Hey buddy, can you spare some carbon credits?

Personal carbon trading could enable consumers to reduce carbon emissions and make money too.

Marc van Dinther | April 2008 issue

Andy Ross and Shannon Moore think twice before hopping on a train or raising the thermostat. Their concerns aren’t limited to transport and utility costs though. Ross and Moore also worry about the impact their behaviour has on the environment.

The duo is part of a fast-growing group in the UK and U.S. aiming to reduce individual carbon emissions. Both are members of a “carbon reduction action group” (CRAG). Ross is the founder of the world’s first CRAG, in England’s Stratford-upon-Avon, and Moore set up the first U.S. version in Maryland. CRAGs are the economic equivalent of microgeneration, but instead of every person generating his or her own power through solar panels or wind turbines, everyone in a CRAG generates a carbonemissions portfolio, which they can use, sell or trade as they see fit.

Government campaigns call on consumers not to leave their TVs on and to put on a warm sweater instead of turning up the heat. But Craggers go a step further: They want heavy energy users to pay fines, a portion of which would then go to those who use energy sparingly. CRAGs are part of a group of consumers working on private trading systems for the purchase and sale of CO2 credit. The system, known as “personal carbon trading” (PCT), is modelled on the European Union’s Emissions Trading Scheme (ETS).

The ETS was introduced in 2005, when some 12,000 industrial plants in 25 EU countries were given emissions quotas. The quotas are allocated as credits, representing the amount of carbon a firm is permitted to produce. If a company doesn’t use all its credits, it can sell them to other companies that have exceeded their own quotas. The idea is to make it expensive for corporations to emit the greenhouse gases that cause climate change, at the same time making it financially attractive for them to limit those emissions. Under the scheme, companies can trade their surpluses on a specially developed exchange and supplement their shortfall by paying a “fine.” In January, the European Commission announced plans for the next phase of the project. The most important change is that producers will have to pay for emissions rights, which were previously given away.

Under a PCT system like CRAG, individuals are given a particular energy allowance based on a calculation of their country’s national budget. Households that need more credit can purchase it on a public energy exchange, just as companies do under the ETS system. Meanwhile, consumers with a surplus can trade it on the public trading floor.

“Climate change is probably the biggest threat humanity has ever faced,” says Ross, from the Stratford-upon-Avon group. “And as a member of a CRAG, everyone will have the opportunity to contribute to reducing CO2 emissions.”

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