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Carbon trading/tax News and Discussion pt.2

A carbon tax

Unread postby Denny » Sun 07 Aug 2005, 13:07:02

I rcall reading several years ago, in order to meet the Kyoto accord, some governments toyed with a carbon tax.

I think it would be a good thing overall.

Some benefits:

1 - By giving more of an impetus, it would cause people to consider alternatives and efficinecies in their use of fuel. Turn down the A/C. Use more car pooling. Consider planning such routines as shopping trips better. Use the bike or mass transit. Americans really cut down on car use during World War II due to rationing, yet life went on, so it can be done. My father-in-law rode a bike to work during WWII.

2 - Stimulate alternative energy industries.

3 - Help the clean the air and reduce CO2 build-up, which is the prime intent of Kyoto.

4 - Walking, biking and even using mass transit is healthier for commuters than dirinvg. Not enough walking by Americans, especially middle aged.

It seems that the rest of the world should be sweet talking the Bush administration into this, I recall that the U.S.A., was a real hold out on the whole Kyoto accord. Perhaps now with prices increasing so much and imminent shortages, the Bush adminstration will be more receptive to the facts and the opportunities. Even National Geographic, published right in Washington, DC is showing that Europe is leading America in alternative energy developments.

Now that the U.S. has a new U.N. ambassador, it may be a good way to break the ice, and get him on the right track. I understand he has a real "in" with the president.
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Unread postby RonMN » Sun 07 Aug 2005, 14:09:59

I don't disagree with your good points about a carbon tax...but we should equally look at the bad points. for one...i can't afford another tax. I'm currently being taxed to death & gas & food prices aren't helpping matters any. (not to mention that minnesota just increased the tax on ciggies another $7.50 a carton)... Also any more taxes of any kind will further hit the economy & that means less jobs.

When you weigh the good points & bad points i definately think a carbon tax would be a bad idea (IMHO).
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Unread postby Denny » Sun 07 Aug 2005, 16:46:56

Ron, couldn't you just work around it?

Like, my father-in-law told me. He only had ration coupons for 4 gallons a week during the war. (They measured in gallons back then.) Buying more coupons at the filling station was really expensive, and even illegal. The bus lines were always full, as they weren't making more buses due to the war war effort. So, he biked. Then he could afford the odd picninc with the car.

It can be amazing that stuck with lemons, you can make lemonade.

He saved up aenough money during the war to build a house after.
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Unread postby RonMN » Sun 07 Aug 2005, 17:21:32

2 months ago i would say i could bike to work...but our company moved :cry: it is no longer reasonable to think i could bike to work unless i quit there & looked for a job right around my place. I've been there for over 20 years & there is really nobody to replace me so i'd be one of the very last people to be let go. Not to mention, almost 6 weeks vacation and a max of 90 sick days is a huge security blanket.

If i "had to" i could sell my house & live in a tent...but if i had to because of a damnable tax...i'd sure be bitter about it!

It would be like the guy who lost a game of monopoly over a community chest card. :)
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Unread postby backstop » Sun 07 Aug 2005, 22:53:12

Denny -

The merits of a carbon tax depend IMO on quite how it's done.

It could be a huge boon to the status quo, by ending popular support for a government that has the integrity to apply one - or it could be a key shift in the energy industry's investment planning.

Look at it this way - You, a driver, have to buy fuel from me, an oil business. In this relationship you are called the polluter and under the 'Polluter Pays' principle you get taxed for the carbon your car emits.
(I have cohorts of accountants and top-level insider influence and don't tend to get taxed all that much).

Theoretically, you're now supposed to pressure me to start selling you something other than fossil oil, and look, I already am: Hydrogen ! And by 2022 the industry might get 13% of the global fleet onto it. (FT, 2002; less optimistic noises since)

This approach seems to me a sick farce that shows clearly the industry's utter callousness towards causing mass casualties through famine due to foreseeable climate destabilization.

