Personal Carbon Trading: A review of evidence on acceptability and potential behavioural impact

1. Personal Carbon Trading: A review of evidence on acceptability and potential behavioural impact Abigail Bristow Professor of Transport Studies, Department of Civil and Building Engineering, Loughborough University

2. Structure • Context • Policy definitions • Personal Carbon Trading • Carbon Tax • Acceptability • Behavioural response • Conclusions

3. Context Disconnect – between firstly: • A very ambitious UK 80% target reduction in greenhouse gas emissions by 2050; and • A low carbon strategy for transport that may deliver 5% reductions by 2020. and secondly • The dominance of policies based on technological development; and • The need for behavioural change.

4. More radical approaches? A policy framework to incentivise individuals: • Trading - Personal Carbon Trading (PCT) • Taxation - Carbon Tax (CT)

5. Definitions PCT • Individuals receive a carbon allowance based on average emissions; • To cover personal transport use and domestic energy consumption; • The allowance reduces over time in line with reductions targets • Those with emissions below the allowance may sell carbon permits and those with emissions above the limit would have to buy more permits and/or reduce their emissions. CT • More familiar concept, increases the price of carbon intensive goods/service relative to other things.

6. Research to date • Much of the work carried out on PCT and similar schemes has been theoretical. • Now there are a limited number of empirical studies and polls – reviewed here including: • On Acceptability – YouGov 2006a and b; Energy Saving Trust 2007; Harwatt 2008; Bird et al., 2009; Owen et al., 2008; Bristow et al., 2008, 2010; Von Knobelsdorff 2008; Howell 2008; Wallace et al., 2010; Capstick and Lewis 2009 and Jagers et al., 2010. • On Behavioural response: Harwatt 2008; Zanni and Bristow 2009; Capstick and Lewis 2010; Wallace 2009; Parag et al., 2009.

7. PCT acceptability • Some studies are highly exploratory and qualitative pieces of work with small samples (Harwatt 2008; Howell 2008). • Others have relatively small samples (Capstick and Lewis 2009; Bristow et al., 2008) • Table 1 contains only those studies with a sample of more than 100.

8. Table 1: Support for personal carbon trading (or similar)

9. Table 2: Policy Preference

10. What influences acceptability? • Opinion polls relating to green taxes show significant increases in support when revenues are recycled in ways that respondents support: particularly environmental improvements and reducing other taxes. • Stated choice experiments (Bristow et al., 2010) on PCT and CT looked at design attributes. • Threshold set at 4 tonnes CO2

11. What influences acceptance? Personal Carbon Trading Design • Initial allocation of carbon allowances • Choices in disposal of excess permits • Permit life • Limits on permit purchase • Scope of the scheme • Who provides carbon accounts • How is the price set • Transactions • Price

12. Table 3: Example PCT v PCT Choice Card

13. Table 4: Preferred Model

14. Model

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21. Model

22. Forecasting: example • Equal allocation adult and children + no limits on purchase + market determined price + choice in disposal of permits = 59% acceptance • Change one factor to: government sets price = 65% acceptance • Change another factor to purchase limit is allowance level = 73% acceptance • Change another factor to extra permits allocated to those in need = 80% acceptance

23. PCT: most acceptable combination • Allocation: extra permits for those with extra needs • Choice in disposal of permits • Permits expire after 1 year but 50% may be banked • Purchases are limited to the original allocation • Management by not for profit organisation and high street banks • Government sets permit price

24. Carbon Tax • What happens to the revenues? • Least preferred: no hypothecation • Two preferred options: • Revenue is spent on measures to support behavioural change • Threshold exemption (like income tax)

25. Potential Behavioural Response • There is even less evidence on potential behavioural response – partly due to the challenges in designing effective experiments. • The five studies that have examined behaviour are all quite different making comparison difficult. • Therefore, the focus here is on our study in Cardiff and the South East – allowance is 4 tonnes CO2

26. Table 5: Average Carbon Footprint Tonnes CO2

27. Table 6: Emissions by Transport Use Tonnes CO2

28. Table 7: Willingness to adopt actions (-2 to +2) (SE England n = 190)

29. Table 8: Survey Results South East England 2008, 190 respondents

30. Behaviour • People are willing to do the easy, marginal actions • Reluctant to consider new technologies for heating/lighting • Very reluctant to give up international flights • 10-13% reductions in emissions across the sample from an hypothetical first round of implementation.

