Tradable Energy Quotas

From P2P Foundation
Jump to navigation Jump to search

= "an electronic system for fairly reducing consumption of carbon-intensive energy, at the national scale".


Other names for Tradable Energy Quotas include: Domestic Tradable Quotas (DTQs), Personal Carbon Allowances (PCAs), Personal Carbon Trading, Carbon Quotas, Personal Carbon Rationing and Tradable Permits.

Contextual Citation

Shaun Chamberlin:

"It is the distinction between a system that maximises economic growth and hopes to reduce emissions, and one that guarantees emissions reductions and lets the market (and citizens, businesses, communities…) figure out the best solutions within that context. It is the distinction between a ‘market-based framework’ (a la the ineffectual EU ETS) and a framework within which the market is constrained." (


* Important: TEQ is not a carbon-trading system, but a rationing system to insure equitable use of the available energy

Shaun Chamberlin:

"As the evidence for the utter inapplicability of free market carbon trading to our climate emergency continues to pile up, interest continues to grow in the less PR-friendly alternative – the rationing of carbon-rated energy ... National energy rationing systems on the model of TEQs (Tradable Energy Quotas) will be essential to the fair distribution of fuel as shortages unfold, with implementation now an urgent priority for the UK."


Shaun Chamberlin et al.:

"The TEQs scheme is a quantity-based framework for emissions that integrates all sectors of the economy, including households. It would operate at the national scale, providing a means for a country to guarantee the achievement of its national carbon budget, and thus play its part in – even lead – the global climate change mitigation effort.

Several excellent expositions of the details of the scheme now exist, but in essence it can be thought of as similar to an electronic system for rationing energy use, only with legal trading of allowances. A variant named personal carbon allowances (PCAs), which would cover only household emissions, has also been proposed, with personal carbon trading (PCT) having become the established umbrella term for these related schemes.

PCT as a whole has been described as “an innovative, radical policy approach to climate mitigation” [34], with TEQs in particular described as “a simpler and fairer approach than either green taxation or the European Union Emissions Trading Scheme, [that] also provides people with a powerful incentive to demand low-carbon technologies”.

Under TEQs, every adult would receive an equal free entitlement of TEQs units each week. All other energy users – government, industry, etc. – would secure their TEQs units through a weekly tender (auction), either by directly participating, or via intermediaries such as high street banks or the post office (known in the literature as “market makers” or “primary dealers”).

The total number of TEQs units issued into the economy would be determined by the national carbon budget (in the UK, this is currently recommended to the Government by the Committee on Climate Change). The proportion of that total issued as free entitlements would reflect the proportion of national emissions produced by the direct fuel and electricity use of the household sector (currently around 40%), with the remainder issued to organizations via the weekly tender.

Whenever fuel or energy was purchased in the country, a number of units corresponding to the amount of energy bought would have to be surrendered to the retailer from the purchaser’s TEQs account, in addition to their monetary payment. This number would be determined by the carbon rating carried by all fuels and electricity, which is calculated on the basis of the lifecycle emissions associated with their production and use (and thus provides a competitive advantage to lowcarbon energy sources).

TEQs units would only be required for direct purchases of fuel and energy (not for purchases of all products and services within the economy), and unit transactions would generally be automatic, integrated into existing credit-card and direct-debit systems [50]. Those households using less than their entitlement of TEQs units would be able to sell their surplus to the bank or post office at the prevailing national price (determined by the auction price at the start of the week and varying with national demand thereafter). Those who need more could buy these surplus units at the national price, with the process of buying and selling comparable with topping up a mobile phone or travel smart card (e.g., London’s Oyster cards). Similarly, overseas visitors, or others without units, would simply pay a surcharge at the point of energy purchase, determined by the retailer buying the necessary units on their behalf and passing on the cost." (


"1. Tradable Energy Quotas" (TEQs) is a system to enable nations to reduce their emissions of greenhouse gases along with their use of oil, gas and coal, and to ensure fair access to energy for all.

2. There are two reasons why energy-rationing may be needed:

- a) Climate change: to reduce the greenhouse gases released into the air when oil, gas and coal are used.

- b) Energy supply: to maintain a fair distribution of oil, gas and electric power during shortages.

3. TEQs (pronounced "tex") are measured in units.

4. Every adult is given an equal free Entitlement of TEQs units. Industry and Government bid for their units at a weekly Tender.