I'd suggest that there are several requirements for a reliably productive carbon tax.

1/. It should be placed on the (incompetent) industries, not the (dependent) consumer.

2/. It should be revenue-neutral, by using all income raised to advance the RD&D of transparently-selected sustainable energies, (i.e. it should not be open to political attack as being just a fund-raiser for general govt. spending).

3/. It should be levied on the profits of those who mandate the investment strategy of the energy corporations and energy-using appliance-manufacturers, namely their shareholders.

4/. It should be levied on shareholder profits according to the relative proportion of investment going into renewables/efficiency of the corporation's "Budget for Research, Exploration & Development", with the best performers paying least.

This would be a BRED Tax on fossil energy shareholders' profits.

The resulting differential pressures on share-prices would be a cogent signal to the corporations that changing course has become a necessity.

As to how soon any nation gets sufficient democratic voice for its govt to levy such a tax, your guess is as good as mine.

Personally I'm looking forward to a catastrophic ice-storm over Washington/Paris/Peking/London/Venice to do the trick.


regards,

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Personal Carbon Allowance Rationing(TEQs)

Unread postby donshan » Tue 29 Nov 2005, 14:21:47

This post is to discuss the ideas of how to ration a declining energy supply in a Post Peak Oil world as fairly as possible, while encouraging the maximum economic activity possible. This will be a world of steadily declining fossil fuel energy availability, especially oil based liquid fuels, which also requires reducing the CO2 emissions from fossil fuels simultaneously.

The UK has developed a plan to ration fuels in order to solve the carbon emission problem involved in meeting the Kyoto Accords. However the idea is easily extended to ration the fuels themselves.

I first came across this idea at the ASPO Ireland website.

http://www.peakoil.ie/newsletters/603

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.
......

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 idea is a blend of government allocation and free market principles called Domestic Tradable Quota (DTQ) or a “carbon allowance” (Google carbon allowance) This allowance involves a “carbon card” that works much like a computerized Bank debit card and is used to make any purchases of fuels, electricity, airline tickets etc. For example, one gallon of gasoline is 9 carbon units.

The US currently uses a somewhat similar system to buy and sell air pollution allocations to industry.

The role of government is to establish and pass the laws, set up the computerized system and divide the total amount of energy available by allocations. The rest of the system is handled by the free market. The system would be integrated into today's credit/debit card system.

The government decides how much energy is available and sets the allocations that are free to individuals. The essential parts are:

• An equal annual ration of carbon consumption is allocated for each adult citizen, with a smaller one for children

• Rations are tradable and can be bought and sold. Those not using their full ration can sell carbon units to others who use too much and can pay for them. People who power down can get a money income as payback for their investments in energy conservation. They are paid by people living in energy wasting McMansions, and refusing energy conservation who must buy carbon units in the market. .

• The ration covers the direct energy used in the household and for personal travel including such things as an airline ticket.

• A phased year-on-year reducing ration is signaled well in advance each year as energy resources decline allowing planning and intelligent purchase decisions. Carbon units used would be required on product labels and as part of money pricing. This is similar to fuel surcharges added today.

• The arrangement is mandatory, and enforcement would be needed similar to tax evasion and theft laws.

Business users are not discussed in the UK plan that I saw, but would probably be required to purchase their carbon units in the market or collect them from their customers. For example if an airline ticket had one seat share of the fuel used as its carbon charge, the airline breaks even if all seats are full, but must purchase carbon credits for empty seats flown. The system then becomes an energy tax applied to the commercial sector. This is not new, since fuel surcharges and energy taxes are part of the economy today.


I will not try to cover all the details here, but refer you to the links below.

The benefits I see are as follows:

• The carbon allowance uses free market principles which force consumers to plan their limited fossil fuel budget, just as they plan a limited money budget. Careful planning can increase money income.

• The carbon allowance has the potential to manage a Power Down scenario.

