A good reason for introducing an energy ration is because Britain’s indigenous oil and gas supply is set to continue to decline to near exhaustion in about fifteen years, as confirmed by the Department of Trade and Industry. More political halos are evidently won by describing it as a response to climate change induced by burning fossil fuels. In any event, it is an excellent proposal especially if the ration could become a form of tradable currency, making the energy content of goods and services a primary component of their cost.
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British residents could face a form of energy rationing within the next decade under proposals currently being studied to reduce the U.K.'s carbon dioxide emissions to comply with the Kyoto Protocol. Under the proposals, known as Domestic Tradable Quotas (DTQs), every individual would be issued a "carbon card," from which points would be deducted every time the cardholder purchased fossil fuel, for example, by filling up a car or taking a flight. Over time, the number of points allotted to each card would decline. High-energy users would be able to purchase points from low-energy users, with the end result being a trading market in carbon similar to the one already in place in the U.K. for industrial users.
The Peak Oil Crisis: Rationing
By Tom Whipple
It has to come sooner or later. As oil becomes scarcer and scarcer and price rises higher and higher, pressures will grow for a formal allocation system. Rationing will come, if only to calm the havoc at the gas lines and the social upheavals that are bound to occur as long as rationing is only by price.
America ’s most recent experience with rationing goes back to World War II. You have to be nearly 70 to remember the little square “A”, “B”, and “C” stickers affixed to the windshields of ever car. These stickers, when accompanied by a sheet of rationing stamps, allowed one to buy gas. Everybody got an “A” sticker (a whole 4 gallons a month just for the asking). To get a “B” or “C” sticker, one had to appear before a rationing board and make the case their mobility was vital to the war effort or at least the well-being of their fellow citizens.
If one ponders for a few minutes on how a modern rationing system might be structured, it is soon apparent nearly any scheme is full of inequities and would be subject to massive and, no doubt, ingenious fraud— especially when an American’s ability to drive his beloved car is at stake. Do you allocate fuel by vehicle? Buy a yard full of clunkers and drive to your heart’s content or until you run out of money. Or allocate gasoline by person, by licensed driver, by commute distance, by adjusted gross income? Problems abound everywhere.
Once again our friends in Europe , this time in Britain , appear to be out in front in thinking about this problem. The ostensible British concern, of course, is global warming and the contribution made to this phenomenon by the combustion of fossil fuels. While we Americans, and particularly our government, seem little bothered by the idea that Florida might one day be under water, the British seem much more upset by the notion the melting artic ice cap will set the Gulf Stream to warming someplace other than Northern Europe.
A couple of weeks ago, the British press reported that Her Majesty’s cabinet is considering a plan to ration energy consumption. The immediate reason for implementing such a system is to reduce the UK ’s emission of greenhouse gases as required by the Kyoto Treaty. The plans authors, however, claim that if the proposal works, it will deal equally well with equitably allocating dwindling energy supplies caused by peak oil.
Given the seriousness with which the British are taking global warming, it is natural that they should put their finest minds to work on the problem. In this case, the Environmental Change Institute at Oxford and the Tyndall Centre for Climate Change Research, a consortium of ten other British Universities. The current proposal has been in development for ten years and, given the organizations involved in its preparation, has obviously been subject to much intellectual rigor. While the details, pros, and cons of the plan fill many pages, the general concept is simple enough to outline here.
The major feature of the allocation system is that it covers all fossil fuels, not just gasoline; and it makes a real effort to be fair to all, by giving consideration to the needs of the poorer folks.
Under the plan, every adult in the country would be given (for free) an annual “Personal Carbon Allowance” (PCA). This allowance would be measured in “carbon units.” One carbon unit would be equal to one kilogram of carbon dioxide emitted into the atmosphere when the fuel is burned. Carbon units can be equated easily to gallons of gasoline, heating oil, diesel, or jet fuel, or to pounds of coal, BTUs of natural gas, or KWh of electricity. For example, one gallon of gas would be the equivalent of about nine carbon units. Thus, for every gallon of gas purchased, nine carbon units would be subtracted from your account.
The annual allowance would be the same for all adults, with possibly a smaller allowance for dependent children, and would be tracked on a central electronic system similar to a credit card account. The size of the annual individual allowance would be based on what a government panel believed would be the total amount of fuel available for consumption in a country during the coming year, divided by the number of energy consumers. Whenever one purchased or consumed fuel, such as on an airplane trip, an appropriate deduction would be made from one’s PCA account. With oil depletion, of course, the annual carbon allowance would shrink with each successive year.
The next most interesting feature of the plan is the government would also establish an electronic free market to buy and sell carbon units. Thus, those who have no need for their complete annual carbon allowance would be free to sell their excess units for cash at the market price. Those individuals who want and can afford more than their allocated share can buy as much as they want at the going price. Note that above-allocation consumers would not only have to pay for the energy, they would also have to pay for the right to buy the above-allocation energy. Non-residents visiting a country would not be given an annual allowance, but would have to buy the carbon units they use on the open market as they consume energy. Businesses that consume energy would buy their carbon units on the open market and would pass the cost on to the final consumer either money or in cases such as airplane rides as a PCA debit.
The object of all this, of course, is to force people to cut back on their energy use in a systematic way. With full knowledge of the projected costs and allocations of energy, people could make choices between SUVs or bicycles, McMansions or efficiencies, and train or plane rides.
Way below average energy users could make some money under the plan. While the very rich would not be bothered in the slightest, most people would start making energy saving choices in their lifestyles -- smaller cars, better-insulated homes, less air travel. As demand for energy drops in response to conservation measures, then the costs of energy would drop even in an era of oil depletion.
The plan’s developers claim that declining amounts of energy will be allocated equitably and with minimum government interference. For, aside from setting up the system and determining the annual carbon ration, the free market would be left to work out the details of oil depletion.
aahala wrote:I don't think the system has the desired result. Once you make these
energy credits freely transferrable, like you said, it's simply money.
When you give people money, they will spend it as they see fit, so it's
not like you have provided the poor with energy at reasonable costs. Without such an involved system, tax the energy in question, hand over the proceeds to the poor. Much simplier, same result.
You don't have to leave the rationing totally to the free market either.
Governments can and have imposed efficiency standards on cars, appliances, etc. In some cases, governments can impose taxes on
above average useage as well, such as requiring a higher per kilowatt
charge on households that use over a certain monthly amount.
gego wrote: If you ration equally, but do not control the price then the price will skyrocket anyway because of limited supply, and those without funds will not be able to get an equal portion. The end result will be that price rations the energy anyway and you have just added an extra meaningless government structure. If you attempt to control price then the producers will soon gradually shut down and produce nothing, defeating the attempt to provide oil and gas to everyone.
dub_scratch wrote:Sounds great, but this idea has about a 1/1000th chance of ever being adopted.
julianj wrote:I am glad this subject has come up again.
julianj wrote:Mr Bill,
I think you've misunderstood: the TEQs scheme is only meant to apply to energy, eg fuel or electricity.
Obviously there is a fossil fuel component to most goods and services, but that's surely too complex to administer.
David Fleming thinks that the TEQs would be part of a UK ID card (so you wouldn't have a separate card)
I have to say I have great qualms about an ID card myself.
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