"To be truly radical is to make hope possible, rather than despair convincing." - Raymond Williams

All Party Parliamentary TEQs report – rationing, not carbon trading

by Shaun Chamberlin on August 14th, 2009

Market invisible hand

As the evidence for the utter inapplicability of free market carbon trading to our climate emergency continues to pile up, interest continues to grow in the less PR-friendly alternative – the rationing of carbon-rated energy.

Yesterday, the UK Government’s All Party Parliamentary Group on Peak Oil and Gas previewed a draft report commissioned from The Lean Economy Connection. The report, which I co-authored with Dr. David Fleming, emphasises the necessity of considering our pressing energy challenges alongside climate change, and argues that national energy rationing systems on the model of TEQs (Tradable Energy Quotas) will be essential to the fair distribution of fuel as shortages unfold, with implementation now an urgent priority for the UK.

John Hemming MP, Chairman of the All Party group, stated that the UK government remains unprepared for peak oil: “The evidence is now strong that peak oil is either upon us or just over the horizon. Even the International Energy Agency accepts that an oil supply crunch seems to be on its way. The UK government should urgently consider the TEQs system, as I believe it’s the only comprehensive and fair way to tackle climate change and the coming oil crisis.”

“The alternative to rationing by tradable quotas is to hold back consumption through massive price increases. This gives economic instability, unemployment and fuel poverty. We need to plan for a system to give some stability in what will soon be a sellers market for fossil fuels rather than a buyers market.”

Alternative route

TEQs were also the subject of a Parliamentary Westminster Hall debate on the 18th June, called by the Chairman of the House of Commons Environmental Audit Committee, after the EAC came out firmly in favour of what they term ‘Personal Carbon Trading’ (PCT) following DEFRA’s pre-feasibility study in May 2008.

Despite their welcome enthusiasm, I do find this ‘re-branding’ of the debate somewhat pernicious. Of course it is to some extent understandable – politicians deal in public consent, and words like “quotas” and “rationing” bring with them the distinctly unwelcome connotations of shortage and war. Indeed, perhaps only truly horrific words like “taxation” would rank lower in a popularity contest.

Yet a moment’s thought shows us that this bad name is undeserved – rationing is a response to hard times, not the cause of them, and in times of shortage we cry out for fair shares. We need only imagine wartime Britain without a rationing system.

The difficulty today is perhaps that the electorate do not yet recognise the scale or urgency of the energy/climate problem we face, and so are more than happy to do without the inconvenience a solution might bring.

WWII travel poster

Still, politics is politics, we might think, and in a democracy ideas must be ‘sold’ to the electorate (here H.L. Mencken comes to mind: “Democracy is the system where everybody gets what the majority deserve”).

Yet despite the names “PCT” and “TEQs” often being used interchangeably, the distinction between the two is not merely a matter of marketing, it is the distinction between two discrete schemes, and between two very different cultural approaches.

It is the distinction between a system that maximises economic growth and hopes to reduce emissions, and one that guarantees emissions reductions and lets the market (and citizens, businesses, communities…) figure out the best solutions within that context. It is the distinction between a ‘market-based framework’ (a la the ineffectual EU ETS) and a framework within which the market is constrained.

When it comes down to it, there is no getting away from the fact that it is not PCT – an extension of the discredited carbon trading model to the level of the individual – that we need, but TEQs – energy rationing – with the size of our rations determined by energy availability and the latest science on retaining a hospitable climate.

It is true that trading is a necessary part of such a scheme (both since prohibiting the exchange of rations in the past has always led to substantial black market activity, and since certain vocations intrinsically require more energy, meaning that a non-tradable equal entitlement would simply destroy many professions) but it is not the essence of the scheme. The heart of the scheme is a non-negotiable respect for the limits set by physical reality, and a desire to harness the collective genius of the populace in thriving within those limits.

Sadly, the slightly subtle distinction between the necessity of utilising trading in an energy rationing scheme, and the insanity of ‘trading as replacement for solution’, leaves plenty of ground for the professional spin doctors to confuse those who don’t have time to unpick the differences, leading us ever closer to the non-solution of a scheme designed to pander to the popular pretence that we can simply ignore the realities of our time.

Indifference

The Dutch edition of David Fleming’s seminal description of TEQs – Energy and the Common Purpose – has also recently been published.

  1.  Chris Jones says:
    20 October, 2009 at 9:47 am

    Shaun,

    I have had another go at a petition following the UKERC Oil Depletion Report.

    The last one got 560 signatures. Perhaps more this time. I have anchored the new one on George Monbiot’s excellent argument about the contrast in contingency planning, although the characters were limited.

    I was very surprised by just how quickly Number 10 approved this (a matter of 3 hours) despite an overlap with something similar.

    You can see the new petition at:

    http://petitions.number10.gov.uk/UKERCoilreport/

    Regards

  2.  Shaun Chamberlin says:
    20 October, 2009 at 1:25 pm

    Thanks Chris,

    I have signed it, although my personal feeling is that it is a bit of a non-statement for UKERC to say that conventional oil supply “may be constrained by physical depletion by 2030″. If I was putting my money on it I’d go for a peak last year! Certainly there is no doubt that physical depletion is already constraining supply – just look at America (and the implications for their foreign policy).

    Still, I suppose it might move ‘political reality’ one step closer to physical reality.

  3.  think says:
    2 December, 2009 at 4:38 pm

    TEQ is still cap-and-trade, it’s just that the permits are given to individuals rather than auctioned to industry with the auction revenue distributed to individuals. It’s quite obviously still a market-based system. It’s also one that burdens individuals with the task of buying and selling their personal credits rather than industry doing so according to the signals their customers send them. I don’t see what is to be gained by doing so.

  4.  Shaun Chamberlin says:
    10 December, 2009 at 1:00 am

    Hi think,

    To address this, I think we have to unpick the rather misleading ‘branding’ widely given to the debate. Certainly TEQs is a way of implementing a cap, and certainly it involves trading, but it is a very different beast from schemes like the EU ETS, which are what the term cap and trade is generally used to refer to (although in fact TEQs does also involve the auction of permits to industry – see David Fleming’s booklet on his scheme)

    As I said in the post above, all of these schemes utilise trading, but in the existing cap and trade schemes, the trading takes precedence over the cap (take a look at the video by the Story of Stuff team that I posted a few days ago for more details).

    What we need is a scheme in which the cap is primary and robust and, I would argue, one that recognises the energy scarcity side to our climate emergency. As I understand them, your last two sentences are a reference to the debate between ‘downstream’ schemes like TEQs and ‘upstream’ schemes like Cap and Dividend as the most appropriate way of doing this – you may be interested in my post on this.

  5.  Robert Lujan says:
    28 January, 2010 at 9:49 pm

    Good post, thank you. Could you explain the first paragraph more?

  6.  Shaun Chamberlin says:
    1 February, 2010 at 4:50 pm

    Thanks Robert. As with all my posts, if you click the green links that are embedded in the text you will find more info on the points I raise.

  7.  Oscar says:
    5 April, 2012 at 1:19 am

    The transcript of the commons debate about TEQs has been moved, it now lives here:
    http://www.publications.parliament.uk/pa/cm200809/cmhansrd/chan94.pdf

  8.  Shaun Chamberlin says:
    9 April, 2012 at 8:23 pm

    Thanks Oscar! Link now updated in the text.

  9.  » #40: “Our climate is not your business!” says:
    4 November, 2014 at 11:38 am

    […] Carbon Rationing (Dark Optimism) […]

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