• The carbon allowance could be used by governments to encourage development and use of alternative energies by direct carbon allowance credits.

• The carbon allowance accounts for and reduces environmental degradation due to fossil fuels and produces a managed decline in CO2 emissions.

• The carbon allowance charges users for depletion of a finite energy resource in the earth.

• The carbon allowance introduces financial incentives into the free market system to conserve energy and consider the long-term sustainability of the earth.

• The carbon allowance would encourage electricity from non fossil fuel sources, since there would only be a prorated carbon charge for that fraction of the electricity generated from fossil fuels. Zero carbon charge if no fossil fuels went into the electricity.

• The carbon allowance would encourage EROEI analysis, and would discourage schemes like using natural gas to produce "green" hydrogen fuels. Hydrogen from natural gas would still have a carbon charge, but fossil fuel free hydrogen would not have a carbon charge.

•The carbon allowance is the first type of “new money” for a new world with limited fossil fuels. In time as the world fuel shortage becomes more serious, a carbon allowance could BE the new money


There is an alternative that free market economists prefer- let the money price rise to whatever it takes to ration supply. This is classic economics. This is a product of the industrial revolution. Using only price is an idea that has both its merits and problems of fairness to the poor. Using only money pricing to control fossil fuel use has none of the advantages above; rather it encourages exponential growth instead of a power down mentality. The carbon allowance plan would be vehemently opposed by the present economic system, but that system is flawed.

This introduction has not begun to explore the pros and cons of this idea. I think it deserves discussion.



Further details are at:
http://www.eci.ox.ac.uk/pdfdownload/ene ... _doc_l.pdf



An American adaptation of this idea is described at this link:

http://www.fcnp.com/519/peakoil.htm


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.




Edit Note added: The name for these carbon allowances has been updated to Tradeable Energy Quotas or TEQ.

julianj provided a link to a 2004 thread on this same subject

http://www.peakoil.com/fortopic4556.html

see:
http://www.teqs.net/
Last edited by donshan on Fri 02 Dec 2005, 10:35:22, edited 3 times in total.
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Re: Personal Carbon Allowance Rationing

Unread postby aahala » Tue 29 Nov 2005, 16:23:44

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.
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Re: Personal Carbon Allowance Rationing

Unread postby donshan » Tue 29 Nov 2005, 18:09:26

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.


You are correct that this is a money creation scheme. However, I suspect it is not a subsidy for the poor, who tend to live in poorly constructed houses with enormous heating costs. One writer indicated that the poor in the cold UK climate may need subsidies for better insulation etc. in order to avoid having to BUY carbon allowances. Adjustments may have to be made for regional issues.

Another obvious alternative is simply bringing the US gas tax in line with Europe et. al. One study I saw indicated fuel use would drop 8% with a $1/gal gas tax. That number many not be right, but I am sure that an announced plan to raise the gas tax to $4/gal implemented in stages over 10 years would do a lot of good on fuel conservation and purchase decisions.

One of many complications. I do not endorse the carbon allowance for America without some reservations myself , but when things really get tight something is going to have to happen to manage the situation rather than long lines and tempers. This will be a lifetime issue for everyone sometime in the near future.

People need to brainstorm all the ideas.
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Re: Personal Carbon Allowance Rationing

Unread postby gego » Tue 29 Nov 2005, 18:21:22

Rationing creates black markets. Black markets are really free markets, and people gravitate to them whenever government attempts to interfer with free trade; witness the drug trade.

What makes you think that each person is entitled to an equal share of something he does not even own? This is just another collectivist plan that will fail and will cause just as much human suffering as did communism in the USSR. 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.

