This working paper explores what people may need to know, learn and have if a Personal Carbon Allowances (PCA) scheme was implemented, and suggests ideas for policies, programmes and initiatives that could support them. A PCA scheme implies that individuals would have a personal budget of carbon credits, which they would need to manage, to some extent, in order to stay within its limits, and in the best case scenario earn some money by selling not-needed carbon credits. Thus, this paper looks at the budgeting process from the carbon account holder’s view point and applies insights from how people budget under monetary and non-monetary constrains to the study of PCA. It also highlights related policy design issues.
The paper is composed of two sections. The first sets PCA in the policy context alongside other existing and proposed emissions reduction policies. Next it explains the mechanisms through which PCA supposes to change energy demand behaviour and then describes the current discourse surrounding PCA in the UK. The second section lays out the rational for examining PCA through the lense of budgeting and points at questions arising from the concept of living within a carbon budget. It then discusses in detail the prerequisites for carbon budgeting, which include: setting the budgetary limits; knowing personalised carbon ‘income’ and ‘expenditure’; having low carbon alternatives; having the opportunity to perform low carbon choices; receiving advice and support; and learning how to trade. This is followed by a short concluding section.