Imagine that it’s January 2030 and last month you had to adjust your Christmas shopping to a new constraint. As the year-end approached, your annual personal carbon allowance, or PCA, was running out and so you had to find low-carbon presents for family and friends. Now that all goods and services have a carbon label, every purchase triggers an online deduction from your PCA. For 2029 the government had given you, like everyone else, a mere 3 tonnes of CO2 to emit, in line with its ‘net zero’ strategy.
Is this science fiction or a realistic portrayal of life in a future low carbon world? The PCA is not actually a new concept. It was the subject of several UK government reports back in 2008 and promoted by the then Environment Secretary, David Miliband as a ‘thought experiment’. It would have been confined to household heating, electricity use and travel, but was still considered too difficult to implement for a mix of social, economic and technical reasons.
The idea has recently resurfaced in the press and academic literature, with the suggestion that it be extended to all personal consumption. That would include embedded emissions in all the products we buy, which represent around half of the average person’s carbon footprint. It would require the carbon auditing of all products on an end-to-end supply chain basis.
I’ve been sceptical for many years about the feasibility and desirability of carbon measurement and labelling at a product level. Attempts by companies, such as Tesco, Boots and Pepsico, 10-15 years ago revealed how difficult and costly this was, particularly for multi-ingredient/component products with complex global supply chains. After all, many companies report that over 90% of their carbon emissions come from their supply chains rather than their internal operations.
Although great progress has been made in the calculation and reporting of logistics-related emissions at a company, service, trip and even consignment level, drilling down to a product level still presents a formidable challenge. Even if companies developed the capability to do this in an accurate and affordable way, there would still be a need for independent verification of the CO2 value quoted on the packaging. Otherwise companies might under-report emissions to gain market share.
Merely carbon labelling products would be unlikely to induce much of a shift to lower carbon consumption. Hence the need for PCA to keep consumers within an annual carbon budget and to charge them for extra carbon credits should they overshoot. Such credits probably funded much of the fictional Christmas spending in 2029.
So why not simply use carbon pricing to monetise the whole process, thereby avoiding the need for elaborate systems of emission auditing and personal carbon accounting. As Tim Harford explained recently, imposing carbon taxes on energy use at a company level ‘sends a signal along all those supply chains, nudging every decision towards the lower-carbon alternative’. The carbon intensity of products can then be reflected in their selling prices, giving future consumers one less thing to worry about when agonising over who gets what for Christmas.