Tradable Energy Quotas: A policy framework for peak oil and climate change
Posted by Chris Vernon on January 24, 2011 - 10:51am
| This is a guest post by Shaun Chamberlin. Shaun is the co-author of the report described below, as well as the author of The Transition Timeline, and founder of Dark Optimism.
On the 18th January 2011, the UK’s All Party Parliamentary Group on Peak Oil (APPGOPO) launched their report into the TEQs (Tradable Energy Quotas) system of energy rationing. Speakers included two Members of Parliament – John Hemming MP, Chair of APPGOPO and Caroline Lucas MP, author of the 2006 peak oil report Fuelling a Fuel Crisis. Also speaking were Jeremy Leggett, convenor of the UK Industry Taskforce on Peak Oil and Energy Security and Shaun Chamberlin, co-author of the new report. Copies of the report, answers to Frequently Asked Questions, video footage of the launch event and links to the media coverage can be found at: http://www.teqs.net/report/ |
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John Hemming MP, Chair of APPGOPO: “I believe TEQs provide the fairest and most productive way to deal with the oil crisis and to simultaneously guarantee reductions in fossil fuel use to meet climate change targets” (the UK Climate Change Act mandates 80% emissions cuts by 2050).
Political progress
APPGOPO’s endorsement of TEQs comes at an interesting time in the rationing scheme’s progress towards political acceptability. The inventor of TEQs, Dr. David Fleming (who passed away in November 2010), was a close friend of ASPO’s Colin Campbell and one of the early whistleblowers on peak oil, and designed TEQs explicitly to address peak oil as well as climate change. He first published on the scheme in 1996, but its profile has grown in tandem with that of the challenges it was designed to address.
TEQs first received a Ten Minute Rule Bill reading at Parliament in 2004, before extensive interest from research centres led to a Government-funded scoping study in 2006. This reached positive conclusions, and was followed by expressions of interest from successive Secretaries of State for the Environment.
Accordingly, the Government commissioned a pre-feasibility study into the scheme, which concluded in May 2008. The headline finding of this was that TEQs “has potential to engage individuals in taking action to combat climate change, but is essentially ahead of its time and expected costs for implementation are high… The Government remains interested in the concept and, although it will not be continuing its research programme at this stage, it will monitor the wealth of research focusing on this area and may introduce (TEQs) if the value of savings and cost implications change”.
The new APPGOPO report pulls together an impressive range of research to demonstrate conclusively that this condition has now been met, with bodies such as the Institute for Public Policy Research, the Lean Economy Connection, the Centre for Sustainable Energy and the UK Parliament’s own Environmental Audit Committee all having criticised the pre-feasibility study’s methodology and the decision to delay further moves towards implementation. One of the key criticisms is that the pre-feasibility study’s cost-benefit analysis was overly focused on carbon emissions, and entirely failed to take into account the benefits of ensuring fair access to energy.
More detail on the political progress to date is in Chapter 6 of the report, and links to the various reports and articles examining TEQs have been collected on the TEQs website here, including details of the world's first tradable carbon rationing scheme in a 'closed system' island environment, being run by Australia's Southern Cross University and starting in 2011.
Caroline Lucas MP, Leader of the Green Party of England and Wales, and author of Fuelling a Food Crisis: “The TEQs scheme would guarantee that the UK’s targeted carbon reductions are actually achieved, while ensuring fair shares of available energy”.
How TEQs would work
So how does TEQs work, and how does it deal with the challenges that all rationing systems face?
TEQs is an energy rationing scheme designed to cover a nation’s whole economy, within which individual adults would receive an equal per capita Entitlement of electronic TEQs units, free-of-charge. Organisations, the government and all other energy users would have to buy their units at a Tender, or auction. The number of units issued into the economy via the weekly Entitlement and Tender would be determined by either the availability of energy resources or the national carbon budget – whichever represents the tighter constraint on the national economy at any given time.
The weekly auction would also generate a price for TEQs units, and all buying and selling of units within the nation would take place at that price (which would, of course, fluctuate in line with demand).
The purchase of any fuel or electricity within the national economy would require the surrender of TEQs units, alongside the usual monetary payment. Each TEQs unit would allow for the purchase of a set quantity of fuel or electricity. If the scheme were being used to address energy resource shortages, this quantity would simply be a proportion of the total resource available. If used to implement a carbon budget, it would be dependent on the lifecycle emissions associated with that energy source.
The TEQs design is based on the insight that all emissions from energy use within a national economy can be measured simply and efficiently by assigning a ‘carbon rating’ (e.g. 0.2 units per kWh, or 2.3 units per litre) to fuels and electricity, based on the quantity of carbon dioxide and other greenhouse gases generated by their production and use. Once this is established, the total emissions attributable to a given purchase becomes implicit in the quantities listed as usual on invoices, utility bills and till receipts.
The TEQs system simply uses this information, making it unnecessary to measure carbon emissions directly, or to grapple with the endless costs, complexities and compromises of embodied emissions calculations and carbon labelling. This ‘carbon rating’ for fuels and energy also provides a competitive advantage to retailers of more efficiently or renewably generated energy, who would not have to require their customers to surrender so
many units.
The purchase of goods other than energy would not require the surrender of TEQs units, since the producers of those goods would have already surrendered units for the energy used in the production of the goods. Producers would then pass on the cost of buying these units to consumers, who would simply find that certain goods (those produced in a more energy-intensive manner) cost more.
Lord Smith of Finsbury, Chairman of the UK Environment Agency: “Rationing is the fairest and most effective way of meeting Britain’s legally binding targets for cutting greenhouse gas emissions”.
Rationing? Really?
Rationing has acquired a bad name with the public due to its obvious association with shortage, yet it is clearly a response to shortage, not the cause of it. It might be argued that the word rationing contains two intertwined meanings. The first is limits to what people are allowed to consume, the second is guaranteed minimum shares for all. The first of these can cause resentment, but in times of shortage populations cry out for the second.
TEQs are rationing in the second sense as they guarantee an Entitlement to minimum shares for all, but they are not rationing in the first sense as they allow individuals to exceed their basic Entitlement (if they are willing to pay those who choose not to for the privilege). The purpose of TEQs is not to limit the consumption of individuals per se, but rather to share out fairly the shrinking energy budget required by national circumstances, and to allow maximum freedom of choice within that.
In the absence of such a framework, resources in short supply would simply go to the richest (“rationing by price”), strongest or quickest, creating massive inequity and attendant resentment. With TEQs everyone is guaranteed a basic Entitlement.
The reasons for making TEQs units tradable are twofold. Firstly, prohibiting the exchange of rations in the past has always led to substantial black market activity, unnecessarily criminalising otherwise law-abiding individuals. Secondly, energy demand differs from food demand (the most commonly quoted example of rationing, at least here in the UK); while we all require comparable amounts of food, certain vocations intrinsically require more energy. For this reason a non-tradable equal Entitlement would simply destroy many professions.
With tradable rations those who live within their TEQs Entitlement can sell their surplus onto the market, rewarding their energy-thrift and increasing the supply for those who want or need to purchase additional units. Since the poor use less energy than the rich, the scheme would also be redistributive.
The actual use of TEQs units would be very straightforward. As units are only required for direct purchases of energy, utility bills and fuel purchases are likely to be most people’s main direct engagement with the scheme. Utility bills are already easily paid by direct debit, and the TEQs cost of fuel purchases could either be paid together with the cash cost via a credit card linked to an individual’s TEQs account, or a separate TEQs card could be carried and swiped alongside the money transaction. If an individual had no card and needed to buy additional TEQs units the cost of these (at the current national price) would simply be added to their bill at the point of energy purchase.
Jeremy Leggett, convenor of the UK Industry Taskforce on Peak Oil and Energy Security: “What I like about TEQs is the fairness of it. When the energy crunch hits us, it will behove government and industry to ensure equitable access to available energy, within a national budget. TEQs is a route to synergisitic efforts of the kind we will need if we are to mobilise the infrastructure of a zero-carbon future fast, under pressure. It would increase the chances of working our way through the grim times to renaissance-through-resilience.”
Popular engagement
TEQs would have a price-balancing effect that would benefit the planning of energy consumers. The price of energy and the price of TEQs units will tend to move in opposite directions. When oil prices increase, this will reduce the demand for oil (at least to some degree), therefore reducing the demand for units and thus their price, so that the net price paid by consumers (oil + units) is more stable than the price of either oil or units alone.
Since the scheme covers the entire national economy, the variations in the national price of TEQs units would be of interest to all. And since lower demand means lower prices the population would be encouraged not only to reduce their own energy use, but also to work with other individuals and organisations and urge them to do so. Additionally, the substantial income from the weekly auction of units to organisations would be accessible to communities to fund the building of new local infrastructure or otherwise support their energy transition.
It would be transparently in the collective interest to work together in finding ingenious ways to increase low-carbon energy supplies, reduce demand and move towards the shared goal of living happily within our energy and emissions constraints, with the TEQs price providing a clear indicator of how well the nation is doing.
This cooperation is essential, since the rapid transformation in infrastructures necessitated by peak oil and climate change requires collaboration between the different sectors of society, united in a single scheme easily understood by all. It is a critical feature of TEQs that it encourages constructive interaction between households, businesses, local authorities, transport providers, national government, and so on. In short, the scheme is explicitly designed to stimulate common purpose in a nation.
The public may often be tempted to hold fossil-fuel companies and governments responsible for all our ills, but it must be recognised that even if these bodies wished to, they could not solve our energy problems without the engagement of the wider public. Our individual and community lifestyles need transformation too, and this cannot be done for us.
Jonathon Porritt, Founder Director, Forum for the Future: “This eloquently presented proposal merits very serious consideration by all political parties. There remains an undeniable gap between the current policy mix and what we actually need to do urgently both to reduce emissions of greenhouse gases and to avoid the potentially devastating consequences of declining fossil fuels. Tradable Energy Quotas offer significant policy advantages in addressing both those pressing imperatives”.
Policy advantages
As is widely recognised, we currently have a contradiction at the heart of our energy/climate policy, with proposals for emissions caps to deal with climate change sitting alongside support for coal, tar sands and the like to address our energy challenges. It is increasingly clear that the common solution is to reduce fossil fuel usage, but the key approach to this thus far has been to focus on raising the carbon price.
Unsurprisingly, it has been hard to gain popular support for increasing the cost of fossil fuels, since people rightly perceive that this increases their cost of living. And this approach also leads us towards the self-contradictory pursuit of trying to raise the carbon price while striving to keep energy prices low.
TEQs offer a fundamentally different approach. Rather than raising the price of carbon/energy and hoping that this reduces demand sufficiently, TEQs start from a strict quantity-based budget, and allow price to find its level in response to that. This restores straightforward motivation for individuals, organisations and nations. Once you guarantee people a fair Entitlement, in line with a declining cap, society can then collectively focus its attention on finding ways to thrive on reduced demand, and thus keep the price of energy/carbon as low as possible. This is a simply-understood task that everyone can buy into with enthusiasm.
TEQs might also make a difference at the international level, where agreements are proving so elusive. Introducing national TEQs schemes would allow leaders to have confidence that the national emissions reductions they are discussing will actually happen, emboldening them to throw down the powerful challenge: “we are acting, so must you”.
* * *
More detail on every aspect of TEQs, the scheme’s fit with existing UK and European policies and the energy and climate challenges it is designed to address can be found in the APPGOPO report, with Chapter 2 focused entirely on TEQs’ role in assuring entitlements to energy.
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David Fleming's obituary in The Times can be read here.
Here's a review of the media coverage from the launch:
Fuel Rationing in U.K. Needed by 2020 to Cut CO2 Emissions, Lawmakers Say – Bloomberg News, 18 January
Brits Ponder Fuel Rationing – Time Magazine, 18 January
Quotas ‘would tackle fuel poverty’ – UK Press Association, 18 January
British lawmakers propose energy rationing – Financial Times – 18 January
UK could need fuel rationing before 2020, warns report – Energy Efficiency News – 18 January
TEQ backers predict fuel and energy rationing by 2020 – Edie.net- 18 January
Report calls for energy rationing within the decade – GreenWise Business – 18 January
TEQs: A policy framework for peak oil and climate change – Energy Bulletin – 18 January
Interview on “Wake Up To Money” show – BBC Radio 5 Live, 18 January (from 27m 30 – available until January 25)
A fully updated list of the ongoing media coverage is here:
http://teqs.net/report/media-coverage-and-launch-event/
(including audio and video clips)
So the "Global Warming" continually promoted by the Establishment and Media may ultimately be used a means to ration depleting resources... gee, who would have ever guessed?
With the greatest respect to the late David Flemming, the notion that the policy response required for peak oil and climate change are one and the same is wrong. There is an area of overlap in that deployment of sensible renewable energy and nuclear power can boost indigenous production of low carbon primary energy. But there it stops. Accumulation of CO2 in the atmosphere is driven by increasing amounts of combustion of FF. The threat from peak oil is the opposite, i.e declining access to cheap FF energy.
My general response to this post is in three parts:
The only way to reduce the ultimate emissions from FF is to ban their production and combustion.
Hi Euan,
I seldom fail to understand your arguments,which generally impress me as being entirely reasonable;but today I am either not getting it, or else perhaps you might need to expand your comments a bit if others are in my position, and not connecting all the dots properly.
In your part two, you seem to be saying that TEQ can or will promote more or greater extraction and consumption of fossil fuels than would otherwise occur;I fail to see why this should be the case-unless perhaps TEQ's result in a more vigorous economy; imo, it's a foregone conclusion that barring a political miracle, fossil fuel consumption will proceed at near the economically possible maximum pace the economy can support, until such time that physical realities impose defacto rationing.I can't see anything likely to actually ever be implemented on the political front appreciably slowing this process down, although somepolitically possible things might speed it up.
In respect to your number three, as it is written, I see nothing to disagree with, if I read it literally.A unilateral UK TEQ program designed primarily to lower co2 emissions would undoubtedly "quite simply mad"-very well put, and eloquently phrased.
But a TEQ system , if properly designed, without too much emphasis on co2, might be a very good thing for the UK economy, in that it would stimulate energy efficiency inside the UK.
Furthermore, at this time when it seems to be another foregone conclusion that the economy going to be is tough for every body except fat cat bankers, apparently, for the forseeable future, it is going to be ESPECIALLY tough for the poor-whose ranks are expanding.
Such a system of energy rationing can potentially go a very long way toward preventing social turmoil, as well as building a sense of national solidarity.
If I were a young UK man with a kid or two two support, with no car, no job, and no prospects, I would very likely be glad to sell my quota in order to buy food or pay rent;without such an option, I might take to tossing large stones off overpasses at passing high price automobiles-just to relieve the boredom , not out of any sense of injustice or anything so shocking as all that. ;)
As a properly conditioned serf , the idea of actual rebellion would never enter my head, of course.;)
Mac - many may find point two difficult to conceptualise or agree with.
If we start with the easy part - high energy prices promote energy efficiency. Easy to see with high gasoline prices folks buying more fuel efficient cars and insulating their homes. So far so good I hope.
If we turn this on its head then we would conclude that simply promoting energy efficiency may lead to higher energy prices. This is also true but less easy to grasp. But imagine two families totally equal in every way apart from the type of house they live in. One living in small super modern house, the other in sprawling drafty mansion. The power bills of the former will be much lower and so they are more shielded from higher prices which they can more easily afford to pay than the latter.
The last part is more tricky considering TEQs. If energy were rationed this would most certainly promote higher efficiency but would it promote higher prices. Well you are creating artificial scarcity and I'd expect prices to be bid up at auctions. If energy was rationed everywhere then this would result in lower consumption and this would make resources last longer - this is the key bit.. This is very good for peak oil concerned, but the resources will ultimately be produced. If you accept that with time, energy efficiency will lead to higher price then a greater proportion of the resource base will get produced too. My understanding is that ultimate production is the key to eventual CO2 concentration and not the rate of production. So all these short term targets are meaningless if the oil and coal gets produced none the less in 70 years time.
As pointed out, sensible renewables and nuclear serve the ends of both climate and energy concerns and so if everyone converted to carbon free energy both issues would be addressed - but this has nothing to do with TEQs.
As also pointed out, it could be sensible for the UK to adopt TEQs to address the energy crisis that is consuming us. But utterly daft to adopt them to unilaterally tackle CO2 emissions. I think it is a great pity that those who have taken this idea to Parliament have failed to recognise this folly.
The purpose of TEQs is to reduce carbon emissions and TEQ allocations are to be based on the carbon content of the energy source. That would imply reducing the total amount of the allocations with each succeeding year. Since we think Peak Oil is an immediate problem, TEQs would serve to address the impending shortage in the world market place for oil. One can envision that the BAU response to Peak Oil would most likely be a shift in implied demand to the energy available in other fossil fuels, such as coal and tar sands.
The TEQ mechanism would limit the amount of energy available to the consumer from those sources and encourage the various alternatives which are not price competitive because the renewable alternatives must also provide some mechanism for storage of that energy, an aspect which is already available from fossil sources. The alternative is to do nothing, in which event, one might expect people to eventually burn everything which can be obtained, the result which would cause the fastest possible increase in CO2. If you are seriously concerned about increasing CO2, what's your alternative plan???
E. Swanson
TEQs could actually be used either to ration carbon emissions as Black_Dog says, or to ration oil, gas, electricity or other energy sources in times of shortage, as Euan highlights. Hence the interest of the All Party Parliamentary Group on Peak Oil (as it happens I just now heard an interview with the Chairman, John Hemming MP, discussing the scheme on BBC Radio 2).
Chapter 1 of the report details how it would apply to carbon, Chapter 2 details how it would apply to energy rationing. Once the scheme is implemented, any changeover would be straightforward. The two could even run concurrently without any difficulty, meaning there is great flexibility in the scheme for addressing national circumstances as they emerge, or indeed changing opinions on the severity of either challenge.
Shaun Chamberlin
www.teqs.net/report
Shaun, your whole report is based on an untrue and quite probably dishonest premise, namely that Nuclear energy cannot bridge the energy gap. You state in the report,
In fact a recent series of reports from MIT (for example, see http://web.mit.edu/mitei/docs/spotlights/nuclear-fuel-cycle-nfc-119.pdf) indicate that there is no short term uranium shortage, and that advanced nuclear technology can burn the 99% of uranium that is not burned in conventional reactors. How long will the uranium last according to MIT? Thousands of years, and this does not include the huge global stock of Thorium. Your reports claim of an impending uranium shortage references a tract written by the late David Fleming and edited by you. Yet when that tract was discussed on The Oil Drum nearly three years ago. it received dozens of harsh criticisms. (see http://europe.theoildrum.com/node/3450#comments) Fleming offered only one comment to those criticisms, a virtual acknowledgement that he could not contest the discrediting of his thesis. Honesty should have lead Fleming and you to ignore the discredited pamphlet, and its refuted thesis. But it typical Green fashion, you continue to refer to the thesis that Fleming could not defend.
I have an enlarged discussion of my critique of your report on my blog, Nuclear Green. (see http://nucleargreen.blogspot.com/2011/01/will-united-kingdom-need-green-...)
I conclude
I would be interested in your comments, if any, eithere on Nuclear Green or here.
It comes as no surprise to me that Shaun Chamberlin has ducked my challenge and has not answered my criticisms. This is typical Green behavior. Greens seem to believe that they, and they alone, know what the truth is, and that they neither have to listen to critics, nor answer them. Mr. Chamberlin believes that his pretensions to be a philosopher make him more intelligent and better informed, and therefor answering criticisms, or actually demonstrating that what he says is true, is beneath the dignity of a brilliant person like Shaun Chamberlin.
Charles
There are laws against MP misleading Parliament. I will be asking questions about appgopo, if they have been making false statements to scare people to push this though, I will make sure these facts are highlighted.
As I said higher VED taxes on cars work, if the U.S. had our taxs on cars and petrol they would use about 8 million Barrels a day. That would delay peak oil effect for 10 years.
Increased subsidy on eletric cars and much more investment in electric public transport, power produced mainly with nuclear and some wind and pumped storage.
The problem sorted.
Charles,
As has been pointed out by myself and others in the comments here, my late colleague's opinions on nuclear energy (or indeed mine or anybody else's) are irrelevant. Regardless of what anyone thinks about it, any energy source that provides electricity with a low carbon footprint (over the entire lifecycle) will be supported by TEQs.
I do believe that the UK faces energy supply challenges over the coming decades, especially as we strive to achieve our legally binding emissions reductions targets under the 2008 Climate Change Act. If you feel that nuclear energy renders this basic assertion untrue, then we do indeed hold very different viewpoints. But even if that is the case, TEQs would still only serve to support and incentivise the development and rapid implementation of any low-carbon, high-energy-output power plants.
As for your comment that I have "ducked your challenge" on the basis of not replying to you within 24 hours, and your unwarranted assertions about my character and motivations - apparently based entirely on the fact that I once studied philosophy at university - a quick glance at the amount of time I have spent responding to the various comments on my article here might have been a better guide to my willingness to discuss critiques of TEQs.
Can the UK actually afford to import most of our energy needs? ... IMO, if not, then we will definitely need rationing of all energy, not just FF.
What are we going to sell to energy exporters in order to pay for our imports ... I suspect we as a nation are close to our borrowing limit!
We need a scheme where everybody gets some affordable energy, since we all need (even the poorest) a minimum amount for cooking etc ... but above that minimum level the price should rise exponentially ... the more you use the (much) less affordable it becomes. I'm not sure the TEQs will do this ... and is the opposite of what we currently have for many energy sources, the more you use the cheaper it gets!
"If I were a young UK man with a kid or two two support, with no car, no job, and no prospects, I would very likely be glad to sell my quota in order to buy food or pay rent;without such an option, I might take to tossing large stones off overpasses at passing high price automobiles-just to relieve the boredom...."
Why not do both?
No it is perfectly right, both require less consumption of fossile fuel, the only area where they defer is with respect to things like CCS (carbon capture and storage) which are in general false solutions or bad good ideas. If we take the CCS example, it is estimated that the loss in energy production efficiency would be at least 30 or 40%, to capture, transport, and pump the CO2 under the carpet, so for every two moutain tops blown up in the Appalaches, you would blow up a third one in order to be able to put a "green" sticker on the energy produced from the first two (and not even talking about the other pollution aspects besides the CO2 one, augmented by so much). And this being heavy industry tons related energy intensive processes, no progress Moore's law kind to be expected there (always take so much energy to move a ton, or possible to know theoritical maximum levels of efficiency for the whole process).
So things like CCS are really an extension of the "BAU mindset": lets use more energy to clean up the mess in order to be able to keep on using as much energy or even more, meanwhile accelerating resource consumption and the speed towards the resource crash.
But otherwise mitigation strategies for PO and AGW are the same : burn less fossile fuel and try to transform the infrastructure in the meantime to reach something else providing more or less the same function (insulated houses instead or not, electrical transport, etc)
However personnally I don't like this TEQ schema, I think a flat tax as proposed by James Hansen which revenues are 100% (or a high part) directly redistributed on an equal share basis per citizen is much better :
- it is much simpler (and cheaper) to implement
- it does not require tracking every citizens consumption and moves (major point here, orwell isn't far already)
- it can lead to exactly the same thing economically by not favouring the rich over the poors
- it doesn't create all these trading jobs, markets and associated casino playing
- it is much closer to the product getting scarcer and more expensive
I did a post a few years back outlining why I prefer the TEQs approach to Cap and Dividend (which is the scheme James Hansen has come to endorse, although he uses various names for it).
I can see the arguments on both sides, but I do firmly come down on the side of TEQs. One reason - though not the most fundamental - being that Cap and Dividend doesn't address the issue of ensuring fair access to energy at times of shortage:
http://www.darkoptimism.org/2008/06/08/teqs-downstream-vs-cap-and-divide...
"One reason - though not the most fundamental - being that Cap and Dividend doesn't address the issue of ensuring fair access to energy at times of shortage:"
And what is the most fundamental then ?
As to fair access, don't see the point really.
There are enough financial people and markets as it is ! (and the EU cap and trade market is a failure, enough of these "economist tricks", point is to consume less, "tradable" energy "quotas" ... just to set up an official black market, enough of this really)
to quote Hansen :
This, plus the key point of much less information per citizen required to run the tax compared to TEQ and associated markets, clearly put myself in the flat tax camp, that's for sure.
Besides most of the rich/poor mitigation should be through the income tax.
With all due respect to Dr. Hansen, he is only thinking of the problem of climate change. Once Peak Oil kicks in, the market for oil will automatically tend to become restricted. The oil market is highly inelastic, in an economic sense, thus a shortage will result in a steep price increase. That would lead to higher prices and also a transition toward other sources. Cap and rebate would only add to the speed of the price increase and instill an inflationary mind set in the public which could easily spiral out of control. The cost of all alternatives would also increase along with rising material and wage expenses. Thus, to tax necessary to cause an ever more limited emission of CO2 would necessarily spiral upwards as well and at a faster rate than inflation, which would force governments to clamp down with high interest rates. I don't see a way out of that situation and thus I think a rationing scheme such as TEQs is the better alternative...
E. Swanson
Yeah, one thing for sure, if the US didn't stay with its totally ridiculous gas tax level, they (and others) would not be in such a mess, adding all the subsidies on oil which the US military truly represents.
Sorry but all this economic reasoning is just that, economic reasoning without any model behind, taxes on raw materials do work to limit their use, and it is the way to go if any.
The gas tax in Europe have been set up after the first oil shock, nothing to do with CO2, the cars fleet and transport infrastructure is way more efficient, and the fossile fuel usage per capita much lower, they clearly should be increased, the fact for instance that the current level of tax on jet fuel is 0 is a scandal. Much more urgent to do that than these tradable quota, "tradable" rendering them not quota anyway, but creating an official black market and associated brokers, ridiculous.
Rationing will come in time of war, and indeed it will probably come.
A black market is an illegal market, which is what non-tradable rationing has always brought about. These too have their brokers - either organised crime or ordinary citizens who are criminalised for their reasonable desire to exchange. Providing an organised mechanism for legal trading seems a sensible alternative.
I wonder whether people will discount the tax in their heads because they know that a part or all of the increased tax will be compensated later by a tax rebate. Yes, they can come out ahead if they decrease their energy usage. On the other hand, they can do that now. If they just focus on the increase in price, they will decrease their usage in relation to their personal elasticity of demand. A certain percentage have a very low elasticity and will respond in a very small way if at all. Frankly, I think the cap and dividend has too many uncertainties.
The bottom line is: do we have any empirical evidence that actually tells us what behavior will occur if people know they are being compensated for the higher tax?
We have had a very significant run up in gas prices in the U.S. in the last six months. Do we see a decrease in usage commensurate with the decrease? Does anyone really know how high the tax needs to be to achieve any given X decrease in usage?
I come down on the side of TEQs because they provide more certainty than a tax scheme. Further, one tax increase won't be sufficient. It will have to be raised again and again in order to achieve continuing decreases in energy usage. We can't even raise taxes once in this country (U.S.), much less on a continuing basis.
A carbon tax with 100% return to the consumer/citizens will do nothing to reduce either fossil fuel consumption or CO2 emissions. Money in a consumers pocket will be used to buy stuff, stuff that either is fossil fuel (petrol, gas, electricity) or stuff that was made with thes inputs. A carbon tax that redistributes just moves the consumption points and all prices by the same increment as the tax.
The only way for a carbon tax to actually reduce fossil fuel consumption is for the government to confiscate the money generated and cancel it out of the economy. And that will never, ever, ever happen.
Don't know if it's 100%, but there is a problem in rebating money back to the citizen. This will reduce their incentive to cut energy usage because they know they are getting a credit.
A carbon tax with 100% return to the consumer/citizens will do nothing to reduce either fossil fuel consumption or CO2 emissions. Money in a consumers pocket will be used to buy stuff, stuff that either is fossil fuel (petrol, gas, electricity) or stuff that was made with thes inputs.
This would be true if there were only one consumer on Earth, and if energy were the only thing he could spend money on.
But a carbon tax with flat redistribution penalizes carbon hogs and rewards carbon misers. This forces the hogs to change their behavior, but extra cash in the pockets of the misers is *not* going to turn them into carbon hogs any more than giving cash to a teetotaler is going to turn him into an alcoholic.
