Emissions Reduction Currency System

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Emissions Reduction Currency Systems (ERCS) are schemes that provide a positive monetary reward for reductions in greenhouse gas]] emissions, either through distribution or redistribution of national currency or through the publishing of coupons, loyalty programs & reward points, or Complementary Currency.

Emissions reduction currency is different from an emissions credit. The value of an emissions credit is determined by a national cap in emissions and the degree to which the credit confers a right to pollute. The ultimate value of an emissions credit is realised when it is surrendered to avoid punitive fines for emitting.

Emissions reduction currency is also different from a voluntary carbon offset where a payment is made, typically to fund alternative energy or reforestation, the emissions reduction or sequestration resulting from which is used to reduce or cancel the payers responsibility for emissions produced by themselves. The value of an offset is in its being held by the purchaser and applies only for the period and purpose against which the offset applies. However, an offset can be used as a basis for issuing emissions reduction currency.

An emissions reduction currency, by contrast, is purely an incentive for behavior change by individuals or groups. As such the currency creates an additional economic benefit for emissions reductions separate from the cost imposed by national emissions caps or the voluntary cost assumed by the purchaser of a voluntary offset.

Emissions reduction currencies are not exchangeable within national Cap and Trade systems and as such do not confer any right to pollute.

While no emissions reduction currency system has achieved the scale of emissions crediting systems, there are a number of small scale schemes in operation or being set up. In addition there are a number of approaches that are currently hypothetical being promoted by a number of organisations, academic institutions and think tanks.

Emissions reduction currency systems conceptually are inclusive of carbon currency systems but also include schemes that reduce emissions in incidental ways such as through waste reduction and community education.

The idea of a similar global currency based on alternative energy production was first proposed by Buckminster Fuller in his 1969 book Operating Manual for Spaceship Earth. This idea was piloted by Garry Davis who distributed these "kilowatt dollars" at the 1992 Earth Summit held in Rio De Janeiro.[1]

Emissions Reduction Currencies are based on the theory that pre-industrial compositions of the atmosphere represent Pareto Efficient interactions between living organisms in the biosphere. This outcome is probable due to high levels of interconnectivity between populations of species within ecosystems, and the rate of species evolution being in phase with the rate of habitat changes. Due to these two factors information asymmetries of the kind that prevent Pareto Efficient outcomes in free market economies cannot persist. In a Pareto Efficient environment all ecosystems will tend to maximize the benefits for organisms living within them as a result of the natural selection of the organisms competing for resources within them. All trades of emissions reduction currency, in that they support a return to optimal atmospheric composition, thus stimulate ecologically based value creation as well as promoting exergy efficiency in the economy.

Categories of Emissions Reduction Currency Systems

Currently envisioned emission reduction currency systems can be categorised into five categories:

Carbon title schemes

Introduction of sustainable land management practices in tropical rainforest and other high carbon environments can lead to abatement of emissions from land clearing that might have otherwise occurred or from additional CO2 sequestration.

Land purchased and managed for these purposes can be used to create an independently tradeable carbon right[2], which may or may not be recognised within an emissions credit scheme. For example, aboveground biomass resulting from land use changes can currently be converted to recognised emissions credits under the Kyoto Protocol's Clean Development Mechanism (CDM).

Increases in soil carbon for reasons other than reforestation either through changes to land management practices or through the burial of biochar are currently not included in emissions credit systems such as the CDM[3].

These certificates of legal title can be traded as a form of currency independently of their use as an offset, yielding additional economic benefits. This use is suggested by The Carbon Currency Foundation [4].

Another emissions reduction currency system proposed on this basis is the ECO, a project of The Next Nature Lab which is an initiative of Eindhoven University of Technology in the Netherlands.[5][6]

Promotional discount schemes

An emissions reduction currency system based on promotional discount is one where participants are rewarded for reducing their emissions by gaining points which can be redeemed for discounts from businesses advertising in the system.

RecycleBank [7] is one such scheme where participants weigh recycled materials in specially designed disposal bins that identify themselves to scales embedded in garbage collection vehicles. Recyclebank is also funded by municipal governments that purchase and operate the required equipment, allowing RecycleBank to operate as a private for profit company. Another similar scheme is Greenopolis [8][9] that works through social media websites such as Facebook.

