Understanding Personal Carbon Trading

Text by Brent D. Smith

The concept of sustainability has been discussed for many decades, but it wasn’t until the 1980s and 1990s that it began to gain widespread attention and become a mainstream concern. So why, after 40 years, is sustainability still being debated? It seems that we have no choice but to adhere to the guidelines which are of utmost importance in order to save our planet. Yet, here we are, still trying to understand and wrap our minds — and some would say, pocketbooks — around taking actions that will have an impact on the world as we know it. Perhaps not in our lifetime, but hopefully for future generations.

Having heard personal carbon trading being bandied about in conversations on sustainability, I wanted to understand the concept, so I turned to OpenAI and their somewhat controversial chat bot, ChatGPT.

Here is my interview.

Good evening. It’s nice to speak with you.
Good evening! It’s great to speak with you too. How can I assist you today?

What is personal carbon trading?

Personal carbon trading (PCT) is a policy approach that aims to reduce carbon emissions by putting a price on individual carbon use. Under a PCT scheme, individuals are allocated a certain amount of carbon credits, which they can use to purchase energy, goods and services that emit carbon. If they use less carbon than their allocation, they can sell their unused credits to others who need them.

What were the results of the U.K. pilot program?

The pilot program found that participants were generally supportive of the PCT concept, and that it had the potential to encourage more sustainable behavior. However, there were also challenges and concerns identified, such as the difficulty of accurately measuring and allocating carbon allowances, and the potential for the system to be complex and difficult to administer.

In the end, the U.K. government decided not to move forward with a national PCT scheme, citing concerns about the complexity of the system and the potential for it to be unpopular with the public. However, the pilot program did provide valuable data and insights into the feasibility and effectiveness of PCT, and it continues to be studied and discussed as a potential policy approach for reducing carbon emissions.

Are any countries actively looking at a PCT policy program?

As far as I am aware, there are currently no countries that have implemented a national PCT program. However, PCT remains a topic of research and discussion in many countries, and there have been a number of pilot programs and proposals in various parts of the world.

What are the problems with a PCT program?

There are a number of challenges and concerns associated with implementing a PCT program. Some of the main problems with a PCT program include:

Complexity: PCT is a complex policy approach that involves significant infrastructure and administrative capacity to implement. It requires a system for measuring and allocating carbon allowances, as well as a market for trading carbon credits. This complexity can make it difficult to implement and may limit its effectiveness.

Equity: PCT could lead to unequal distribution of allowances, as those who can afford to purchase more allowances may be able to continue emitting at higher levels. This could create equity issues, as low-income individuals may be disproportionately impacted.

Political feasibility: PCT is a controversial policy approach that could be unpopular with the public, and it may be difficult to implement in a political context where there is opposition to market-based solutions or carbon pricing.

Administrative costs: The administrative costs of implementing a PCT scheme can be significant, and the costs may be passed on to consumers or taxpayers. This could make the policy unpopular and limit its effectiveness.

Technical challenges: There are technical challenges associated with measuring and monitoring individual carbon emissions, and there may be concerns about the accuracy of the measurement systems and the potential for fraud or manipulation.

Implementation challenges: Implementing a PCT program would require significant coordination and cooperation between governments, businesses and consumers, and it may be difficult to achieve buy-in from all stakeholders.

Isn’t the whole point of PCT to be equitable in that everyone is given the same carbon credits and they can buy and sell on the open market?
The idea of PCT is to allocate a fixed number of carbon credits to individuals, which they can then trade on an open market. In theory, this could be a more equitable approach to reducing carbon emissions, as everyone would be given the same carbon credits to start with, and those who can reduce their emissions more than others would be able to sell their surplus credits to those who emit more.

But if lower-income households are not using their credits, they could effectively sell their credits for inflated prices to high-net-worth households who need more credits, no?
It’s possible that in a PCT scheme, individuals who emit less carbon than their allocated credits could sell their surplus credits on the open market to those who emit more carbon and need additional credits to cover their emissions. This could include low-income households who emit less carbon than their allocated credits, and who might be able to sell their surplus credits for a profit.

Are there any private companies interested in creating the PCT marketplace?
To the best of my knowledge, there are currently no companies that are actively developing a PCT marketplace. PCT is a complex and controversial policy approach that would require significant government support and investment to implement. While there has been some interest in PCT as a potential solution to reducing carbon emissions, there are still many challenges that need to be addressed before it can be implemented at scale.

Thank you for your comments. It was a very educational conversation.
You’re welcome! I’m glad that I could provide you with some useful information on these topics. If you have any more questions or if there’s anything else I can help you with, don’t hesitate to ask.

And now you know.