"...but extra cash in the pockets of the misers is *not* going to turn them into carbon hogs"
That would be true if the cash stayed in their pockets or under their beds, effectiveley removing it from the economy. If however, they "invest" that cash, to create other energy consuming businesses, who in turn rely on consumers to buy their products, then the overall consumption of energy derived mainly from fossil fuels.
In effect, energy is the only thing you spend your money on as every transaction for goods and sevices exchanged represents an expenditure of energy all the way along the supply chain.
That would be true if the cash stayed in their pockets or under their beds, effectiveley removing it from the economy. If however, they "invest" that cash, to create other energy consuming businesses, who in turn rely on consumers to buy their products, then the overall consumption of energy derived mainly from fossil fuels.
Not all activities, goods and services have the same carbon intensity in their supply chain. Carbon taxes change the relative price of high-carbon vs low-carbon purchases throughout the economy, not just at the gas station. When Amy Carbonmiser goes out to spend her extra cash, the high cost of high-intrinsic-carbon goods will factor into her buying decisions.
Energy taxes work on the margin. They don't reduce the amount of money available to spend on energy; rather, they change the calculus of side-by-side comparisons.
I totally agree. Having a carbon or energy tax signals to buyers to make better buying decisions. However if governments then spnd this money back into the economy, even if it is on low carbon intensity products, the net result is going to be just as much, if not more demand for energy services from the government induced stimulus spending.
It is the feedback mechanism into the economy that needs close scrutiny. Focusing only on the behaviour change of individual consumers while ignoring the consumptive nature of government leaves too much uncertainty as to how effective a carbon tax would be, in the absence of a comprehensive strategy to decarbonise.
Government would need to be very careful with how it spent the revenue of a carbon tax, and even if a transition to low carbon economy was politically acceptable and supported by all sectors of society, the short to medium term result may have to include an increase in fossil fuel use, to build out the infrastructure that allows individuals to really move to a low carbon lifestyle. Given the current economic paradigm of consumption growth as teh holy grail to social welfare, I just don't trust governments to have that sort of foresight or competence to execute through the various electoral cycles.
You people when talking "the economy", always tend to forget the difference between CAPEX and OPEX, or about building some infrastructure (also perishable but not same timing), and the fuel needed to run this infrastructure or perishable products, in other words you can spend the same amount of money on insulation or on more heating fuel, not the same. Partly directly redistributed tax push to CAPEX at all levels, what is needed.
CAPEX, OPEX blah, blah, blah. Just words designed by economiststo try to mystify everyone else. Attempting to complicate the argument doesn't add much here really.
Trade in energy quota will require some accounting. We would need to have the ID system we always should have had for verification of who is dealing with who. I have always advocated for a state of the art ID system as a requirement for all citizens. We will need an interface of energy purchase, probably a credit card, then this coupled to the quota market. I assume the pool of quota to be put up or sold to the market would be complex enough to have a reserve so a seller could hold quota, as it is an individually held commodity item. For the system to work, as in my fishery quota system, (Market Quota System: The Ultimate in Public Resource Management. www.environmentalfisherman.com) I would suggest the quota have a built in depreciation over time, the meaning of this is to keep the market free of chaos, or pure. So perhaps after a year the value of quota held could lose ten percent per quarter, "use it or lose it".
This all does not sound un-doable and if the Brits try it out and it works to reform energy systems, over there, then maybe we could give it a try. I think though it may be cumbersome. I worry about food stamp style corruption, and in general don't like pandering to egalitarian based systems, instead favoring simple equal opportunity. I don't like redistribution of the wealth for it's own sake, and this seems to be one third just that.
Probably I would favor instead a Market Quota System for Energy Systems use and development. Essentially, the MQS favors simply taxing what we don't like, and then using that tax money for the subsidy of what we do like. In the case of energy system we don't have a port to put into though. I recommend both the Track-Pipe system, and the Market Quota System. Our day of reckoning for holding true to the fossil fuels is on it's way. We don't have a newly designed sustainable and comprehensive energy system to build, but instead are dithering. It's too bad we can't settle on some other central form of a workable energy system, and this is not to our credit.
I would be comfortable with policy in which we were taxed for our energy consumption, perhaps in conjunction with such a system as the tradable energy quotas, perhaps not, but the point would be that the tax would go to public infrastructure.
Below trying to compare both schema, TEQ and redistributed taxes, in a very simplistic way :
let's suppose 1000 citizens, 100 rich 900 poors
current consumption :
rich citizen 30 eu (energy unit) per month
poor citizen 10 eu per month
so for the country 12000 eu per month
let's suppose the "international market price" of the eu is ep (energy price) and that the energy is sold at market price at the beginning
if the quota system starts at current consumption :
12000 eu delivered evenly so 12 teq per citizen/month
(the poor can sell 2 teq each month, the rich needs to buy 18 if he wants same consumption as before)
teq price determined by the market, when and where do you buy them ? a huge bureaucracy and sytem development to manage the thing, potential cheating stealing, hacking (EU cap and trade just has been stoped for carbon credit stolen by hacking)
redistributed tax system
same starting point
let's say the tax, wich has to be volume based (and not price percentage) is set up at 0.5 ep per eu at the starting point
energy bill for the poor : before 10ep , now 15ep
energy bill for the rich : before 30ep , now 45ep
tax revenu : 6000ep redistributed evenly per citizen so 6ep redistributed per citizen
actual energy bill for the poor : 9ep
actual energy bill for the rich : 39ep
Clearly considering the redistributed tax system (doesn't need to be 100%) much higher simplicity, and same effect with repect rich/poor, I think it should be highly prefered, maintaining a very clear price signal for the products. You could say it doesn't integrate the "cap" part, but how will this "cap" part be evaluated ? with "economists evaluation" ? Come on ..and the TEQ price crashing on recession (as happened with EU carbon credits) On the other hand the level of the gas pedal can be pushed regarding the tax level, residstibutive effect the same whatever the state of the economy.
Of course all this should most probably be simulated on a more real life case, but don't understand why Hansen's proposal doesn't get more traction
Do we really want to create more "financial trading jobs" in this transition ? where actual work is going to get more and more important as we go down the slope ? Isn't it time to favor simplicity over complexity ? And perhaps more importantly, having the less information possible required per citizen to run a system as a top choice criteria ?
In the U.S., we have food stamps which are provided through a debit card. Stonleigh stated on TAE that as much as 30% of the population are using some food stamps to provide for part of their food needs. This means that over 100 million people are provided for in some way by this program.
Could not this be an argument that we already have systems in place that appear to be functioning fine which are similar to what is being proposed here. In essence, these electronic food stamps are a kind of quota on food and are provided to provide some assistance to the poor, those people who otherwise would not be able to obtain sufficient food for themselves. The only essential difference between this food program and a TEQ program is that these "stamps" are not tradeable. Since they are electronic, their is probably less fraud than under the old system of paper stamps.
The issue of financial firms being involved in this program occurs in the food stamp system. There is no inherent reason, however, why financial firms need to be involved in this program other than the possibly corrupt nature of those states who choose to use firms like Goldman Sachs over state employees.
As far as that goes, the IRS uses a financial firms to audit tax returns. So, just because we choose to use a tax system to cut carbon doesn't mean that financial firms won't get their piece of the pie. Again, however, I think this is based upon the over reliance on contracting out which isn't necessarily the most economical course of action.
Frankly, I think a quota system will send a stronger signal than a price signal. An announced reduction in fuel and a certainty that this would increase every year, I think, would evoke a more significant response than an announcement of gradual tax increases.
Regardless of which system one uses, things will be difficult if not impossible for those who will need to make drastic changes in their consumption without the necessary means to achieve that reduction. If one needs a major retrofit of one's house given an impending shortage of propane for the winter and one does not have any spare cash, what does one do? Perhaps any program needs to accompanied by assistance for those not able to afford the necessary conservation investments.
Food stamps are much simpler. They are simply a dollar balance on an electronic benefits card that can be spent on a restricted list of items in a grocery store.
TEQs, if I understand correctly, are like a permit to buy an ounce of protein. To buy a dozen eggs and loaf of bread, you need both the money to pay for the eggs and bread, plus the number of protein quotas corresponding to the weight of protein in the eggs and the bread. The grocer needs the protein quotas corresponding to the protein in the eggs and the bread to get the eggs from the farmer and the bread from the baker. The baker needs the protein quotas from the grocer to get the milk and the flour for the bread from the dairy and the miller. And so on until you get back to the primary producers who turn in the protein quotas to the "registrar" who then cancels them in return for permiting the producer to produce the protein in the first place.
Since some protein is lost or used up in the various steps of the supply chain, the intermediaries must also buy added protein quotas from the "market" in order to be able to buy somewhat more protein than they sell.
I think your analogy is incorrect. The TEQ rations are only used when a producer or an individual buys energy in some form. When the producer sells his product, he passes on the cost in the form of a price increase, as he has no allocations to return. Those allocations were acquired when the energy purchase occurred and were immediately debited from the white market. There's no need to track the amount of energy or which type of energy is consumed by the producer other than the cost in money. that's exactly what happens now when a producer buys fuel, it's just that there is an extra cost applied to the price paid for the energy.
Individual consumers are given allocations and those are only useful for the purchase of one of the available forms of energy. Or, the individual can sell TEQs on the white market. If an individual hasn't enough TEQs, they would be able to buy them at whatever price is current in the white market...
E. Swanson
I would assume that the sellers of energy, gasoline, electricity, etc. would be in the business of buying the energy purchase rights quota, and then that cost passed on to the consumer. Over and above the given, what we all get for quota, the difference would end up simply as a cash transfer for the purchaser. The belt tightening on the set amount of Total Allowable Quota (TAQ) would determine the markets competition levels and price for the energy purchase rights.
To say the quota would only be used when an individual was purchasing fuel may be incorrect as I understand the proposal. The free quota to all is essentially a gift. If I ride my bike and sleep in a cold house and eat without cooking then I would have quota to sell to others for cash, and be the net gainer in the deal, while purchasing no energy. But that's what the system wants. I theoretically would use no energy, and then sell my quota? Is this right?
So what is happening is the introduction of a new commodity. The commodity is government controlled energy purchase rights. We are setting a new price for a new value. We are essentially creating a market because the flip side price of inaction is in itself a cost we want to avoid. We are (trying in vain?) avoiding the waste cost and introducing the conservation cost, or market commodity price. As I understand it, it may work out. I think it would be best though to start the system off with plenty of quota and then "turn up the heat" gradually, making adjustments. Just brainstorming. Thanks.
Black_Dog -- Please see Figure 2 in the report and the following excerpts from the text.
My analogy is consistent with this description of how TEQs are envisioned to be issued by the Registrar, flow through the markets and business transactions, and finally surrendered to the Registrar.
Energy efficiency leads to higher consumption of fossil fuel. Shaun and Jeremy (and you) need to grasp that point - I'll be making it in Brussels at ASPO 9.
Yes, Jason "paradox" ... doesn't think it works with the tax or teq concept and in a recession economy, insulating your house will not make you buy a second one with the benefit gained on heating, or buying a more efficient car in order to pay the same gas bill as before without a tax will not make you buy a second car, trashing your car because your are tired of boxes of steel will not make you buy another one either, for sure you could say it will make modern society last longer instead of full collapse, so more FF extracted in the end, but in terms of CO2/Year I maintain it has the potential to lower the emissions. One thing for sure gas taxes have led to more efficient cars and transport infrastructure in Europe than in the US for instance, and the per capita energy consumption is lower.
In any case my view on this is a partially (80% or something) equal share redistributed tax is the way to go, with government revenue focused on low energy infrastructure work (if there is a way out ..)
A tax doesn't change the market price of the product, so it doesn't allow BP or TOTAL to go drill even deeper, it just increase the differenciation factor towards alternatives, let's be clear, fossile fuel taxes is about stealing revenue from BP, Exxon, Total, or OPEC, that's where Jason's paradox fall (and more so in a recession)
A tax doesn't change the market price of the product
Not directly but it affects demand. You are constantly harping on the US fuel taxes and above jaz tossed out the unsupported numbers (though likely supportable) that US taxing vehicles and fuel (to some unspecified level) would cut the US daily oil use by more than half (to 8 million bpd). No doubt the demand destruction caused solely by those sort of taxes would affect market price substantially.
In principle the TEQ proposal functions in a very similar manner to my graduated fuel tax idea--the entire body of work on which has been a couple of pages of my blog comments over the course of a year or two. It doesn't appear my idea is entirely off the wall.
Yes agree with that, but doesn't change the basic fact that increasing US gas tax is a US pure self interest measure.
And still think a simple, flat, partly directly redistributed gas tax à la Hansen is the best system.
In any case the US better move fast
That may be, but if we wait around for the world to act, nothing much will ever get done.
Major countries have to start setting examples of what can be done, so that others can decide which parts of which models to adopt.
But I certainly agree with your earlier statement that we have to stop producing/extracting ffs (ie. stop punching huge holes in the hull of the ship we are all in.) If they are extracted they obviously will be burned.
Any ideas on how that could come about?
Is it as simple as that, in a post peak, declining supply environment? If we take as red that a peak exists, and a period will come when energy available from fossil fuels is decreasing, then efficiency can't do anything to increase fossil fuel consumption. But it can increase the energy service available from the declining supply.
Chris
Yes, I understand this line of reasoning.
By definition there is not going to be an increase in the net use of oil after Peak Oil.
Substitution by fossil fuel other than oil is possible until we reach global Peak Fossil Fuel Energy. But 'Peak Net Economic Utility' could well come earlier. (We may well be approaching or have passed already the world economic zenith.)
As an example, I do not see how we could reverse engineer the UK to perform competitively on coal, or it has to be said, by using our previous version of nuclear power. Here in UK we could not continue to run a modern competitive economy when coal was 70% or more of our net energy, as it still was in my early adulthood. Our per capita energy use had not risen much overall between 1900 and 1950, despite electrification and early petrol driven machinery and transport. The subsequent rise in energy use came from 'modernisation' to oil and gas. We were able to extract more economic utility from the latter (and rather horribly recently for a short while, we gained more utility from the global financial 'industry').
I would agree we might retain some utility from better use of declining net resources, both here and eventually in a global economy that overall must necessarily be using less net fossil fuel.
But it can increase the energy service available from the declining supply.
I think this is the basis of the Transition Movement. We are going to have to sqeeze a lot more utility out of a diminishing energy supply and we are going to have to really think hard about investing that energy in long term systems and infrastructure that will help us transition to a much lower energy economy, while mainting essential services. During that transition, I expect that the consumer nations will discover that much of what they thought was essential is actually discretionary and easily sacrificed.
Chris, I think there is a mistake here. The first part is wrongly formulated and the second then contradicts the first. By increasing the energy service we are able to pay higher price and that enables higher production (you use the word consumption).
But I have a question for you. It is correct is not that that the ultimate CO2 concentration of the atmosphere is linked more to the absolute amount of FF that we burn than to the rate at which we burn it? In the OECD we are aiming to slow down our rate of burn which will result in one of two outcomes. Either someone else burns the FF we forego or we burn it at a later date. And as I've argued we adapt to higher price then we will burn more of it. Thinking about shale gas is the simplest example. If we adapt to a higher nat gas price then there is a whole sh*t load of HC out there that we will burn that would otherwise have stayed sequestered.
If you can answer my question first about rate / quantity of burn and CO2 ppm, then I'll continue with some more thoughts.
First off, I'm defining my post peak world as one where supply can't be increased by higher price.
Absolutely, this was the subject of my MSc thesis a couple of years ago. I made the point that URR is all that really matters, that there are two ways to constrain CO2 emissions, demand-side and supply-side, that as any policy will only be partially adopted you need to apply the right one at the right time.
For example, in 2000 for sake of argument, the global fossil fuel industry was demand-side limited. The production/consumption was dominated by demand-side factors (eg size of economy, gas taxes etc). However, in a post peak world, the industry becomes supply-side limited. Demand-side policies (partially adopted) don't impact the global situation as the supply-side limited production will just shift to another market.
I guess your point about efficiency increasing URR simply depends on how the price vs URR curve interacts with the efficiency curve. If price has an exponential relationship to URR when efficiency improvements are logarithmic. Efficiency won't increase URR much.
Finally, a definition of peak oil could be the point when efficiency improvements fail to support the price increases needed for marginal production increases.
Thanks Chris, you confirm what I thought. I spent yesterday painting (wall not art - I'm not Kunzler) and thinking about this problem.
I'll stick to my original position, energy efficiency and TEQs are a great idea for the UK to reduce our consumption of imported primary energy in an equitable way. The more countries that adopt this the better since this spreads out production over a longer period, and I will continue to argue that this leads to higher price and thus higher ultimate URR - the worst outcome for atmospheric CO2.
It seems clear that the OECD strategy for reducing atmospheric CO2 is wholly misguided and wrong. Setting reduced emissions targets simply postpones combustion, it does not cancel it. We will either consume and combust ourselves at a later date or someone else will consume and combust on our behalf.
For any CO2 strategy to work, producible oil, gas and coal need to be left in the ground. Or the CO2 produced has to be captured and stored. Incidentally, as a long time opponent of CCS, I'm beginning to at least see the logic now.
And so someone asked what should be done to limit atmospheric CO2:
1) the whole global energy system would have to be converted to low C - solar, wind, tide and nukes - quite soon
and / or
2) all CO2 would have to be captured and stored
3) international accord on leaving large amounts of HC and coal in the ground
I don't see any chance of this happening and therefore hope that the worst excesses of climate predictions are wrong.
The current strategy with energy efficiency at the heart will have the right outcome for energy security and the exact opposite of the desired outcome for atmospheric CO2.
CO2 will never be captured and stored, at least let's hope so, doing it would be a pure reflection of the "let's move faster towards the complete ressource crash" mindset, in other words a pure easter island style technological statue. Why ? Because the CCS process is highly energy intensive, and therefore ressource intensive, at least 30% or 40% loss in efficiency, and all the other pollution related to hydrocarbons extraction must also be augmented by so much.
It is also the mindset of considering hydrocarbons as basically TRASH, using even more of them to push the unwanted part of their combustion Energy output under the carpet, when hydrocarbons are very valuable materials that took millions of years to be get synthetized.
And I am not a "climato skeptic" - at all.
But clearly all R&D and projects on CCS should be stopped right now (they will be anyway).
And a very sizeable, partly directly redistributed TAX on hydrocarbons fuels should be set up also right now, in any country that cares at least slightly about its own future (not currently the case of the US obviously)
Indeed, the only way to seriously address the CO2 issue is with supply-side policy, not the demand-side policy we see today. Supply-side policies have been shown effective, OPEC have been operating them for years. It comes back to what I said about partial adoption. The fact that OPEC's quota (supply-side policy) is effective today illustrates that the market is currently supply-side limited. Their partially adopted quota, can't be made up for from other producers. When OPEC or even just Saudi hold oil off the global market global production is lower.
The same can not be said for partially adopted demand-side policies. If the UK reduced demand for oil - the freed up supply would be consumed by other nations and the global picture wouldn't have changed at all.
Chris, I don't think it is the intention of OPEC to leave oil in the ground, the idea is to leave some for future generations - a fine idea, but will still end up as CO2 in atmosphere.
But Iagree in principle that supply side measures are needed for the CC angle - huge taxes on the oil, gas and coal producers would limit their ability to access "expensive" reserves that would then remain in the ground. Again the argument that PO and CC hits the buffers. The PO argument is to make the operating environment as benign as possible for operating companies so they can maximise discovery, recovery and production. The CC argument is to make life Hell for them so that they give up and leave oil, gas and coal in the ground.
This conflation of the two issues has created a god awful hotch potch of contradictory policies. An energy efficiency drive on one side and CCS on the other. This has been a useful discussion for clarifying issues.
I think your point regarding CO2 emissions is reasonable. Certainly, the best alternative would be to leave all the carbon underground, where it now is. But, for the moment, this can't happen as all the world's economies depend on the use of fossil fuel burning equipment. The trick is, how to wean the people of Earth from our present growing addiction to oil and other fossil fuels. To accomplish that goal, the flow must be first restricted and then the restriction tightened as replacement equipment is produced and distributed to replace the fossil fuel burning gear.
Of course, one nation, even one as large as the US, can have little impact from it's actions, assuming that the alternative resources cost more than continuing to burn oil and coal. Ultimately, all nations must agree to cut emissions.
But, the problem is, how to get people to accept those cuts, even after the point at which the governments representing most of the emissions agree. The rationing approach offers a mechanism to smoothly begin the transition. Systems for energy supply which produce little or no CO2 emissions would require few allocations, perhaps approaching zero as time passes. Burning coal to produce electricity and sequestering the CO2 would result in a supply of a low TEQ electricity, thus would gain a preference in the market. The same would also apply to wind and solar, which would provide electricity with little need to burn carbon or sequester the resulting CO2, once set in operation. Thus, the TEQ rationing scheme would offer a means toward a transition to a future economy based on low CO2 emissions...
E. Swanson
Euan Mearns, I know you out rank me but I would like to challenge you to think outside the box. I admire your work. I think it may be simpler and easier than you expect to change the worlds energy infrastructures virtually over night, or within 10-20 years. I see the problem as a thinking mental blockage issue. I think we all have sort of a manifest concerted (group think) predisposition to old school electrical systems. These are of course the systems tied historically to the fossil fuels.
Sustainable primary sources of energy such as wind and wave and geothermal face an up hill battle to fit into the old electric grid systems, and cars etc. We know this. Intermittence problems call for some (other) form of energy storage. Sustainable (primary?) energy sources are most often remote, and call for some (other) form of energy shipment, that will work where electrical will not. This is not to say of course that later conversions to electricity will be frowned on. I think we're not trying hard to fill this need. I think it is critical to our survival that we do. The costs of small thinking is big.
We seem adverse to find concepts that best fix the energy storage and shipment issue, hence I say the mental block. There are few energy vehicles that MAY work to fill the needs of energy storage and shipment: But the pay off IF we do figure it out is the practical usage of remote sustainable energy sources. Finding this energy common denominator(s) will literally solve the energy crisis, and globular climate change too. (act globularly think locally) To me, my complaint is, that seeking this holy grail seems to be somehow ... out of step? Or, wrongheaded? It's what we need.
Currently, given our electrical grid infrastructure, we could have, or "if we had", large scale wind and wave generators offshore, and large scale solar or geothermal plants these all would not fit into the current puzzle of what we do have. So I say we can either continue to futilely try to conform the puzzle pieces to fit into our pre conceived picture, or we can change our own picture of what energy infrastructure means on it's most fundamental level. In a nutshell our base of thinking is still locked into the fossil fuel mindset. Remote sustainable energy sources don't fit with our infrastructure. Will we continue to see that as "their" problem? That's the challenge.
With the possible market flexibility of incentives and penalties, we could ease our way into the future without undue shock to the system. But only if what we want is right, and only if we know what we want. A tall order. We can through quotas of a socio-political-economic design advantage what we want, ie non or low carbon based energy systems in some percentage, new sustainable energy systems, and hold the growth of what we don't want, FF etc. Introduced markets and pricing is the key to healthy transitions. My experience in that area is fisheries, but I have not changed that status quo. But we don't know what we want because we are driven to seek ideas that conform to our existing FF and grid set up. This is wrong thinking. The energy systems of the future it seems to me will need to be sustainable based, non carbon, interface well, and ship and store well. I obviously think it can be done. I think the energy storage and shipment vehicles, or new green fuels for sustainable energy storage and shipment could be compressed air, hydrogen, and oxygen rich compressed air.
How easy is it for us to discard energy storage and shipment ideas? All too easy. But what does the world need? Does the world need what fits into our existing energy infrastructures? Or, does the world need a new energy system, phased in, that horse of a different color.? If it's true that the current infrastructure does not favor sustainable green energy fuel commodity markets, shouldn't market programs be written to answer that need,?? rather than just concentrate on the negative side of the equation? If wind, wave, tidal, solar, geothermal energy fits well with storable fuels, then why not a market quota system program to start that ball rolling? It's the future I hope. But don't we all have to see that first?
In short, can't we think on a higher plane? Thanks, Steve www.environmentalfisherman.com
(see, I didn't say tripe.)
Steven, I read your thoughtful contribution a few times trying to grasp what it is you are saying. This is not an insult but a simple truth that different groups of folks here are viewing global issues from different positions and are all too often reaching very different conclusions resulting in polarised debate. Its interesting you are using a certain vocabulary here that I have been using in private.
A very small number of my colleagues admit in private that they agree with most of what I am saying but favor a position in public of going along with myths if they believe it to be in the broader public interest. This for me is a very difficult point. I quite strongly believe that we need clear understanding of why we are doing things and what the consequences of our actions might be and should not set a course based upon false premise. I see great danger in going down a route where we simply go along with something we personally believe or know to be false. The reason for this is that doing the right thing for the wrong reason often enough may lead individuals and societies to become so detached from the truth that no one ends up knowing where the truth actually lies. I think we as society are very close to that position, where for example, the UK faces a grave energy crisis that is seldom discussed while controlling emissions deploying strategies that make our energy crisis worse is core policy of all our main parties.
Your position in USA is very different to my position in Scotland. Scotland has volunteered to be the guinea pig in an energy experiment aiming to produce 80% of electricity from renewable sources by 2020. We have actually begun to walk along a path with a very uncertain outcome. This plan involves closing 2 out of 5 large power generators in 2015 - one coal and one nuclear, replacing capacity with wind - 5 GW by 2015 and 10 GW by 2020. Now I'm not actually opposing this plan but am spending a great deal of time auditing it at present - some of the results of this will appear on these pages. It is quite clear that we need to greatly increase our primary energy production and reduce our consumption. The question is what is the best way to achieve that. If the Scottish experiment is successful then other countries will clamor to replicate it. If it fails then we will be in desperate trouble. I don't think our politicians fully understand how high the stakes are.
You lost me on this one. I really don't understand what you are saying. Personally I believe focussing on solutions that will generally address both energy and climate issues - sensible renewables and nuclear power - is a good starting point.
This bit from the lead article - I'll admit that I have perhaps missed something here - in that TEQs may somehow be used to rig the market in favor of renewables and against FF - that may not be a bad thing. Is this what your are driving at? This may both reduce our over all energy consumption and push that consumption towards renewables, which as you point out are disadvantaged. The reason for doing this would be to boost the % of energy used towards indigenous and away from imported and to reduce overall energy use. The implementers of the scheme should not try to fool politicians or the public that this will have any significant impact on ultimate CO2 emissions unless the majority of major economies around the world adopt same policy - which in effect would amount to taxing FF out of existence.
I agree with you on energy storage. No point trying to fool politicians or the public that this is easy or cheap. When you look at the problem in detail certain truths jump out at you.
Hope I managed to understand some of your points.
Best,
Euan
Quite right Euan. This is true of any attempt to reduce emissions anywhere in the world without a global agreement of course, as production that is able simply moves to a less-constrained location. As the President of the European Commission has highlighted (http://news.bbc.co.uk/1/hi/world/europe/7201835.stm) that means we require either a binding global agreement or tariffs.
The various proposed global agreements on climate change (the UN process, Contraction & Convergence, Greenhouse Development Rights etc.) would require something like TEQs to sit underneath them, to actually implement the national budgets they set. Such global agreements become utterly meaningless if they do not ultimately stimulate changes at the local level where we live out our lives. TEQs is designed to bridge the gap between the two, enabling nations to guarantee achieving their targets for emissions reduction while ensuring fair access to energy.
But you're absolutely right that TEQs does not in itself resolve the challenges of the global nature of climate change and peak oil, more's the pity. I see it as an essential part (the national part) of a reasonable approach, not a standalone panacea.
Shaun, this has ben a good discussion. When you say:
and this
in my mind you are conflating peak oil and climate concern perpetuating what I view as a myth that these are one and the same problem to be dealt with in the same way (many who read these pages seem to believe this). It's perhaps not your intention to do so. But to make real progress I believe it needs to be made clear that these are two quite separate issues (though linked) for which different remedies are required - though some remedies fit both, i.e. sensible renewables and nuclear - its a pity you guys seem to have adopted an non nuclear stance (Charles Barton up thread).
I am strongly in favor of TEQs and in getting away from the carbon footprint abstraction to straight energy rationing. I really don't like the idea of promoting 2 different sorts of TEQs since in the UK we need to reduce consumption to meet a series of staged targets and we need to boost indigenous primary energy production. Renewables and nuclear. Can you explain how a single TEQ may do this?
