Personal carbon trading: A critical survey Part 2: Efficiency and effectiveness

Equity, efficiency and effectiveness are three key criteria use to assess environmental policy instruments. Part 1 of this survey shows that, in terms of equity, Tradable Energy Quotas (TEQs) - a widely discussed personal carbon trading (PCT) scheme - cannot be differentiated from Cap and Dividend (C&D) or Cap and Share (C&S). Hence, Part 2 explores whether they can be differentiated in terms of efficiency and/or effectiveness. The paper reviews two studies that compare the efficiency of TEQs and C&D. Whilst their estimates of the costs and abatement potential of TEQs differ, neither study considers that there is a case, on efficiency grounds, for its implementation. The paper goes on to sketch two arguments for the implementation of PCT that might, nevertheless, be made on efficiency grounds and one - relating to public acceptability - that might be made on effectiveness grounds. Exploring the various public surveys conducted on the acceptability of PCT, the paper concludes that support for PCT is not obviously greater than for alternative instruments and notes a methodological limitation in the work reviewed. The paper concludes that, to date, the case against implementation of PCT is stronger than the case for.

► This paper compares TEQs, C&D and C&S in terms of efficiency and effectiveness. ► Two important studies find TEQs is unlikely to be more efficient than C&D or C&S. ► Proponents have not offered good evidence that TEQs will be more effective. ► A convincing case for TEQs has yet to be made.