When everyone understands the imperative of less fossil fuel availability each year up to the end date, everyone will be motivated to reduce their emissions and work with others to make change happen as smoothly as possible. When we’re all in the same waka it becomes pretty apparent who is not paddling in the desired direction.
Opinion: If the impact of the Russian invasion of the Ukraine hasn’t clearly enough underlined the fragility of global energy supply, the latest Intergovernmental Panel on Climate Change report surely does.
The world is not going to avoid the worst climate disasters unless we reduce fossil fuel use rapidly. The language of the report is unequivocal, despite it being watered down from the scientists’ version to make it acceptable to 196 national governments.
Greenhouse gas emissions must peak no later than 2025 to give us a fighting chance of averting irreversible tipping points.
What to do?
A British economist has devised a fossil fuel rationing scheme that could do the job and which has several important benefits.
The most important feature of any energy rationing scheme is that it provides certainty of controlling emissions. The same certainty is not possible with schemes which attempt to control emissions by manipulating prices for fossil fuels, such as our ETS or a carbon tax.
The certainty of effect is increasingly critical as we approach dangerous and potentially irreversible climate tipping points that would be game over for modern civilisation. The stakes couldn’t be higher. Certainty of effect must be our highest priority.
The scheme devised by the British economist David Fleming is known as Tradable Energy Quotas. It works by first establishing a carbon budget allowable, and then distributing this amount across the years over which the scheme would operate. This provides a declining annual carbon budget for government to then issue as quotas to citizens and organisations. The number of quotas declines over the years to zero.
When everyone understands the imperative of less fossil fuel availability each year up to the end date, everyone will be motivated to reduce their emissions and work with others to make change happen as smoothly as possible. When we’re all in the same waka it becomes pretty apparent who is not paddling in the desired direction.
All adult citizens, driving age and over, get the same number of free quota units to ensure their year's energy security, and these are topped up weekly so everyone always has a full year’s supply. This gives people time to adjust to what they know will be fewer free quotas in each subsequent year of the program. That certainty of declining supply focuses the attention and motivates everyone to make changes to reduce fossil fuel use in coming years.
The free quotas adults receive are tradable. Once you make adjustments to your lifestyle to reduce your energy needs, you can then sell your remaining quotas to others who may be having a harder time making the needed adjustments.
You could also sell your unneeded quotas to businesses or other organisations. Organisations of all kinds, businesses, not for profits, governments, would be allocated a portion of quotas which reflect their initial level of GHG emissions. But they would have to purchase these quotas, not receive them as a free allocation. The price is set by a weekly tender attended by a small number of brokers.
By requiring these organisations to purchase emissions, this scheme motivates these players to reduce their emissions rapidly to stay competitive.
Some businesses may find they cannot operate in such an environment and will need support to transition to something that can function with lower energy inputs. Support should not include giving them free quotas or exempting them from the rationing scheme (as the ETS does), but rather to assist their transition to something less damaging to natural systems.
Notice that fairness in terms of access to basic energy needs is ensured by the Tradable Energy Quotas in that all adults receive the same amount, regardless of income or wealth. Our current Emissions Trading Scheme disadvantages those with fewer financial resources because it relies on increasing fuel costs. The wealthier among us can continue purchasing fossil fuels and are likely to do so with an Emissions Trading Scheme or carbon tax. And it is the wealthy who create the most emissions, so they need to make the biggest changes.
“Wealthy” in this context doesn’t mean billionaires and millionaires; it means anyone with a net worth of approximately NZ$200,000 – that is, the majority of middle class New Zealanders. We are the ones that need to make the biggest changes to our emissions.
This fairness feature is an important aspect of the scheme. Along with the tradable nature of quotas, it involves everyone, in every walk of life, whether you are a government Minister, a chief executive, a small business owner, or a retiree, in the process of reducing emissions. By contrast, the Emissions Trading Scheme omits some of New Zealand’s largest emitters.
The impact of involving everyone in the emissions reductions scheme should not be overlooked in terms of its value in fostering cooperation to make things work well with less energy. This transition isn’t going to be easy and being creative and cooperative will make it easier for everyone.
