Making it personal: per capita carbon allowances

This chapter presents a scheme to motivate individuals to reduce their carbon emissions from electricity use and other sources. Consequences of global climate change are appearing faster than estimated by the Intergovernmental Panel on Climate Change (IPCC). This highlights the importance of introducing new, efficient schemes for mitigation of global warming. One such scheme is Personal Carbon Allowance (PCA), whereby individuals are allotted a tradable ration of CO₂ emissions per year. The chapter reviews the fundamentals of PCA and analyzes its merits and problems. The United Kingdom and Denmark have been chosen as case studies because the energy situation and the institutional setup are quite different between these two countries. As the chapter concludes, PCA is an idea worthy of serious further consideration. PCA is a promising approach that urgently requires a much greater research effort to see if it could be an important part of future carbon and energy policy.