Eian, The case has not been clearly made for energy rationing in the UK. There are circumstances that may require it, but it is possible that a well managed program of NPP construction would prevent those circumstances from arising. Nuclear power can solve most energy problems in transportation. For example nuclear generated electricity could power urban transport, including cars, trucks and busses. Trains could be nuclear power. Heat produced by high temperature reactors, could be used in a process that would extract CO2 from the atmosphere and Methanol produced from it. The Methanol could then me used in long distance transportation, or to power internal combustion engines as suplemental power sources in electrical vehicles. Some Fossil fuel rationing might be required during a bridge phase, but that decision would require a whole lot more discussion by people who are far more trustworthy than Chamberlin and his fellow Greens.
Charles, I met an old Prof at the University several weeks ago and he told me two interesting things I didn't know. The first was that UK government had struck deal with Greens to not use Pu in UK reactors. This valuable fuel therefore is rotting at Sellafield. The French use their Pu in MOX fuel. I don't know what sort of deal that was.
The other was that Dounreay had operated "safely" as a breeder reactor for a number of years producing electricity (250 MW I think) until the plug was pulled and no explanation given.I can't recall the details, but there was some equivocation over what was viewed as safe. Damned shame about those radioactive particles on the beaches.
My view on nuclear is tempered by the reality that I live in a country (Scotland) that has a no new nukes policy. But we have an election in May. I am going to model our future power supply with 3 * 1.2 GW reactors versus 10 GW of wind to see what it looks like.
It would be an interesting question for a referendum "Would you prefer energy rationing or new nuclear power stations?"
Euen, It would be an interesting question. i don't think energy rationing would get many votes in the United States, France, China, Japan, South Korea, or India, and probably most of the rest of the world.
Euan
For what it is worth, a bit of gossip I picked up at the time in the 1980s. Thatcher wanted to privatise UK nuclear. The nuclear people had kept their finances a national secret, where they had bothered with accounting data, that is. From a guy who was supposedly in the room when some approximate numbers were revealed for Dounray fast breeder, the reaction was brief. Some laughed, some blenched, and then they all went home.
best
Phil
PS You and Chris et al have helped clarify issues for me in these discussions
I find this fascinating
Are you the primary source for this story or is there something in writing or a name one could call for a statement on such a deal?
or is it some opaque coded arrangement?
Who in government brokered such a deal and when?
How are such deals made, I mean who does the gov call to make a deal with the green movement?
How are they ratified and kept in place across different governments?
The debate on TEQs has raised numerous comments on a deep and powerful influence the green party has had on energy policy including the thatcher governments. I would be very interested to know more about the details of how this influence was applied. For instance the rush to gas in the 1980's has been presented as the consequence of anti-nuclear lobbying of that time. Sizewell B comes to mind. I would have thought thou that the thatcher gov and industry would have been more motivated by price and undermining the Miners Union. How much store do you place in these green lobbies as a primary or even major source in effecting UK energy policy over the years?
I am similarly fascinated. For the benefit of those outside the UK, the Green Party here has far fewer MPs than in most other European countries due to our unusual First Past The Post electoral system (in fact the first Green MP in the London Parliament was elected just last year).
So, having no votes to offer, I wonder what leverage the Green movement might have on such decisions? Are the Government that worried about the influence of the big green NGOs - Greenpeace, Friends of the Earth and the like?
Thanks Euan, agreed.
Personally, I don't see them as the same problem, but as you say, they are clearly interrelated, and some remedies fit both. Above all of course, reducing fossil fuel consumption.
Jevons' paradox limits the effectiveness of technological efficiency improvements, and 'decoupling' energy consumption from emissions through low-carbon energy generation is an important aim, but we must admit that this is failing to keep up with the urgency of the challenges that we face. So reducing energy consumption seems to be key (alongside, as you say, stimulating low-carbon supply).
This of course leads to the problem that reductions in consumption in one region only lead to lower energy prices elsewhere, which is why we need new frameworks, like TEQs, to incorporate an understanding of hard limits on total consumption, and encourage common purpose in reductions (with the caveat we have discussed just above - that the same problem applies globally)
Regarding nuclear energy, as I have discussed elsewhere in these comments, and just now repeated to Charles, David's opinions on the matter (or mine, or anyone else's) really have no bearing on TEQs. Nuclear is of course a hotly-debated topic, but regardless of what anyone thinks about it, any energy source that provides electricity with a low carbon footprint (over the entire lifecycle) will be supported and incentivised by TEQs.
The reduction of consumption should be clear enough I think - TEQs set a hard (declining) budget within which the economy needs to learn to thrive.
This provides the long-term certainty needed for heavy investment in new energy infrastructure, renewables etc, as it is clear that they will be highly-valuable as the cap reduces.
The carbon footprint aspect is what allows TEQs to boost low-carbon energy production without also boosting coal etc (as you say, not all remedies to our energy crisis help with climate change).
Since each TEQs unit will allow the purchase of fuel or electricity with 1kg of CO2 of associated emissions, energy from low-carbon sources will have a clear competitive advantage. Energy consumers will need to surrender fewer TEQs units in order to purchase this energy.
Having an energy rationing system in place should also enable the economy to follow a more managed descent in energy consumption than would be permitted by unmitigated supply shortages. The same might be said of the importance of avoiding the resentment and anger that comes with "rationing by price".
And, I think importantly, having a single national price for TEQs units (which would of course be widely known and publicised) should help to engender a sense of common purpose around reductions in energy consumption - it would not only be in my interest to reduce my own energy consumption, it would become transparently in my interest to cooperate with others to reduce ours. Figure Three of the report (p.25) outlines some of the cooperation across sectors that could be engendered. It also means that is I see, for example, my supermarket wasting energy with open freezers, it is clearly in my interest (and everyone else's) to hassle them about this.
If numerous countries implemented TEQs, you could even see healthy competition, as people take pride in paying less than their national neighbours.
If you haven't already had a look, you might also find Chapter Three of the report a good read (only four pages) - this outlines research from the field of behavioural psychology, looking at what drives behavioural change, and why many of the current policy approaches to reducing fossil fuel use are doomed to failure.
I hope that I have satisfactorily answered your question.
Cheers,
Shaun
And, I think importantly, having a single national price for TEQs units
TEQs might even be more effective if they had graduated price steps for increasing consumption levels but this would require a lot of messy work in categorizing user classes and where and how steep the steps would be for each of those classes. If there were a significant difference in heating energy needs due to local climate some sort of user categorization would seem to be necessary anyway.
None of these proposals eliminate rationing by price as enough money buys more TEQs (up to the limit of the total amount available on the market) but the guarantee of a set minimum TEQ allotment (or low tax allotment in the graduated fuel tax system) is a critical element that cannot be supplied by just letting the market set the price.
Actually, since brokers would be making a big part of the profit in the TEQ market a graduated price from the government might squeeze a little more of those potential broker profits into the public sector. Just a thought.
I can envision a new mob enterprise supplying black market energy creeping in though. Paid off dock employees and on up to get undocumented fuel into the country and the like. Could make good cinema anyway?- ) It would seem such activities would more affect the petrol than the electrical generation sector. But given that some portion of the population always sees shortage of supply as a gold mine neither sector would be immune to such corruption.
Euan, Thanks for the effort on my post. I have been working for so long all by myself on energy issues that I may have a bit of my own language and line of thinking too. I'm sorry to make you wade through it. I think if there is a truth to the future of our energy machinery it is this: We need to spend money on development of sustainable energy that is both easily shippable and storable, even if not super efficient as are our current systems. Doing this will result in more stand alone systems, that require less or no coal, oil, or gas. For now, my preference is for quick and easy hybrid systems that use compressed air.
If this is true I haven't seen anyone sharing the opinion. The common, wrong thinking is to keep trying to fit the square peg of sustainable energy sources into the round hole of our current FF and electric grid systems. We need the new green fuels to affect the interface between the new systems and the old. If there are other energy transmission vehicles other than common compressed air, hydrogen, and a mix of oxygen and compressed air, for this purpose, then I would like to learn of them. I do think it is false thinking to hope and wish for good interface systems that will allow sustainable energy sources to charge our electric lines, and of course I mean at the scale we need them to. I think it is true that we can rig all the sustainable energy systems: wind, wave, solar, geothermal etc. to produce the green pipe-able ship-able "fuels". My thinking is that 8,000 psi compressed air requires newer thinking than we use for the nail gun. But this old nail gun thinking does dismiss compressed air, neatly, summarily, for our future large scale systems.
As well the false thinking about Hydrogen is to believe we will be dealing in similar efficiencies such as piston produced compressed air, etc. On site, geothermal, offshore etc. electrical generation to hydrogen production must be the goal, and doing this will be inherently more feasible than using traditional systems and tankage. We can do it to the extant of first tries, because we do need this fuel and we can build machinery to have it.
While offshore energy based compressed air production would be nothing similar to the inshore versions, and far, far, far more efficient, much, much, much larger in scale. When air is taken to depth, mechanically, the costs are the machines and their maintenance. Moon tidal, current tidal, wave, wind, all these off shore systems, especially when hybridized, can produce horsepower in the form of compressed air, but yet due to our thinking faults, and our dithering, this is irrelevant to us. We want other. We want what fits with what we have now. Well the whole point with new system designs is that they are just that, new. We don't want new? We're crazy. We need new systems. If we can't, and I damn well know we can't, plug the sustainable systems into our existing systems we need new systems that can get around that problem. The simple answer is conversions. But there is no urgency or interest in these. I just find this to be so surprising. We have the technical smarts, no doubt about it, to create the needed machinery, but we love our old machinery. So to reiterate, to me this is fundamentally a thinking issue, non-technical, but more emotional, dare I say fearful? Maybe the fundamental thing to understand is that we have totally misdiagnosed the first phase, or "What is the problem?.
Perhaps pilot projects in Scotland could prove the viability of a small compressed air only wind farm plant, coupled to a small nuclear plant. Use conveyors not pistons. The costs to produce and ship electricity are big from the off shore wind, but the costs to produce simple compressed air that can turbo boost the small pilot nuke plant are much smaller. The compressed air is most easily and cheaply stored, and kept on tap, in deep water. We can't store wind to electricity of course. Wind to electricity just means infrastructure duplications all over the place. Bad. Pilots for a gas plant, a coal plant, an oil or biomass plant with compressed air from wind, also using co-gen for heat, small, would be a gamble, but one easier to fail at since the existing systems would still be in place.
Sorry for the humor, but the global needs are for major structural changes in infrastructure. Global risks and damage call for scaled up advances, which can only mean the use of sustainable energy systems. Our major energy issue is the interface issue. Can't we get serious about some sure fire, though currently yes inefficient interface modalities? I think we must figure out energy storage and shipment in order to use sustainable energy systems.
TEQ's are too simple. Not that simple is bad, but the multi needs, not just the need to cut down on the carbon fuels, make teq's inadequate to the many needs of energy system renovations. It's also too socialized as in proscribing for poverty too will solve anything? After all the system does call for, foolishly I think, a give away of assets to some people who will actually do nothing for those assets in return. I do think in the simple form it can and will work, but the better system would be the more versatile Market Quota System, which essentially works to tax the bad and reinvest in the good (externalized positives), and cut externalized (pollution for instance would be just one) negatives. The TEQ is on the right track with a pricing core which is an essential for such a system. But all sorts of things can be priced and dealt with through created markets. An oddball co-gen system of using closed loop urine, and urine and grey water, to grow grass, to make fuel pellets, while being augmented by wind produced compressed air ... this sort of thing, complex, will require the MQS to encourage. The MQS handles complexity well, while the TEQ's don't. The TEQ's don't come with enterprise accounts, and don't penalize and reward systems, or behaviors, under the umbrella. TEQ just says, "Hey, let's all cut back and, let's have some fun doing it". Which is not a solid criticism, if TEQ works for the social and energy needs.
Thank you, and to all on the oil drum, thank you. Steven J. Scannell www.environmentalfisherman.com
I share your interest in storage. However, your discussion suggests that you don't have much understanding of thermodynamics, a subject that sets us engineers apart from most other people. Certainly, compressing air and then expanding it thru some device, such as a piston engine or turbine would allow the storage and recovery of some energy. However, when the air is compressed, it becomes hotter and the greater the compression, the hotter it gets. Usually, this heat is lost to the environment, as the air is either intentionally cooled or allowed to cool to the storage environment. When that high pressure air is then allowed to expand while driving some motive device, there will be less energy produced than that which was originally used to compress the air. As in any other energy conversion or storage system, the resulting efficiency is less than 100%. With very high pressure compression, as you propose, the fractional lost will be larger.
Storage of energy thru compressed air is a well known process. There have been experimental vehicles built which use compressed air to capture the energy lost in braking, energy which can be used later to accelerate the vehicle. Some have proposed using compressed air as a form of battery for cars. In either situation, the overall efficiency of the system must be carefully calculated to assess whether it's a good idea or not...
E. Swanson
Thanks Black_Dog, But do we need to be engineers to understand basics? I think not. Common piston compression may heat the air up, or gas turbine systems too, but slow compression does not suffer the thermal loss. I have mentioned a good web site which is sustainx. They have a good treatment of their hydraulic slow compression systems which are being designed for utility scale. Their testing using non-conventional slow hydraulic compression methods indicates but very little thermal loss, to the point where it really is not even negligible, and I agree with this. These facts (sustainx) don't lie, and one fact is ... we've never really asked compressed air to perform well. It's a technology we now need, so ... now we're asking it to perform. It will, it will. You may agree if you look into some of the new research, such as sustainx.
So I do think the common inefficiencies with compressed air are just old school thinking. Future offshore air compression, to my designs, will drag air to depth mechanically, hydraulically. These machines will need constant care, as do most any machinery, and designs of course will be critical to efficiencies, but there is no FF fuel spent (directly) during this work. So let's throw away the old book. A scale up of say wind and wave machinery can easily overtake the supposed inefficiencies perceived with common inshore thinking about the old styles of compression. Air of tremendous horse power can easily be everywhere we want it to be. Conduit systems, which do double and triple duty, can make that a reality.
So the mechanical energy, or compressed air, so highly charged that it is as a fuel, from wind, wave, tidal, all we could desire, can be gotten from bigger machinery, that's all. Size conquers efficiency paranoia here. With solar, geothermal, more heat from larger machines gobbles up the feared so called standard CAES inefficiencies documented with such as gas turbine plants, or piston machines. Pardon my insular uneducated bad attitude towards the status quo, if I'm wrong, but we will not be using those FF based air compression systems, so the efficiencies are totally incongruous. I'm selling apples and you'r talking oranges.
These common denominator fuels, which will allow for the storage and shipment of many a distant sustainable energy plants horsepower, even over thousands of miles, to me are absolutely the keys needed to go ahead with many forms of sustainable energy. For too long Compressed air has been dismissed, and I think it's time to end this summary dismissal. We must adapt the many promising sustainable energy systems to our usage, using what I call the green fuels of the future: Compressed Air of up to eight thousand pounds per square inch; Hydrogen; ORCA (oxygen rich compressed air) will have commodity prices attached to them. These green fuels will be international in nature.
I have spent a lot of time designing offshore wind and wave machines, three generations worth. What good are they if we still need the FF infrastructure to back up these systems? What good would, on top of that, these mills be, when more than half their electricity gets spent just in transmission costs, or line drop? Electrical systems of these natures are staggering in their installation costs as well.
Wind, wave, geothermal, tidal, etc. etc. all these are the answers we've been looking for, but we just need the adapter tools to make them work. A good mechanic knows when to stop and get another tool. Thanks. www.environmentalfisherman.com
Mr. Scannell,
You apparently think that engineers don't understand physics and chemistry. It's a fact that the process of compressing a gas causes it's temperature to increase, called the Ideal Gas Law. The SustainX company is blowing smoke, trying to obtain funding from investors who don't understand what they are selling. They intend to use "storage in the form of industrial-grade, off-the-shelf gas cylinders" working at a maximum of 3000 psi, an approach which results in a situation where the storage media become the heat exchangers which cool the compressed gas to ambient. They give no further details, nor do they present any test data, including the efficiency of their system. As I noted before, such a system can provide storage, but there will be some losses in the process, which are likely to increase as the working pressure is increased...
E. Swanson
Black_Dog: I was googling about and finally found a professor at U of Nottingham Seamus Garvy. He either is or was pushing an idea of wind to air. This person may lend more credibility than I, as he is an engineer. Thanks
Well, not quite. Up around the 57th parallel, a Scottish solution with renewables would not be replicated in very many places. Wind with pumped hydro may be your main ticket. Direct solar, which is available in abundance in much of the world, is not going to be so great in Scotland. Iceland already has 100% renewable electricity -- almost all hydro and geothermal.
Energy supply solutions with renewables are feasible everywhere on the planet. Working out the details for each area is a task that will vary greatly from area to area.
Agreed. And this zeros in on ERoEI argument. Declining ERoEI creates economic trauma, but so long as the ERoEI >> 5 we can still technically get at stuff. There is massive duplicity in OECD. Why has UK government not banned drilling for shale gas in UK? Well they secretly hope that this may boost our indigenous primary energy, and despite all the bluster, this is their real concern. And they'll say that gas is clean and energy efficiency will take care of global warming.
slightly OT
why EROEI>>>5?
I can see less than 2 is very very very problematical but >> 3 or 4?
See this paper from Charlie Hall et al:
What is the Minimum EROI that a Sustainable Society Must Have?
cheers
From memory, Charly's sustainable society was nothing like what we have today.
Glad to see that TEQ's are gaining recognition as the most rational approach to out present energy problem. I wrote a bit about this idea many years ago, posting a similar concept on sci.environment in 2000, but never published my ideas. I've written about TEQ's several times on TOD, in response to proposals in the US for a Cap and Trade system for reductions in carbon emissions. My complaint was that the consumer was left out of the process, since the Cap and Trade system was to focus on the top of the distribution chain, which would leave the consumer with no "signal" other than higher prices. I thought that this approach was a recipe for uncontrollable inflation, since the increased costs would be passed on down the line by every person or corporation that could do so.
I suggested that a rationing system with a white market would be the best alternative, since the message would be driven home to every consumer and would result in many actions by individuals and corporations which would reduce both energy consumption and emissions. The rationing approach would also foster the development of new and improved renewable energy sources, which could allow human civilization to continue as fossil fuel use declines.
Keep up the great work! Maybe the government of the US will also decide to adopt a similar scheme. We can only hope this will happen, given our present drift away from such measures from the Federal government...
E. Swanson
Cheers Black_Dog. Yes, have seen your comments on the topic before. As you say, hopefully governments will continue to move towards implementation. As John Hemming MP said at the launch on Tuesday (video here: http://teqs.net/report/media-coverage-and-launch-event/#JohnHemmingMP), if Governments think they even *might* face energy problems in the future, they should be preparing now.
I agree that rationing is now the only 'rational' choice. It will be interesting to see if this gets any legs.
I despair that we will ever have anything so sane implemented here. High and increasing taxes over the last forty years or so would have been the logical approach here, but that time is passed. And anything with the letters t a x associated with it seems to cause the scabs of our nation to go totally insane (to paraphrase F. Zappa).
A fundamental issue here is that in a post-growth world, energy (and other things) may have to be rationed in ways other than price. Rationing by price (the market) has become to be seen as fair in the mainstream. Rationing by other means is constricting peoples freedoms. The reduction of freedoms, either piecemeal or whole hog, is going to be a central issue in the coming decade. TEQs are just one of many trial methods to maintain order/stability/fairness in a world of less (in aggregate).
Question
Tradable Energy Quotas are these costs applied to goods manufactured in China as well as UK?
I would think that some sort of adjustment would be required to capture the energy embodied in the finished products as they are imported. That process would likely result in higher prices for imports that would otherwise be the situation...
E. Swanson
Yes, as Black_Dog says, there would have to be import tariffs.
See the FAQs on the report website for a comment on this, and its political feasibility:
http://teqs.net/report/frequently-asked-questions/#Tariffs
The free marketers will really go ballistic over that, too. Can we just stop listening to those nitwits?
In other words as it stands, the answer is NO
I would say yes
If the idea is limit consumption per capita
Rationing during the War in Britain had little to do with fairness, it was more like making sure that the war effort got the lions share while the populace didn't starve. The fairness came out of the rationing. When you ration things need always trumps greed.
With all due respect, I can make no sense of your post. Do you mean that the original intent of rationing didn't have much to due with fairness, but that eventually fairness resulted?
Dohboi
Perhaps I could have put it better, let me try again rationing is all about allocation of goods and services, it comes in two flavours demand rationing ( so called free market) command rationing where a certain amount is allocated on a per/person basis. What I should have said the first aim of rationing in the war was to allocate as much of the goods and services too the war effort,this had nothing to do with fairness. What was left over could have been allocated by demand rationing which is done by price and is inherently unfair too the poor. Command rationing has fairness decency built in, call it what you will. I hope I have explained myself.
Thanks, ym. That makes a lot of sense and introduces an important distinction to the discussion.
Yair...My views are always simplistic but one strategy I have never seen discussed here is to "ration" electricity by limiting households to (say)a twenty amp supply.
This has the affect of forcing folks to become responsible for their consumption.
Life goes on, they can have all the appliances...but the big split system A/C has to be turned off in the living room before the small wall A/C's are turned on in the bedrooms.
I used to set remote homesteads up with Lister diesel gensets and back in the seventies a 4Kva and an 8Kva were pretty standard.
I used to have a big amp meter in the kitchen and an indicator to show which engine was running. Even the young kids soon learn that you can't plug the jug in when the little engine is running and the gauge is showing nine amps...that is to say the engine will trip out and daddy will get very cross when he has to go down to the engine shed to restart it.
Same thing with the "rationed" grid supply you would have to go out and manualy reset a breaker...and wait on a timer. There have to be consiquences, it helps folks to learn.
I think you are on the right track Scrub Puller. The new houses now being built in Australian suburbs are desinged on the assumption that electricity is limitless. The most absurd thing to appear in the last few years is the giant cinema size plasma screen, that is so big, you have to sit so far away from it that the room that houses it must also be huge. I have seen homes where there is cricket pitch between the lounge and the screen and all that air has to be heated and cooled and often contains a gazillion 50w downlights.
The smart meters being rolled out may have the ability to do some sort of demand control in the future but I would expect these to be introduced very, very softly for politcal reasons.
Hello Nate Hagens: My experience with market systems for fisheries work may work well for us in energy systems. I wrote a paper in 2000 an presented it at IIFET which is International Institute of Fisheries Economics and Trade. The fishery market quota system as designed works (in theory as a government control) well for any public resource that would be transferred to the public realm.
In a world of less it may be nice if systems to ... divvy up resources or ... divide common sacrifices, or to ... whatever, it may be nice, if they were fair, and even handed, and effective to the need.
So for fisheries the need may be, could be, to advantage the assets of habitat and stocks. To do this a system of quota, or fishing rights limits, may be used that would treat all fishermen the same. This wasn't done and class systems were created, because we rationed not on price but on as you say "other means". This put systems off track "for fishermen" instead of "for the resource". So let's not follow failed fishery quota models.
With energy systems are we of the mindset that we're all in it together? Or will we create class systems? As system designs formulate people will default to rig the system to their own personal self interests. Or, is the question of common good inappropriate, since energy assets are in the private realm? What quota system on energy will be fair to all, but not too fair to some, all the while having that achievement that the system was designed for in the first place. The question, which is complex is this: What is the energy future we are attempting to mold? The problem here is that while we may know what we don't want, we still have no real firm designs on what we do actually want and need. I would suggest a good place to start would be a commodity market for green fuels. Prices, values, markets: these are the foundational philosophies that precede a good quota system. A quota is a limit. Limits with no firm production goals amount to stagnant economies. Unfair limits amount to class systems.
Using analogies of fishermen to energy owners will work. There are separate and distinct economies for fishermen and those private harvest and related industry economies, separate fishing rights economies, seafood consumer/ public trust needs, public institution economics, and for wholesale seafood market economics. Such with energy it is too that we have energy extractor companies, lease rights law and economics, energy consumer economies, and energy markets. The complexity here related to quota systems is this: A good system will have some complex adaptive attributes and will not be a narrow band-aid of sorts. A "system" or interactive working parts of a whole, insofar as energy quota goes, must be a machine capable of real time change, and of a capacity to accept into its core all the differing but equally important and worthy but separate economic interests and economies. (Then, there are all these fights which are framed usually quite wrong and are value calculations, essentially handled by monied interests usually, but let's not stray too far.) A good quota system, such as my market quota system design will have a base and a core. The base part is the mission purpose and all the goals, which must be holy. Then the core which accepts and deals with the "plug-ins" of all sorts of players and economies.
For a fishery quota system a good foundation would be the mission of building the assets of habitat and stocks. The core of a good fishery quota system for this purpose would be a value price system based on how one fishes, and coupled to that at what fishing rights commodity cost the fisherman pays, what one takes while fishing-big fish - small fish and at what cost, not free, not externalized negatives foisted on the public, and backed up by an agricultural economic mindset, how one deals with polluters, what penalties and incentives to clean up, how one deals with habitat investments, how one deals with stock investments, all through one very good system, and all the R&D that goes with fishery management. These quota systems are complex systems and the machine can be understood to be rational, only, if the system is coherent to it's mission, and if the mission is holy, and the core works to connect the parts.
Being that I'm much better at fisheries than energy systems, I can't see all the pieces of an energy system puzzle as well as most on the oil drum. But the animal, system, or machine elementally I think is the same. One inevitability is the sickening competition for advantage over and above fairness. Prepare for ethics and love to go out the window and people, and their families, to be ruined.
If I were to design an energy quota system it would be MQS style, not the simplistic presentation above. It would have a firmer mission than just conservation, a grander mission. It would start slow and build. It would value price what we want and what we don't want and it would have a core that would be the reference for the prices and markets both for what we want and what we do not want. Essentially quota systems can create a physical market, to handle the hurt of some negative. But if a quota system is to excel at it's job then there must be a well thought out mission, like the tripe system, or some other better grander system that could serve as the ultimate goal for energy systems.
I agree. I think the general form of this reduction/rationing/constricting should be "use what's local."
The concept of global interdependence for essential consumables is a concept foisted by powerful multinational corporations, with their proxies in government. This is the catastrophic idea we must counter.
This is almost a great idea. But as it stands, I see three problems. Starting with the most severe:
International Trade
Country A implements TEQs. Country B does not. Country A's manufacturers must pay for TEQs to run their factories, and pass that cost along to their consumers: Country B's manufacturers do not.
Even if both countries are on par in terms of labor and fuel costs, goods from Country A cost more: citizens of both countries will buy Country B's cheap goods instead. Non-location-based services also migrate to Country B. Country A sinks into recession.
One way to solve this is to assign a TEQ cost to all imported goods and services, but this totally defeats one of the key benefits of TEQs: you don't have to explicitly assign carbon values to goods and services, you let the market determine them.
And even if you did assign a TEQ price to imports, there's another problem: suppose Country A has some energy resources -- say, a big coal mine. Coal consumers in Country A will have to surrender valuable TEQs to burn the coal -- thus, they won't be willing to pay as much cash for it as the consumers in Country B. So the coal mine sells all its production to Country B: they make more money that way. Country A still loses.
Energy conversion efficiency
As described, TEQs are created at the citizen's doorstep, and destroyed at the doorsteps of electricity and fuel companies. But no allowance is made for the efficiency of the energy source behind that doorstep. Suppose two coal power plants are in competition: one has an efficiency of 40% and the other 20%. Obviously, we want our rationing system to financially favor the efficient plant, but it does not: since each company receives and destroys the same number of TEQs per megawatt-hour produced, there is no incentive apart from fuel costs to switch to more efficient plants.
The same problem creeps in when discussing renewable vs fossil electricity sources, coal-to-liquids and other inefficient energy transformation processes, etc.
One solution is to have TEQs destroyed at the doorway of the *fuel providers*: since nuclear and renewables have no fuel provider, this puts them at a substantial advantage, which may or may not be desirable.