5. At the start of the scheme, a full year's supply of units is placed on the market. Then, every week, the number of units in the market is topped up with a week's supply.

6. If you use less than your Entitlement of units, you can sell your surplus. If you need more, you can buy them.

7. All fuels (and electricity) carry a "rating" in units; one unit represents one kilogram of carbon dioxide, or the equivalent in other greenhouse gases, released when the fuel is used.

8. When you buy energy, such as petrol for your car or electricity for your household, units corresponding to the amount of energy you have bought are deducted from your TEQs account, in addition to your money payment. TEQs transactions are automatic, using credit-card or (more usually) direct-debit technology.

9. The number of units available on the market is set out in the TEQs Budget, which looks 20 years ahead. The size of the Budget goes down year-by-year - step-by-step, like a staircase.

10. The Budget is set by the Energy Policy Committee, which is independent of the Government.

11. The Government is itself bound by the scheme; its role is to find ways of living within it, and to help the rest of us to do so.

12. TEQs are a national scheme, enabling nations to keep their promises, guaranteeing their carbon reduction commitments within whatever international framework applies at the time."



How TEQs differ from Personal Carbon Trading

Shaun Chamberlin:

"The EAC came out firmly in favour of what they term ‘Personal Carbon Trading’ (PCT) following DEFRA’s pre-feasibility study in May 2008.

Despite their welcome enthusiasm, I do find this ‘re-branding’ of the debate somewhat pernicious. Of course it is to some extent understandable – politicians deal in public consent, and words like “quotas” and “rationing” bring with them the distinctly unwelcome connotations of shortage and war. Indeed, perhaps only truly horrific words like “taxation” would rank lower in a popularity contest.

Yet a moment’s thought shows us that this bad name is undeserved – rationing is a response to hard times, not the cause of them, and in times of shortage we cry out for fair shares. We need only imagine wartime Britain without a rationing system.

The difficulty today is perhaps that the electorate do not yet recognise the scale or urgency of the energy/climate problem we face, and so are more than happy to do without the inconvenience a solution might bring.


Despite the names “PCT” and “TEQs” often being used interchangeably, the distinction between the two is not merely a matter of marketing, it is the distinction between two discrete schemes, and between two very different cultural approaches.

It is the distinction between a system that maximises economic growth and hopes to reduce emissions, and one that guarantees emissions reductions and lets the market (and citizens, businesses, communities…) figure out the best solutions within that context. It is the distinction between a ‘market-based framework’ (a la the ineffectual EU ETS) and a framework within which the market is constrained.

When it comes down to it, there is no getting away from the fact that it is not PCT – an extension of the discredited carbon trading model to the level of the individual – that we need, but TEQs – energy rationing – with the size of our rations determined by energy availability and the latest science on retaining a hospitable climate.

It is true that trading is a necessary part of such a scheme (both since prohibiting the exchange of rations in the past has always led to substantial black market activity, and since certain vocations intrinsically require more energy, meaning that a non-tradable equal entitlement would simply destroy many professions) but it is not the essence of the scheme. The heart of the scheme is a non-negotiable respect for the limits set by physical reality, and a desire to harness the collective genius of the populace in thriving within those limits.

Sadly, the slightly subtle distinction between the necessity of utilising trading in an energy rationing scheme, and the insanity of ‘trading as replacement for solution’, leaves plenty of ground for the professional spin doctors to confuse those who don’t have time to unpick the differences, leading us ever closer to the non-solution of a scheme designed to pander to the popular pretence that we can simply ignore the realities of our time."

A critique by James Quilligan

James Quilligan:

"The proposal is based on numerous ungainly assumptions, and I will consider three of these.


First, there is a tacit assumption in this proposal that the carbon cycle is the world's most important commons, and it is at the level of the climate commons that humanity must address the growing emergency of climate change. But this does not address the fact that the world's nitrogen cycles and hydrological cycles are also in critical jeopardy. Although there are interaction effects between the carbon and nitrogen cycles and hydrological cycles, this cannot be used to justify overemphasizing the carbon cycle without giving similar -- and interdependent -- attention to the nitrogen and hyrdrological cycles. Following the path of TEQ, civilization would be trying to save the air, while allowing the regeneration of our food and water supplies to fall into extreme disrepair and dissolution, with no safety net whatsoever.


