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An upstream alternative to personal carbon trading

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  • STEVE SORRELL

Abstract

An upstream trading scheme is described that could operate alongside the EU Emissions Trading Scheme (EU ETS). In this proposed scheme, fossil fuel producers (or suppliers) surrender allowances for the carbon contained in their fuel sales. Since the administrative costs are relatively low, such a scheme could provide a simpler, cheaper and more practical alternative to personal carbon trading, while at the same time delivering comparable economic and environmental benefits. The incentive effect for downstream consumers would be similar to a carbon tax. However, instead of a fixed and visible tax rate, the carbon price would be variable and largely hidden within the price of fuel. Consideration is given to the distributional impacts of the scheme and the potential benefits of linking to the EU ETS-including improved liquidity, reduced price volatility and reduced scope for exercising market power. It is argued that an upstream scheme is likely to have greater political acceptability, while at the same time delivering comparable performance in terms of economic efficiency, environmental effectiveness and social equity.

Suggested Citation

  • Steve Sorrell, 2010. "An upstream alternative to personal carbon trading," Climate Policy, Taylor & Francis Journals, vol. 10(4), pages 481-486, July.
    • Handle: RePEc:taf:tcpoxx:v:10:y:2010:i:4:p:481-486
    DOI: 10.3763/cpol.2009.0008
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    Citations

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    Cited by:

    1. Alice Brock & Simon Kemp & Ian D. Williams, 2022. "Personal Carbon Budgets: A Pestle Review," Sustainability, MDPI, vol. 14(15), pages 1-18, July.
    2. Fan, Jin & Li, Jun & Wu, Yanrui & Wang, Shanyong & Zhao, Dingtao, 2016. "The effects of allowance price on energy demand under a personal carbon trading scheme," Applied Energy, Elsevier, vol. 170(C), pages 242-249.
    3. Fan, Jin & Wang, Shanyong & Wu, Yanrui & Li, Jun & Zhao, Dingtao, 2015. "Buffer effect and price effect of a personal carbon trading scheme," Energy, Elsevier, vol. 82(C), pages 601-610.
    4. Brown, Donal & Brisbois, Marie-Claire & Lacey-Barnacle, Max & Foxon, Tim & Copeland, Claire & Mininni, Giulia, 2023. "The Green New Deal: Historical insights and local prospects in the United Kingdom (UK)," Ecological Economics, Elsevier, vol. 205(C).
    5. Nicholas Bardsley & Milena Büchs & Sylke V Schnepf, 2017. "Something from nothing: Estimating consumption rates using propensity scores, with application to emissions reduction policies," PLOS ONE, Public Library of Science, vol. 12(10), pages 1-23, October.
    6. Andersson, David & Löfgren, Åsa & Widerberg, Anna, 2011. "Attitudes to Personal Carbon Allowances," Working Papers in Economics 505, University of Gothenburg, Department of Economics.
    7. Nie, Qingyun & Zhang, Lihui & Tong, Zihao & Hubacek, Klaus, 2022. "Strategies for applying carbon trading to the new energy vehicle market in China: An improved evolutionary game analysis for the bus industry," Energy, Elsevier, vol. 259(C).

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