Complexity
This is quite complicated to handle: each and every household must manage the buying and selling of TEQs, in shifting amounts from month to month, at varying prices depending on market rates. This is way more complicated than paying the utility bill: I'm not sure how many citizens have the financial training to handle this well. It's also a problem for people on a fixed income: *your* energy usage may remain constant, but your monthly living expenses could vary radically as the price of TEQs fluctuates.
The market of course has a solution for this problem: most citizens will probably hire an energy broker to handle all this complexity for them. Possibly your local energy utility would provide this service to you for a fee.
Re Complexity: Consider that the UK already has a huge and influential financial sector in its economy. This proposed scheme would seem to be a huge boon to the City of London. If the scheme could be propagated beyond the UK, the UK's financial firms may benefit from a first mover position of dominance.
It is unclear why energy in general should be rationed when the real problem is peak oil and oil imports. Quotas on oil imports and/or higher taxes on imported oil to restrict imports would seem to be more targeted and appropriate. Purchases of nuclear, wind, solar, tidal, biologic, geothermal, hydro, etc., should be unrestricted at market prices to encourage their development.
The TEQ system is actually a rationing of carbon emissions, since the allocations are based on the "carbon rating" for the various fuels, not the BTU content. Renewable energy systems aren't included directly, except that the businesses which make the renewable systems must purchase TEQs to make their products. Read the commentary above or the more detailed TEQ report...
E. Swanson
The report from http://teqs.net/report/APPGOPO_TEQs.pdf is pretty sketchy and doesn't say exactly how it would work. I'm currently connected to an electrical utility and through them I can purchase electricity from one out of a few generating companies. Presumably the TEQs per KwHR would differ depending on the generating company because they use a different mix of coal, gas, nuclear and wind? What would happen if during the month there is less wind than expected and the generator has to use more gas or coal? Would I be able to tell the utility to send me electricity from a different mix of generators during the month?
Besides, all the cant about fairness to the consumer is likely just eyewash to sell the scheme. The real meat of the proposal is the box labled "The Market" in Figure 2. Especially note that 60% of the TEQs are "tendered" by the government through the "Primary Dealers" to be bought by all the "All other energy users. Firms, Governments, etc". This is envisioned to result in "Government revenue from Tender", which sounds awfully like a tax, but one which is administered by Barclays, Goldman Sachs, JP Morgan Chase, etc.
Also, the equal distribution of TEQs to each adult is not likely to survive the first political discussions. There will immediately be a plea from unwed mothers of 10 to get additional TEQs for the children. Local governments will not stand for being bled by the financial institutions and will make their case. The British Museum will argue that an inadequate supply of HVAC will destroy the nations priceless heiritage.
In essence, schemes like this prove to be a political minefield resulting in the establishment of huge bureaucracies, financial institutions, etc. Note that it is envisioned that the TEQs will flow back the "Registrar" through consumer card payment transactions. So I'd imagine that Visa, Mastercard, Eurocard, will all get their cuts as well.
Thanks for your comments Merrill.
The report details that each TEQs unit would allow the purchase of fuel or electricity with associated emissions of 1kg of CO2, so yes, as you say, the TEQs units required per kWh would differ depending on the mix of coal, gas, nuclear and wind used. This would reflect the existing need for companies to provide information on the carbon-intensity of their generation. It would be hard to get the information through quickly enough for you to change supplier due to a drop in wind speeds, but an averaged figure should do the job fine.
I firmly disagree with your assertion that the market is the real meat of the proposal, but it is a key part of it. Markets are good at some things and bad at others. One thing they are very bad at it is limited their own total consumption, hence the failings of 'market-based frameworks' to address emissions. TEQs is, instead, a market constrained within a framework. There is a hard cap on the quantity of energy/emissions, within which the market has to operate. The market can then find a price within that quantity constraint. Markets are good at that. Tax and so many other proposed schemes aim to use price as the means to attempt to manage the quantity, which seems less sensible than capping it in line with the available supply (fuel) or climate science (carbon).
I agree that the question of whether children should receive full entitlements, no entitlements or partial entitlements will be a very politically charged one. The answer to that will likely differ from country to country depending on their family policy. However, this does not affect the operation of the TEQs scheme.
Shaun Chamberlin
www.teqs.net/report
Would people in rural areas who are dependent on motor transport get more TEQs than people in cities will well developed and already-subsidized public transport?
Would people in colder regions (perhaps Scotland) get more TEQs than people in balmy climates (perhaps East Anglia)?
The proposal vastly oversimplifies the relationship between "equality" and "fairness". What is equal is not necessarily fair.
Mixing up welfare economics with energy economics is likely to lead to a bad result. Measures to address energy (and GHG emission if you like) should be framed to reduce energy consumption by those who consume the lions share of the energy, i.e. the rich and the middle class.
Yes, this has been one of the big discussions in the field.
It's true that equity is a much more straightforward concept than fairness. In fact, Richard Starkey at the Tyndall Centre wrote a 35,000 word paper exploring the issue:
"Allocating emissions rights: are equal shares, fair shares?"
In the context we are discussing, equity does have one big advantage - everyone means the same thing by it. Fairness on the other hand, would be defined differently by everyone you asked. This makes equity perhaps the best approximation to fairness from a political point of view.
The other point is that if those with more energy-intensive lifestyles were simply given more TEQs units, this would counteract the role of the scheme in rewarding low-carbon lifestyle choices. If we had a surplus of energy there would be no need for such a scheme - as we do not, low-energy lifestyles do need to be encouraged, to avoid absolute shortages.
But you miss the point. Society requires some people to live eg. in northeast Scotland, in order to operate the remaining fossil fuel extraction systems or wind generation infrastructure. For a standard base lifestyle there (say maintaining home at 19 degC through the winter, operating one vehicle to ferry husband to work and necessities to home), more TEQ's would be required than for the exact same lifestyle on the Channel coast. It's not such a big issue in UK, but in eg. Canada it becomes very significant.
Additional point on TEQ's unmentioned. I was involved in implementing the V.A.T. tax (GST) in Canada, and if I recall correctly, of the 7% tax initially levied, 1% was assigned to merchants as payment simply for collecting, documenting and submitting the tax. Being about as complex, won't TEQ's cost about 1% of GDP simply to administer?
Yes, I certainly wasn't advocating the evacuation of Scotland and Canada! And if there are regions with significantly different energy requirements within a nation, it might possibly make more sense for them to operate separate TEQs schemes, with a separate budget. Otherwise either the Government has to purchase additional TEQs units on their behalf (which may cause resentment from others and undermine the sense of national common purpose in keeping prices low) or, as you say, they may struggle to adapt. This is of course true of any cap on energy supply, whether imposed by nature directly or by policy.
Having said that, here in the UK, I feel a convincing case is made for certain supplements to TEQs (I should have mentioned this in response to Merrill). A number of Government studies of TEQs have confirmed that the poor use less energy/carbon on average than the rich, so they would benefit financially, but it seems that around 0.3% of UK households are both in the lowest income band and likely to be worse off by more than £1 a week under TEQs (these unusual cases likely due to factors such as health problems, cheap low-efficiency appliances, an inability to insulate homes etc).
Of course this 0.3% of households are in no position to deal with being worse off. For this reason the studies advocate that a benefit be introduced alongside the TEQs scheme to compensate this small number of households. This would be easily funded from the revenue to Government that would be generated by the Tender of TEQs units. Other cases may be able to be made, but I caution strongly against this wherever reasonable, for obvious reasons. It probably makes more sense to introduce support for struggling demographics separately (as a Government might anyway), rather than to make this explicitly part of the TEQs scheme.
In terms of administration costs, the Govt pre-feasibility study (report conducted by Accenture) estimated running costs in the UK of £1-2bn per annum, although more recent work has suggested that halving that figure may be more realistic, as they somewhat mis-specified the scheme when doing their initial estimates. On the pre-feasibility study's assumptions, the auction of TEQs units would generate Government revenue of £6bn per annum (though the public sector would also be a buyer).
From Energy Flow Chart 2009 it appears that annual consumption of gas, oil and coal is about 180 million TOE, or 1300 million barrels of oil equivalent.
You say the scheme would generate Government revenue of £6bn per annum, which is only £4.54 per barrel in revenue.
However, any scheme which causes a serious percentage reduction in energy usage is likely to inflate the price of oil much more than that. Thus, it appears that it must leave substantial money on the table as either a subsidy to consumers, windfall profits to energy companies, or windfall profits in the TEQ markets.
A wellhead or port of entry tax does not leave such windfalls, collects more revenues more efficiently, and the added revenues can be used to compensate those most disadvantaged by higher prices.
Apologies Merrill, but I'm not following your 3rd paragraph.
Are you assuming that the way TEQs aims to reduce energy demand is through rising prices? If so, this is incorrect, as I explained at the end of the article above. If not, sorry - please clarify for a tired man, it has been a long day!
For simplification, assume we are talking only about petrol.
If a businessman wants to buy 1000 litres of petrol, he has to pay about 1350 pounds (if the current price is unchanged) for the petrol, plus 2300 TEQs. How much will he have to pay for the TEQs.
If the petrol supply is reduced from the current supply to 95% of the current supply, then the 5% reduction in supply will result in a 15% increase in willingness to pay, assuming a .33 elasticity for petrol. So the TEQs have to have a value of 0.15 * 1350 / 2300 = 8.8 pence.
Actually, the elasticity of petrol prices may be much lower than 0.33, and therefore the value of the TEQs may be much higher. If the elasticity is 0.1 for petrol, then the 50% increase in willingness to pay would result in 0.5 * 1350 / 2300 = 29.3 pence.
The pricing of the TEQs will be very uncertain, and the financial firms managing the tender offer of TEQs may make a lot of money.
The unequal price elasticities for various forms of energy are also likely to shift consumption in unpredictable ways.
The price of the TEQs units for your businessman will depend on how successfully the country is adapting to its supply constraints. The whole point of TEQs is to provide a framework to support and encourage reductions in demand through means other than price increases. So analysing the likely price of TEQs units based purely on supply and a fixed elasticity value rather leaves out the whole substance of the scheme. TEQs will be succeeding if the price is very low. The cap on energy use/emissions is already assured by the design of the scheme.
The price of the TEQs units will also depend on the carbon emissions associated with the production of that petrol, so will depend on the businessman's supply chain. As technology improves and more efficient processes come into use, the number of TEQs units required for his purchase will drop.
You are right that modelling of the likely price fluctuations under TEQs is a critical area of study, and one that we have discussed with a number of institutions, with a view to a more detailed modelling than was done in the Government's existing pre-feasibility study.
Since the supply of energy is reduced, we know that the price will increase. There are very few products for which the price falls when the supply is reduced. In fact, the whole principle of monopolies relies on the fact that the monopolist can constrain supply below that which would be produced by a multiplicity of suppliers. This results in a higher price per unit, and allows the monopolist to optimise his rate of return on capital.
So the only issue is how rapidly the energy supply is "constrained" and whether the price elasticity to use is the short term elasticity that results from a rapid reduction in supply or whether a long term elasticity that results from a slower reduction in supply. For petrol, these elasticities are all such that the percent increase in price is a multiple greater than one of the percent decrease in supply.
Consequently, either the TEQs are priced at issue sufficiently high to capture the monopolist profits, or else the profits will be captured elsewhere by producers, intermediaries and financiers in the energy supply chain.
The only way to keep the effective price (price per liter + TEQ price) down would be to institute an additional scheme of price controls.
At various points you seem to be conflating the price of TEQs units, the price of energy and what you term the effective price (price of fuel + price of TEQs units). But I think I may see now why we have been talking at cross-purposes.
The purpose of TEQs is not to impose a cap on, say, petrol supply. Rationing is a response to shortage, not the cause of it. If a country faces a fuel shortage, TEQs is a mechanism for sharing that out as fairly as possible, and supporting demand reduction in order to keep the price as low as possible.
Discussions about whether supply should be ratcheted down quickly or slowly, and the impacts that might have on the price, are not really anything to do with TEQs. The supply budget would be set either by availability (fuel), or by politics' take on climate science (carbon). TEQs is simply a means of implementing whatever budget is available to the nation, and there is no body that prices the TEQs units.
TEQs is a quantity-based mechanism, not a price-based mechanism.
If the objective were to protect the individual in a condition of shortage, then you could simply issue a instrument that would be a right to buy N liters of petrol to each individual. These rights would by law have to be honored by the petrol stations and turned back into the government. Businesses, or individuals wishing to purchase more than N liters, would pay market prices for the remaining petrol. The tender process, the TEQ market, the tracking of TEQ transfers from one party to the next through the centralised accounts of the Registrar, etc. all could be eliminated.
But that obviously is not the objective of the TEQs.
and Figure 1 clearly indicate that a deliberate reduction in energy supply dictated by government policy is the objective of the scheme.
No, as I have explained repeatedly, TEQs could be used *either* to implement a carbon budget (Chapter 1 of the report) *or* to do what you describe and ration fuel shortages (Chapter 2 of the report). Or indeed, both concurrently.
The reasons for making TEQs units tradable are twofold.
Firstly, prohibiting the exchange of rations in the past has always led to substantial black market activity, unnecessarily criminalising otherwise law-abiding individuals.
Secondly, energy demand differs from food demand; while we all require comparable amounts of food, certain vocations intrinsically require more energy. For this reason a non-tradable equal entitlement to energy would simply destroy many professions.
If, as you suggest, the Government issued fuel rations but also allowed additional fuel to be purchased at the market price even when consumers have run out of rations, then the ration coupons would be meaningless, guaranteeing nothing.
Please read Chapter 2 of the report - it's only a few pages.
Another reason to be in favor of redistributed tax compared to TEQ, you can bet that guys likes Accenture (who are already at the root of so many ultra liberal (Europe sense) messes) will want to eat on that thing for quite a while, as they just eat on complexity bubbles everywhere, fueling the whole thing with powerpoint slides and cashing the bills.
Clearly no way out in that direction !!
I would expect some amount of "overhead" cost to administer a rationing system, which would be paid for thru the initial sales of the TEQs into the white market. But, your local merchant wouldn't actually collect TEQs as the producers would all pay for their TEQ along the way as a function of the energy cost of production, just as production expenses are handled today. That's one big advantage to requiring the producers of goods and services purchase their TEQs from the market using the usual monetary system. Individual consumers would surrender their TEQs only when purchasing energy in its various forms. All purchases of other goods and services by consumers and payments for such would not require TEQs, AIUI. Of course, it would conceivably be possible to structure the pricing scheme such that all energy transactions were paid thru careful accounting, tracking all the way down to the level of the individual consumer for every product, but there are relatively few producers and very many consumers, so the TEQ approach would appear to be much less difficult...
E. Swanson
Merril old lad....but it would encourage higher density living. What you point out as unfair because it is equal is the answer to the suburban sprawl issue raised countless times in the pre plateau run up era... Back when people advocated mitigation before the advent. How naive those discussions seem now.
The thing that strikes me most about this debate on this post on rationing is how thin the counter arguments appear to be. And how hollow market based mantras of personal freedom seem to be. "Rationing can be gamed and is a restriction of personnel liberties" as if recent history hadn't exposed to how gamed the markets are! and how cheated everybody feels. Was that the era of freedom we are losing? At best it was a temporay happy delusion we are all waking up from.
Rationing has been objected to and dismissed almost out of hand without even been debated...even here at TOD for as long as I can remember. But here we are debating the topic semi-seriously for the first time and I'm struck by poverty of the opposition to the idea. Basically in the final analysis rationing is all there is... unless the energy paradigm is changed by some miracle access to zero point energy or some such arriving here was inevitable.
I am also in favour of the TB(abys)Qs and all, but that is an even harder sell (for the moment)
"Tax and so many other proposed "
Don't you think that you tend to forget that taxes already DO exist and have been shown to WORK ??
Prime vector for limiting inequalities should remain the income tax.
You are looking over your shoulder at a past when fuel taxes were applied in a time when the oil supply was rising fast enough to meet the demand. After Peak Oil, it will be too late to add more taxes, since the price will start to rapidly rise due to market forces and the nearly vertical supply/price curve. As for your other point, those income taxes shift consumption from one segment of the public to another, thus do not reduce the overall level of consumption...
E. Swanson
No , not at all, the numbers of SUVs sold in the US is back to pre 2008 levels, you just refuse to see the evidence, VOLUME based TAX on fossile fuels do work, are in any net importer country best interest, and they work in rising product price or not, pre or post peak.
The evidence is that the gas tax level in the US is totally ridiculous (and suicidal), full stop.
Tradable energy quotas are not quotas, by definition, they are still a way to manage distribution based on purchasing power, creating an official black market and associated complex system and traders in the meantime, basically outsourcing the tax system to private companies, directly partially redistributed tax is another way, much simpler, same results rich/poors, no market mecessary (or let's say with a self induced market included in the redistribution principles and managed by the nation), and no detailed info per citizen necessary to run the system.
I agree that our US fuel taxes are too low. Most of the tax is applied at the state level and the taxes have not kept up with inflation for decades. I've often suggested that the US needs to increase the gasoline tax by at least $2 a gallon.
I don't know where you live, but there's a considerable complaint in the US about the general perception of high taxes. During the oil price spike in 2008, there were numerous politicians that wanted to reduce the taxes on gasoline. After Peak Oil, it's logical to expect an upward spiral in oil prices, which would result in vastly more complaints about cost to the consumer. After that happens, it will be politically impossible to actually increase taxes on transport fuels. After that point, an allocation system is the only alternative...
E. Swanson
I live in Paris (France) and it's indeed maybe a bit easy for me to talk about gas tax as I have dropped having a car for more than 10 years now, only use a 125cc scooter when I'm too lazy to use my bicycle (which is still quite often I must say, but hope to improve on this point :) ), rent a car once in a while when necessary. But tax isn't a nice word in any country, and during 2008 price spike there were also people in France asking for reduction of the tax or having part of it that would be reduced when barril price is too high (variable TIPP), this being reinforced by the fact that when barril price rises in fact so does the profits of oil companies, so people have to pay more looking at Total benefits rising at the same time. But one shouldn't forget either that a positive aspect of having a high volume based tax is that the end product price variations is smoothed compared to the barril price variations due to the fact that the tax part of a liter of gas does not change with barril price.
As to allocation being the only possible system available after peak I still don't agree. First of all one should consider the starting point (gas really cheap in the US, major potential efficiency gains), plus I see redistributed tax "à la Hansen" and TEQ system (with the T standing for tradable don't forget) as really two possible options to achieve the SAME THING, that is keep access to fossile fuels based on purchasing power but somehow increase their price/lower the consumption for the country/improve effciency of infrastructure & vehicles. If the tax is 100% redistributed it is really just another way to put TEQ, except that it has two advantages that I consider truly critical : 1) not yet another mor or less fake market created with all the traders commissions complexity associated, 2) no detailed info on citizens actions necessary to run the system.
But the end results are the same, really. (rich poor redistribution aspects included)
Yes, this is really the crux of the debate. On a purely mathematical analysis, you are right that the end results look the same. And if this is the reality, then clearly the upstream option is cheaper and simpler to implement, as you say.
Many of us argue that in the real world the end results would not be the same though, and that the engagement of citizens is essential to societies finding a way to thrive within tightening energy/carbon constraints. I did a post on this a few years ago (http://www.darkoptimism.org/2008/06/08/teqs-downstream-vs-cap-and-divide...), but to sum up, the debate revolves around issues like whether a TEQs system would help to shift perceived norms in acceptable behaviour, create a sense of common purpose or encourage greater cooperation.
This topic is explored in Chapter 3 of the TEQs report, and there is a deal of research exploring the question (see eg. Capstick and Lewis, Personal Carbon Trading: Perspectives from Psychology and Behavioural Economics, IPPR).
As yet, I come down with the House of Commons Environmental Audit Committee, who concluded that:
"A carbon allowance could be more effective at incentivising behavioural change and engaging individuals in reducing their emissions than price signals... We remain to be convinced that price signals alone, especially when offset by the (additional income from the dividend), would encourage significant behavioural change comparable with that resulting from a carbon allowance" (http://www.publications.parliament.uk/pa/cm200708/cmselect/cmenvaud/565/...)
Yes, frankly I'm not convinced, and even on the behavioural aspect, in fact I think behavioural aspect with the redistributed tax system (maybe a new word should be used, "redib" or something ?), the fact that you would receive a check or money transfer directly on your account from the government every month would be something truly new, and this transfer really being directly based on the accounting of the tax, so variying every month, somehow giving you a direct feel of the fuel used by the nation for that month.
Moreover the crux of the issue to me with the behavioral thing (and again here my view is to be very careful not to surrender core values in this transition), is that the deficit in communication between CO2 aspect and peak oil aspect has been truly astounding, and I'm not an AGW denier at all.
But you really end up with the conclusion that let's imagine the CO2 aspect was not there, we would have handled the situation much better, even putting back the CO2 aspect afterwards ! For instance when you look back at Carter's TV discource on energy, these were more sane and rationnal with respect to the issue that what happened aferwards, even if they didn't lead to much action. Outsourcing PO alarmism entirely on the AGW side is/was truly a major mistake (especially when the term used to designate PO alarmism is "energy security"). But somehow if we do not go through a fast crash, I think the message is starting to get through (and fundamentally the PO thing is a much simpler concept to understand than AGW, no detailed physical/chemical/biological notions necessary, just basic maths so the "prise de conscience" (awareness period ?) could go fast, without all the skeptics debate and all that junk.
And then the measures, more than complex economics rules and everybody playing with their quotas online, should be targeted to the energy problem itself much more directly.
Like for instance cars, huge potential gains in efficiency are still there, even in Europe cars have been getting heavier and heavier for a given category generations after generations, with all the gadgets, weight added on security standards etc, so all the improvment in engine efficiency being sucked up by the cars being heavier or more powerfull.
For instance with my scooter although I'm allowed to, I never take the freeways or "périphérique", because I don't feel secure not having enough power to manage entry or exit lines or other tricky parts. If let's say 50 or 70 kms around cities the speed limit on freeways were down to 70 or 80km/h, this would lower consumption for existing cars a lot but also greatly favor a new class of vehicles much less powerfull and heavy. Because we shouldn't also forget that for instance the electric car, whatever way you look at it, it just cannot be the same concept as current cars, that is it cannot be a current car except that it is electric (starting with the basic fact that you need 30kg of the top current batteries to store the same energy as in one liter of gas). The optimal "place" for electric vehicles is most probably smaller lighter less powerful, and hybrids between 3 or 4 wheels scooter and cars in terms of shape/form.(also because of the price aspect). Favouring the use of the existing road infrastructure around cities for these kind of vehicles could most probably bring major consumption gains (and doesn't mean that public transit infrastructure shouldn't be improved to of course)
This is valid in other domains, insulation is less glamorous than PV cells on a roof, but people will soon understand it is a better investment, really don't see why these quota would bring any more "buy in" from people, except some guys getting pissed off because they forgot to buy some quotas or bought some, the next day the price crashed and they feel ripped off or things like that.
The motivation must be targeted directly at the energy consuming infrastructure and way of life, and really don't see why an "online market" thing for everybody would bring that more than the redistributed tax.
Was at a public meeting at "Assemblée nationale" yesterday about PO, Yves Cochet (green MP) had a good formula I thought, something like for transport it will be "less often, less far, less quickly", that's the kind of things that must get through.
Only problem I could see with the redistributed tax is, if it is quite high, people having to pay in advance before receiving their check end of the month, but think this isn't really an issue considering actual figures at the beginning.
Not having a CAP part I don't see it as a problem, cap aspect is kind of wishfull thinking somehow anyway, and the important thing is the actual results in terms of consumption being actually decreased, and on this I'm confident the tax would be efficient.
The utilities would pay cash when they buy the TEQs. So would the government, using tax money to pay the bills. Your utility would simply pass on the cost of purchases of TEQs in the price of electricity delivered to the consumer. So what would happen to your "unwed mothers of 10" in a BAU situation, if she is not working and can't pay for fuel with oil at $500 a bbl? Around here, if you don't pay your utility bills, they cut you off completely, which happens rather often to poor people. Would she be better off freezing, (along with her 10 kids) without access to enough heating to survive in winter? What's that old saying: "The sins of the father (and mother) are to be laid upon the children"???
E. Swanson
If the objective is to limit the amount of fossil fuels used, then import quotas on oil would be the simplest way to accomplish that goal. If that falls afoul of WTO rules, it may be necessary to adopt instead a large tax on both domestic and imported oil, preferably at the wellhead or port of entry.
These would undoubtedly raise the price of oil-based fuels. This would decrease consumption of oil, and it would create a more favorable environment for the development of alternative energy sources. It would also reduce the trade deficit.
As the price of oil-based energy propagates through the system, there will be cases of individual hardship. These are best taken care of by providing specific aid based on need using the established welfare apparatus, which does include assistance with heating, at least in the US. This is better than lavishing TEQs equally across the population, including on people who have no economic need for them.
The scheme does not protect businesses, since they have to buy TEQs on the market at market price. Therefore, energy intensive businesses will be disproportionately disadvantaged. As they close their doors and fire their workers, there will also ensue a political cry for a variety of favoritisms to different kinds of businesses. So it is likely that some fraction of the 60% of TEQs for businesses will be doled out to these business "hardship cases" as well, further complicating the scheme and its enforcement.
Lastly, it will be difficult to distinguish between business and individual use of energy. Note that in the US we have had a lot of > 6000 pound SUVs bought as business expenses for a substantial tax break, and then subsequently used to motor the kids to soccer.
TEQs would, in effect, function as import quotas for a nation which imports oil and/or other fossil fuels. Your notion that TEQs would produce higher costs to a business than increasing taxes or the addition of tariffs assumes that the resulting price to business would be greater under a TEQ scheme than that which would result from your alternative. Perhaps you can provide some sort of analysis, other than simple assertion, to support your contention. You would need to show that your system were stringent enough to provide the same limits on CO2 emissions as TEQs. If you can't do that, I think you're blowing smoke...
E. Swanson
TEQs issued to individuals are a subsidy to individual consumption. Any TEQs that are sold by individuals to businesses are a cash flow from businesses to individuals. They represent, in effect, a tax on business and a rebate of the tax to consumers. Therefore, the prices to business are higher and the prices to individuals are lower than they would be without the 60-40 distribution system.
Second, there is likely to be considerable overhead in the operation of the "market". The primary dealers will want their cut, the processors of transactions will want their cuts, etc. A brisk market in TEQ futures and derivative instruments will ensue with all its volatility and opportunities for trading profits. There will be an entire administrative and enforcement apparatus required. These either increase costs to business or dissipate revenues to the government.
Even an individual may be purchasing some subset of gasoline, automotive diesel, heating oil, heating coal, gas for heating/cooking/hot water, and electricity. The proposal only mentions petrol and electricity. So the individual will have to juggle multiple accounts against his TEQ account. Maybe individuals will be able to borrow TEQs until the next TEQ payday for a fee? A new business opportunity!
A wellhead and port of entry tax would subsidize consumption less and make more revenues available to the government for the same fossil fuel quantity at less adminstrative and regulatory cost. The more I look at Figure 2, the more it looks like you need to set up a whole new electronic money scheme for TEQs with all the protections against fraud, counterfeiting, etc. of a real monetary system. Electronic welfare systems, such as the US' WIC (women, infants and children) payments can be implemented fairly cheaply on top of existing card payment systems since they use the same currency. TEQs look like a new currency.
The TEQ plan is not a tax and rebate plan. That's because the allocation (or your rebate) has no economic value if the individual uses the same amount of energy as the average. The "rebate", that the amount of cash money which will be available to the individual, is a function of how well the consumer responds and how much less carbon is used, compared to the average amount of consumption. If one happens to consume more than the average, it costs that individual more per unit of carbon emitted. The 60-40 split just gives the business owners more immediate incentive to conserve, since they would pay a premium if the overall consumption were greater than the total allocation. If the consumption were to decline faster than the rate of decline in the allocations, there would appear to be a surplus of TEQs and their price would represent only the cost of the market transactions.
Business and industry are not like individuals. A business can pass on the cost of operations thru the price charged in the market place, whereas an individual often has almost no power to set the price for his/her service, except thru a union. A business (in the US) can expect an asset to depreciate and eventually be replaced, thus can implement energy conservation improvements as are available and write off the expense as a cost of doing business. An individual can not depreciate the cost of a car or a house and both require continual maintenance and upkeep, for which the individual must pay.
