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TEQs & Cap-and-Dividend

 
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jo



Joined: 20 Oct 2007
Posts: 184
Location: London

PostPosted: Mon May 26, 2008 12:22 pm    Post subject: TEQs & Cap-and-Dividend Reply with quote

There are more ways to set a Carbon Cap than simple Carbon Taxation...

=========================

Date: Sat, 24 May 2008 02:44:39 +0100
From: chris.keene@...
Subject: [Fwd: Cap and dividend as an alternative to carbon trading]
To: CRISIS-FORUM@...

http://www.capanddividend.org/?q=readfirst

This is an American idea, but there is no reason why it could not be
adapted for the whole world, and it would have the enormous benefit of
providing revenue for the majority world, since everyone would be given
a share of the revenue of auctioning permits. Alternatively, for those
who favour public investment as a policy, some could be used to fund
the development of renewable energy

Chris

============================================

How cap and dividend works

Cap and dividend starts with a descending economy-wide cap on carbon
suppliers rather than carbon emitters. The way the cap works is
extremely important.

There are two possible places to cap carbon: (1) where CO2 leaves the
economy and enters the atmosphere, and (2) where carbon enters the
economy in the form of a fossil fuel. Economists call the former a
downstream cap and the latter an upstream cap.

In choosing where to put the cap, it?s important to recognize how carbon
differs from other pollutants. Most pollutants are impurities that can
be regulated or removed where they are emitted. Carbon, however, gushes
not just from a few pipes, but from hundreds of millions. Capping
carbon emitters is therefore extremely difficult. To the extent it can be
done, it will be an administrative nightmare for businesses, consumers
and government. And it will never catch all of the carbon that flows into
the atmosphere.

By contrast, capping carbon as it enters the economy is relatively
simple. The cap can be administered by requiring the first sellers of
oil, coal and natural gas to buy permits equal to the carbon content of
their fuels. Once a year the companies would ?true up? and pay a stiff
penalty if they don?t own enough permits. No other businesses would
need permits, and no smokestacks would need to be monitored.

Dividends. When fuel companies buy permits, they?ll pass that cost along
to their customers. This is as it should be: the cost of emitting CO2
needs to be paid by energy users. By adding this currently ignored
cost, we?ll shift private investment away from fossil fuels and toward
efficiency and clean energy.

Higher fuel prices have a downside, however: they take lots of money out
of everyone?s pockets. The trillion dollar question is, where does that
money go? In traditional cap and trade, the extra money we pay goes to
companies who receive free permits. Under cap and dividend, by
contrast, it flows into a not-for-profit trust. There it?s divided into equal
shares and wired to every American?s bank account or debit card. This
happens monthly and automatically. As the price of carbon rises, so do
the dividends everyone receives. And no large bureaucracy is needed.

==================================

From: jo abbess (jo_abbess@...)
Sent: 24 May 2008 09:07:21
To: crisis-forum@...

Hi Crisis Forum,

Cap-and-Dividend is almost the same as Cap-and-Share being
pursued as a policy in Ireland by the FEASTA spin-off campaign :-

http://www.capandshare.org/
http://www.feasta.org/

The only sector that the Irish plan hopes to impact at first is
Transport. All the citizens would receive a "Share Certificate"
to compensate for the predicted rise in the cost of motoring.

A "dividend" is effectively what the British Columbia government
offered to citizens to held get their Carbon Tax accepted :-

http://www.bcbudget.gov.bc.ca/2008/backgrounders/backgrounder_carbon_tax.htm
http://www.canada.com/vancouversun/news/story.html?id=354a5380-0bf2-4ab1-bb67-eab5f5fcaa95
http://www.carbontax.org/blogarchives/2008/02/20/british-columbia-introduces-revenue-neutral-carbon-tax/

The same idea has been roundly ridiculed in the form of the
10p Tax Band in-lieu cash re-payment from Alistair Darling.

And although nobody laughs at Fuel Poverty winter fuel payments,
they do amount to the same thing, as there is still a large "green tax"
component tucked into energy prices.

The only thing important about Cap-and-Dividend is the (a) Cap at
(b) Source, the idea that demand destruction should move upstream
to those actors who put the Carbon into the Pipeline at the start.

jo.

==========================================

Date: Mon, 26 May 2008 11:50:58 +0100
From: chris.keene@...
To: jo_abbess@...
CC: CRISIS-FORUM@...
Subject: Re: [Fwd: Cap and dividend as an alternative to carbon trading]

The difference between cap and share and cap and dividend is that in C&S
the energy companies buy their pollution authorisation permits from
intermediaries who buy them from citizens who are given them free
by the government (which means citizens can refuse to sell, thus reducing
carbon emissions even more than the carbon budget set by the independent
carbon policy committee), whereas in C&D the energy companies buy their permits
from an independent trust in an auction, the money raised being given
back to citizens on an equal per capita basis.

But in both C&D and C&S there is no reason why some of the revenue from the sale
of permits could not be used to fund mitigation and adaptation; in C&S some of the
carbon budget could be sold directly to energy companies rather than being
given out to citizens to fund it, and in C&D some of the money raised
in the auction could be used

Chris

================================================

Re: [Fwd: Cap and dividend as an alternative to carbon trading]‏
From: Discussion list for the Crisis Forum (crisis-forum@...) on behalf of jo abbess
Sent: 26 May 2008 11:11:29
Reply-to: jo abbess (jo_abbess@...)
To: CRISIS-FORUM@...

