TEQs (Tradable Energy Quotas) What they are How they work Why we need them.

transcript

TEQs(Tradable Energy Quotas)

What they are

How they work

Why we need them

Context1. Climate change

IPCC (Sept 2007): “If warming is not kept below 2 degrees C, which will require the strongest of mitigation efforts, and

currently looks very unlikely to be achieved, then substantial global impacts will occur, such as: species extinctions and

millions of people at risk from drought, hunger and flooding, etc.” (my emphasis)

2. Resource depletion (Peak Oil)Global peak oil production around now. Extreme and

unprecedented price volatility. Not just oil – energy resources including gas, uranium and even coal.

“Large-scale problems require large-scale solutions”

What is needed?

"Large-scale problems do not require large-scale solutions; they require small-scale solutions within a large-scale framework."

~ David Fleming

What is needed?

Local Level – Transition Towns/Woking/Eigg/Fintry/…

National Level – Support

International Level – Collective responsibility (COP?)

Personal Level – Us

TEQs (Tradable Energy Quotas)

WHAT TEQs ARE FOR

1. Guaranteeing that our national carbon budget is achieved

2. Empowering communities and building a common purpose

3. Securing fair access to fuel at a time of deep scarcity

IN OUTLINEWhat are TEQs?

Tradable Energy Quotas arean electronic system for rationing

carbon-rated energy

for all energy users.at national level

All other users obtain their units through the weekly Tender (auction).

Units are surrendered in addition to cash payment when fuel or energy is purchased.

Individuals who use less than their Entitlement may sell them and benefit from their energy-thrift.

Those who want more may buy them from those who are selling.

All individuals receive an unconditional Entitlement to TEQs units.

Tradable Energy Quotas

SURRENDER

Fuel wholesalers/ electricity

generators

Fuel/electricity retailers

Fuel extractors

MARKET

Organisations

Primary dealersCitizens

40% Entitlement

60% Tender

UNITS FLOW THROUGH THE ENERGY CYCLE

COMMITTEE ON CLIMATE

CHANGE

QuotaCo REGISTRAR

CARBON

BUDGET

CHANGE

CARBON

BUDGET

THE CARBON BUDGET

1. Establishes the total quantity of TEQs units (rations) that may be issued

2. Sets a long-term time-horizon

Year 1

0 5 10 15Years

Commitment

5 year

Intention

5 year

Forecast 10 years

Year 2

0 5 10 15Years

Commitment

5 year

Intention

5 yearForecast 10 years

THE CARBON BUDGET

1. Establishes the total quantity of TEQs units (rations) that may be issued

2. Sets a long-term time-horizon3. Set by the Committee on Climate

Change……which frees up the Government to

focus on achieving the Budget

(and TEQs provides money for this!)

CHANGE

QuotaCo REGISTRAR

CARBON

BUDGET

40% Entitlement

60% Tender

CHANGE

QuotaCo REGISTRAR

CARBON

BUDGET

THE ISSUE OF UNITS

1. By equal Entitlement to all adults (40%)2. By Tender to all other users (60%)

The Tender is a weekly auction at which organisations (industry, government etc.)

purchase the TEQs units they need

THE RATING SYSTEMCarbon units:

1 unit = 1kg CO2 (gwp)

(fuel rated by carbon content)

Fuel units:

1 unit = 1 litre oil

1 unit = 1 metre3 gas

1 unit = 1 kWh electricity (etc)

MARKET

Organisations

40% Entitlement

60% Tender

CHANGE

QuotaCo REGISTRAR

CARBON

BUDGET

THE MARKET FOR UNITS

Everyone has access to the same market.

The market price is set by the Tender.

MARKET

Organisations

40% Entitlement

60% Tender

CHANGE

QuotaCo REGISTRAR

CARBON

BUDGET

MARKET

Organisations

40% Entitlement

60% Tender

CHANGE

QuotaCo REGISTRAR

CARBON

BUDGET

SURRENDER

generators

Extractors/importers

MARKET

Organisations

40% Entitlement

60% Tender

CHANGE

QuotaCo REGISTRAR

CARBON

BUDGET

THE SURRENDER OF UNITS

1. Utility bills: direct debit2. Petrol: by card3. The cash option

Embodied energy in other goods

A hands-free scheme

SURRENDER

generators

Extractors /importers

MARKET

Organisations

40% Entitlement

60% Tender

CHANGE

QuotaCo REGISTRAR

CARBON

BUDGET

TEQS: THE CRITICAL FEATURES

THE GUARANTEE

What is the Guarantee?