You assert again that well head taxes and import duties would cost less than TEQs, but you haven't provided any analysis to support this. I can assert that it is just as likely that the market price required to provide the same level of reductions would be higher than that resulting thru a system like TEQs. I don't have proof at my finger tips, but I know that the way the markets work. When a major shortage hits, some fraction of individual consumers tend to be shut out of the market, either because the market price becomes too great or because their ability to consume is cut sharply as they no longer have a job or their pay is cut. Clearly, the issue is as much about equity as it is about economics. After Peak Oil becomes obvious, will nations go thru a gentle slow down effecting everyone, like a soft landing, or a series of repeated sudden cutbacks which leave more and more people unable to survive and foraging in the streets for food, while those still working keep on going?
E. Swanson
Well, I'd contend that my experience with the V.A.T. tax in Canada, which is simpler than TEQ's, since it creates no new means of value exchange / currency, and simply applies universally at a single rate to all transactions, costs 1% of GDP paid to merchants to administer.
Don't get me wrong, I think I might like the concept of TEQ's, but I won't advocate going into it without investigating the issues first.
Businesses can pass through costs only if their competitors also pass through costs and if their customers can afford the higher costs. The impact of higher energy costs on the price of finished good and services produced by a business will be highly variable depending on how energy-intensive the business is. Whether businesses pass through or absorb higher operating costs is also dependent on the ratio of operating costs to fixed costs. If fixed costs are high, some competitors may not pass on the higher costs and absorb them through losses to their balance sheet.
Businesses may have foreign competitors that are unequally affected by schemes such as this. Businesses also decide where to invest their depreciation dollars in replacement plant and equipment. They will generally invest it in jurisdictions where they receive favorable treatments and move operations accordingly.
@Merril
Fully agree agree with you, the tax on raw materials at wellhead or port of entry is really the way to go.
Redistribute part of it equal share per citizen.
Handle specific cases in a decoupled way.
Really this should be studied/simulated in comparison with TEQ, because making broad logical statements isn't enough here.
And one thing for sure, the tax system avoids yet another market and associated traders/brokers, as well as the very detailed flow of information per citizen necessary to run system, both of these points are truly critical, and should also be taken into account for the choice of system.
Probably the safest easiest way is to tax at the wellhead, or coal mine, and then spend, very simple and easy, with little argument about moral hazards. That same money then used to subsidize people who do well for the cause. This could be your business retooling for more energy efficiency, or insulation for your home. If the money from the wellhead tax went to individuals who were "with the cause" of conservation, then they would need some sort of a point grade to collect cash from. So if I sold my truck and used a bike, and cut my utility bill, this then could pay me. This system should be modeled first, with lots of conservation value Spanish Inquisition style judgement calls, perhaps by districts competing for national efficiency points?. It is an easier system to scrap, cold turkey. Quota rights become social entitlements. It is a system that can follow onto emerging energy conservation technologies. So the government could spike up with subsidy a PV plant's production locally, providing employment, then too the government could subsidize the purchase and finance of the systems. The savings would be in the form of lower national oil imports, and also the factor in real estate value increases would mean a higher tax base. Also this system could be easily dialed up or down. This is a system that could stand alone from an energy quota system too, unrelated. Or the two could both be implemented in a mild mannered fashion and the people could judge both the systems on their merits.
Just brainstorming, food for thought, and all that sort of rubbish.
Combine TEQs with TBQs, tradeable baby quotas.
I'm with you here.
I have my quota for sale as a bankable future if anybody is interested?
Once implemented, TEQs could actually be used either to ration carbon emissions as Black_Dog says, or to ration oil, gas, electricity or other energy sources in times of shortage.
Chapter 1 of the report details how it would apply to carbon, Chapter 2 details how it would apply to energy rationing. The two could even run concurrently without any difficulty, meaning there is great flexibility in the scheme to address national circumstances as they emerge (including tightening or loosening of carbon budgets)
Shaun Chamberlin
The UK is a large and increasing importer of all fossil fuels, oil NG and coal. All we have left is wind, solar, tidal , geothermal and hydro. And nuclear if you ignore importing uranium. From an energy security and financial point of view, all fossil fuel rationing is a good move.
It will be a very hard sell.
I think you have missed the basic point of TEQ's. A large fraction of the allocations are to be given out to individual consumers. Businesses and industrial operations, on the other hand, are to obtain their share of the allocations via a market based auction for the remainder of the allocations.
In your example of two power plants, both producing electricity, the less efficient power plant would pay more for the extra allocations of carbon, which would increase their cost per kWhr delivered, thus would experience a competitive disadvantage compared with the more efficient power plant. The white market balances the distribution between the consumer and the commercial users, without the consumer having to worry about making detailed calculations of the amount of carbon actually consumed. Individual consumers would seldom need to buy more TEQ's beyond their allocation at the start, unless their individual carbon emissions were above the average.
Have you read the TEQ report? You might want to do some homework before engaging in a rant...
E. Swanson
Black_dog
would every man, woman and child get equal TEQs
From the TEQ Report, page 13:
People under the age of 18 are usually not considered adults, depending on a country's laws...
E. Swanson
That is fair as a three bed house with One child, takes as much to heat as a three bed house with two children. Although perhaps an argument would be made about showers and baths etc.
A person could sell their unused TEQ at the end of the week/month.
So an unemployed alcoholic could sell their unused quota to a hard working sales person driving around selling, err solar panels, for instance.
They could then use this money to buy more booze, how would you prevent this obvious injustice?
I've known a few alcoholics in my time and if you are suggesting that a alcoholic would drink less without the TEQs, I find that hard to accept. I learned long ago that people make their own choices in life and then must live with the results...
E. Swanson
My point is your system would pay for their problem with hard working peoples money.
It's not a system to solve all of society's problems. It is primarily a system to reduce carbon emissions, as far as I understand it.
I am guessing that booze price may go up to the extent that they are energy intensive to produce?
It would discourage irresponsible breeding. Presumably the single alcoholic does not have kids. Or is at least will die sooner, making a net benefit for energy consumption as a whole. I like a system that discourages breeding, and don't consider it unjust. See also "The Tragedy of the Commons."
jaz, Few words filled with much wisdom, your stock and trade. So give away a bunch of quota rights, in this case the new market rights to make energy purchases, and ... so what. I get these quota's worth good money in the mail; I sell them; and go on with my business, which never had anything to do with leading any sort of a conservation charge whatsoever. In this case have we furthered the common good at all? Or, did we actually just buy some hapless unfortunate another pack of cigarettes? Verily, I say if we're going to give away quota, let's give it away only to the people who ask for it, and in the asking express an intent to conserve in some specific way. Any local fire district could do some very simple personal energy audits, to keep score for us all as we get into a new system of incentives and penalties. Hire the kids who spend their energies on sports and such, no need for any skilled labor. Let's for argument sake consider the fire district to have a common kitty of money. Into the kitty goes money from energy quota purchase fees, not from a total give away but sold for a fraction of their face value, for the accounting. Out of the kitty comes money for those participants who actually do some tangible work toward the energy goal.
So we'll need a list of the energy negatives and positives. We'll need a kitty, and local fire district kitty control. Keep it simple and casual and of good humor. Start it out with small figures, just for fun, like recycling, and then in time fund what works, and produce the penalties and pain for that which produces the most gain. Do the deal in twenty five districts, as a pilot, to begin and end at a time certain. Now we have something in development.
Nope, I absolutely understand that, as should be clear from other parts of my reply.
Okay, this is the "TEQs destroyed at the doorstep of the fuel providers" fix I mentioned. However, the article says "Each TEQs unit would allow for the purchase of a set quantity of fuel or electricity", which suggests that power plants are considered energy sources.
The overall point is this: at some level in any rationing system, someone must receive rations from their consumers and destroy them. Whether that's done by retail distributors, wholesalers, refiners and generators, or primary extractors, efficiency gains *above* that level gain no benefit from TEQs.
I wouldn't call my comments a rant: they're just some concerns that are apparent from the short summary. Of course I don't expect every detail to be covered in the summary, but if most major objections to it can't be assuaged in a 2000-word essay to an engaged, technical audience, you're going to face a real PR hurdle with the general public.
I'll also note that you only responded to one of my three points, the one which was one about limits to effectiveness, not a show-stopping problem. I see that my biggest concern, international trade imbalance, *is* covered by the TEQs FAQ: the solution, as I expected, is import tariffs. But while I have no objection to tariffs, they require you to put a TEQ value on every good or service that could possibly be imported, and to charge for it at the border. The need for tariffs destroys the principal benefit of TEQs: that one can ration energy without assigning a specific energy value to everything in the economy.
To give you an idea of how insidious the international trade problem is, suppose I'm running a movie studio. Tons of actors, lights, computers, office workers, catering -- takes a lot of energy to run that, right? I'm gonna need to buy a lot of TEQs! Nope: I run the entire operation in a non-TEQ country. I import a single copy of each film, a few gigabytes of data, via the Internet, into a TEQ country. There, I make a million copies of the file and sell my blockbuster movie to every cinema in the country, every video store and online distributor. How much in TEQ tariffs should I be charged to import that video file?
Now, on my day off from running my studio, I take a home video of my kids playing soccer and e-mail it to their grandmother in the TEQ country. Same size data file as before: how much in TEQ tariffs is it worth?
Interesting points goodmanj. "Almost a great scheme" is exactly what I thought when I first heard about TEQs, but David Fleming managed to convince me to drop the "almost"! I hope I can do the same for you.
On your three points:
International Trade
As outlined in the FAQs on the TEQs site, there would have to be import tariffs, which is no longer as politically unthinkable as it used to be:
http://teqs.net/report/frequently-asked-questions/#Tariffs
This would involve some kind of estimate of the energy/carbon involved which, as you say, is not ideal. But it's 'fairly difficult' to come up with a scheme to address peak oil which is ideal in all respects ;) You make a very valid point, but personally I don't think it's a deal breaker.
Energy conversion efficiency
Each TEQs unit would allow the purchase of fuel and electricity with embodied emissions of 1kg of CO2 (or gwp equivalent). So electricity from renewable or highly-efficient sources would require customers to surrender fewer units than electricity from outdated coal power stations. The competitive advantage for the efficient supplier that you are looking for is there.
Complexity
I'm not sure why you feel it would be difficult for citizens to handle. The majority of TEQs transactions would be automated and require no extra time and effort at all. Since TEQs units are only required for direct purchases of energy, utility bills and fuel purchases are likely to be most people's main direct engagement with the scheme. Utility bills are already easily paid by direct debit, and the TEQs cost of fuel purchases could either be paid together with the cash cost via a credit card linked to an individual's TEQs account, or a separate TEQs card could be carried and swiped alongside the money transaction. If an individual needed to buy additional TEQs units the cost of these would simply be added to their bill at the point of energy purchase, whether that purchase takes place by cash or card.
People would be aware of the limits set on the national economy and the need for energy thrift, but the practicalities of the TEQs scheme itself should not trouble them at all. It would be easier than, say, managing mobile phone credit.
Shaun Chamberlin
www.teqs.net/report
I have no political objection to tariffs, but as I said, implementing them requires you to assign an energy value to everything, which is a nightmare the TEQ scheme was designed to prevent. In another post I give an example of just how tough this is.
Granted, the energy efficiency issues aren't showstoppers, depending on where you set the boundaries of the TEQ economy.
Complexity: the difference between TEQs and mobile phone credit is that since citizens are the only sources of TEQs, many will be both buying *and selling* TEQs, at variable rates of exchange, on the open market. This isn't a showstopper, but it's messier than mobile phone credit. Given the number of folks who have trouble understanding a 30-year fixed-rate mortgage, I expect personal TEQ management services to be a booming industry.
Ah, yes, it would be complex for people to grapple with if it were done in that way, but that is not the TEQs proposal.
Citizens are not the only source of TEQs units. As you highlight elsewhere, they are issued into the economy through both the Entitlement to individuals, and an auction (or Tender) to all other energy users. Then all trading takes place in a single market, so that at any given time there is a single national TEQs price for all energy users (this would vary over time with demand of course). But yes, you're right that people sell too, so I suppose to extend the analogy, it as as though the phone company allowed you to sell back surplus credit at the current price!
With regard to tariffs, I don't really see that your film example is a problem specific to TEQs. As discussed in the FAQ you link to, any country that succeeds in reducing its emissions, by whatever means, will face these problems of activities moving to countries that do not. And as the President of the European Commission highlights (http://news.bbc.co.uk/1/hi/world/europe/7201835.stm) that means either a binding global agreement or tariffs.
TEQs enable nations to guarantee achieving their targets for emissions reduction while ensuring fair access to energy. Such a guarantee is essential to the effectiveness of the many global frameworks (Contraction And Convergence, Greenhouse Development Rights etc.) which aim to set fair national emissions budgets for all the world’s nations. They would require something like TEQs to sit underneath them, to actually implement these budgets.
Adequate global agreements are important, but they become utterly meaningless if they do not ultimately stimulate changes at the local level where we all live out our lives. TEQs bridge the gap between the two. But it's true that TEQs do not in themselves resolve the challenges of the global nature of climate change and peak oil, more's the pity.
Shaun Chamberlin
www.teqs.net/report
With regard to tariffs, I don't really see that your film example is a problem specific to TEQs.
No, I don't claim it is. But to my mind, it's the key problem in all rationing systems, and any system which doesn't have a good solution to it is probably doomed. I freely admit that I don't have a better proposal, but the choice is not between my rationing scheme and yours: it's between the best rationing scheme we can think of, and busines-as-usual suicide. And the whole point of the tragedy of the commons is, business-as-usual suicide is really attractive when your neighbor is benefiting from your sacrifice.
Citizens are not the only source of TEQs units. As you highlight elsewhere, they are issued into the economy through both the Entitlement to individuals, and an auction (or Tender) to all other energy users.
Some issues with the auction scheme:
As I understand it, the main reason to use TEQs as opposed to assigning dollar values to energy through taxation or cap-and-trade is that it makes energy use explicit to the consumer, encouraging conservation. If consumers are only seeing TEQ values on obvious energy purchases, they're missing a chunk of the story. That's not a fatal flaw, of course.
If business gets its TEQs from one pile while consumers get them from another pile, the ratio of the two piles had better be set in stone and very clear. Business has a huge incentive to "encourage" the TEQ regulators to shift the balance in their favor. (The public has the opposite interest, but we all know who usually wins those battles.)
I worry about auction-house collusion. In any auction, there's always the risk that the buyers will form a cartel, and agree to bid 1 cent each. The seller combats that by (a) setting a minimum bid, and (b) holding back his goods and waiting for the price to rise. But as I understand it, the Tender in the TEQ scheme *must* sell, at whatever price it can get: if it walks away from the auction house, the whole national economy collapses. How can we ensure that TEQs are auctioned at a truly free market?
1) Yes, it is simply the proportion of emissions that originate from each. So, for example, in the UK currently around 40% of emissions come from households, and around 60% from organisations. So around 40% of the budget is allocated to households, and around 60% to organisations.
2) The Tender itself would likely be done alongside the existing weekly auctions of Treasury Bills and government debt. As you say, there are inherent challenges to defining an appropriate auction process, but they are well understood.
I tend to agree that TEQs do not address AGW or peak oil at a global level, though at a national level especially for the UK there is little choice.
In time I think rationing will become a state default with some international co-operation.
Peak oil at a global level is being addressed already by of all things the interaction of the market and the oil cartels. This rationing suggestion is a response to that reality rather than a solution. In other words the things that need to be done are not acting on oil production but vice versa.
Energy rationing was a central policy of the Technocracy Movement, and the idea may have been contributed by M. King Hubbert, who was an important member at the time. The difficulty in finding support for rationing at the time, as now, is that it is seen as socialism (although it isn't).
A better system might be to grant individuals a trad-able right to generate renewable energy, and possibly tie these units to fossil fuel ration units. A universal right to operate a solar panel or wind turbine would be popular and an appropriate incentive.
The plan which King Hubbert and the Technocrats proposed envisioned a monetary system based on energy, as in BTU's. More traditional systems based currencies upon something real, such as gold or silver. Here's an updated version of their ideas from 1937. As we now know, today's fiat money system is based on little more than hot air...
E. Swanson
I don't see why a system of carbon/energy taxes plus per capita/family rebates wouldn't work as well--and avoid all the extra costs for administrating this new system
Good question pasttense, I think there are probably three main answers:
1) Tax has no role in the distribution of fair entitlements to energy at a time of scarcity. Even if an effective carbon tax regime did exist, it would still be necessary to have in place a rationing scheme specified in terms of entitlements to energy.
2) If taxation were high enough to influence the behaviour of the better-off, it would price the poor out of the market for fuel and energy.
3) The focus of the scheme needs to be on the long-term energy-descent, sustained over many years. There needs to be a framework to guide this and support long-term investment, but taxation cannot give a long-term steady signal: if it remains constant, it will be inappropriate at certain periods of the economic cycle; if it fluctuates, it does not provide the steady signal.
2) is clearly false (in fact the higher the tax the higher the benefits for the poor at 100% redistribution)
1) is very debatable
3) tax level can be changed, look at what Turkey went through for instance in below, and it doesn't suffer from the TEQ market crashing (even if ok this could be considered a good thing, provided someone isn't bailed out for whatever reason) on recessions, and there is no need to define the cap.
The tax must be volume based (energy or carbon) and can be increased.
It *is* mostly equivalent to a tax + rebate system, with two crucial distinctions:
1) If you're giving per capita rebates on energy taxes, each person has a strong incentive to claim the full rebate by maximizing their energy consumption. That's not a good way to conserve!
2) If, on the other hand, you give a fixed cash credit to everyone, then it *is* mostly equivalent. But...
If you want to control energy usage in a free market, you must make energy usage explicit to the consumer. (This same argument has been used in the health care debate and elsewhere.) If I see two loaves of bread in the store and one costs $2 and the other costs $1, I have no way of knowing whether the price difference reflects different energy costs to make them, different raw material or labor costs, or just raw profiteering. But if they both cost $1 but one costs 1 TEQ and the other costs 3 TEQs, the energy consequences are obvious.
Wot ?
Don't think you understood the concept of the redistributed tax, Hansen kind.
Tax revenues are redistributed equal share per capita basis.
So if you consume less than average, you end up positive
If you consume more, you end up negative
The two parts of my post are distinguishing between a "rebate" and a "credit". You're talking about a credit, but pasttense referred specifically to a rebate. You can't get a rebate on tax you didn't pay! So if everybody's rebate is $200, but I typically pay only $150 in energy tax, it costs me nothing to crank up the thermostat in my home until my energy tax reaches $200, allowing me to claim the full rebate while staying toasty warm.
I wouldn't call that a credit (but I'm not nativ English speaker so maybe right word), I would call that a direct redistribution of global tax revenues to citizens on and equal share per capita basis (ok a bit long, but that's what it is and does not exist anywhere on a true direct tax accounting basis to my knowledge)
I would appreciate a significant addition to this piece that recognizes the time and locational premiums on energy. If you can consume electricity when the wind turbines are producing a lot of power then you should be able to consume a lot more energy equitably. This writing makes no mention of the fact that not all energy is the same, and the fundamental concept of an energy quota for a person is poor construct. We need to instead allocate an energy value per person.
After all, the interchanges between different forms of energy is key to the solution of the problem, and this wouldn't be the first time that politicians screwed that up. Credits for transportation fuel and feed-in tariffs in the united states have neglected green energy in other areas such as for industrial heat. It is incredibly poor policy to use energy quantities as any form of baseline.
I implore the reevaluation of this initiative based on energy value and not quantity. Otherwise I have no major problem with the effort of equitable energy quotas. Just do it right.
Especially in Canada, where existing electricity generation infrastructure / fuel inputs varies dramatically from isolated region to region.
How did people live in those areas before fossil fuels? If they can't earn enough "money" to pay for the expected increase in the cost of energy as Peak Oil kicks in, will they continue to live there? I suppose that should their services are required for some government or industrial activity, their pay would cover their higher energy use. When their jobs go away, they would likely need to move as well. I think the economist call that "mobility of labor"..
E. Swanson
In California, PG&E charges different rates in summer and winter and different rates by region while charging more per kwh as usage falls into higher tiers. Those living on the mild coast pay more than those living in the central valley. This is an attempt to be fair while also trying to encourage conservation.
Other states don't feel the need to adjust rates depending on where you live and no one seems to complain. Frankly, I am not sure that charging different rates by region makes much sense as it might be beneficial to incentivize people to live in areas that take less energy to live. I live in the mountains of Colorado and higher energy usage in the winter has always just been a fact of life and those living or moving here are aware of this situation and act accordingly. Cheaper housing prices may partially reflect this situation.
From an energy perspective, things are going to get bad in the U.K. especially because it appears to not be a very good place for renewable energy, especially solar. One way or another, energy is going to be expensive, whether it be provided by renewables, fossil fules, or nuclear. They can choose to start rationing now in an orderly, planned way which provides some equity between the rich and the poor or they can wait for rationing with higher energy prices, whether taxed or not. Regardless of the plan chosen, or no plan as it were, some of the suffering could be mitigated by an investment program which facilitates massive conservation and the highest possible efficiency.
Yes, this absolutely makes sense.
Remember that TEQs are not quantified in terms of quantity of energy, but in terms of a rating system (e.g. 1kg of CO2 emissions produced over that fuel's lifecycle). Accordingly, there is no barrier at all to the rating system incorporating the information you describe, whether in dealing with emissions or energy shortages.
Indeed, we have had meetings with an impressive group called AMEE to consider the practicalities of making this happen. See e.g.
http://realtimecarbon.org/
http://explorer.amee.com/categories/Real_Time_Electricity
Shaun Chamberlin
www.teqs.net/report
I have no doubt that it can be included in the accounting of the system.
And your main battle lies elsewhere anyway. Convincing politicians is the challenge.
Accounting will only be a problem when conflated with politics. Deciding exactly the line with which to weight g CO2 against $ in front-end cost, for example, will pit economics against responsibility, and could pit peak oil concerns against responsibility.
From the main post:
It seems we're looking at sort of a meta-lifecycle emissions number, which seems fine. I don't know why any preceding carbon cap and trade system wouldn't just use such ratings anyway. On the factory scale, engineering specifications should very accurately allow an accurate calculation specific to the plant. Power plants were never a challenge in this arena anyway.
More specific to quotas - this approach can give the poor greater leverage to make a difference, and I understand that argument. The problem with taxes on energy related metrics is that those who are not well off do not have much leeway to adjust. But with quotas you can assure the same quality of living (for some baseline) remains the same, while having the same cost sensitivity to behavior of a more highly taxed scheme. In that case, the baseline would have great incentive to spend time to reduce consumption and would find it acting as a money-making activity.
In virtually any case politically, you have to pay someone to get what you want. My greatest concern regarding feasibility is whether or not the poor are politically powerful enough for this discussion to matter. Maybe you would do better paying the bankers :P
Thanks Shaun and Chris for addressing this topic in-depth (as well as it *can* be addressed in a blog post, that is).
TEQs are inevitable if we are to approach declining energy supplies (and climate disruption) in a proactive manner. They don't HAVE to impact industry, as building and transportation energy use is an area with very broad opportunities for energy reduction.
Would like to see this concept gradually introduced to the US, which would initially shudder at the thought that the country did not have unlimited resources.
These TEQs are just a subsidy of BAU and are insidious.
The idea is to get the power elite to buy into the idea of playing the GW/PO game but they are smarter than the economists and will figure out how to cheat.
Another freak-market canard is that the 'Consumer is 'King', consumers do not direct the economy, TPTB do.
For the UK you need to directly attack the creation of fossil fuels.
Cars and trucks have to be rationed/taken off the road. This will raise the demand for mass transit or telecommuting. Companies will be told to support these measures. Schools and public offices will be storefront rather than 'factories', in the spirit of a walkable/bikeable neighborhood. This is the opposite of BAU.
For electricity the UK load is roughly 1/3 industrial, 1/6 private commercial, 1/6 public sector and 1/3 residential.
Here again the objective should be to simply close energy wasting enterprises(replace with telecommuting, Internet). Boost local walkable retail(close Walmart). Replace inefficient public housing with Passivehaus.
Boost renewable energy with much MORE mandates--require utilities to produce 25% of their electricty from renewables.
Phase out coal with CCS coal.
If CCS coal and offshore wind cost 4 times as much as coal or gas, raise the price to cover the conversion.
Natural gas is a chimera for the UK and simply it's too valuable to burn, better used to produce plastics.
Right now wealth is measured in cheap energy and cheap energy products. It's a form of Gresham's law--cheap energy drives out clean energy.
Good point.
Someone wrote recently about "the secret of herding cats" which I think is applicable here. Unless people see a clear advantage they probably won't buy it, so the simplest and most direct question here is: Who are the winners and losers?
As best as I can tell the potential winners are people who use less energy/emit less carbon, and those are most likely people of limited economic means. The potential losers are wealthy and powerful business interests who will find themselves in bidding wars for expensive and scarce quotas.
Not exactly a recipe for success.
Cheers,
Jerry
These TEQs are just a subsidy of BAU and are insidious.
I disagree. They're a *smooth transition* from business as usual, but not a subsidy of it. The system rewards conservers and penalizes wasters, which promotes conservation even when quotas are huge. But once the system is in place, it allows a smooth belt-tightening transition to as strict a conservation scheme as you like.
The idea is to get the power elite to buy into the idea of playing the GW/PO game but they are smarter than the economists and will figure out how to cheat.
Perhaps. But your alternative, if I take your choice of verbs literally, involves government seizure of personal and real property on a nationwide scale and the mass closure and forced destruction of many billions of dollars of investment.
No matter how lofty your goals are, you will never, ever succeed in doing this peacefully. If you believe in the fundamental greed of the "power elites", your choices are to either tolerate business as usual, co-opt the powerful with a scheme like TEQ, or fight an honest-to-god war.
At the point that the an invading enemy has gained a beach head and is moving toward major population centers, do you think the government of the country should gently try to incentivize those with vital equipment to use them in ways that may be helpful to the war effort?
Both PO and GW are existential threats to civilization. As long as that is not understood, we will not take actions appropriate to the threat.
This is a point that needs to be made over and over and over again. These existential threats make WWII look like a day at the beach. Watch tonight to see how clueless O is about this existential threat.
He may or may not be clueless, but he is acutely aware of the limits of power (see Bacevich's book by that name).
He is mostly now defined by his position, which is the president of a crumbling empire controlled by GS and populated largely by people dominated by an empire of illusion (see the Chris Hedges book by that name).
You seem to think that we can tinker with the system(rewards and incentives) and it will give us what we want.
That is a fundamental error.
We're talking about depletion of energy, material and even food resources.
We're talking about mass extinction +4 degC temperature rise.
And you want to adjust the tax code or the financial regulation so we can grow ourselves out of our dilemas?
So much of what we do is just out of inertia; we do things now that will have no logical purpose in the near future.
The only hope I can see is for us to use the 50-100 years of precious fossil fuels left to create a renewable energy economy.
This new economy will be less energetic, less certain and less profitable than the one we have now so we can't trust the greedy power-elite to embrace it.
Our current trajectory is into paralysis and poverty.
As in the Middle Ages and in parts of Africa today, the vast majority of humans will live a bleak hopeless existence in a Post-Fossil World without electricity or fuel or food or medicine or security.
The alternative is a world of peace and order with the ability to maintain a high level of technology albeit far less wastefully
than the world we live in now and much of it is within our grasp now.
All that is required is forethought, imagination and a desire to take concrete steps forward rather than rely on the economic promises of a free market fairy tale.
I agree with you about the possible long-term consequences of inaction. But I don't believe your approach will ever be accepted peacefully by the public, even if the wolves are howling at the gates.
You're taking a high-level, grand strategy view of the problem -- "we need to change our society by getting rid of X, Y, and Z" -- which is useful up to a point. But you're failing to account for the fact that this isn't a game of Sim City, with you as the omnipotent player who can demolish polluting industry with a mouse click. These are real human beings, and they won't always do what you want, even if they agree with your goals and principles.
You don't get to redesign society by fiat, no matter how perfect your solution is. The "useless inertia" that angers you is a fundamental fact of human society, and cannot be swept away. Your only choices for change are to work within the existing system to create incentives and mutually-agreed rules which encourage the behavior we want to see -- stuff like TEQs -- or become a dictator and *force* your societal change through, with a very large army.
