Policing carbon: design and enforcement options for personal carbon trading

Different approaches have been suggested for extending the reach of carbon trading into the whole economy by including the emissions resulting from individual consumption of energy. The most radical suggestions involve granting emissions rights to individuals-known as 'personal carbon trading' (PCT). A taxonomy is provided of various proposed design options along with consideration of the previously neglected issue of who surrenders the emissions rights and how this is enforced. PCT relies on an enforcement system in which the penalty level determines the price at which constrained actors will breach the cap. Breaching the cap may require a 'safety valve' option to cap carbon prices at politically acceptable levels. This could weaken the argument that PCT guarantees certainty of the environmental outcome. Enforcement is examined for three sets of actors: primary fuel suppliers (upstream), suppliers of final energy (midstream), and the final users themselves (downstream). The choice leads to very different consequences for the design and political economy of the resulting carbon markets. Although upstream enforcement is relatively straightforward, it would not lead to the strong involvement of individuals in carbon markets. Midstream enforcement could encourage more citizen engagement, but cannot guarantee it. Downstream enforcement through end-users would be administratively complex and is politically unlikely.