29 June 2007
Combating climate change is a colossal global challenge. But you have got to start somewhere. The LGIU's carbon trading scheme for councils points a way forward, as David Janner-Klausner explains
The fight against climate change is now an urgent global priority – but the decisive action needed to get to grips with the problem has been notable by its absence.
The scientists are way ahead of the politicians when it comes to saving the planet. This was starkly illustrated by the failure of the leaders of the Group of Eight countries to agree specific targets for cutting carbon emissions at their recent summit in Germany.
Scientists now largely agree that only a worldwide reduction in emissions, particularly of carbon dioxide, will avert runaway climate change and its catastrophic consequences. But around the world politicians are still shying away from taking the kind of action that is needed to avoid this domesday scenario.
We urgently need concrete action to move away from our carbon-intensive economy and society. At the same time, the only way CO2 levels can be curbed is by engaging and involving the public in the effort to transform the way we live.
That is why the Local Government Information Unit is launching a carbon-trading scheme for local authorities that involves the whole community – right down to individual households – in the fight against climate change. The details will be revealed at the Local Government Association's annual conference in Birmingham next week, where we will be encouraging councils to sign up to protect the planet.
This grassroots initiative is critical because, as the G8 summit has shown, generating the political will to act on the scientific consensus will be no mean feat. Against that background of slow diplomacy, the change required in the way we generate energy and then use it is dramatic.
For a truly low-carbon future, the UK will have to be powered primarily by energy from renewable sources. If there is to be enough of this to meet our needs, consumption must drop drastically even as production of clean energy is ramped up: 'reduce demand, increase supply' is the formula.
Tentative steps are being made on both fronts and these need to be supported. But economic behaviour is the key to doing this, which is where carbon markets come in.
The alternative – taxing all fuels that emit greenhouse gases to an extent that would change habits – is highly visible and therefore unpopular. So governments prefer to pursue a trading scheme because it disguises the costs in a way that is not obvious to the retail customer or taxpayer. The European Emissions Trading Scheme, set up by the European Union, has already begun this process by placing a price on carbon and creating a system of emissions permits that can be traded. However, it is fundamentally flawed and not just because arguably too many permits have been issued at too low a price. The real flaw is that the trading scheme does not involve communities and residents – politicians have not recognised its potential as a means of transforming public attitudes.
What is needed is a scheme that spells out the carbon emissions generated at every level, from the large business trading in the European system, right down to the family living in a terraced house in Liverpool.
That's why the LGIU has decided to set up a groundbreaking voluntary trading scheme – Carbon Trading Councils. Under the scheme, each local authority will have an overall annual carbon budget, which will be allocated among its departments and facilities just as happens with the financial budget.
The size of a council's initial carbon budget will be based on its existing emissions, adjusted against a good practice standard. Each unit of carbon in the budget will carry a price and will be tradable: budget holders with a surplus can sell the excess to those requiring additional allowances.
The cost of each carbon unit will rise from one year to the next, exerting additional pressure to limit carbon use. Each year, the carbon budget will be reduced, encouraging improvements in energy efficiency and development of renewable energy supplies.
Local authorities will be encouraged to invite other emitters of greenhouse gases in their area to join the scheme, such as schools, colleges and supermarkets.
Most radically, even neighbourhoods and individual households will be able to join, provided they accept the basic principles of reducing carbon emissions. This means they would have to abide by a carbon budget and trade allowances if they generate a shortfall or a surplus.
Of course, there are different views on how to calculate the emissions of any facility. One can look at the building and its suppliers – how much carbon is used for heating and lighting and embedded in supplies such as paper and food. A wider measure would include the carbon used in travelling to the facility. This would encourage environmentally friendly initiatives such as safe cycle routes and special bus services that reduce transport-related emissions.
The LGIU's scheme is in step with the central idea that underpins much of the current thinking on curbing emissions – harnessing the power of markets to deliver reductions.
The existing scheme has targeted intensive energy users such as chemical industries. Environment Secretary David Miliband has recently launched his proposals for a carbon 'cap and trade' scheme for middle-sized energy users, which includes many local authorities and NHS trusts.
The new scheme – announced in the energy white paper, Meeting the challenge, published in May – is called the Carbon Reduction Commitment. It replaces the Energy Performance Commitment and will apply to large energy users within business and the public sector. Overall, it will be setting a declining cap. The scheme will start in 2010 at the earliest and the government estimates at present that it will apply to organisations with energy bills of more than £500,000 a year.
The LGIU's project will be up and running earlier and will be offered to all users. It is also far more radical and ambitious than the government's proposals because it is an open scheme, designed specifically to mobilise communities rather than remain an arrangement between central and local government.
What gives weight to our scheme is the dissonance between the clamour of scientific pronouncements on climate change and the lack of changes felt by individuals. Government policies are visibly inconsistent: aiming for zero-emission housing at the same time as sanctioning airport expansion, for example.
Our scheme will enable councils to focus their own efforts to reduce carbon emissions and lead the way – locally and nationally – in doing so. It will apply to the majority of councils that will not be covered by the government's proposed compulsory emissions trading scheme because their energy use falls below the threshold. And it will involve businesses, public sector organisations and communities in carbon reduction.
Ultimately, we are laying foundations for the next global agreement in 2012, when the Kyoto Agreement is due for replacement, and for a future where each individual in every country could have a personal carbon budget and countries trade in their annual allocations. There is a dual challenge here: engage people and reduce emissions. A trading scheme centred on local government will address both challenges, linking local and global, and make communities the drivers that usher in the zero-carbon era.
David Janner-Klausner is head of the centre for local sustainability at the Local Government Information Unit. The LGIU will launch its trading scheme at an LGA conference fringe session on climate change and carbon twinning on July 4
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