Maybe this means we're all doomed, I dunno. But I do know that grand designs of how the world should be restructured are useless without a viable plan to put them in place.
In the past countries were capable of tremendous changes in very short amounts of time under war mobilization.
It's true that people have changed since then but that only means that people can change back.
In WWI all the various countries were at least quasi-democracies
the Kaiser's Reichstag was dominated by Social Democrats and the Czar had his Duma, yet all mobilized for war.
The only thing that is crystal clear is that growing your way out of a no-growth situation is an oxymoron.
In the past countries were capable of tremendous changes in very short amounts of time under war mobilization.
Yes, but to begin a war mobilization, you need to first convince people that there is an existential threat. And the problem with peak oil is, if it gets to the point where citizens actually start fearing for their lives, it's far, far too late.
In WWI all the various countries were at least quasi-democracies
WWI is a bad example of trying to change the world order: I'd claim it was one of the least visionary wars ever waged. The events leading to that war were all essentially self-preserving actions, in which all sides were trying to maintain their own status quo.
Now, World War II, *there* was a war where someone was really trying to reshape the world.
The only thing that is crystal clear is that growing your way out of a no-growth situation is an oxymoron.
Can't argue with that. But where does "growth" appear in the TEQs scheme? Figure 1 of http://teqs.net/report/APPGOPO_TEQs.pdf doesn't look like growth to me!
We do need to grow renewables enormously and need tremendous investment in a sustainable lifestyle.
TEQ is basically cap and trade with an International Committee on Climate Change issuing international carbon dollars.
Supposing they work like real dollars people will try to accumulate them. Every year fewer will be issued as the carbon budget is decreased. For every kilowatt of electricity or gallon of gasoline you will have to cough up TEQs as well as a few dollars.
Most CO2 is produced by power utilities, oil refineries and transportation. How will these companies respond? By reducing production and raising prices. They won't invest in low output renewables. The company profits will go into speculation and buying TEQ financial gimmicks.
Relying on old institutions and channels to produce radical changes won't work.
OTOH, renewable mandates require a measurable progress.
Indeed, I wrote about the issues associated with a 'Wartime Mobilisation' in response to peak oil here:
http://europe.theoildrum.com/node/4233
I just want to say that I really appreciate both majorian's and goodmanj's contributions to the discussion (I have saved them in my file of useful passages).
The discussion gets at an essential element of our predicament--how far reality has outstripped the apparent ability of our political and economic system to respond in any way that remotely reflects the extreme severity of that reality.
Planning seemingly practicable solutions giving current structures can cement in place approaches that are far outside of what is now needed. But waiting and hoping for dawn to strike on the populous or on the powers that be so that we can get to truly realistic solutions seems like a counsel of despair or irresponsibility.
I see this at every level now--personal, institutional, municipal, state, national and international (I work on the first three, my brother on the last two levels).
Many claim that we need a Pearl Harbor-like event to wake us up to the enormity of the situation, but I can't imagine what that would be.
Katrina didn't do it.
Tens of thousands dead from the '03 European heatwave didn't do it.
None of the other one in 100 or even once in 1000 year events that seem to be hitting every month or so seem to do it.
The Gulf disaster didn't do it.
Every single event has just enough deniability (especially those inclined to denial) that they are not sufficient to galvanize action.
And of course those of us trying to sound the alarm are, predictably, dismissed as, what else, 'alarmists.'
Ah, but therein lies the rub. Those very concrete steps might be walking us forward right into a fetid swamp with myriad hidden sinkholes of quicksand that might look like solid ground to the unsuspecting. The problem is that we are in uncharted territory. We know for sure that we can't turn back nor stay where we are but it sure as hell isn't clear how it is that should proceed or even that there is a path to guaranteed safety. Whatever we do, we will be lucky to maintain a solid foothold.
http://images.wikia.com/left4dead/images/5/5b/Left-4-dead-2-2.jpg
Cheers!
This comment is so spot on.
Hence the need for a hard quantity-based mechanism like TEQs to bring the reality of physical constraints into decision-making, rather than the current ineffective free market price-based models of carbon trading, taxation etc (well, ineffective if the effect you're looking for is a resilient future, they are certainly creating windfall profits..)
Edit - majorian, I notice that elsewhere you declare that "TEQ is basically cap and trade with an International Committee on Climate Change issuing international carbon dollars". It really isn't. For starters it is explicitly a national scheme, but read this for more on how fundamentally different it is (I am a long-standing critic of carbon trading schemes like the EU ETS):
http://www.darkoptimism.org/2009/08/14/all-party-parliamentary-teqs-repo...
I stand corrected.
Let me change that to,
"TEQ is basically cap and trade with a UK Committee on Climate Change issuing UK carbon dollars".
It's still cap and trade. People and businesses will just horde their TEQs for future trading. It will intensify the effects of energy shortages.
This isn't what the UK needs to MANDATE investments in renewable energy and negawatts openly.
Think about what happened in the 1930s.
Why did the economy collapse?
Because that's what is exactly supposed to happen under capitalism--demand collapses, the economy collapses.
In the 1930s people openly practiced central planning in most all countries. And the Soviet Five Year Plans actually worked! The TVA actually worked (though it was fought fiercely by the coal companies)!
Contrary to various lies of free-market idiots who repeatedly claim that Red China is no longer socialist, the Chinese government ministries continue to plan and direct most investments
in the PRC.
http://en.wikipedia.org/wiki/Economy_of_the_People's_Republic_of_China
I don't support market based 'solutions' to Peak Oil.
I think your TEQs if they work will indeed reduce consumption of energy but will not create renewable energy or negawatts. Instead it will create a trade in TEQs.
Surely there's a difference here?
On the one hand you have market-based approaches like the EU ETS, which have 'safety valves' built in to ensure that the price can never go above a certain level, meaning that price is effectively the fixed variable, and emissions can go where they will (misleadingly termed 'cap and trade', despite that there is no effective cap)
On the other hand you have a quantity-based approach like TEQs where the emissions are fixed, and price is the free variable. So the market is constrained - it can find a price (which markets are good at), but it is not trusted with restraining its own appetites (which markets are not good at).
Well there is nothing but an insidious outcome if you are right because free markets are a form of mind control and TEQ rationing will be gamed.
Like your style. You are in favour of harsher form of rationing and command economy.
You know people are beginning to consider this issue with a degree of seriousness when they are split on how deep it should go.
If eg. TEQ's are implemented in Canada, are electricity credits issued in eg. Ontario (largely nuclear and hydro electricity) valid when I move my family to Alberta (largely coal electricity)? If not, does there need to be an expert bureaucracy in place to deal with that? At what cost?
TEQs units are not quantified in terms of a set amount of electricity - they are quantified in terms of the associated emissions. So the same TEQs units would be valid in either place, but one unit would allow the purchase of more electricity from coal-based suppliers than renewables-based suppliers. The system thus provides a competitive advantage to companies that produce energy in more efficient, more renewable ways.
Oil importing countries face impending massively declining available light oil exports. Shutting down the economy in proportion to availability of fuel imports is a national security threat of the highest order. Robert Hirsch highlights this immense challenge in The Impending World Energy Mess. Even the worst alarms over catastrophic anthropogenic global warming (CAGW) are minor by comparison, both in rate and magnitude.
Thus the critical issue is is NOT CO2 or even total energy, but transport energy.
Given the auto's dominance, this overwhelmingly relies on transport fuel.
The urgent need is to allocate Tradable Transport Quotas, (NOT tradable Energy quotas), and without the complexity and distortions of linking them to CO2.
Uncertainties in climate models are still far higher than what is needed to make prudent policy on "mitigating" "climate change". The Copenhagen Consensus exposes climate mitigation as giving only $0.30 benefit on the dollar. Climate mitigation further starves the poor of urgently needed humanitarian funds for far more important projects. Warmer climate may likely be more beneficial than the current environment. Furthermore, adapting to the always changing climate is far more economic and prudent that forcing a carbon cap - to the great benefit of financiers, and the severe harm to the poor. Bjorn Lomborg observes:
Vitamin A gives a 5600% higher return with immense human benefit.
Restore sanity, care for the poor, prepare for rapid decline in available fuel imports.
But, climate models are never going to be perfect. One must be aware that uncertainty cuts both ways, which means that climate change may just as well be worse than the models tell us as better. For example, most all the climate model experiments have predicted a slower decline in sea-ice than that actually seen the past 10 years. Bjorn Lomborg isn't a climate scientist and made several obvious mistakes in his first book and his estimates of the costs and benefits may be skewed as well. The weather events of the past year are stunning examples of possible variation in weather. We are suddenly facing a shortage of grain supplies in the world's markets, after Russia embargoed grain exports and Australia's floods. Whether or not these extremes are in part due to Global Warming, these events should serve as a warning that we are playing with fire and are likely to get burned if we keep on doing so...
E. Swanson
E. Swanson
Journalistic hand waving to generate sales does not constitute sound basis for political action. Lomborg gathered a very high caliber of economic Nobel prize winners and experts to evaluate 30 major global projects. His errors are insignificant compared with ClimateGate. David Stockwell found CSIRO's Drought predictions were backwards from actual historical trends. Historical records suggest Russia has had similar or worse fires in previous centuries, Australia's floods are but a repeat of 1974 etc.
There is no quantitative scientific statistical basis for attributing weather extremes to "global warming", nor for the portion due to anthropogenic influences. Climate Scientist Prof. Judith Curry observes: "I find no basis for confidence in the model-based attribution of extreme events." Attribution of extreme events
Even if your examples were due to anthropogenic causes, your examples pale in comparison to shutting down our economies for lack of transport fuel. Go read Hirsch & Jones to understand the real threats we face.
Where did I claim that last year's interesting weather events were the result of global warming? As for Climategate, I found little to complain about, as did the review panels that looked at the e-mails. BTW, have you ever considered that there might have been more e-mails, which were intentionally left out of the release because they did not support the claims of abuse by scientists at CRU? And, who did the criminal acts of snooping and the theft? Were they paid to do so and if so, by whom?
With all due respect to David Stockwell, his choice of publication automatically brands his paper as suspect. Energy & Environment is not peer reviewed and is the something of an "astro turf" organization which is favored by those who use slight of hand to appear to be publishing high quality scientific research. I wrote a letter which was published in E&E in which I pointed out gross errors in one of their papers, a work which had found massive following in the denialist camp. Of course, my experience does not prove Stockman's work is flawed, but then, simple publication doesn't prove him correct either.
The variation in weather is quite large in the short term and thus detecting and change in climate is quite difficult. Precipitation extremes are especially notorious for variation, since precipitation events tend to have highly local impacts which may not impact a whole region. I would think that precipitation extremes would be the last place to look for detection of climate change. Anyway, one year's data is not enough to give a valid trend, again, because of the large variability in the short term. For example, the dearth of hurricanes hitting the US the past 2 years may be representative of a longer trend, or this may be just a short term situation brought on by El Nino forced upper level winds and we won't know for a few decades.
As Judith Curry notes in her post A disastrous truth:
E. Swanson
Swanson - "brands his paper as suspect"
You commit the ad hominem logical fallacy instead of addressing the substance of the argument. Please raise your language to professional discourse.
Is that all you can say after I shot holes in your argument? Maybe you don't understand the view of E&E by the rest of the scientific community. Perhaps you still think that the Soon & Baliunas 2003 Climate Research paper was good one and that the denialist who still refer to it are doing good work by spreading propaganda and disinformation? And you expect "professional discourse" in reply to your use of an "appeal to authority" of some group of Nobel Prize winners without giving names or reference?
E. Swanson
You gave no quantitative evidence worth evaluating.
On expertise, methodology and open documentation, see:
Participants. Read the published books. Why should we follow the siren call of warming alarmists when the benefit / cost only comes to $0.30?
On the rapid severe impact of fuel cutoff, see the major famine in North Korea following the collapse of the Soviet Union, with the loss of subsidized fuel and loss of their export market, loss of tractor parts etc., leading to loss of diesel transport of coal to fertilizer plants. Loss of tractors, loss of fuel, loss of fertilizer resulted in a major drop in good production. That was compounded with drought/flood. e.g., see: Famine and Reform in North Korea
So it's your way or the NoKorean way? Black and white thinking much?
Your argumentation is so faulty and riddled with (self?) deceptions, it is really not worth responding to.
One question:
How many established scientific organizations in the world have concluded that GW is anything other than anthropogenic and very serious.
Citing long-time, long-discredited deniers like Lomborg and E&E does not lead anyone to take your positions seriously.
I doubt anyone here, though, would argue with the point that dropping availability of oil will cause major problems for economies--it already has.
The people in the "Expert Panel" of the Copenhagen Consensus all have backgrounds in economics. Several have been given the Nobel Memorial Prize in Economics, which is different from the other Nobel Prizes, since they are awarded by a different organization. The analysis appears to be an economic analysis of costs and benefits, a process which is notorious for problems. The challenge report section on Global Warming is also based on the costs of various scenarios over time all the way out to 2100, but not beyond. All the emission and mitigation scenarios at 2100 are still on an upward trend in temperature, all of which might be expected to continue to grow due to the thermal lag in the oceans. Those mitigation efforts discussed make the future seem less frightening, but a perspective paper by Christopher Green points out many of the problems of implementing even the least successful of the mitigation scenarios. The other perspective paper from Anil Markandva points out the rather obvious problem of calculating a cost benefit ratio using a 4 or 5% discount rate, which is, any valuations past 2050 are buried in the mud. I noticed no mention of the problem of Peak Oil, as the official governmental line didn't include this situation in their energy projections. Some have suggested that there isn't enough fossil fuel available to push the CO2 level to dangerous levels. So the debate goes on and nothing is being done about either problem.
Of course,your reference to the experience of North Korea is just a red herring, as nobody is talking about a sudden cut of of energy use to mitigate climate change. If North Korea had allowed an opening of their society, those resources might have been available to them...
E. Swanson
E.Swanson
You raise the strawman "nobody is talking about a sudden cut of of energy use to mitigate climate change".
North Korea (and Cuba) in the mid 1990s are prime examples of the consequences of rapid reduction in available liquid oil usage, not "red herrings".
The USA used to be the world's largest exporter of light oil. US light oil production peaked in 1970, as predicted by M. King Hubbert in 1956.
It is now importing 65% of its oil - most of which is used for transportation fuel.
The rapid reduction of light oil EXPORTS will be forced on the world by the physics of oil recovery and rising domestic oil consumption in oil exporting countries.
For the top five oil producers see:
A Quantitative Assessment of Future Net Oil Exports by the Top Five Net Oil Exporters
Updated at:
Peak Oil Versus Peak Net Exports--Which Should We Be More Concerned About?
You will have to deal with it, one way or another, like it or not.
The challenge now is how fast can we transition to other fuels / transportation methods, or how fast and how far do we shut down our economies by inaction.
PS, there are a lot more scientific evidence that anthropogenic global warming is not as catastrophic as some paint it. There are many benefits of global warming that have not been seriously considered. e.g. the Medieval warm period etc. See Climate Change Reconsidered, the 2009 NIPCC report.
I tend to agree with your depiction of our predicament. Peak Oil will present difficult decisions and one of the most difficult will be how to allocate the shortage as time passes. That problem is the reason I think a rationing scheme offers hope, since the other approaches would tend to leave many people sitting by the side of the road slowly starving.
As for your claims regarding climate change, I've looked at the NIPCC report and found it full of errors. Fred Singer is someone with whom I've had some dealings and I do not agree with him as he has an agenda. Also, I've looked at the so-called Medieval Warm Period and I do not see evidence that the world was as warm them as now. I've even published a bit of analysis on the subject in reply to Loehle's "corrected" paper in E&E. I was the guy that found some of the errors in Loehle's first version in 2007.
E. Swanson
Re: "leaving many people siting by the side of the road slowly starving."
That is exactly the policy already in place. OPEC has driven the prices up by effectively capping production in 2005.
Consequently all developing countries are already being severely hurt.
On the impact of oil shortages on Cuba, see:
RUSSIAN OIL-FOR-SUGAR BARTER DEALS 1989-1999
Cuba's oil imports dropped 58% in four years from 13.1 to 5.5 metric tons, while domestic production only rose 0.58 metric tons. Its imports from Russia dropped 79% in 2 years, from 8.5 to 1.8 metric tons.
For the impact of major (>20%) resource shortages on nations, see:
Jorg Friedrichs Global Energy Crunch How Different Parts of the World would react to a Peak Oil Scenario, addressing North Korea and Cuba.
On the medieval warm period, it appears you have not considered historical data. e.g. Easterbrook summarizes:
Wow, where to begin? Easterbrook's piece is seriously bad. For starters, he takes the GISP2 ice core data and then picks out sudden changes in temperature between 25,000 BP and 10,000 BP. Funny thing, those were not changes in Global temperatures and the Antarctic data does not exhibit such wide swings, because the GISP2 record only gives a local, high latitude measure, given that the source of the δ18O is up wind from the drill site. Those large jumps are what happened to the glaciers after LGM and such shifts can't happen today, since the massive ice sheets are long gone, although his presentation implies that these will be a natural part of climate change in the near future.
Given the wonderfully precise ice core data, why is that he begins to drift into anecdotal descriptions of warm and cold extremes in Europe, without any mention of available proxy data, of which there is considerable quantity? He blasts thru the story of Iceland and the Vikings in Greenland, ignoring the fact that we do know that Iceland' population didn't die from climate but from the Black Death and the fact that there is no proven cause for the disappearance of the Vikings in Greenland. Of course, he doesn't mention the rather solid evidence that the Younger Dryas was the result of a flooding event which capped the thermohaline circulation in the Nordic and Labrador Seas and that a similar, smaller event is implicated in the 8200 BP event. He seems to have completely missed the worry that global warming might produce another such pool of salt depleted waters, which could weaken or stop the THC again.
Of course, he makes no mention of the impact of volcanic eruptions, which are known to have occurred and which could have resulted in those short, sharp cooling events that people recorded in their historical records. The one in 1452 may have finished the Vikings, if any of them were still trying to live there, after all the trees had been cut and there was no firewood. There were also large eruptions in 1601, 1683, 1813-15 (which produced The Year Without a Summer) and 1883.
Easterbrook's piece is a great example of denialist propaganda, with careful omissions of facts which refute his claims. Sorry to say, guys like him and Singer have managed to spread their propaganda so widely, with the help of Beck and Limbaugh) that many folks believe their story instead of the scientists.
E. Swanson
There appear major overstatements in oil reserves. See: Middle East OPEC reserves revisited. This suggests major dangers far beyond "climate change", regardless the portion of anthropogenic causes.
On climate, there appears a lot of evidence for the medieval warm period: The Medieval Warm Period - A Global Phenonmena
e.g. Geophysical, archaeological, and historical evidence support a solar-output model for climate change Charles A. Perry and Kenneth J. Hsu, PNAS.
You are ignoring evidence of higher temperatures: Grapes in England, France, Germany higher/north of present extents. Wheat & Oats in Trondheim, Norway. etc.
That we are discussing this highlights the uncertainties of the magnitude of global warming, and what portion of that is due to anthropogenic causes. We need to focus on keeping our economies afloat, not on a few mm of sea level.
Your first reference to Watts' site about The Medieval Warm Period is full of errors. For example, the post presents that old graphic from the first IPCC report, which the denialist have turned into an ikon. The person responsible for that graph, Tom Crowley, testified before Congress that the graph was "a cartoon" that is to say, it's not an graph of temperatures. Indeed, the data available wasn't good enough to provide precise temperatures. The other colorful graphic shows lots of proxy data, but the warm peaks don't line up in time, so one can't say whether there was an overall, world wide warm period. Not to mention that those graphs don't have error bars for temperature or dating. The other examples of a MWP could just as well be single episodes of warm weather of short duration, not continuous, global scale warmth. But, that doesn't seem to concern Watts or the other denialist who continue to repeat the same discredited claims over and over again, as you are also doing.
E. Swanson
Remarkable. Not even PNAS peer reviewed science is acknowledged as evidence!
OK, let's set aside any preconceptions about the quality of journals or scientists, and look at the star of your argument, this PNAS paper, on its own merit, without partisan attitudes or preconceptions.
http://www.pnas.org/content/97/23/12433.full
The paper discusses the remarkable similarities between observed climate events and a "solar output model". That's a significant result, IF the model is a good one. So let's ask one simple question: What data are used to produce this "solar output model"? It claims to produce a timeseries of solar output over hundreds of thousands of years, down to decadal resolution. What's the data? How is it processed?
The PNAS paper doesn't say. AT ALL. The only information is a citation of the following:
Perry C A (1994) in Proceedings of the Oklahoma/Kansas TER-QUA Symposium (Stillwater, OK) ed Dort W, Jr (Transcript Press, Norman, OK), pp 25–37.
This miraculous solar model, which claims to produce results which every stellar physicist and paleoclimatologist would give their left nut to have, is not published in a peer reviewed journal -- it's just a talk someone gave at an obscure meeting in Norman, OK 15 years ago. There's no information about it online, not even a title. A background search on the author finds that in 1994, his research was on correlating late 20th century solar observations to rainfall and river flow. He does appear to have any interest or insight in long-term solar variations in either past or future.
This PNAS article is a house of cards standing on thin air. I agreed with your earlier point, that it's unfair to instantly reject a scientific paper based on the reputation of its journal. But the opposite is also true: a prestigious journal doesn't guarantee good science. And this Perry & Hsu paper is a steaming pile of dogshit on the front steps of the National Academy. Whoever reviewed this thing should be ashamed of themselves.
The fuel crisis in No. Korea (and Cuba) with the subsequent famine, triggered by the fall of the USSR is summarized by:
Jörg Friedrichs (2010) ‘Global energy crunch: how different parts of the world would react to a peak oil scenario’, Energy Policy 38 (8): 4562-4569.
He cites:
Williams, J.H.,Hippel,D.Von, Nautilus Team,2002.Fuel and famine: rural energy crisis in the DPRK. Asian Perspective26(1),111–140.
See full paper:
James H. Williams, David Von Hippel,
and Peter Hayes, Fuel and Famine: Rural Energy Crisis in the Democratic People's Republic of Korea, Policy Paper #46, March 2000
Both North Korea and Cuba were/are nations which had closed societies and did not participate in international trade. Had they opened their economies, they would have been able to trade their products for energy. You are just throwing out yet another red herring, a repeat of the same claim you made previously which has no relevance to the slow restriction in energy supply such as might result globally from Peak Oil or from efforts to limit CO2 emissions. You are a troll, IMHO...
E. Swanson
Pointing out that a paper was published in a journal which is not peer reviewed is not the strongest possible argument, but it is still legitimate.
jjggbb False ad hominem accusations do not a scientific argument make.
Please first check your facts and sources.
"EBSCO Publishing lists Energy & Environment as a peer-reviewed, academic journal.[8][9]"
See: Environment Index
Coverage, Policy, Source Type ISSN / ISBN Publication Name Publisher Indexing and Abstracting Start, Indexing and Abstracting Stop, Peer-Reviewed, Searchable Cited, References Start, Searchable Cited, References Stop, Availability*
"Core Academic Journal 0958-305X Energy & Environment Multi-Science Publishing Co Ltd 1/1/1993 Y 1/1/2006 Available Now"
So given that, I assume your are saying that we can consider all possible consequences of the real or imagined effects of climate change to be moot.
The fact remains that resource depletion and specifically peak oil are real constraints on a growth based economic paradigm. Without access to transport fuel, continued growth will come to a halt and the system will ultimately collapse and chaos will ensue.
Therefore your suggestion is that we do what exactly? keep pushing forward with the current paradigm until it becomes unfeasible? Shouldn't we be hard at work using what we resources we still have available to us to construct a new paradigm that depends less and less on fossil fuels?
My personal opinion is, that even if we can't absolutely know for sure that anthropogenic induced climate change is directly related to any specific extreme weather event, perhaps common sense and the precautionary principle should be applied regardless. Granted I live rather close to the beach in south Florida and have on more than one occasion seen first hand what extreme weather events can do and therefore am somewhat less inclined to want to tempt fate.
Oh, and before I forget, there was no 'ClimateGate' other than a right wing, special interest smear campaign against legitimate scientists who did nothing wrong (google climategate debunked). Denialists grasping at straws to justify not having to accept reality is a rather sad spectacle.
FMagyar
"we do what exactly?" Good question.
ALL HANDS ON DECK!
Focus on the fastest most cost effective options to reduce transport fuel use, and for alternative transport fuels.
Read/listen to Robert Hirsch & Jeff Rubin
Pickens Plan
CO2 Enhanced Oil Recovery
Oilsands
Coal Liquifaction - See Linc Energy, Sasol
Methanol from gas & coal. eg China is pursuing methanol.
Solar thermochemical fuels - see Sandia Alliance
etc. etc.
REDUCE ETHANOL from grain - as driving up food prices with marginal energy advantage.
On "common sense and the precautionary principle"
Use Van Pooling
Transition to efficient vehicles. See RMI.org
Develop Tradeable Transport Quotas (NOT TEQ)
PS The "Precautionary principle" is to go with "First Do No Harm" - and the null hypothesis.
Current "mitigation" proposals do major economic harm.
"Tradable Transport Quotas", what is that again ? Really time to go back to basics, to matter, to being materialist in a marxist sense, without necessarily the political aspects of course, starting by calling oil and coal or gas RAW MATERIALS and not "commodities".
We do not pay the correct price for these RAW MATERIALS, nowhere the fact that "producing them" (lol) corresponds to depleting some capital assets.
So the point is to consume less of them, a TAX on them pushes the consumption down, being agnostic towards the solutions, alternative production or efficiency, exactly what is needed.
And reducing inequalities must be primarily done through the income tax, as well as removing some tax on work, but hiding the fact that oil is still dirt cheap for what it really is and putting a huge complex system around that for sure isn't the way.
Here is an interesting chart that shows normalized oil consumption (100 = 1998 level, EIA) for five oil importing countries from 1998 to 2009, from the linked presentation* on Peak Oil Vs. Peak Exports:
Note that the developing countries have shown generally rising oil consumption, relative to 1998, as annual oil prices rose at 20% per year from 1998 to 2008 and at 16%/year from 1998 to 2009, while US consumption in 2009 was below our 1998 level.
Chindia's (China + India) combined net oil imports, expressed as a percentage of (declining) global net exports, rose from 11% in 2005 to 17% in 2009 (and probably to 19% to 20% in 2010). Based on our work, the US and many other developed countries are well on their way to "freedom" from their dependence on foreign sources of oil.
*Here is the link to a summary:
http://www.energybulletin.net/stories/2010-10-18/peak-oil-versus-peak-ex...
And what happens to that graph when you change it to absolute levels of consumption per capita?
When would you predict that US's use would fall below its production?
The US oil consumption to production ratio (C/P) fell from 250% in 2005 to 205% in 2009. At this rate of contraction, the US would hit 100% (production = consumption and thus zero net oil imports) in 2023. Coincidentally, at Chindia' 2005 to 2009 rate of increase in net imports, expressed as a percentage of global net exports, Chindia would be consuming 100% of global net oil exports in 2025.
BTW, here are the recent C/P data for oil, natural gas and coal for the US:
I haven't seen the analysis for the US, but a similar sort of thing in Europe is due to imports. Goods that used to be made in Europe are now made in China, but still consumed in Europe. If the energy used to manufacture goods outside Europe is added in, then the European energy consumption including energy embedded in imports looks like BAU.
Those big increases in China etc. are not just for chinese consumption, they are for manufactures that are consumed in Europe, and I suspect, also in the US.
Here is an interesting coincidence: If we extrapolate the rate of change in the 2005 to 2009 US oil consumption to production ratio (EIA), and if we extrapolate the 2005 to 2009 rate of increase in Chindia's combined net imports, as a percentage of global net exports (BP + EIA), the US would cease (net) importing oil around 2023, while Chindia would be consuming 100% of global net exports around 2025.
This is a well intentioned attempt but has the drawbacks alluded to above, particularly that it would price in externalities for UK businesses seeking to compete with companies for whom these remain externalities. Embodied-carbon import tariffs would be insanely complex and probably illegal.
