Public acceptability of personal carbon trading and carbon tax

Abstract

14 15Climate change is one of the greatest challenges confronting the international 16 community requiring action to achieve deep cuts in carbon emissions. The 17 implementation of potentially uncomfortable but necessary policy measures is, 18 though, critically dependent upon public acceptability. This paper reports a 19 novel application of stated preference techniques to explore the influence of 20 key design attributes on the acceptability of a personal carbon trading scheme 21 in isolation and when compared to a carbon tax. Illustrative forecasts from the 22 models developed indicate the importance of design attributes, especially the 23 basis of the initial permit allocation for personal carbon trading and the use to 24 2 which revenues are put for carbon tax. Results indicate that the "best" 25 scheme designs could be acceptable to a majority of respondents. 35In the light of compelling evidence of the need to make very deep cuts in 36 greenhouse gas emissions (IPCC, 2007;Stern, 2006) instrument with which to achieve demanding reductions in carbon emissions 46 and has aroused interest at national government level in the UK (Defra, 47 2008a). PCT is a downstream trading mechanism normally understood to 48 involve an initial allocation of carbon permits to individuals based on carbon 49 reduction targets, with individuals able to buy and sell permits according to 50 their desired carbon consumption and prevailing permit prices. However, the 51 precise structure of a scheme could vary considerably given the potential 52 range of additional design features including management of individual carbon 53 accounts, market operation, regulation, permit allocation, scope of coverage 54 and transaction costs. Policy makers would be interested in which scheme 55 designs have the greatest acceptability amongst the general public. 1 For a complete account of theoretical differences and equivalence between the two schemes please see Pezzey (2003) and Crals and Vereeck (2005) 5 a high degree of variation in emissions levels within as well as between 82 countries (Brand and Boardman, 2006; Druckman and Jackson, 2008; 83 Ermoliev et al., 2000). All these aspects combine to push the arguments 84 towards tradable permits. Whilst the set up, administration and management 85 costs of such a scheme are anticipated to be high, they might be expected to 86 fall over time as in the case of road user charging systems (Raux, 2008), but 87 are still likely to be higher than the costs of implementing a CT. The 88 arguments in favour of CT generally focus on the clarity of the price signal, the 89 ease of implementation and the generation and use of revenues for 90 distributional purposes (Baranzini et al., 2000). However, whilst theory might provide some insights into the attractiveness of 100 PCT and CT, it is ultimately personal preference that determines their 101 acceptability and the impact of specific scheme features on this acceptability. 102 Some PCT scheme designs might be regarded as fairer (for example, wi...

Policy Design and Implementation Issues of Regulating Greenhouse Gas Emissions in China

“…Different from carbon tax, carbon emissions right trading directly affects the amount of carbon emissions, it is through decentralized carbon emissions trading market to regulate the supply and demand of carbon emissions rights, and thus through carbon market mechanisms to form a balanced number and price of emissions. Once the equilibrium price signal of emissions right trading is formed, it can lead the emissions behavior of related entities to achieve the objective of emissions reduction [3].…”

“…If the related information that the government imposes a carbon tax is sufficient and there is no any rent-seeking and other improper behavior, as long as tax rate and tax base are appropriate, and the generation and use of tax revenues can be used for distribution purpose, then the carbon tax has environmental safety and cost-effectiveness. As for carbon emissions trading, If carbon emissions trading market is effective and the service system of carbon emissions trading is perfect, as long as the initial allocation of carbon emissions rights is reasonable and can adapt to the socio-economic changes, then the carbon emissions trading has environmental safety and cost effectiveness, too [3]. Higher administration and management costs, and lower long-run and innovative costs.…”

“…Unlike the carbon tax, the carbon emissions right trading involves the rational allocation of initial carbon emissions rights, the effectiveness of carbon emissions trading market and the reasonable design of trading system and on these aspects there is also a lot of uncertainty, so this limits the efficiency and effectiveness of its implementation, too. From a practical point of view, in short, the carbon tax may be a better choice; while in the long-term, the carbon emissions right trading may be a better choice [3], [7].…”

“…Of course, although both of carbon taxes and emissions trading are built on the basis of market mechanism and there are some similarities between them, and furthermore in the case of uncertainty their efficiency and effectiveness is theoretical equivalence [2], [3]. However, in practice, the degree that they are attached great importance and applied is different.…”

“…The focus of debate, besides focusing on the transaction costs, welfare effects, policy environment and political risk, still involves in the personal preference, uncertainty, emissions measure, balance and coordination of the interests, and so on. It is generally believed that the carbon tax is easy to be implemented, and its tax revenue can be used for the personal distribution, and thus personal acceptability is relatively higher [3], [4]. However, the others believe that the carbon emissions right trading has more advantage, for it has many of advantages over cost-effectiveness, broad participation, fairness and equity between different countries, and being favor to control cumulative emissions.…”