective.
Carbon Trading with Carbon Credits: Brief Analysis
If anyone is able to save upon his carbon footprints, i.e. use less than the allocated carbon rations, carbon credit is earned. This carbon credit can be equated with having extra, shopping redemption points that are often offered on credit cards but with a vital difference — carbon credit can be sold among people and various sectors at pre-defined rates.
Why carbon credits make sense?
Even, if a manufacturer empties his carbon ration before the designated period and ends-up purchasing excessive amounts of carbon credits, the customer is not liable for the resulting damages. The eventual expenses (cost of production) would be obviously higher due to the carbon credits purchased but all of it cannot be passed on to the consumer, i.e. the manufacturer would be liable for his dependency on more than the allocated carbon ration and not the consumers.
Why is carbon rationing deemed more effective?
The simple and obvious answer lies in the fact that it provides a financial incentive in the form of allowing anyone with carbon credit to sell it in a government-controlled marketplace. Yes, this does imply that the government should establish lucrative rates but even if it doesn't, the concept is bound to become popular with the masses since it offers a basic level of profitability.
Understanding carbon trading through a household example — a domestic household that was struggling to buy an expensive solar installation would now have a monetary lure to do so. Why? The household would be able to create a lot of saleable carbon credit as its energy consumption and carbon emissions would decline by using solar energy instead of electrical energy. Most renewable energy installations are expensive but can be bought in a monthly installment plan. The saving made through selling carbon credit would be used to pay for the monthly installment expense incurred by installing the solar panels. The resultant situation catalyzed by carbon trading gives multifold advantages:
- The number of energy conservation/alternate energy installations purchased by the average consumer would rise, liberating the stagnant marketplace selling greener energy configurations that has largely had limited success
- Even if the manufacturers try to shift a certain (minimal) degree of expenses incurred due to purchasing carbon credits towards the consumer, it wouldn’t be an issue — since the consumer has already made a substantial saving through trading carbon credits, i.e. chances of a manufacturer backlash in terms of price-rise is negated
International Reaction is Divided — the Irish Government is heavily inclined towards imposing Carbon Taxation. Already, its Commission on Taxation has appealed to the government that taxation on all sources using carbon-heavy fuels should be introduced. Estimated earnings from this taxation are in the realm of €500 million for the 2009-10 fiscal. Further, the government wants that the carbon tax should be clearly indicated to the end user. France too seems to be mulling the effectivity of using CO2 taxes, particularly among the household users. President Sarkozy has indicated that the French citizens need to be sensitized to the cause of rising carbon emissions through introducing something more than customary taxation. The only substantial support in terms of a government endorsing carbon rationing has come from the UK government. UK’s Institute for Public Policy Research has clarified that it wants to set-up carbon rationing to address greenhouse gases being released through daily household activities like, fuel consumed in daily commuting. It has proposed to give the carbon credit system an overall functionality at par with swipe-based credit cards, to make the entire concept appear fashionable and thus, more convincing.
To get a more exhaustive idea about the political considerations involved in Carbon Rationing measures, browse through — http://www.e3g.org/index.php/programmes/climate-articles/copenhagen-2009-political-risks-briefing/. Those interested in Carbon Rationing initiatives, can browse through CRAG’s (Carbon Rationing Action Groups) official site.
Resources
http://www.carbonrationing.org.uk/wiki/what-is-carbon-rationing?
http://greeninc.blogs.nytimes.com/2009/09/07/france-mulls-co2-taxes-on-citizens/
http://www.infowars.com/irish-government-moves-to-impose-carbon-tax/
http://www.carbonequity.info/PDFs/defranov06.pdf
http://www.infowars.com/irish-government-moves-to-impose-carbon-tax/
http://news.bbc.co.uk/2/hi/8248392.stm
http://uk.news.yahoo.com/4/20090909/tuk-carbon-rationing-proposed-dba1618.html
DoBeGreen
we share environmental information





