Making the case for effective climate policy

There is a gulf between the scientific reality of climate change and the political response to it. Tom Pashby, Fleming Policy Centre, outlines a proposal that could bridge that gap.

ResponsibleSci blog, 8 July 2015

In 1996, the late Dr David Fleming proposed a policy framework designed to enable the UK to thrive within the limits imposed by energy scarcity and climate reality.

The framework, which he named Tradable Energy Quotas (TEQs), entails an electronically-managed system of energy rationing, with a hard cap that would be reduced over time, structured so as to engage all people, companies and government in a fair and manageable transition to a low-energy society.

Since then the concept has attracted intermittent flurries of attention, not least from the UK government, including a DEFRA-commissioned pre-feasibility study in 2008 into Personal Carbon Trading (an umbrella term for frameworks including TEQs) and a parliamentary report published in association with the All Party Parliamentary Group on Peak Oil in 2011.

But there has been insufficient recognition of the potential of TEQs to facilitate the changes so urgently needed given the climate crisis, let alone any changes in policy.

A paper published in April this year in Carbon Management journal is bringing the TEQs model back into the conversation.

Entitled “Reconciling scientific reality with realpolitik: moving beyond carbon pricing to TEQs – an integrated, economy-wide emissions cap,” the paper has soared in popularity to become the journal’s third most read article ever. (Note that it can be accessed for free until the end of July.)

As the title says, it’s about bridging the gap between climate science and political reality, and it argues that the TEQs policy framework is the best solution.

The paper is part of Carbon Management’s ‘Perspectives’ series, which provides academics and policy experts with an opportunity to talk in detail about a specific area of work. In it, the authors, who are affiliated with the Fleming Policy Centre, make clear the extent to which political and climate realities diverge and how they may be brought together to create workable solutions.

They note that “while realists about climatology rightly argue that physical reality bats last and does not negotiate, realists within politics argue with equal validity that any approach that tries to radically transform society against society’s wishes will be resented and, soon enough, rejected”.

The TEQs framework anticipates and overcomes some of the reasons for public resistance to transformative policies.

For example, one of the key reasons for the unpopularity of other policies that attempt to reduce carbon emissions is their failure to positively engage all people and organisations. Those other policies - such as carbon taxes - have a tendency to impose regressive measures that put further strain on the poorest in society, and drive unpopularity. TEQs, however, would significantly shift consumers' experience of the energy market: intensive fossil fuel users would effectively pay lower energy users for the privilege of using more than their fair share.

Currently, people can be priced out of buying fuel to heat their homes or driving their cars by fluctuating energy prices driven by supply and demand. Carbon taxes raise the price of fossil fuels, which tend to be the most prevalent source of energy. So increasing the reliance on carbon taxes as a means to reduce greenhouse gas emissions risks further pricing people out of the market and increasing fuel poverty.

In contrast, TEQs would significantly increase equality of access to energy because everyone gets a guaranteed entitlement to purchase energy; above that, the more you use, the more you pay in additional TEQs units.

According to a study in 2013 by the Centre for Sustainable Energy, 71% of households in the lowest three income deciles would benefit from implementing TEQs, whereas 55% in the highest three income deciles would face higher costs.

Having a nationally-set, flat price for TEQs units would mean that everyone pays the same per unit, but the laws of supply and demand combined with the hard cap will mean that this price will rise if too many people use more than their fair share. This aspect is designed specifically to create a shared incentive to lower overall energy use. Wasteful energy users will directly and adversely impact everyone else’s TEQs price, leading to social pressures, especially on those otherwise unconstrained by financial pressures, to use less energy.

In summary: TEQs would ensure fair access to energy for all, would guarantee that a nation meets its emissions reductions targets, and would support the active participation and cooperation of all energy users in rapidly reducing our reliance on fossil fuels. If implemented, TEQs could provide the incentive for all parties to work together to develop solutions to the energy and climate crises.

The Carbon Management paper concludes by calling on colleagues in the sector to “frankly recognise the shortcomings of carbon pricing frameworks” and to “play a key role in refining, promoting and driving the implementation of TEQs in a national context”.

As David Fleming said ahead of the Parliamentary report launch, hard cap-based schemes are necessary and “TEQs is the best-placed framework to reconcile the rift between science and politics”.

Tom Pashby is Campaign Manager at the Fleming Policy Centre.