The best way to accelerate the dieoff is to bring on this and similar well intentioned plans. This will also fly in the face of natural selection. Nature intends to eliminate the weakest of the species in the process of bring the population down to sustainable levels. You are attempting to save everyone with rationing and this is impossible when there is not enough energy to sustain 6+billion people on a planet capable of sustaining 1/6 of that.
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Re: Personal Carbon Allowance Rationing

Unread postby MacG » Tue 29 Nov 2005, 18:54:21

"Individual tradable Carbon Alowance" ..??

Sound pretty much like the suggestion from old Hubbert himself.

"Carbon Allowance" or "Coal and oil ration" makes no real difference. Would result in a robust monetary system anyhow.

Edit: Thought some more on it. This is a completely dead idea. Will never get even close to implementation.
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Re: Personal Carbon Allowance Rationing

Unread postby dub_scratch » Tue 29 Nov 2005, 19:10:15

Sounds great, but this idea has about a 1/1000th chance of ever being adopted.
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Re: Personal Carbon Allowance Rationing

Unread postby donshan » Tue 29 Nov 2005, 20:39:39

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.


There is a lively free market today in options to buy and sell stocks in the future. If the stock is available in the future and the price does not change these options to buy expire worthless. These carbon allowances have a similarity in that they are an option to buy fuel in the future at the free market price, and that price may be high if the fuel comes from coal or oil sands or shale. If fuel were plentiful the carbon allowance option has no monetary value. However, the number of these options created equals the available fuel supply. Without an option right ( the carbon allowance) you are not permitted to legally buy fuel, so demand is suppressed, preventing a skyrocketing price. Only people who want more than their share of fuel drive up the price of options to buy, but do not drive up the price of the gas itself. Unfortunately for pure free market economics, higher prices for oil do not quickly increase supplies like the theory says they should.

I agree, you never control price without limiting supplies even more, but you can use controls (even taxes like alcohol and tobacco taxes) to dampen demand, and let the free market price rise to what ever it takes to keep supplies coming.

Your point is accepted that deciding everyone gets a equal option right to buy fuel at the market price regardless of wealth is a society value judgment. The free market has assumed in the past that one could pollute waters and the air for free. We know now this is not true. One man's pollution does affect everyone else which gives society the right to suppress the polluter. This gives everyone an equal share in controlling pollution. Everyone has a stake in preventing the sea level rising 30 feet in the next century or two. Also the idea that the owner of a mineral lease owns the mineral output is not entirely true either. Mineral rights are owned by the government in every country in the world for most oil and gas production. Thus every citizen has a small right to that resource, regardless of who brings it to market. There is a case for equal rights to control global warming and to assure energy supplies in the future.
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Re: Personal Carbon Allowance Rationing

Unread postby donshan » Tue 29 Nov 2005, 20:46:41

dub_scratch wrote:Sounds great, but this idea has about a 1/1000th chance of ever being adopted.


True. But wait a while. People may feel different about an organized system of some sort after month after month of waiting in line for four hours for an allocation of 5 gallons of gas, and it is getting worse every month.
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Re: Personal Carbon Allowance Rationing

Unread postby julianj » Wed 30 Nov 2005, 12:05:56

I am glad this subject has come up again.

Here's the original discussion:

http://www.peakoil.com/fortopic4556.html

Please note:

David Fleming has changed DTQs name to Tradable Energy Quotas (TEQs), because he felt that was a clearer definition.

Here's the website:

TEQs

I am given to believe that the UK govt is looking seriously at this.
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Re: Personal Carbon Allowance Rationing

Unread postby donshan » Wed 30 Nov 2005, 19:04:51

julianj wrote:I am glad this subject has come up again.


Thanks for the link. Before I did my original post, I did a search of the forum but did not find this thread and was a bit surprised. However I did not use the right search terms, not thinking of using DTQ.

This idea is of course totally objectionable to the present US policy of "forget about demand reduction, we need increased supply", and rejection of anything like Kyoto. The idea will need some time and debate and surely some adaptations before it would be acceptable in the USA.

However, I would have thought a zero down, interest only mortgage on a $400,000 house was unthinkable a decade ago.