One more: I'm looking through the document and it is all about energy. What about feedstocks? Will the companies that use FFs to make fertiliser and plastics be forced to spend TEQs in order to do so?
insanely complex and probably illegal
Insanely complex: I agree. Probably illegal: then change the laws! There's a sovereign government running this operation, after all. (In the E.U., maybe not so sovereign, but you guys signed up for that.)
One more: I'm looking through the document and it is all about energy. What about feedstocks? Will the companies that use FFs to make fertiliser and plastics be forced to spend TEQs in order to do so?
I see no reason not to make 'em pay TEQs too. Honestly, if you don't, you'll end up creating some perverse incentives (people might burn TEQ-free plastic pellets to heat their houses, for instance.)
I presume the government is not going to stop the idiotic environmental vandalism of energy suppliers offering discounted tariffs for higher consumers. So as usual we will have conflicting social engineering systems which cancel out, leaving the usual complicated mess for finance lobbyists to profit from.
Industry will always get better rates than residential and commercial consumers. It's often the governemtn that brokers these deals based on the fact that there are many spinoffs for society.
Chris
I know a huge amount of work has gone into the TEQ proposal by people I respect, but for me it fails two key tests:
(a) the complexity test;
(b) the centralisation/top down test.
Re the former, I recall attending an event in Newcastle a couple of years ago when one of the main items on the agenda was a presentation on TEQs followed by a break-out session where about a dozen tables of 10 were presented with a scenario, and asked to game play how TEQs would work.
I was on a table where there were a lot of activists from a village in Cheshire which is at the vanguard of the sustainability/Climate Change movement.
Believe me, they really, really, really wanted TEQs to work.
But no-one on that table, or on any other, were able to feed back to the presenter/speaker anything better than incomprehension.
Re the latter test, IMHO central issuance is a complete non-starter, since it creates a single point of failure, both technological and political.
In my view the answer cannot lie in creating another - essentially 'deficit-based' - currency enforced by administrative and political fiat.
I believe we should instead monetise/unitise, from the ground up, the intrinsic energy value of carbon - which is universally fungible - as I outlined in a couple of recent lectures to Sheffield University PhD students on the 'Politics of Energy and the Cost of Carbon'.
The first outlined how we got into the shit.
The second outlined how we might get out of it.
I wish you the best of luck with TEQs, but suggest that you might also consider a simple (understandable to anyone who has ever used Air Miles or Tesco Club Card), voluntary, and therefore complementary, approach based upon 25 years' practical experience of 'what works' in markets up to and including the global level.
the simplest most workable form of rationing is rationing
Oil Drum readers need to know the type of people who are behind these ideas.
The Green Party has fought tooth and Nail for 30 years against Nuclear and Coal.
They were responsible for crippling the decision making process of Government with their protests and hysterical rhetoric.
The consequence has been a building of gas fired power stations which produce over 50% of UK electricity, despite the fact that North Sea gas has been falling for 10 years.
They are responsible for this dilemma and they now what to tax us for using the fuel they forced us to use.
The TEQ organization is an anti-nuclear spin off organization, their main reason is because they say, that there is insufficient Uranium.
http://www.theleaneconomyconnection.net/nuclear/summary.html
Lower grades of uranium mining will be needed, but uranium is a tiny fraction of nuclear costs.
http://www.parliament.uk/documents/post/postpn268.pdf
Dark optimism is an extreme new age group, on their website they want to create a freeconomy village.
A place where it can be proved that society can run without money.
Many people would ask, where does the tax come from to pay for the doctors and nurses when these villagers get sick?
http://www.darkoptimism.org/projects.html
http://www.justfortheloveofit.org/blog-3329~the-future-of-freeconomy
This is where these people would ultimately want to take us.
Do they need to know? perhaps?
Even if we all collectively agree the proponents of this idea (which I have suggested myself yrs ago) are in fact massive a--holes of historic proportions does that mean this suggestion is a poor idea because of their character?
No judge it on its merits rather than bias ones judgement on the source.
plus the proposal is TEQs represent energy derived from fossil fuels so in fact this helps nuclear power? no?
Actually it is important to look at what they wish to achieve.
They are totally against nuclear despite the fact that it would be a major contribution to averting the worst consequences of peak oil, gas and coal.
The world population is growing and to think we can have more jobs without the energy to power them goes against everything history teaches us.
Every country is different, we do not have the sun of Florida nor massive space for hydro or pumped storage. Although I am sure wind and pumped storage and things such as storage heating etc can play a part in moving away from fossil fuels.
This TEQ idea will not stop a single rich person heating their homes, they will simply buy the TEQ that they need. So how does this help anyone?
hmmm a society without money where everybody does stuff for the loveofit...
aside from the practical problems where can I sign up? seriously practicalities aside you seem to suggest such a world is not desirable?
is it extreme?
I think a lot of people would sympathize with this world view.
EDIT add: I have had discussions with Sun readers who share this sort of view.
Er, not meaning to impugn your research, but this "extreme new age group" you mention is just my blog, and details of my work! (as clearly stated on the about page).
And yes, I'm very interested in Mark Boyle's Freeconomy Village project, have blogged about it and am a big supporter. As mididoctors says, not sure what that has to do with TEQs.
Bloody Hippies ;-)
Having sex when they should be working for the man.
Tax is a reality in modern society, only the most backward societies have a barter system.
If you want to live in a society with schools, and hospitals then only taxes can pay for them.
How would you start to barter for an eye operation?
TEQ website clearly are anti nuclear power, they think China can stop burning hugh amounts of coal without nuclear displays a lack of any basic reasoning.
If our Government had continued our nuclear programme and not mad the UK so dependent on gas, then Peak Oil and gas would be a small problem. Their would be plenty of power for an electrified transportation system.
The situation we are in, can rightly be laid at your door and the Green party and many people I talk to are starting to realize that.
No reason we can't support nuclear and TEQ. In retrospect, many of us would have chosen differently starting about 40 years ago. But not much is to be gained by rejecting TEQs even if they are associated with some who would make different energy choices than you. As it were, the risk/reward ratio on nukes has changed due to peak everything and AGW.
even if the TEQ website is anti nuclear what's your point?
even if all those proposing TEQs forced you to use fossil fuels rather than nuclear energy for the last 4 decades what is your point?
lets say it is all the green party's fault...and?
I would have thought the point is obvious, They are trying to undo their error with another bigger one.
If someone has a big house to heat they will heat it. They will just buy the TEQ from a poor person who could never afford to heat their house in the first place.
Where is the savings?
who will then use the money to heat his house or buy smack I guess?
When one has run out of arguments, there is always fear. Different communities can choose different models of living. There is no one answer and different people will prefer different modes of providing one's subsistence.
Jaz, we have a typical Geen crock of sxxx, which Chamberlain and his associates pretend to be rational policy. David Fleming's attack on Nuclear power was discredited nearly 3 years ago on the Oil Drum. 400 comments fllowed aPost of Fleming, and Fleming had only a single comment in response. I discuss how Fleming's attack on Nuclear power was discounted in a new post on Nuclear Green. The post is titled, "Will the United Kingdom Need a Green Program of Energy Rationing."
http://nucleargreen.blogspot.com/2011/01/will-united-kingdom-need-green-...
Needed less to say, if the UK ever needs energy rationing, the power hungry and dishonest Greens should not be trusted to write the legislation for it.
Hi Charles
They are experts in distorting evidence, nuclear has it's problems but Fleming and the like destroyed our nuclear industry with their disinformation. LIES to plain speakers like you and I.
The reason we are in this mess is due to them.
None of them stand up and say they were wrong, people in the UK are getting fed up treated like idiots by these sorts of people.
The students in this country are not the only ones who feel cheated.
Take a look at this video of the presentation I did at Parliament on Tuesday and see whether you're still in incomprehension:
http://teqs.net/report/summary/
And besides, the average person doesn't need to understand how it works, they just need to use it, which would be straightforward by any standards. I don't understand how mobile phones, Oyster cards, computers work, but that's ok. As the Government pre-feasibility study found, TEQs would in fact involve fewer transactions than using a supermarket loyalty card, and would be more integrated with existing habits (no need for a separate card).
The TOD post above, with details for all those thinking about the ins and outs of the scheme, is far more than the public would need to understand (unless they wanted to, of course!)
how much time/thinking has been put into how players could cheat?
A fair bit. In short, there are two main possibilities for fraud proposed, and one for gaming the system (not cheating, but perhaps 'cheating'):
1) Not surrendering sufficient (or any) TEQs units when purchasing fuel or energy
2) Procuring TEQs units illegally, whether by identity fraud, computer hacking or whatever means.
3) Organisations or rich individuals attempting to corner the market and artificially drive up TEQs unit prices
Number 1 shouldn't be a big problem, due to the flow of units around the economy. If your brother who works at the petrol station let you off surrendering units, the petrol station would find it had no units to surrender to their suppliers. It would make as much sense as them letting you off your money payment and not being able to pay their suppliers. The Government has no need to monitor every shop to ensure that they take cash in exchange for their goods, and the same would apply to TEQs units. So this aspect of the scheme is also largely self-monitoring, just as cash is.
Number 2 is more of an issue, and undoubtedly there would be some degree of fraud, as there is with all such schemes. However, there is nothing in the scheme to make it more open to fraud than any other (benefits etc).
Number 3 isn't much of a problem. If some rich purchaser bought up vastly more TEQs units than they require, the price would of course rise. But since every adult in the country would still be receiving their free Entitlement every week, they would find themselves able to sell at a wonderfully high price. If you could earn £1,000 by delaying that trip to visit your aunt, you just might! ;) Our rich purchaser would find money flowing from their own pocket to pockets around the country at a fast rate, and the more units they purchased, the worse it would get. In this respect, TEQs would make the domestic energy market even more resilient to being 'cornered' than it already is.
you could get some unforeseen social consequences... in russia everyone was issued privatisation tokens back in 1991.
TPQ if you like of equal amounts which the maority sold off because they needed the money for short term needs..
While in the Uk the analogy doesn't fit perfectly I could envisage an underclass of subsidized drug addicts in a shrinking economy scenario. Then again it beats going out to commit crime and prostitution so maybe that will be a good thing?
there will be a lot of unintended consequences... not all good.
broadly speaking I am in favour
what happens next now you have published the report?
Politics.
Others are better qualified than me to talk about that process - I'm just the technical guy ;)
But further discussions with the likes of the Department of Energy and Climate Change and the Climate Change Committee are in the pipeline, and hopefully a resumption of the full feasibility process that lays the practical groundwork for potential implementation.
As Parliament's Environmental Audit Committee put it,
"There is no barrier to the Government developing and deploying the policies that will not only prepare the ground (for TEQs), but which will ensure its effectiveness and acceptance once implemented."
DO - Unfortunately I have to agree with how little detail the public (yours and ours) can absorbe on any issue. Or, more easily said: "Keep it simple, stupid".
I'll admit I haven't had time to study the details of TEQ's. But perhaps a naive question: the Brit govt will issue X TEQs to your folks. But the TEQ's can't amount to more than the supply, can it? So how will the govt determine how much TEQ is allowed monthly? Or is it quarterly/yearly?
the problem comes if they overshoot I guess
having too much in storage isn't a problem but not being able to cash in your TEQs...
Would TEQs have an expiry date? if they are not spent in theory the FFs they represent have to exist in storage somewhere?
Yes, avoiding any overshoot is another reason for the weekly issue of TEQs units.
Regarding expiry dates, there was a lot of discussion of this a few years ago, but ultimately it was decided that dating units would remove the simplicity of the scheme for those using it - a TEQs unit with more time remaining on it would clearly be worth more, and this would destroy the clarity of the single national price for TEQs units.
Chapter 2 of the report is really short (pp.19-21) - I strongly recommend reading it (free download) to understand how the system would manage fuel shortages:
http://teqs.net/report/buy/
The total TEQs budget will depend on whether the scheme is being used to achieve agreed emissions reductions (each unit allowing the purchase of fuel or electricity with 1kg of associated CO2 emissions), or to share out limited supplies of gas, oil etc (each unit allowing the purchase of a certain quantity of the fuel). The scheme can be quickly adjusted to deal with whichever of these is the tightest constraint on the economy at any time, and the two can even run concurrently if desired.
If the scheme is used to address climate change, the budget is set by the agreed political targets on emissions reductions (in the UK, this is currently set by the independent Committee on Climate Change). If TEQs is use to ration scarce fuel, then the available amount of fuel determines the number of units issued.
The units are anticipated to be issued weekly. Less than that and the admin costs are prohibitive. More than that and you end up with more 'edge' issues, as people struggle at the end of the month, and the like.
Shaun,
in the Video, part 1, you say that teqs ultimately find their way back to the registrar. You give the example of a family buying petrol at a filling station, surrendering an amount of teqs to the petrol station, which in turn passes the teqs to, say, the wholesaler.
Could you tell me which party would be the last to hold these teqs - perhaps a refinery? How does a holder of teqs know that he/she is the last one in the line, to pass the teqs back to the registrar?
What if the teqs should be passed back to the registrar by some arab oil producer?
Thanks for explaining the idea of teqs here on The Oildrum.
Glad to be doing so, radlafari. If there's one place for an energy-related scheme to get a thoughtful, constructive critique, it's here!
And good question. TEQs units would not end their journey at refineries though, as refineries would have to surrender their units to whoever supplies them with the crude oil that they are refining.
The units ultimately end up with those who bring energy into the economy - energy producers and importers. They have to surrender TEQs units back to the registrar in order to be allowed to sell energy within the nation in question. In this way, all energy within the national economy is covered by the scheme.
Hope that's clear.
Cheers,
Shaun
Besides the gaming risks, which will destabilize this, this type of multi-hop transaction quickly fails due to transaction costs.
In stark contrast to the impost of excise taxes, which are simple : applied to few, large vendors, as a simple one line % calculation, the tracking of individuals' myriad TEQs will be extremely costly.
Imagine an energy-trail, that charges a low 1% admin charge per hop, and that an individual's ever more fragmented portion of allowance, takes 50 hops. Just the admin costs alone, which seem small, will have swallowed a massive 40% of the supposed generated funds.
thoughtful, constructive critique
I hope so. Yet I still don't see the end of the line before teqs are turned back to the registrar. If it's whoever supplies them with crude oil then Germany might get some problems. We get lots of oil from Russia, Norway or even Libya and don't have a common market with these nations. How could teqs work in international markets?
Another point is this: wouldn't all businesses that depend on motor cars become more expensive in the moment teqs are implemented? How should a plumber pass the risen costs for more teqs to the customer other than by higher prices?
Ok, take the example of crude oil in Germany (if Germany had implented TEQs).
If the oil arrives in Germany by pipeline or tanker, then the importer has to surrender TEQs units to the German registrar in order to be allowed to sell that oil within the German market. They get these TEQs units from their German customers. In other words, the 'end of the line' is the national border.
Sorry, missed your second point.
This point is really more about energy prices than about TEQs, so the pertinent question I think is how TEQs would affect energy prices, and relative to what.
Most here at TOD would agree that energy prices are set to rise, but whether they would rise more with or without TEQs is an interesting question.
Clearly, if TEQs allow an economy to constrain its emissions in line with climate change, and it would not otherwise have succeeded in this, then TEQs are likely to raise energy prices. But that brings in a much wider debate, of course, as this price rise is a consequence of emissions constraints - TEQs is just the instrument used.
So perhaps for the purposes of your question we can most usefully look at TEQs as used to address energy shortages. In this scenario I think TEQs being implemented is most likely to lead to a reduction in energy prices (relative to the same scenario without TEQs). The purpose of TEQs is to assure Entitlements and minimise disruption to the economy, while stimulating and supporting reductions in energy demand. Reductions in energy demand are of course exactly what is needed to keep prices down in times of supply shortage.
So in short, plumbers dependent on their car are very likely to have to put up prices in times of energy shortage, but TEQs would smooth this transition. They would be less likely to suddenly find themselves with no fuel at all. Of course, it would benefit them to a much larger extent if they could find a way to become less dependent on scarce energy resources, e.g. by cooperating with others on solutions like carsharing, or even worksharing! Low-energy plumbers will have a strong competitive advantage.
"And besides, the average person doesn't need to understand how it works, they just need to use it, "
Yeah sure, we are talking politics here, not technology, I understand that you have put a lot of time in polishing your little (quite big and complex in fact) system, so you love it quite a bit.
but it's crap !
Partly directly redistributed high tax on fossile fuel is a much better, cheaper, simpler, less Orwellian system, and it is what needs to be set up, not your cherished complexity bubble.
internets win!
The way this scheme can be good for Britain is for it to be introduced by another country with major energy use, but not major financial specialisation. That way we can pick up the fees for administering it, and benefit from all the opportunities to exploit market inefficiencies that will arise from introducing this new financial instrument, without paying the costs of instability in price of basic goods or taking the risk of having our economy collapsed by the unforeseen consequences of a new system of finance.
What is needed is an authoritarian government, which is worried about its energy consumption, and is ready to impose drastic quotas on its populace. A 1 kWh per couple policy shouldn't worry a country with a 1 child per couple policy.
Sell it to China. If it works there, it might work elsewhere, but if it can't be made to work there, it won't work anywhere.
A truly authoritarian wouldn't need a complex scheme such as TEQs. All that would be required would be an order to cut off the electric power for 23 hours a day and another order to gas stations to only pump 1 gallon of fuel into any car each day (excepting, of course, those who enjoyed the favor of the Party). Simple, yes???
E. Swanson
TEQs are attractive to authoritarians. If every citizen is going to be made to carry an identity card, then TEQs can be added to its functions. Your TEQ card is indeed rather like a supermarket loyalty card, except its a government loyalty card. Its no great surprise that the party that wanted to inflict identity cards on us, liked the idea of TEQs.
Only an authoritarian would think that the best way of setting the consumption of energy in the country was week by week decisions of a civil servant. There is a cold snap in winter. What happens? The price of energy goes up, but energy can't be imported into the country, because the government has fixed how much energy is to be consumed. The public has to freeze and pay extra to do so because the TEQs push up the price without altering the supply. Only a government that doesn't have to stand for election from time to time will get away with that.
This comment betrays a complete misunderstanding of the TEQs scheme.
I am personally a long-standing campaigner against UK identity cards. I'm delighted that they have been scrapped, and it doesn't undermine the campaign for TEQs in any way, shape or form. Why is TEQs a "government loyalty scheme"?? It just isn't.
And there are no civil servants deciding on our carbon budget (set by the Committee on Climate Change on the advice of scientists) or on fuel availability to the UK. Nobody's suggesting that there should be, or even that there could be.
Apparently the Registrar would be aware of transfers of TEQs from one participant to the next, and thus have a record of carbon consumption of each participant. You would not be able to anonymously fill up your tank using cash while on a business trip, for example.
You would not be able to anonymously fill up your tank using cash while on a business trip, for example.
...
You will be able to pay cash to buy the TEQs off the market rather than from your account. This has to be allowed, because your TEQ account might be empty. Whether it is allowed anonymously depends on just what market you are buying them out of. For example, the petrol company might purchase a surplus to have available for sale to its customers that were caught short. You pay the fuel company extra, and the TEQ goes back to the registrar, who never needs to know that it passed through your possession.
Problems arise further down the road. Distribution is done by individual entitlements, which are in total sufficient for individuals, and auction to companies, with sufficient for company use being auctioned. You have just bought a company TEQ and used it for personal use. Unless this type of transaction is balanced by individuals selling to companies, there is a leak from company use to individual use which will eventually cause the scheme to collapse as TEQ liquidity drains out of the company sector and into individual accounts.
Why should this cause the collapse of the scheme? Part of the beauty of TEQs is that all transactions take place at a single national price (which fluctuates over time, of course), covering all energy-users.
The kind of problem you posit is a real problem for the alternative "Personal Carbon Allowances" approach, which suggests giving carbon allowances to individuals only, while the rest of the economy is covered by other schemes. This would cause all manner of boundary issues, as you outline. It's not a problem for TEQs though (although it might well be a problem for your employer!)
Its a problem for you when your employer goes bust.
Its a problem for the scheme when transactions don't happen. It starts off with huge liquidity, but the structure has a liquidity leak built in. Initially it will be ineffective due to huge surplus liquidity, and finally it will collapse due to a liquidity crunch.
Let us call the initial week's allocation a wTEQ and to keep the numbers simple that the initial allocation is 50 wTEQ.
Individuals have 20 wTEQ sitting in their accounts which they were given for free. Companies have 30 wTEQs sitting in their accounts which they got for almost nothing. (An auction of something which has a supply of 50 times what the buyers need is going to have low prices.)
Each week individuals get a further 0.4 wTEQ into their accounts and companies bid for a further 0.6 wTEQ. 1 wTEQ is returned. Some of the individual allowance will get returned via direct debit type arrangements with utlity companies, but a proportion will go unused because some individuals use less than others, and some aren't carrying their TEQ card when they fill up. The proportion that goes unused will be small in the first week, because individual accounts have a year's worth of TEQ to draw down before they empty. However, 1 year into the scheme those that need to use double the energy will have exhausted their initial allocation and top ups, and be buying off the market.
50 weeks into the scheme, individuals have had w40 TEQs allocated to them, and they have returned perhaps 18 of them, but the distribution is now much lumpier than it was. Companies have bought 60 wTEQs at knock down prices, returned 30 for their own use and sold 2 to individuals. Individuals have sold none into the market because the rock bottom price isn't worth the transaction cost. Individuals now hold 22 in their accounts and companies hold 28. Only the 28 in the company accounts are liquid. The overall liquidity in the scheme has dropped from 30 to 28.
Another 50 weeks into the scheme, and as those individuals that use more energy empty their TEQ accounts, purchases from companies increase. Individuals return perhaps 15 from their allocation and another 5 purchased from companies, while their total balance increases from 22 to 27, and the company accounts drop from 28 to 23. That's another 5 wTEQ leaked from liquid accounts into illiquid ones.
Individuals will always have higher transaction costs than companies, which will continue to drive the total balance of 50 wTEQs from liquid company accounts into illiquid individual accounts. The initial response, as company accounts start to dry up, will be a price rise, but it will only slow the liquidity leak slightly and when a shock to the system (e.g. a week of cold weather) requires additional energy in that week, TEQs prices will go through the roof. Major utility companies are probably the ones most exposed, and they will be faced with a choice of illegally supplying energy, blacking out their customers, or going bust.
Whichever way they crumble, the scheme collapses, causing a lesser or greater amount of harm as it does so, and allowing lesser or greater profits to those that dealt in the TEQ market with the intention of profitting from the liquidity crunch.
I too think that the proposed scheme for distribution of allocations still requires some work. However, I think your description of the TEQ scheme isn't correct, as the 60% allocated to business is not to be handed out in increments directly, but via purchases thru an auction. The way I understand it, a business would purchase the amount of TEQs corresponding to the energy used when they purchase the energy. A business might also purchase TEQs for future use perhaps just enough for a month or for a year, based on their projected energy needs. If their needs were less than than their purchase, they could sell the allocations to the market at the current market price.
My thinking is that the allocations should be handled a bit differently. The TEQ proposal allocates quantities to individuals on a continual basis, starting with a year's supply in an initial distribution. The accounts are to be given added amounts periodically, to "top up" the account. While it's true that energy use follows a yearly cycle (mol), energy use is a flow, not a stock and the idea of maintaining an account of allocations would continually remove allocations from that flow of energy. If many people followed this approach, there would be fewer allocations of energy available to the other participants via the auction process, even thou the market was able to supply that flow, which would force the distribution system to store more product. Conversely, if many people decided to sell a large fraction of their initial yearly allotment, the market would be flooded with allocations, thus pushing the price of allocations down at a time when the market was unable to provide the physical supply, leading to an increase in price for the fuel. The situation could be even worse if the "topping up" allocations did not match the available supply of fuel. Such a situation might happen if a large number of people decided to buy heating oil or propane at the same time of the year.
I have suggested another approach, which is, that the allocations should expire at the end of the distribution cycle. The allocations tendered to the white market and would be converted to cash at the present price in the market. If the allocations were staggered, say 1/4 given out each week, there would never be a large influx of allocations from individuals thru this means. If an individual needed to use that remaining allocation, it could be purchased by going back to the market, a process which would be automatic as one's purchase exceeded their allocation. This approach would minimize hoarding thru the use of the allocation accounts, but would not stop an individual from buying and storing oil, gasoline or propane in tanks for later use. Since all the transactions would be electronic, it would be possible to roll over the accounts to individuals on their birthday, rewarding them for their frugality with a cash transfer and giving them a full account to begin another year.
Shaun, if you are still reading, what is your thinking on this idea?
E. Swanson
If I understand correctly, the accounts that keep track of the number of TEQs possessed by each party, and which transfer TEQs between accounts, whould be kept by the Registrar. In other words, the transactions would work like debit card payments between parties that are all customers of a single bank.
It is likely possible to set up a cryptographically secure electronic money system in which digital emoney coins would be used as TEQs. See papers by David Chaum or Shimon Even for example. The coins can be transfered anonymously and securely between any two parties equipped with cryptographic wallets.
However, the use of an anonymous emoney approach doesn't seem to be contemplated. Instead, big brother keeps the books.
You would not be able to anonymously fill up your tank using cash while on a business trip, for example.
That's true, but it doesn't seem to be a big problem for millions of customers who fill up and pay with a credit card (and have done so for decades.) Credit card companies often are the first to give detailled reporting about the development of gasoline prices, so there seem to be really many customers paying that way.
"set on the advice of scientists" There are the civil servants.
From the report,
"If energy scarcity were to
develop before tried and
tested rationing systems
were in place, profound
hardship would follow"
Command economies have already been tried and tested and found wanting.
This isn't just a scheme for overall energy rationing with one TEnergyQ. Its actually a framework for having lots of different rations. You will have your TcarbonQ, your ToilQ, your TgasQ, etc. according to what the committee decides should be rationed. Its a framework for an authoritarian command economy.
Its a framework for an authoritarian command economy.
This is true. However, up until now, our economic resources have been limited only by human ambition and motivation. This is why capitalism has succeeded where command economies have failed: the capitalist system rewards ambition, while command economies only penalize failure.
It's better to train a dog by giving him biscuits for doing well than to beat him with a stick when he misbehaves. But what do you do when you run out of biscuits?
Dark Optimism
Hot air understands, how this perverse system could be maniputated, better than you do.
A Government could easily withhold or reduce the number of TEQ to any individual it wants.
A government could easily give more TEQs to people in it's favour, Who would know?
You are not as smart as you think you are
You are not as smart as you think you are
This kind of comment is absolutely unnecessary. When you know Shaun personally - would you have the guts to say this right in his face? (And if you don't that comment is even more unnecessary.)
This idea comes right out of Orwell's 1984.
The government controlling who can buy and sell, not just electricity but petrol and ultimately food. This idea coming from the very people who have created much of this problem, is even more galling.
Yes i would say it to his face and so would millions of others, who do not share the anti nuclear hysteria of this lot.
Leaving aside the scaremongering comparisons and personal comments about my intellect, your points are simply factually incorrect.
TEQs proposes no government control of who can buy and sell energy (or food, as you oddly suggest). Limited availability of fuel provides the constraint. TEQs responds by providing an assured Entitlement to all, which they can choose to sell or buy as they see fit.
My late colleague's opinions on nuclear energy (or indeed mine or anybody else's) are immaterial, as others have already pointed out. Regardless of what anyone thinks, any energy source that provides electricity with a low carbon footprint (over the entire lifecycle) will be supported by TEQs.
If you wish to continue commenting, please read the report - you will discover that this scheme is not what you appear to think.
And sure, Government corruption is possible, just as it is now, and just as it would be under the taxation approach that you favour.
Give you an example, last year people were arrested for peaceful protest against war.
If TEQs were in place a judge could easily fine these people two weeks removal of TEQ allowance.
Nothing would be easier for a government to use against the individual.
How could government corrupt a higher tax on vehicles?
Judges fine people in cash now, just as they would under any future TEQs or tax schemes.
I can think of no plausible reason why they should begin fining people in TEQs units instead of cash in future. Can you?
I notice you did not answer my second question.
I will answer yours however, removing peoples TEQ entitlement would be a very effective way of making sure people did not oppose your policies.
Going to previous point will the production of food be TEQ free Then? Farmers buying diesel, heating and lighting for barns, horrible fertilizers?