31. Conclusions Acceptability • Innovative approaches such as a PCT or CT with revenue recycling or rebates may be acceptable. • Good design can improve acceptability – key issues for PCT are the initial allocation of permits; choice in disposal; limits on purchases and lifespan and management. • Preferred use of revenues for tax is either to provide a threshold exemption or measures to support behavioural change. • It is critical to remember that in the early years of a PCT many would benefit financially.

32. Conclusions Behavioural response • A willingness to do the easy carbon reduction actions • A reluctance to invest in unfamiliar energy provision • A real reluctance to give up international flights • Hypothetical implementation: 10 to 13% reduction in emissions • With respect to the theoretical argument that PCT could generate higher savings than a policy that was solely based on a price signal. • To date no real evidence to support or refute this argument.

33. Conclusions Future Research • Further systematic exploration of preferences for PCT design with larger samples; • Examination of the role of framing and discussion in influencing response; • Simulation of dynamic settings for trading and behavioural change over time.

34. References • Bird J., Jones N. and Lockwood M., (2009). Political acceptability of personal carbon trading: Findings from primary research. Institute for Public Policy Research, London. • Bristow A.L., Wardman M., Zanni A. and Chintakayala V.P.K. (2010) Public acceptability of personal carbon trading and carbon tax, Ecological Economics. 69(9) 1824-1837. • Capstick S.B. and Lewis A. (2010) Effects of personal carbon allowances on decision-making: evidence from an experimental simulation, Climate Policy 10(4) 369-384. • Capstick S. and Lewis A. (2009) Personal Carbon Allowances: A Pilot Simulation and Questionnaire. UKERC Report. • Energy Saving Trust, 2007. Green barometer: Measuring environmental attitude, April 2007, London EST. http://www.energysavingtrust.org.uk/uploads/documents/aboutest/Green-Barometer-Web(spread).pdf (accessed 6th March 2009) • Harwatt H., (2008) Tradable Carbon Permits; their potential to reduce CO2 emissions from the transport sector. PhD Thesis, Institute for Transport Studies, University of Leeds. • Howell R. (2008) What can we learn from opinion research and focus groups? Presentation at the workshop Personal carbon trading (PCT) bringing together the research community 27th-28th November 2008, UKERC, Oxford. http://www.ukerc.ac.uk/TheMeetingPlace/Past%20Activities/Activities2008/0811PCT.aspx • Jagers S.C., Löfgren A. and Stripple J. (2010) Attitudes to personal carbon allowances: political trust, fairness and ideology, Climate Policy 10(4) 410-431.

35. References (2) • Owen L., Edgar L., Prince S. and Doble C., (2008) personal carbon trading: Public Acceptability: A report to the Department for Environment, Food and Rural Affairs. Opinion Leader and Enviros Consulting. Defra London. http://www.defra.gov.uk/environment/climatechange/uk/individual/carbontrading/pdf/pct-public-acceptability.pdf • Parag, Y., Strickland, D. and Capstick, S., (2009) Judge a book by its cover: the impact of policy framing on the willingness to reduce energy consumption. Paper presented at European Conference on Energy Efficiency and Behaviour, Maastricht, 18-20 October • Von Knobelsdorff M. (2008) Public Acceptability of Personal Carbon Trading, Masters Dissertation, University of Cambridge • Wallace A. (2009) Reducing carbon Emissions by Households: The Effects of Footprintingand Personal Allowances. PhD thesis, De Montfort University, Leicester. • Wallace A.A., Irvine K.N., Wright A. and Fleming P.D. (2010) Public attitudes to personal carbon allowances: findings from a mixed method study, Climate Policy 10(4) 385-409. • YouGov, (2006a). Daily Telegraph Survey Results http://www.yougov.co.uk/extranets/ygarchives/content/pdf/TEL060101021_1.pdf (accessed 6th march 2009). • YouGov (2006b) Carbon, prepared by YouGov plc on behalf of RSA. • Zanni, A. M. and Bristow, A. L., (2009) Exploring the potential impact of personal carbon trading and carbon tax schemes on personal transport and domestic energy usage. Paper presented at 17th Annual Conference of the European Association of Environmental and Resource Economists, Amsterdam, The Netherlands, 24-27 June.