And how many thought $3.00/ gal gas prices were realistic even a couple of years ago?
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Re: Personal Carbon Allowance Rationing

Unread postby MrBill » Thu 01 Dec 2005, 06:46:58

Excellent post Donshan. I do not see many problems with it other than administration and that admittedly is quite complicated, as is calculating the energy intensity of every good and service.

I am surprised that in a country opposed to personal identity cards and mandatory police registration as elsewhere in Europe where it is the norm that individuals would consent to carry around a card which in essense is needed to track each and every purchase made through out the year. If not, then the system is open to abuse by the clever or the dishonest. Not even VAT and other duties are administered evenly without some serious evasion on behalf of consumers and politically motivated tinkering by governments.

For example, what use are higher fuel surcharges if France makes allowances for truck drivers, fishermen and now farmers? Who is next, taxi drivers? I agree a universal system would be the fairest, but that in turn requires the kind of good governance that so far we have lacked and therefore we are in this situation to begin with. Why give a bureaucrat another rubber stamp? It is just extracting another rent from taxpayers.

Also, this may not be very politically correct but if you give every participant in a poker game the same amount, by the end of the game, the quick and the clever will have all the chips. During privatization in the Czech Republic, each and every citizen was given privatization vouchers to invest in state entities. Fortunes were made buying up these individually worthless certificates and then collectively using them to buy valueable companies. The experience in Russia was similar. It is not that loans for shares was inherently bad, it is that only a minority of the truly clever with moxy were capable of executing such deals which they used to buy valuable companies for pennies on the dollar. In theory, anybody could have, but in reality, only a very few became billionaires while the majority were too slow or too dumb and ended up poor.

In Canada, the government gives Native Indians on reservations money each and every month. That money is simply re-invested in the local economy. At the end of the month, the recipients are no better off. Welfare recipients are the same. If you give poorer, under-educated citizens certificates or credits they will not calculate their value correctly and they will be accumulated by options traders and entrepreneurs that can accurately calculate their worth. As I said, this is not politically correct, but how many laws do we currently have simply to protect people from their own stupidity? Many, mucho, viel, tres.

If you cannot manage money, you cannot manage options on future value. Don't forget 50% of the populous have below average mathematic skills. :oops:

But the admin and calculating the energy value of every good and service are major hurdles, too. Not to be under-estimated, which is quite different than simple rationing.

Other than that, I think it is an excellent scheme. Too bad the average person just is not going to be able to use it. And then as we all know it is because free markets don't work. Look what a mess money has gotten us into? :)
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Re: Personal Carbon Allowance Rationing

Unread postby julianj » Thu 01 Dec 2005, 07:03:28

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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Re: Personal Carbon Allowance Rationing

Unread postby MrBill » Thu 01 Dec 2005, 07:58:26

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.



Yes, sorry, I think I did misunderstand that detail. Thanks for clarifying it. However, if not all energy, then would it not promote avoidance by for example cutting down trees in the commons, to put in your own fireplace to the detriment of all, to avoid paying for heating fuel? Or making your own bio-fuel or ethanol, which by definition means using ingredients such as corn or sugar that used fossil fuels to plant, grow, harvest.

Sorry not trying to nit-pick but just know when GST was introduced in Canada and they tried to differentiate between basic food, processed food & restaurant meals, for example, and a lot more pre-cooked meals ended up being sold via supermarkets. Even cooked or pre-heated at the supermarket.

If there is an out someone will try to take advantage of it. That might not be so bad so long as you capture 98% of the economic activity and leave the third deviation from the mean as uneconomic/impractical to collect, but on a more sinister level 'black markets' can lead to substitution effects whereby you create another problem by trying to solve one set of symptoms rather than addressing the underlying causes.

