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
Structure
 Context
 Policy definitions
 Personal Carbon Trading
 Carbon Tax
 Acceptability
 Behavioural response
 Conclusions
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.
More radical approaches?
A policy framework to incentivise individuals:
 Trading - Personal Carbon Trading (PCT)
 Taxation - Carbon Tax (CT)
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.
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.
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.
Table 1: Support for personal carbon trading (or similar)
Study type, sample size and date
% support
National Poll, 1619, 2006 (YouGov)
25%
National Poll, 2645, 2006 (YouGov)
61%
In-home interviews 1192, 2007 (EST)
29%
On-line poll, 1081, 2008 (Bird et al)
31%
CAPI South East England, 208, 2008 (Bristow et al)
43%
Postal survey, Cambridge, 152, 2008 (Von Knobelsdorf)
44%
Postal survey, Nottinghamshire, 317, 2008 (Wallace)
42%
Postal survey, national, Sweden, 938, 2007 (Jagers et al)
36%
Table 2: Policy Preference
Author &
date
Bird et al.,
2009
Survey type & Choice
sample size
1081 online
27% PCT
opinion poll
15% CT
15% limits on fuel and energy
suppliers
43% none of the above
Owen et al., 92 in 12 focus 34% PCT
2008
groups, and
34% CT
post group
11% upstream trading
questionnaire 15% refused
Bristow et
79 Citizens’
20% PCT
al., 2008
Forum, Cardiff 56% CT
24% unsure/don’t know
Jagers et al., 938 postal
66% CT
2010
survey Sweden
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
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
Table 3: Example PCT v PCT Choice Card
1
Choice Card 2
ATTRIBUTE
Allocation of permits
Permit sale / purchase
Purchase limits
Price is set by
Excess permits
2
Option 1
equal allocation to all
people including
children
£100 per tonne of CO2
you may sell or buy as
many permits as you
like
Option 2
allocation to adults
based on a government
assessment of needs
£50 per tonne of CO2
purchases are limited to
1/4 of your local
allocation
the market determines
the market determines
the price - government
the price - no limits
sets a price ceiling
you can choose whether you can choose whether
to sell excess permits in to sell excess permits in
the market, donate or
the market, donate or
destroy them
destroy them
Table 4: Preferred Model
Permit Allocation
Equal Allocation to all including children
Coefficient
BASE
t stat
Equal Allocation to all adults and children get 40% of adult
n.s.
allocation
Equal Allocation to all adults, no allocation to Children
-0.172
Allocation According to current levels of consumption
Equal allocation to all with extra permits for those with
greater need, for example, living in rural area, poor
housing or disability
Equal allocation to all households
Allocation to adults based on a Government. assessment
of needs
Equal allocation. to all but additional financial support for
those with greater need, for example, living in rural area,
poor housing or disability
n.s.
0.350
2.7
3.4
n.s.
-0.289
n.s.
2.8
Model
Coefficient t stat
Transactions
Payments-as now. Automatic updating of carbon
BASE
account
Payments-additional transaction. Needs authorisation
n.s.
of carbon movement in and out of account
Model
Management of carbon accounts
A Central Govt. agency
Coefficient t stat
A single not for profit national operator
0.268
BASE
A single not for profit national operator + high street
0.319
banks
A Central Govt. Agency + local organisation
n.s.
Open to any organisation meeting standards to provide
0.233
carbon accounts
2.8
2.7
1.8
Model
Excess Permits
Coefficient t stat
You can choose whether to sell excess permits in the BASE
market, donate or destroy them
Excess permits must be sold in the market
-0.145
2.5
Excess permits may be sold privately to whoever you
wish
n.s.
Excess permits must be sold in the market or donated
to charity
-0.182
1.9
Model
Life time of Permits
Coefficient
All permits expire after 1 year
BASE
All permits expire after 5 years
0.165
Permits expire after 1 year but 50% may be banked up
0.301
to 5 years
Permits expire after 1 year but 25% may be banked up
n.s.
to 10 years
t stat
1.8
3.2
Purchase Limits
You may sell or buy as many permits as you like
Purchases are limited to 1/2 of your allocation
Coefficient t stat
BASE
Purchases are limited to 1/4 of your allocation
n.s.
n.s.
