Crazy or genius ideas: Individual Carbon Emissions Cap (II)

On the previous post I put on the table an idea to help control carbon emissions at an individual level while at the same time creating a way for citizens to monetize from their energy efficiency. I named it the Individual Carbon Emissions Cap (ICEC for short). After explaining its inner workings on the first post, now is the turn to explain why I think it could be highly beneficial for the economy.

Motivation

I am fed up of seeing the utility companies promoting energy saving and efficiency (even though one could think, on first instance, it goes against their business) but governments doing nothing but subsidize renewable energies producers. Renewable energies, as of today, are not capable of covering our whole energy consumption and they will not in the short term either, at least if we follow our historical trend of growing consumption. For renewable energies to really become alternative energies, efficiency measures must be applied to our daily life.

That is where ICEC kicks in, by setting a comprehensible limit on individual carbon emissions it promotes energy efficiency while at the same time boosting non fossil-based energies as they do not emit any CO2.

Prize efficient people, punish wasteful spenders = Prize the economy

I do not want anybody to think about the ICEC as a tax, because it is not. It could only become a tax for someone who is not capable of living without wasting a lot of energy by doing so. If that was the case, then tax him like you would with a normal business... The ICEC limit is high enough to not disrupt you usual life habits, but at the same time giving you an incentive to be efficient. For those who find the way to be efficient, the prize could not be more obvious: cash. Well, apart from the peace of mind of helping the environment and such... This cash could be forced to be for consumption only (if needed), then it would give a much needed boost to our weak economic recovery by increasing goods consumption. The best part? it would come at zero cost for the government, no need to raise taxes to the already tax-massacred citizens and, collaterally, it would mean increased earnings from VAT and other already existant taxes on consumption.

ICEC could serve as a social measure too. Unemployed people do not have to commute to work every day, so while they are unemployed they would be saving CO2 kgs on their ICEC, thus giving them some helpful extra income to not stop their spending; or to be able to keep paying their bills if the situation is that bad. This, again, would come at zero cost for the government.

Being over the limit

Up until here everything seems perfect, but nothing is; so let us have a look at the counterparts, the people that are over the ICEC. These people can be arranged on two groups: the ones that are over the ICEC because of their car and the ones who are there because of their household consumption. 

Car group. They can be divided again on two sub-blocks. The first one would be the ones who are over the cap because they own a very old car whose fuel consumption and emissions are far worse than what today's models achieve. In this case ICEC would give an indirect incentive to this group to change their wheels for something more up to date if they want to avoid paying for extra cap each and every year. The ailing automotive industry would like that one for sure...

The second block would be people who own a powerful sports car. This people would gladly be over the limit in exchange for driving them, it is such a pleasure to do so! Sports cars owner tend to have superior purchasing power, so nothing to worry here... Anyway, sports car have been focusing on efficiency lately to keep their market going strong. A lot of R&D money has been invested for increased fuel efficiency measures and weight reduction achievements to minimize this 'problem'. 

Household group. For the people who spend a big part of their ICEC because of their household energy consumption this could be a test, Which is their problem? and old appliance (or light bulb) that swallows more power than all electric devices on a modern house? Bad isolation that makes heating highly inefficient? In either cases the solution is investing in increasing efficiency. Whether this means replacing old appliances by their more efficient grandchildren, enhancing isolation or changing heating/cooling habits. Everything leads to investments on these subjects to avoid paying for extra ICEC, so that would be good too.

Wrap-up 

After this walkthrough of the effects an Individual Carbon Emissions Cap would have on our economies, I can only say (for me) it has a lot more strengths than weaknesses. No matter if you are under or over the cap, it only leads to increased efficiency and increased consumption, which equals economy growth. I am talking real economy growth! not fake, easy-credit-based growth. And in our actual situation, what the global economy desperately needs is real growth.

 

Remember, if this happens, you read it here first!