Heh, I notice you did not answer any but one of my points earlier in the discussion!
But I did answer your second question - tax is quantified in money, and Governments and judges already have plenty of ways of taking money from people. There is no reason why either should start taking TEQs units instead of money, but even if they did, people could simply buy more TEQs units with money, so it would amount to the same thing. It would not be an effective way of doing anything other than fining people, just as currently happens.
And sure, farmers use energy like everyone else. This hardly means that an energy shortage = Government control of who can buy and sell food.
The question I asked is will TEQs be required to buy food? How will the farmers buy their diesel, electricity, furtilizers etc? Food production industry uses 10 calories for everyone it produces.
Supermarkets will have to give TEQs for the produce they buy from the farmers.
So how do you TEQ a carrot?
You've got the same misconception I had at the start of the discussion. TEQs are only used to buy fuel directly. So you don't pay TEQs for your carrots, and neither does the supermarket. The farmer buys TEQs at a national auction, and uses them to pay for fuel and electricity.
goodmanj
If farmers cannot get their TEQs back buy selling their produce then they will have to continually buy vast amounts of TEQs.
This will drive both the cost of food up and drive farmers out of business, many smaller farmers struggle now. Add to that the inflationary effects of Tax on imported goods and this sounds like a worse idea than I first thought.
Have you read the piece or watched the videos?
medidoctors
As i said farmers will have to buy large quanities of TEQs, just to do their work, the only way they will get their money back is through much higher food prices, which hurt the poor more than anybody.
Due to our population we have to import a great deal of food, so as I said, how do you TEQ an imported carrot?
Farming is a business and would be treated like any other business. Farmers would not be expected to use their personal TEQs for their farming enterprise, but would purchase fuel and other energy sources from the market, buying TEQs as necessary. Of course, they could use their TEQs for their business, but they would likely exceed their allotment and would then be in the market, just as every other farmer and business owner would be. In either situation, they would need to pass on their costs to the consumer, else they wouldn't be in business very long...
E. Swanson
Thus we have massive food inflation.
The second part of my question, if you take a imported vegetables, in order to give it a proper co2- TEQ equivalent you have to know how it was grown with diesel irrigation or not, how did it get to the airport, by truck or by train. Work out how many litres of aviation fuel to apportion to that veg. Difficult on a flight with mixed weights of goods.
When you think about a television with a hundred components all made in different regions with electricity from coal in some regions and hydro in another. It gets even worse.
What a bureaucratic dogs dinner. How much will all this cost?
I suggest we use the money instead to insulate half a million houses each year.
How do you think the economic system we now have will respond to Peak Oil? Is oil really "worth" $90/bbl today or is it "worth" $150/bbl? What's to stop the market from boosting the price of oil to $200 or $500 a barrel, once the available oil for export begins a serious decline? I'd say that process would result in worse stagflation than anything which might result from an allocation program. And, the economic cost of the allocations is retained within the national economy, not sent to some OPEC nation where the people might wish you dead...
E. Swanson
Firstly your assertion that tax does not work is contrary to all evidence based studies.
The highest fuel tax countries have lowest consumption and vis versa, look at Saudi arabia and Venezuela where even poor people drive big cars.
In the UK 60 million people use 1.6 million barrels of oil a day, the U.S 300 million people use 20 million, if the US used the same as us they would only use 300/60 = 5, 5 x 1.6 = 8 mbd.
So clearly fuel tax works, car companies respond to buiding energy efficient cars to meet demand.
Increase our taxes on cars and a £10,000 subsidy on electic cars would see massive sales in 3 to 5 years and expand rail, powered with nuclear and some wind (when it blows) pumped storage.
Doing this our oil use will fall year on year, cost of running system, practically nothing as whe already have VED in place.
Job Done.
PS using less oil will help to drive oil prices down!
Clear, but somehow the dogma that "Taxes are wrong for the economy" is so wired up in the American psyche than factual reasoning about it isn't that easy ...
Plus taxes on raw materials and especially fuel or generally speaking OPEX related raw materials are totally different from personal income, company revenues, or work related taxes !
Fuel taxes result in, for a net importer:
- lowering the trade deficit/transfering revenues from the exporter to the importer (a TAX doesn't change a country GDP)
- price signal push on better efficiency for the machineries using the fuel, so impact on customers choice/usage of machineries, and on machinery builders product strategy
- overall pushes the infrastructure in a general sense towards better efficiency regarding the fuel/raw material, ie it favors sound investment strategy towards the fuel usage, and shorten the ROI period over investment projects related to this fuel usage (at all levels)
- overall lowering consumption of the fuel
What can be argued is that :
1) a direct tax on products favors the rich over the poors
2) it decreases the country productivity compared to other country (the fuel part being higher for a factory, or a guy not able to take a job far from home due to commuting fuel cost for instance)
About 1), making it partly directly redistributed as defined by James Hansen make it favoring the poors over the rich
About 2), first of all it can now be considered a matter of survival, and don't forget the efficiency push effect of the tax on the infrastructure, which could be considered as being in a race condition with this one, ie can very well be the case that the tax in fact favor the overall productivity of the country once the market price of the product increases (and for sure its resilience to the coming shortages anyway, not a matter of choice here), and there is also the aspect that this tax cn partly replace the work tax
To "caricature" the perception I have of the American perception of taxes (perception that also exists elsewhere of course), it would be :
- Taxes, any taxes, in the end reduce the purchasing power of citizens, therefore it reduces products or services they can buy, and so it reduces the "size of the economy", together with the market capitalisation, etc
- Moreover taxes revenues go to some kind of black hole (the government), and nothing come back out of it, besides more government workers doing nothing
- so to lower the impact of the above, when there are taxes, their revenues should clearly be affected to a budget related to where they were taken from, like for instance the gas tax should be affected to road maintenance budget.
Clearly here the analysis view point can be very different as :
- In the case of 100% redistribution nothing goes to the government
- it is meant to accelerate changes in infrastructure by acting on price differenciation for a given product (or type of product), compared to other products or solutions (related to investment strategies like insulation for instance)
- it is also a "protective" taxe with respect to international trade
Not to forget that :
- the government still needs a budget somehow
- borrowing/printing money isn't so secure in the end ...
A rise in the price of carbon-intensive goods is not just a side effect of this scheme, it's the whole point! Yes, the price of everything made using fuel, including food, goes up. But the tax money doesn't vanish into thin air: it's redistributed back to the citizens by the government. Those who buy more carbon-intensive food and other goods come out behind, those who are carbon misers come out ahead.
You're right that this system works by disincentive rather than incentive. But as I said elsewhere, while it's better to train a dog by giving him biscuits for good behavior than by beating him with a stick for peeing on the carpet, what do you do when you run out of biscuits?
I suggest we use the money instead to insulate half a million houses each year.
That's exactly the sort of thing the money raised through TEQ auctions would be used for.
As to your second point, that it is extremely difficult to set fair tariffs on the embodied carbon in imported goods, I totally agree with you.
Goodmanj
Setting a fair price for anything imported could never be fair, unless you had tens of thousands of useless officials visiting every farm on a yearly basis to assertain exactly how these crops are produced. Fertilizer use, pesticide use, diesel pump for irrigation transport mode to airport etc.
My other point is the hundreds of millions to run the scheme is lost THIS is the money that could be used to insulate houses.
You know a MUCH MUCH easier way.,
NO tax on Electricity and GAS for first X number of units, this would be about average use. Then say 10% VAT for next few hundred and 20% for high very high users.
Cost of system ZERO as we already have VAT on electric and Gas.
Use the money for nuclear, wave renewables and a programme of insullation, within 10 years every house would have double glazing A rated boilers etc. All new build ideally heated with heat pumps.
tens of thousands of useless officials visiting every farm on a yearly basis to assertain exactly how these crops are produced. Fertilizer use, pesticide use, diesel pump for irrigation transport mode to airport etc.
Nah, doesn't have to be that hard. All you do is set an import tariff so that the price of imported goods is on par with similar domestic goods. We already set and collect tariffs all the time, so no big deal.
I agree with you that there are probably simpler ways to do this, which is one reason I'm not a TEQ convert yet, but it's not as awful as you're making it out to be (or as I thought it was at first reading).
goodmanj
What you are suggesting then is very unfair.
A factory which uses some or all renewable power is treated the same way as one powered by coal. This is totally at odds, with what we are trying to achieve.
The same for a farm using higher cost drip irrigation against a farm using diesel pumps to use loads of ground water, where is the environmental incentive and justice there?
So that leaves thousands of officials checking on these things, it's mad to me.
As I said, use the money which this scheme would use to really make a difference, insulating houses of poorer people, so they can use less power. How many houses can you insulate for the cost of administering this scheme?
You're misunderstanding. The "price parity" tariffs I'm talking about would only apply to imported goods, to make their costs match domestic goods. Domestic manufacturers who use less fossil fuel will have to buy fewer TEQs; those that use more fuel will buy more TEQs, so their goods will cost more. This price differential encourages consumers to buy goods from energy-efficient manufacturers, which is exactly what we want.
Nobody needs to visit farms, factories, or feedlots to make this happen. The only things that need inspection and taxation are gasoline pumps, natural gas mains, and electricity feeds.
You sound interested enough in this topic that it's worth your time to read the complete proposal and its FAQs, and pay attention to what's actually being proposed rather than your preconception on how it could work.
Goodmanj
Setting a fair price for anything imported could never be fair, unless you had tens of thousands of useless officials visiting every farm on a yearly basis to assertain exactly how these crops are produced. Fertilizer use, pesticide use, diesel pump for irrigation transport mode to airport etc.
Goodmanj
I am still talking about imports also, a flat import tax would unfairly tax goods produced in more environmentaly friendly ways.
the report talks about import duty but demonstrates quite clearly they have not got a clue how they would do it fairly. I.E. The farm situation.
Not necessarily, teqs might even keep prices down, because they can prevent hoarding or price fixing (Shaun - I hope I got that right ..!)
radlafari
This is an extra cost to farmers so they will have to pass on cost, ie inflation.
How about the imported food, how do you think 1,000 food products from a million farmers around the world will be assesed.
I suspect he is currently suffering from no such delusion
Hooray for this report and good on England and Parliament for at least trying to come up with a sane approach for dealing with our predicament.
There is great value in trying to do something, anything - whether it will work or be implemented in a timely manner. It is this belief that keeps me hounding my local city councilman about putting together a local PO task force and doing some contingency planning for emergencies. I call it avoiding depression by stoic action.
Unfortunately, I am a cynic. My feeling about TEQs are the same as for the Oil Depletion Protocol: a really good and sensible idea that greedy bastards, callow politicians, and stupid citizens will never allow to be implemented in any form that effectively deals with the original problem.
bigdoug
How about something nice and simple, which will cost nothing to implement and be cost neutral and will actually work.
Increase road tax for all ICE vehicles, use this money to provide another thousand new bus routes where they are needed. One bus takes hundreds of car journies off the road every day. Increase rail travel by opening the old lines and electrify them.
Increase subsidy of electric vehicles that are coming into production up the £10,000 per car.
This would make electric cars very attractive to many people, diesel and petrol use would fall dramatically year by year. Peak oil effects on this country would be prevented as our consumption would fall in line with our production. These things do not have to be complex it just takes the balls to do what is right.
As I understand it, the oil cost of producing a car is equal to the fuel consumed by that car for the first 2-10 years, depending on the make and model. If this is true, the oil use would not fall as dramatically as petrol and diesel use, and would place a lower limit on oil consumption (a limit that keeps growing as developing nations continue their "development". And, with the electricity being generated mainly from fossil fuels, it may not do much to reduce global warming.
sofistek
Yes I agree, there would be little point if the electricity were produced with coal and gas.
China has a massive coal pollution problem and they intend to build dozens of nuclear plants to reduce this problem. They realise that the wind power and hydro will not be anything close to enough.
If we properly invest in our nuclear engineering capabilities we could go a long way to a very low carbon future. Wind in conjuction with pumped storage will help also. Our gas imports would fall year by year also, if done properly.
With regard to the oil to produce a car it is quite small, if you think about tyres, plastics etc.
Most is used in driving, anyway large expansion of electric train sytem is also needed.
I've seen various estimates of the oil used in producing a car (it is not just the oil based components, though that is larger than you may think, but also the oil used in producing the other materials, and distributing the vehicles), from 12 barrels of oil to over 70 barrels of oil. With each barrel equivalent to 42 US gallons, that's a lot of oil. The most common estimates seem to be in the 20-25 barrel range, though it does depend on the car and I've read that electric cars actually take more oil to make. So when a new electric car is bought, the demand for oil doesn't go to zero, as two or more years worth of driving that car on oil has already occurred, and is occurring for the next new electric car being built. Hence, there may not be a dramatic reduction in the use of oil, for several years, at least, as the fleet slowly turns over to electric.
All is I know is those little grey boxes on Mauna Loa keep recording higher levels:
http://co2now.org/
"Are we smarter than yeast?"
You have to admire the degree of self-delusion.
Most Grand Schemes start life, with proponents simply ignoring the flaws. Not until it all goes pear-shaped, do they then pretend it was someone else's idea.
Missing from this, is the risk exposure of gaming the system, and speculation. Profit seeking, rather than real demand, will cripple this.
History has proven that price is a truly lousy demand control mechanism.
Massive wealth transfers can occur, all for single-digit-percentage changes in demand. Not all demand is discretionary, nor with alternative.
Those that fail to learn from History, are condemned to repeat it.
Thanks, Chris, for bringing this report of the UK’s All Party Parliamentary Group on Peak Oil (APPGOPO) with respect to the Tradable Energy Quotas”
In my opinion, this is much more direct and sensible than trading with smoke.
Energy is the ability to produce work and it is absolutely and directly related to most of the greenhouse gas emissions. So in dealing with the energy, we are pointing the fire hose to the fire, not to the smoke; we are dealing with the root of the problem, the original cause, not with the resulting effects.
I also guess that energy will be a much more sensible reference of value, than monetary references, where the bank notes are worth what speculators and printing powers decide at their will. Energy can not be printed at will by a minority.
Having said that, implementing Tradable Energy Quotas will have to face huge problems before it sees the light. First, and not the least, it will have to replace the present exchange system, based on virtual paper bank notes, bonds and electronic purchasing and selling orders. This is the order that confers THE REAL power to those thin minorities today in the top. And they will fight to death before an exchange system based on energy quotas is imposed.
Second, the energy available to society comes in a variety of forms, with different values: thermal, electric, in work or energy units. They all have cross equivalences, but one thing is the pure thermal or electric equivalence and the other the values and demands of each of the energy types and forms for given uses and applications. For some societies, these energies are sometimes essential for life and for others, not so.
Another big problem to implement the TEQ’s is the form in which the World energy reserves are located. The big world centres for capital of today are in very specific places, like the different world stock exchanges, the national banks (every day less and less) and few other key centres. These are very, very different places from those of the world energy known, or proved, or probable, or possible reserves or even the yet undiscovered energy reserves. Both maps are very, very different. Some countries have huge amounts of energy reserves and very little REAL power in the world stage.
For paying an overall look to the state of the world in energy consumption per regions, nations and type of primary energy, go to the
“2010: Chart of the Year” and then, compare it with the energy proven reserves and energy production of the different types in the last IEA WEO 2010.
And now, we come to the problem on how to fix quotas. How to do it? The more just distribution, will be to assign an universal quota per human being, without distinction of nationality, race, religion or political adscription. But the just thoughts are not necessarily the possible ones, under the present circumstances.
So, we may fear that the powerful, which coincide with those consuming more energy, will try to establish quotas (in most of the cases with the energy reserves of others) as, more or less, per the present consumption levels.
For instance, a Spaniard within Europe, today consuming as a machine of 4,200 watts per capita in national average, but having within his/her country domestic reserves producing only as 400 watts, may want continue consuming more or less in the level of 4,200 Watts.
On the other hand, a Nigerian, whose national average consumption per capita may be, for instance today in the level of 800 Watts of average power, but whose national reserves are so huge, that Could Grant to him a per capita consumption of at least as that of the Spaniard, may decide that the new currency is the proper moment to change the balance, once for all.
Las, but not least, in the same form that the monetary capital world monetary mass has been growing ever since, in the case of energy quotas, if they are printed based on the realities (and there are two basic and approximate realities: the known world reserves of the main primary sources and the world energy flows of each of these world reserves) it will happen the contrary, once the peak oil of the respective primary energies is reached. The global energy capital will be continuously diminishing. This is something I believe the UK’s All Party Parliamentary Group on Peak Oil (APPGOPO) must have had into account. SO, the quotas will have to have periodic downward revisions.
The idea of the energy quotas is good, in principle; probably much better than continue with the monetary or financial growing fiction. But as devil is in the details, we will have to carefully read and scrutinize the small print of any TEQ proposal to see how are these quotas thought to be assigned and distributed. I hope this time we assign quotas proportionally to the real world physical existence of the goods (energy related) and not at the will of the printing powers.
Useful comments Pedro. Scrutinise away:
http://teqs.net/report/buy/ (free download)
Exactly. The very point I made at the end of the article above. Which is why I advocate a quantity-based mechanism like TEQs, rather than price-based mechanisms like tax.
But it is only nominally quantity-based, as you also say this
With tradable rations those who live within their TEQs Entitlement can sell their surplus onto the market....
as soon as you buy/sell these, speculation (and fraud?) fire up, and the price of a complex parallel transaction set, now becomes vitally important.
Has anyone got numbers on the COSTS of all this parallel trading ?
(both brokerage, and compliance costs)
Given how granular these TEQs will become, and the complex tracing/audits needed, it could quite easily exceed (for example) the cost of running Internal Revenue. (I see the UK lists the cost as 1.1%)
No, it is firmly quantity-based, but trading is allowed *within the cap*. There is no 'safety valve' on the price, as there is in the existing misleading titled 'Cap and Trade' schemes, which have no effective cap. These schemes are indeed only nominally quantity-based, with price ultimately the fixed variable, but TEQs is a very different beast. TEQs would be functioning most effectively if the price is very low.
There are two reasons for making TEQs units tradable, and they do not undermine the hard cap:
Firstly, prohibiting the exchange of rations in the past has always led to substantial black market activity, unnecessarily criminalising otherwise law-abiding individuals.
Secondly, energy demand differs from food demand; while we all require comparable amounts of food, certain vocations intrinsically require more energy. For this reason a non-tradable equal entitlement to energy would simply destroy many professions.
In terms of costs, the Govt pre-feasibility study (report conducted by Accenture) produced an indicative estimate of running costs of £1-2bn per annum in the UK, although more recent work has suggested that halving that figure may be more realistic, as Accenture somewhat mis-specified the scheme when doing their initial estimates.
On the pre-feasibility study's assumptions, the auction of TEQs units would generate Government revenue of £6bn per annum (though the public sector would also be a buyer).
This is all gone through in more detail in the report, but hopefully that is helpful.
but this seems to self-contradict; If it is firmly quantity based, then why does the TEQ need to be so separate from the Energy ?
Why incur that huge additional structural cost ?
Then, you admit that trading is necessary, and such trading has wild price components : it does not need to be illegal, to be volatile.
If you have someone backed into a corner, viz : a non-tradable equal entitlement to energy would simply destroy many professions., that person is very exposed to price rorts.
They are over the proverbial barrel, and large numbers of small business operators are not financial wizards.
TEQs would be functioning most effectively if the price is very low. - but what prevents the price being gamed ?
Desperation == Exploitation
If you are trying to quota-base this, wouldn't it be far smarter to centralize the price, and allow users quota refunds ?
That avoids gaming, avoids death-by-granularity, and slashes compliance costs : From what I see, the problem is not the TEQ, but how it will fail in the fringes.
another advantage is such a claim-back design, over-collects revenue. Those who 'cannot be bothered' { or, do not want to be noticed ;) }, leave their refunds in the pool.
(quite a few taxes use this model already)
Because simply taking the available supply of energy and "rationing by price" is profoundly unfair, allowing the richest, fastest or strongest to take all that is available. The very essence of a rationing scheme is to fairly distribute the available limited quantity.
Yes, this is why there is a single national price for TEQs units, as outlined in the article above and in the report - everyone pays at the same level, everyone is in the same boat and no-one has to get involved in any price negotiations.
It would be an ill-advised individual or organisation that tried to buy up vast quantities of TEQs units and corner the market.
They would be paying top whack for their TEQs units (having artificially inflated the price) while every adult in the country was getting them for free. These individuals would then be likely to decide to sell some of their free TEQs units at the temporarily inflated price ("hm, perhaps I'll delay that trip until next week, and pocket a nice little earner"). All that the would-be gamer would have achieved is moving a lot of money from their own pocket to those of ordinary people throughout the country.
In short, TEQs make the energy market more resistant to being cornered, not less.
If TEQs were combined with the Oil Depletion Protocol, it would be a real sign that our leaders actually do understand reality, at least to some degree.
Discussion here is winding down, but I have one more question for the TEQ enthusiasts:
Have you thought through the impact of speculation in the TEQ market? What if someone buys and hoards TEQs?
In most commodities markets, there's a limit to speculative hoarding, because if you want to corner the market on pork bellies, you've gotta find somewhere to store a few million pork bellies. Same with oil, houses, or any other good. One reason futures, options, and swaps are so volatile is that they can be traded and speculated upon without needing to store physical goods.
It seems to me that TEQs are even worse! In a way, they're a commodity that has value, but requires *negative* amounts of storage, because it's oil that *someone else* has to store at the ready.
Suppose I'm a big oil distribution company. I tell my importers "no oil for me this week, thanks": instead, I buy up all the TEQs in a small country. I don't have to pay to store any oil, but my *competitors* do! The price of TEQs skyrockets, and the price of oil plummets since nobody can buy any without TEQs. I sell all my TEQs at once and make a killing; oil buyers rush my competitors and buy up all their cheap oil, they take a loss. I win. Next week, the next round of TEQs is sold at auction. None of my competitors have any oil left, but what a coincidence, my gigantic oil tanker shows up in the harbor, and I sell it all at exorbitant prices. I win again!
since individuals have a free allocation and TEQs=to the total amount of FFs in the economy there is always access so the speculative attempt by the big distribution company is not realistic unless everyone surrenders there ability to use energy|(unlikely).Individuals don't need to buy TEQs
Moreover as an oil exporter I am unlikely to worry because I can sell the oil "you don't want" on the global spot market..
Especially in a plateau production world I am not obligated to store the oil outside of the TEQ system of any country waiting for that particular economy to demand oil... in this respect it is no different from the nymex
whos to say that oil price next week really is going to be unsold or cheaper!
OTOH there may be strange oscillations in price as you suggest just not by the mechanism you describe...
This proposal requires some thought... I'm worried about the taintersque complexity issue of introducing what is effectively two forms of money one of which is given away as a dole.
True, I can't corner the citizens' dole side of the TEQ market, but I can corner the institutional auction side. And if I can't buy up citizens' TEQs, neither can the institutional users! So I only bring half the country to its knees... good enough!
Maybe no big worry for exporters and the rest of the world, but it's still bad news for the TEQ nation.
Commodities vendors have always been able to manipulate supply, but by speculating in the TEQ market, an oil distributor can essentially control *demand* as well. I'm less worried about oscillations in price and more worried about oscillations in availability. I want to be sure we can't ever have situations where the tank farms are full to capacity, yet businesses across the country are shutting down for lack of fuel because a few bits of electronic data are being held by the wrong computers.
In short: if you described this scheme to an Enron executive, would he start to salivate?
hehe - Yes, is does read like a brokers wet dream.
The basic idea of quotas could have merit, but this TEQ design seems quite decoupled from the real world, with many failure modes.
An Academia-only virtual-solution ?
I do not know?
I can not think of one. But I am a stupid man who knows very little.
We must remember Enron itself was involved by proxy in designing the regulatory framework it manipulated in the california energy market. Wall street and (Goldman Sachs in particular) had a revolving door at the FED and the presidents ear across both parties for decades and designed the system they gamed...
It is not like the current paradigm isn't a con to start with.. these fears of corruption while justified tend to come from mistaken belief that we operate some largley functional uncorrupt and transparent system now that we are in danger of losing or has stood the test of time!
the corruption gets hidden by the sheer scale of it because even the little guy gets some sort of payout in a massive credit bubble..Only to left standing without a chair when the music stopped.
When the tide went out in 2007 we can see how much of it was a kleptocracy that failure resulted in transparency.
Sh!t is f@@ked up!
this scheme? pfft! I suspect it unworkable because at the bottom of the food chain people are still not going to get it and numerous social problems will arise from those spending their TEQs as extra "free" money... lot of practical problems...
what if you lose your card or it gets stolen... do cards have to be tied to ID cards.. I suspect they will need to be
I am less worried about greedy bastards gaming it because frankly they do that already.. a sort of constant.
I think this last post makes a good case for pilot systems, either that or take a huge gamble on getting snookered. There's no good reason not to pilot some different systems, such as my Market Quota System, which is at www.environmentalfisherman.com Funding some case studies on a small scale would make the debate much more real than theory based. I would love to help design some models of the basic system and help to judge the positive and negative instruments and social system tie in's.
No, TEQs need not be tied to ID cards. In fact here in the UK I took part in the (successful) campaign against ID cards.
The most likely implementation, as discussed in the videos on the TEQs site, would be that TEQs transactions would be integrated into existing credit/debit cards, although the idea of a separate TEQs card has been mooted.
Either way, if you lose your card you do the same thing that you currently do if you lose your payment card and wish to buy fuel - you pay in cash. The retailer will simply include the cost of buying TEQs units to cover your purchase (at the current national price) in the price they charge you.
Incidentally, answers to other FAQs on TEQs are available here:
http://teqs.net/report/frequently-asked-questions/
But that means that you would be paying top whack for your TEQs units (as you have artificially inflated the price), while every adult in the country is getting them for free.
They may then decide to sell some of their free TEQs units at the inflated price to the institutional users ("hm, perhaps I'll delay that trip until next week, and pocket a nice little earner"). All that you would have achieved is moving a lot of money from your own pocket to those of ordinary people throughout the country.
In short, TEQs make the energy market more resistant to being cornered, not less.
Dark Optimism: One way or another market systems to me offer the best stimulus, but that's such a broad thing to say. I may prefer one method, you another. So again I say let's have a real look at some variations. We in the US and Canada and othere countries may want to follow your lead and participate in some market energy and or environmental quota supply demand incentive penalty (tax) the semantics and programs are endless.
Allowing few can come up to your speed in this specialty, would it not be the line of least resistance to offer some pilots, worldwide, as the initial action. Small scale fire districts would be universal, and easy to fund and provide for multiples of systems plug ins.
The more I read the more I like your work. But incentive and penalty schemes can, and I think should have, separate tax and spend components as a part of the whole transferable quota system.
To the British: Challenge the world to experiment, frame the question, and set the stage for our future energy endeavors. Well done. Thank you. Steven J. Scannell www.environmentalfisherman.com
From the link to FAQ in the report
Conclusion
33. We acknowledge the many difficulties that will have to be overcome in the development and implementation of personal carbon trading, not least work to bring about the public and political acceptance of such a concept; considerable further research is required on many aspects of personal carbon trading. However, we believe that, by designing and implementing a sensitive and moderate scheme, these obstacles could be overcome.
4 Towards a practical personal carbon trading scheme
Key considerations
Scope
34. The concept of a full economy scheme, such as that proposed under TEQs and DTQs is undoubtedly appealing. In the words of Richard Starkey of the Tyndall Centre, ‘it is one scheme that encompasses the entire economy, so it is simple and efficient’.24 Yet, the concept of such a scheme is so vast that it is difficult to envisage when, and how, it could realistically be implemented. The policy landscape is already increasingly crowded in terms of upstream carbon reduction mechanisms. The introduction of a full economy scheme would therefore necessitate a complex revaluation of participation in mechanisms such as the EU ETS. We do, however, have more or less a clean slate for a trading scheme purely between individuals. This is the territory in the policy landscape that has so far been neglected.
35. We believe that trying to solve all the problems involved in introducing an economy-wide system would unacceptably delay the introduction of a personal carbon trading scheme. The most realistic option is to introduce a scheme with restricted participation. Companies and other aspects of the economy could be covered by different trading schemes, with the consolidation of schemes considered at a later date once the principle of personal carbon trading had been satisfactorily established.