I think as someone said, trying to provide enough (in western terms as we understand them) energy to a potential gobal population of 9-10 billion when the planet cannot support that burden or right away restricting all 6.5 billion today regardless of present location or place of birth to an 'equal' share of today's energy? And, why for example, should we, as a childless couple for example, restrict our use so that others for cultural, religious or reasons of status can have more children than they can support? Do the couple with 15 children get a proportionately larger energy allowance? (Hmm, note to self: buy farm, use child labor, collect energy credits, sell produce for bio-fuel. The more the better).

Or even trying to calculate what is sustainable use of all fuels, as we know, no amount of fossil fuel use is sustainable? The devil is always in the detail, although the conversation is excellent and thought provoking. Thanks. :)
Last edited by MrBill on Thu 01 Dec 2005, 09:29:36, edited 1 time in total.
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Re: Personal Carbon Allowance Rationing

Unread postby Liamj » Thu 01 Dec 2005, 09:17:51

I love the idea of DTQ/TEQs, but also think their chances (as currently described) are vanshingly slim, mostly due to decision maker incomprehension and inertia rather than any black market or administrative issues. Climate is too diffuse an issue and money too dear to our hearts. But glad you brought it up, good on you taking it out for a trot, convince me its a stayer.

The wider energy or resource backed currency theme has definate legs, i think its esssential to anything resembling an orderly transition/powerdown, but can only begin to think about it at a local-regional scale (and i'm not a dole-for-all man, incidentally).

Appreciate thats not the topic of thread, will shuffle behind the backdrop after making the point that we're going to need new currencies, like it or not (I know TEQs not precisely a curr.). As at least Hubbert pointed out, an interest rate > 0 in an economy with a declining resource supply cannot work, at least not for very many people at all.
SOme other way, prob involving more than one novel instrument (e.g. DTQs for nonrenewables, another instrument/'currency' for locally produced energy), will have to be found.
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Re: Personal Carbon Allowance Rationing

Unread postby MrBill » Thu 01 Dec 2005, 09:56:07

Another thing I may not quite understand or is not really clear to me. Tradeable certificates work now because firms can buy quotas if it is cheaper than not polluting. But they pay for these permits with real money as they can presumably sell their goods and pass these costs (or savings) along to their customers who are also paying cash. If you remove money from the equation, I am not sure it would function? You have to pay for your extra quota with something and obviously that something cannot be what it is you're buying (i.e. energy).

Remember that many POs are saying that money is the root of all evil or in this case the cause of peak oil in the first place. If not the cause then at least the facilitator.

It seems to me that the system is very impractical to administer on a large scale. If you jump in a taxi, you are not using the taxi driver's personal allotment, but using part of your own. That means the taxi driver doesn't just need a regular meter, but needs an ATM like device in his taxi, even for small transactions. Make exceptions and the system breaks down. This is quite different than 'estimating' how much a power station pollutes and taxing or charging by the month or year for its output. Very expensive and may I say energy intensive to set-up such a system with mini-monitors on all transportion or fuel using devices hooked up to a centralized system. Well those are just technical details.

However, back to cash. So say, a drug user or an alcoholic sells me their personal energy allotment for the year for a few hits now. Does that mean they cannot use any fossil fuels for the rest of the year? They may freeze in winter? Theoretically the only way they can get their allotment back is to, you guessed it, buy it back using cash. This system will always favor the rich, in the traditional sense of the word, as they can afford to buy their credits while others will by nature be natural sellers. So you force those who can least afford it to cut back on their energy use, so wealthy people can buy more than their share.

How does that differ than the system we have today with money? It may encourage a bit of conservation, as energy becomes a direct cost and/or a source of income, but it is a very regressive form of income transfer from poor who cannot buy extra units to rich who can. Versus fuel surcharges with tax rebates to the poorest, which like any good that is subsidized encourages consumption. However, at least taxes on consumption or an energy debit card make it clear to the consumer the true cost of any good better than stealth taxes and hidden surcharges.

Just some other things I thought about. Thanks Donshan.
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