You may purchase up to same amount of your original
0.402
allocation
2.7
Model
Market Operation
The market determines the price - no limits
Coefficient t stat
BASE
Govt. Sets the price of permits on an annual basis
0.242
The market determines the price and government sets
n.s.
a price ceiling
Scope of the scheme
Home energy + all transport use, car, public transport
BASE
and air travel
Home and private car use only
n.s.
Home, private car and air transport.
n.s.
3.8
Model
How Tax Works
Coefficient t stat
All carbon consumption is taxed and all the revenue is
BASE
used to cut council tax
All carbon consumption is taxed and the revenue is
n.s.
used to cut income tax
All adults are given an exemption for the tax up to the 4
0.558
tonnes CO2 threshold, like an income tax threshold
All carbon consumption is taxed. All adults are given a
n.s.
lump sum £X
All carbon consumption is taxed, no hypothecation -0.277
revenues go to the general tax budget
All carbon consumption is taxed and the revenue is
n.s.
spent on technology to improve energy efficiency
All carbon consumption is taxed and the revenue is
spent on measures such as more public transport to 0.454
make it easier to change individuals behaviour
4.9
2.6
4.2
Model
Permit Sale and Purchase
PCT (COST) if CF more than 4 tonnes
PCT (COST if CF less than 4 tonnes
CT (COST)
Coefficient t stat
-0.000204 5.3
n.s.
-0.000398
CT_LCF (COST) when ‘all adults are given a lump sum
£X’
n.s.
6.2
Model
Alternative specific constants
ASC1
ASC2
Coefficient t stat
-0.651
0.376
9.9
6.4
ASC3
ASC4
ASC5
ρ2
Log likelihood
Observations
-0.962
0.255
n.s.
0.035
-5817.25
6389
8.5
3.8
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
PCT: most acceptable combination

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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
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)
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
Table 5: Average Carbon Footprint Tonnes CO2
Category
Home
Appliances
Transport
Total
Cardiff
2.1
0.7
3.1
5.9
South East Total
2.3
2.3
0.9
0.9
2.2
2.4
5.4
5.6
Table 6: Emissions by Transport Use Tonnes CO2
Category
Both air and car
transport
Car only
Air transport only
Neither
Cardiff South East Total
7.3
6.0
4.0
2.9
7.9
6.0
4.4
4.2
7.7
6.0
4.3
3.9
Table 7: Willingness to adopt actions (-2 to +2) (SE England n = 190)
ACTIONS
Turn off lighting when leaving rooms
Switch electrical equipment off at the socket to avoid “stand by” Use washing machine for full loads only and dry hanging your clothes
Reduce your car fuel consumption by around 10% (eco-driving, no aircon,
60mph on m’way..)
Turn your thermostat down by …degrees in winter
Buy a more fuel efficient car
Install double glazing
Taking shorter showers
Reduce your car usage by …miles per year
Replace old boiler with more efficient one
Install solid wall insulation - external and internal
Reduce the number of domestic return flights by…per year
Install floor insulation
Install solar thermal water heating
Install solar photovoltaic panels
Install a micro wind-turbine
Install a ground source heat pump
Reduce the number of short haul international return flights by
Reduce the number of long haul international return flights by
SCORE
1.3
1.2
0.9
0.7
0.4
0.4
0.3
0.3
0.1
0.0
-0.2
-0.3
-0.6
-0.6
-0.6
-0.7
-0.8
-0.8
-0.9
Table 8: Survey Results South East England 2008, 190 respondents
Initial average carbon footprint
Reductions for respondents who saved
In Transport use
In Energy in the home
Overall
Reduction for all sample
In Transport use
In Energy in the home
Overall
Average new carbon footprint (all
respondents)
Average % saving for all respondents
1
only for those who have transport emissions
CT (n=101)
5.62
PCT (n=89)
5.75
0.27 (9.8)1
0.50 (15.3)
0.69 (13.9)
0.60 (15.6)1
0.58 (19.0)
1.03
0.17 (6.0)1
0.37 (12.0)
0.54
5.08
0.32 (8.2)1
0.41 (13.6)
0.74 (13.1)
5.01
9.61
12.89
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.
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.
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.
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.
References
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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 decisionmaking: evidence from an experimental simulation, Climate Policy 10(4) 369-384.
Capstick S. and Lewis A. (2009) Personal Carbon Allowances: A Pilot Simulation and
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the transport sector. PhD Thesis, Institute for Transport Studies, University of Leeds.
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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.
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