When everyone understands the imperative of less fossil fuel availability each year up to the end date, everyone will be motivated to reduce their emissions and work with others to make change happen as smoothly as possible. When we’re all in the same waka it becomes pretty apparent who is not paddling in the desired direction.
The Tradable Energy Quota scheme is also harder to scam for the same reason. Supply is controlled and the only way to get more fuel is to buy more quotas. This is a simple and straightforward process manageable with a credit card scheme. It is therefore easily audited and more difficult to cheat.
Contrast this with the complexity of our current ETS which is difficult for most people to understand, grants free credits to big emitters, increases costs by design, and only applies to certain sectors and not others. It cannot provide the fairness and certainty of a Tradable Energy Quota scheme.
What about biogenic greenhouse gas emissions? These are not directly controlled by a Tradable Energy Quota, and they constitute half of NZ’s overall emissions.
Ideally, we would have a rationing scheme that focuses on all Greenhouse Gas Emissions, including emissions embedded in various products, and one has been proposed. However, it increases complexity significantly as an emissions quota would have to be attached to every item sold in the economy, or at least those items with the highest embedded emissions. This adjustment makes it similar to the Tradable Energy Quota scheme.
If a Tradable Energy Quota system were introduced it would have an indirect impact on reducing biogenic emissions. Fossil fuel inputs are everywhere in the food chain from tractors to trucks to processing to refrigeration to delivery. Artificial fertilisers used by dairy and other farmers is made from natural gas. To the extent that operations generating such emissions cut their fossil fuel use, they will likely have to reduce their operations to eventually function without fossil fuels.
The indirect impact of fossil fuel rationing will reduce biogenic emissions as well. While the magnitude of such a reduction may be more difficult to predict or control, it should not stop us from adopting a scheme that focuses on fossil fuels. We are in an emergency and mustn’t let perfection stand in the way of effective action.
Another objection that is likely to arise from a proposal to ration fossil fuels is that it will negatively impact economic growth. There is a high correlation between fossil fuel use and economic activity. So the concern is realistic.
The questions we should be asking ourselves is whether economic growth for its own sake is as important as a safe climate. NZ is already one of the wealthiest nations on the planet. Perhaps the question to ask is not whether we need more economic wealth, but whether we can have a survivable climate and a fairer distribution of the benefits of economic activity?
So yes, rationing would force us to face the issue of what an economy is for – profits or wellbeing? It’s a conversation long overdue.
If rationing fossil fuels occurred decades ago we wouldn’t have a climate emergency now and we may have even avoided ecological overshoot and all its ghastly consequences. Implementing a rationing program asap would not only make the most impactful reduction of harm from additional climate change, it would also prepare NZ for a lower energy future.
And the transition may not be quite as difficult as we think. New Zealanders are one of the highest per capita energy consumer on the planet. We waste large amounts of energy in our inefficient systems and in activities we could easily do without.
There is little awareness in political and business circles of the limitations of energy technologies that rely on the sun, wind and other naturally occurring phenomena like river flows and heat from below the earth’s surface. Yes, these natural flows will continue for many centuries. But the technologies that capture these natural flows and make them useful to society require lots of raw materials which are non-renewable.
And the technical infrastructure wears out and has to be replaced every few decades. Obtaining, processing and even recycling these raw materials takes large amounts of energy and disrupts natural systems.
In addition, at least the first iteration of such a system would involve significant fossil fuel use, at a time when we have to reduce such use. The more natural materials we use the more destruction we do to natural systems, and we have already done enough to jeopardise our complex civilisation.
Rationing fossil fuels will almost certainly disrupt economic growth, and that can be a scary proposition for many. Fortunately, scientists, thinkers, and even some economists, have been working out how to manage a planned reduction in economic activity.
There are policy options to smooth the way to a new economic paradigm. These policies and programs can be activated to manage the change needed. It won’t be quick. It won’t be easy. It won’t be without bumps along the way.
But such a transformation can bring us to a safe and satisfying society where we can be hopeful for future generations. Our current trajectory won’t.
Don’t expect governments to initiate these changes without broad support. Let governments at all levels know what future you would like.