Assurance that the carbon reductions defined by the Budget will actually be

delivered

THE GUARANTEE

TIME TO PLAN AHEAD

Why the need to plan ahead?

1. The long lead-times needed by conservation and renewables

2. Structural change - the proximity principle - means a deep transformation in our

lives Changing infrastructure and lifestyles

takes time

THE GUARANTEE

TIME TO PLAN AHEAD

LEAVES MONEY WITH THE USER

Why leave money with the energy user?

1. The transition to Lean Energy will be costly

2. Economic prosperity cannot be assumed

THE GUARANTEE

TIME TO PLAN AHEAD

PROGRESSIVE

Progressive

1. Benefits poorer households

3. Equity redefined in the light of climate change and peak oil

2. An equal allocation to every adult

THE GUARANTEE

TIME TO PLAN AHEAD

PROGRESSIVE AN ASSURED RATION

Why is an assured ration needed?

1. Without an assured ration, defined in terms of quantity - not money - the poor

could be out-bid for energy

2. This is especially a risk if the Government has to intervene in the energy market, selling at a lower price than that of

the international market

THE GUARANTEE

TIME TO PLAN AHEAD

SPECIFIED IN TERMS OF ENERGY

Why does it need to be specified in terms of energy?

1. The problem is an energy problem, and will call for imaginative energy solutions

2. If it were seen as a money problem, it would be just one more charge on the

household budget

THE GUARANTEE

TIME TO PLAN AHEAD

BOTH FOR FUEL SCARCITY AND CLIMATE

Why set up an instrument for both fuel scarcity and the

climate?

The solutions to each aspect of the problem need to be mutually

consistent

THE GUARANTEE

TIME TO PLAN AHEAD

HANDS-FREE

Why is “hands-free” so important?

1. It won’t happen without

2. The focus of interest has to be on the energy descent, not on the

scheme put in place to support that descent

THE GUARANTEE

TIME TO PLAN AHEAD

HANDS-FREE GOVERNMENT THERE TO HELP

What is the role of Government?

1. In it together

2. There to help the energy descent happen in the context of the common purpose

3. Budget decisions are made by an independent agency - the Carbon/Energy Policy Committee

THE GUARANTEE

TIME TO PLAN AHEAD

COMPETITIVE ADVANTAGE

What Competitive Advantage?

1. Energy-efficient technology2. Lower energy costs (energy volumes

lower)3. An orderly rationing system

4. Moral leadership

THE GUARANTEE

TIME TO PLAN AHEAD

What is Pull?

It is the opposite of push!

A system which empowers people to think for themselves, cooperate and bring in only those

resources which are needed

THE GUARANTEE

TIME TO PLAN AHEAD

PULL COMMON PURPOSE

What is Common Purpose?

There is a common and clear objective for the whole society

With TEQs, price is under the nation’s control, unlike internationally traded energy

resources

Shared effort towards a shared goal.

THE GUARANTEE

TIME TO PLAN AHEAD

PULL THE COMMON PURPOSE

Carbon tax?

TEQS vs TAX

NO GUARANTEE

NO TIME TO PLAN AHEAD

TAKES MONEY FROM THE USER

REGRESSIVE NO ASSURED RATION

SPECIFIED IN TERMS OF MONEY

WHOLLY UNSUITED FOR FUEL SCARCITY

HANDS-ON GOVERNMENT THERE TO PUNISH

COMPETITIVE DISADVANTAGE

PUSH NO COMMON PURPOSE

TEQS vs TAX

NO GUARANTEE

NO TIME TO PLAN AHEAD

TAKES MONEY FROM THE USER

REGRESSIVE NO ASSURED RATION

SPECIFIED IN TERMS OF MONEY

WHOLLY UNSUITED FOR FUEL SCARCITY

HANDS-ON GOVERNMENT THERE TO PUNISH

COMPETITIVE DISADVANTAGE

PUSH NO COMMON PURPOSE

An equitable, effective and efficient way of managing our country’s energy descent - guaranteeing

emissions reductions, empowering individuals and communities and ensuring fair access to fuel and

energy for all.

www.teqs.net

TEQs (Tradable Energy Quotas) What they are How they work Why we need them.

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