Second, in seeking to create an alternative to free-market carbon trading, this proposal develops a scheme for national governments to ration their domestic energy supplies. No doubt the national sovereign governments of the world are facing the prospects of rationing in the decades ahead. This becomes more likely every day as population grows, resource yields decline, global temperatures increase, the environment is under increasing stress from heat, competition and mismanagement, and governmental authority is helpless to address these problems through the present loose confederation of sovereign states. But is rationing really the best way to solve the complex problem of climate change? Are we to solve this by merely doubling down on climate mitigation rather than climate adaptation? TEQ would have us believe that the proposed energy rations will be equitable for everyone -- but is that likely? If an emergency proposal for tradable energy quotas moves ahead (based on studies like this, which give policy makers the idea for feasibility studies in the direction of resource rationing), does anyone understand the implications of this? Do the authors of TEQ actually think that resource rationing will be undertaken in a free, liberal, orderly and just political environment? If humanity goes down the path of state-enforced rationing, that will be no simple, short-term adjustment; it will be a deep commitment to a centuries' long period of economic scarcity, political oppression and social chaos, possibly a five-hundred year period of decline. It must not be forgotten that governments will begin to authorize and enforce rationing, not out of any need for equity or adaptation, as TEQ seems to believe, but through the parceling out of non-renewable energy rations (and probably renewable energy rations) under *strict emergency powers*. In the great resource crisis of the 21st century, does anyone truly believe that governments will be seeking a soft landing through climate adaptation -- and the class equity of climate justice -- as a basis for the governmental provisioning of *fair shares of energy*? Frankly, since this involves a global resource crisis of such a high order of magnitude, how can anyone even put the ideas of rationing and equity together in the same proposal? Perhaps with no policy experience in the metrics of sustainability or international economics, someone could imagine a more democratic world converging by osmosis under the present system of self-interested sovereign states, where governments happily oblige their people under emergency conditions by offering them equal shares of anything. But that is very unlikely. Facing the declining supplies of food, water, and non-renewable energy, governments will be concerned primarily with the high price of security, survival, and comfort for the controlling classes, with the poor destined for subsistence (and/or elimination). Put yourself ahead in time twenty or thirty years from now: humankind will be not facing the rationing of its non-renewable resources as a result of democratic choice, but through the emergency rationing of all non-renewable resources under militarized enforcement. This will be due to: the decline of food availability caused by declining productive yield of agricultural land and the lack of investment in sustainable agricultural technology; the unavailability of potable ground and surface water due to extreme weather, as well as gross water mismanagement; and the inaccessibility to fossil fuel resources because of the resource competition between commercial agents and between national governments, steadily driving up demand, consumption and technological complexities. If this resource overshoot is managed under martial law (and it appears that we are rapidly moving there for reasons cited above), it will mean a new global strategy: a War on Scarcity through climate mitigation -- an environmental war that is also a social and international war. It will not be a struggle from which the global precariat will benefit. Indeed, if commoners do not take responsibility to produce and distribute their own resources and organize through a cooperative union for their own protection and power, they will suffer and die. /// Third, this article assumes that a framework for carbon rationing can be developed through financial or fiscal credits and debits. Here again, TEQ is flawed because -- like the cap and trade proposals that it wants to replace -- the proposal fails to take into account the reserve value of currencies. This looms very large now that the US is certain to lose its dollar hegemony under emergency resource conditions, precipitating a war for resources and a collapse of the global monetary system. Let's be clear: the economic system itself is unsustainable and no system for Tradable Energy Quotas is going to address that. The global monetary crisis will completely engulf proposals like TEQ, which have no way of independently valuing the credits/debits which they plan to use. Simply put, TEQ does not link sustainability with monetary policy.


So, it behooves the international community to recognize the nature of the crisis that all of us now face and develop a commons framework for rebuilding the global monetary system, as well as the global system of trade and finance. In this new arrangement, the replenishment of non-renewable resources -- stabilized and conditioned by the equitable management of renewable resources -- will underpin the monetary value of currencies, whether those monies are global, national , regional or local. With this kind of metric for currency value in everyday operation, a person's decision on whether to use a good or service will not depend on either market prices or government rationing, but the *sustainable value represented by the proportion of non-renewable resources which are set aside and protected absolutely for future generations*. If governments are going to back a major global program, should it be the trading of energy quotas? Or an entirely new method for creating universal purchasing capacity through the local and regional carrying capacity of resources." (

More Information