EarthAid[10] uses specialised software that publishes utility bills from companies in an online format that participants can share with family and friends. Reduced energy consumption earns reward points that can be redeemed for prizes at businesses in the EarthAid rewards network.[11]

Allocation schemes

An emissions currency reduction system based on allocation is one where all individual participants are awarded an equal allotment of emissions currency. Participants then trade goods and services with one another to obtain enough of the currency to cover their actual emissions. The objective of an allocation scheme is to obtain social parity between participants with regards to emissions reductions.

Technically an emissions crediting scheme,an allocation scheme is classed as an emissions reduction currency system because the trading of the currency between individuals as parity is sought can create a secondary market of trading where the currency can act as a medium of exchange, and this trading creates an additional positive economic value associated with emissions reductions.

The Global Resource Bank [12] is one organisation advocating such a global allocation scheme.

Emissions rationing schemes

Otherwise known as personal carbon trading, an emissions reduction currency system based on rationing presumes a standard ration of emissions allowable for an average citizen that incrementally decreases over time.

Participants using less than the rationed amount receive a currency that can be traded with those emitting more than the allowed amount. All participants pledge to in total remain below the average with a net positive value in the scheme.

Carbon Rationing Action Groups [13] (CRAG), started in the United Kingdom, has a global network of groups. CRAG participants use a standard average for the country as a basis for the rationed amount. Participants emitting at above rationed levels must pay those below it in national currency.[14]

Community based currency schemes

A community based emissions reduction currency scheme is a C4 type local currency in which Local Currency issues are backed by the emissions reductions of the schemes members. The local currency, when accepted for trade by other members or local businesses, thereby rewards participants for their efforts at global warming prevention. These currencies may have various degrees of convertibility into carbon saved, renewable energy generated,[15], or national currency.

The Edogawatt is a form of emissions reduction currency used in Edogawa, Tokyo that is an initiative of the local Jōdo Shinshū Jukou-in temple. In this scheme, the temple and devotees purchase solar panels and sell the excess power to the Tokyo Electric Power Company. The temple then takes the difference between the price paid by the Tokyo Electric Power Company and the price paid for natural energy in Germany and sells Green Power Certificates as a fund raiser for the temple. Purchasers of the Green Power Certificates are given 30 Edogawatt bills per certificate. "These are currently being used among people ... as a certificate of debt or obligation in exchange for baby-sitting, carrying loads, translating and other small jobs. They have provided an incentive for creation of a mutual aid society within the community and we would like to make them a tool for deepening interpersonal relationships and trust."[16]

Kiwah [17] is an emissions reduction currency scheme based on units of kilowatt hours delivered from renewable energy projects funded by the scheme participants. The currency is then used within local communities which adopt it functioning as a local currency. The scheme was launched on December 15, 2009 at the COP15 Copenhagen United Nations Climate Change Conference.

The Maia Maia Project [18][19][20], is a pilot scheme currently being initiated in Western Australia, and is an example of this approach. This scheme, when operational, will have the additional feature of allowing member businesses to donate collected currency (as well as emissions reductions by the businesses and suppliers) to worthy community projects where they can be re-earned by volunteers. In this way the scheme proposes to provide additional support to community social and sustainability initiatives that currently are underfunded.

The Liquidity Network [21], an initiative of the Foundation for the Economics of Sustainability is proposing to introduce a community run emissions reduction currency in the County of Kilkenny in Ireland. The proposal is currently before council for consideration.


  1. You Tube interview with Garry Davis by Kiwah.org
  2. Western Australian Carbon Rights Act of 2003
  3. Biochar—One way forward for soil carbon in offset mechanisms in Africa?, Environmental Science & Policy
  4. Official Carbon Currency Foundation Website
  5. The official ECO project website
  6. The Next Nature Lab website
  7. Official Recyclebank Website
  8. Official Greenopolis website
  9. GoodCleanTech.Com review of Greenopolis
  10. Official EarthAid Website
  11. The Washington Post - Eureka! Get Paid For Paring Down Home Energy Costs
  12. Global Resource Bank Official Website
  13. Official Carbon rationing Action Groups Website
  14. The Ecologist - A rational approach to carbon
  15. The Place for Local Currency in a World Economy: Toward an Economy of Permanence, Robert Swann, The E.F. Schumacher Society 1981
  16. Official website of the Juko-in Temple
  17. Qoin network Kiwah page
  18. Official Maia Maia Project website
  19. International database of complementary currencies
  20. Green.tv interview with founder of the Maia Maia Project
  21. Liquidity Network Home Page