Hi Crisis Forum,

When Chris Keene says :-

>
> The difference between cap and share and cap and dividend is that in C&S
> the energy companies buy their pollution authorisation permits from
> intermediaries who buy them from citizens who are given them free by the
> government (which means citizens can refuse to sell, thus reducing
> carbon emissions even more than the carbon budget set by the independent
> carbon policy committee), whereas in C&D the energy companies buy their
> permits from an independent trust in an auction, the money raised being
> given back to citizens on an equal per capita basis.
>

I say :-

Yes, but... the net effect is largely the same whether (a) you are given a Carbon Certificate by the Government and trade it with a company who wants to burn the rights or (b) the Government gives Carbon Rights to those companies that pay to burn them.

I cannot see why any significant number of people would choose to retain their Carbon Allowances instead of spending them.

I prefer to look at life through the Personal Carbon Allowances system designed by David Fleming, Tradable Energy Quotas, www.teqs.net, except that I advocate a subtle yet powerful change.

In the TEQs world, there is a central Registry of Carbon Credits. 40% of them are allocated to citizens. 60% of them are allocated to corporations (and government functions).

There is possible trade between the two sectors, but I think that would allow too much "Carbon leakage". I propose to keep the Citizen Carbon Credits and their trading entirely separate from the Corporates and Organisational Carbon Credits.

This would allow for greater stability in the prices of food, fuel and energy because no amount of juggling jiggery would increase the amount of Carbon available to be turned into corporate profit, and there would be a balance between people reducing their energy use, and the higher prices set for that energy.

If as I suggest, the Carbon Cap is set at both the upstream and the downstream end of the Carbon Pipeline, this articulates fixed boundaries clearly, without a Recession. Corporates would maintain their profits as long as they accept those limits, and only grow in a non-Carbon way.

jo.

================================
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Shaun Chamberlin



Joined: 04 Feb 2007
Posts: 120
Location: London

PostPosted: Mon Jun 09, 2008 5:16 pm    Post subject: Reply with quote

Cap and Dividend seems to me to be clearly superior to Cap and Share.

Advocates of Cap and Share argue that under Cap and Dividend,
?individuals would be far less involved. They would just get the money without having to think about where it came from and they would not have the option of reducing the world's emissions by tearing up their PAP? (http://tinyurl.com/3sshz6, p.7)

But I find it hard to see how receiving a certificate and selling it at the Post Office is going to stimulate too much more thought and involvement than going to the post office to collect your dividend.

If we want an upstream scheme then C&D seems far simpler (and presumably cheaper), and C&S doesn't seem to provide any real compensatory benefits.

As I see it the debate is boiling down to upstream (Cap and Dividend) or downstream (TEQs). There are reasonable arguments on both sides, and I've added my two penneth worth here.
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jo



Joined: 20 Oct 2007
Posts: 184
Location: London

PostPosted: Mon Jun 09, 2008 9:18 pm    Post subject: Richard Douthwaite's right about this... Reply with quote

@Shaun,

I know the Cap and Share thing looks a little flaky, but I've met and admire the FEASTA people, in particular Richard Douthwaite, who is right on something really very important.

Time was, the only value you could create was by drawing natural resources and human labour into the production and trading systems.

Then we started to dig up large quantities of hydrocarbons and stopped working so hard personally.

So, all wealth is actually based on commodities and Energy.

Money is an "Energy Backed Currency Unit" or EBCU, following the thinking of Richard Douthwaite and the FEASTA people.

And they're right. Without the hydrocarbon flow, there is no value in money.

Think carefully about this : if you cannot pull the hydrocarbons you need into your Economy, you're going to get poorer, in real terms.

With the stress on the supply of hydrocarbons are are starting to suffer, money is in fact devaluing.

Pretty soon we could be staring down the throat of a very hungry recession.

After reading some of the Richard Douthwaite and FEASTA material, I became convinced that the only way forward out of this mess is to RETAIN the value of money by LIMITING the flow of Carbon.

In other words, CARBON RATIONING.

The rations are the value. They are the EBCU.

I did look quite closely at Cap and Share with FEASTA, but in the end I could not support it, as David Fleming's TEQs were far more likely to be able to create a Carbon Cap, by virtue of the fact that he designed it as a COMBINED upstream/downstream system.

With TEQs you are limiting BOTH SUPPLY and DEMAND, AT THE SAME TIME.

This is the only mechanism that can retain the value of money, and the only means to stabilise the Economy therefore.
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Shaun Chamberlin



Joined: 04 Feb 2007
Posts: 120
Location: London

PostPosted: Tue Jun 10, 2008 12:36 am    Post subject: Re: Richard Douthwaite's right about this... Reply with quote

jo wrote:
@Shaun,

I know the Cap and Share thing looks a little flaky, but I've met and admire the FEASTA people, in particular Richard Douthwaite, who is right on something really very important.

...

I did look quite closely at Cap and Share with FEASTA, but in the end I could not support it, as David Fleming's TEQs were far more likely to be able to create a Carbon Cap, by virtue of the fact that he designed it as a COMBINED upstream/downstream system.


Yes, we agree. I have a lot of time for FEASTA and am a member of their Energy and Climate working group, but I think the detail of Cap and Share doesn't make much sense.
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