Personal carbon trading – the entrepreneurial connection

This blog post was published on July 13, 2012 at 03:16 pm GMT

Personal carbon trading is back on the agenda and there are some interesting questions to ask about the way that a PCT-based regulatory system would feed through into entrepreneurial activity. A British politician, Tim Yeo MP, chair of the cross-party Energy and Climate Change Committee, has called for the launch of a pilot personal carbon allowance (PCA) trading scheme, funded by the private sector and possibly the EU.

There’s plenty of evidence that regulation can drive significant market transformation and the sheer scale and scope of national/international PCTs is also likely to open up all kinds of new productive opportunities as individuals and communities seek out innovative ways of reducing their own carbon footprints. There are also lots of questions for researchers and policy-makers regarding the design and implementation of such a scheme. I’ve had a long-term interest in PCAs, sometimes referred to as ‘personal carbon rationing’, and have heard (via a certain close relative) all of the many arguments for and against. However, from my own reserach perspective, some of the most interesting issues concern the kinds of social and commercial entrepreneurship that would be engendered by this kind of intervention. The nature and scale of the response would be critical to the success of any scheme, because it would have a direct impact on the ‘feasibility’ of achieving particular carbon limits, and the rate at which those limits could be lowered. If the bar is set to low, the baby will not thrive. If the spur towards radical or disruptive innovation is insufficient, new entrants will find it harder to enter while the usual suspects will devise ingeniously unproductive ways of milking the system without making changing their existing practice (sound familiar?). If it’s set too high, the politicians will find it impossible to ‘sell’ and the level of resistance will strangle it at birth. However, if they get it right – with a gentle entry level combined with a clear and unambiguous downward trajectory thereafter – the entrepreneurial start-ups, the powerful incumbents and all the rest of us will be in for a really interesting ride.