Personal Carbon Trading: Motivating Better Climate Behavior in Canberra

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Greg Wass
Canberra, the capital of Australia and recently named best city in the world to live in by the OECD, would be an ideal site to pilot personal carbon trading programs.

Australia’s big attempt to tackle climate change by introducing a carbon tax didn’t last long. The country’s conservative party repealed the law shortly after coming to power in 2013, despite overwhelming evidence that it was succeeding in lowering carbon emissions from large-scale producers. While environmentalists are once again urging for the law to be re-instated, it’s worth pointing out some of its shortcomings—namely, that the increased costs to generators was often passed onto consumers, who were, in turn, subsidized by the government. What was missing from these equations was an effort to promote behavioral change among consumers that the law was intended to promote.

Introducing the notion of personal carbon trading could make a major contribution to shifting climate behavior in Australia because it provides direct economic incentives for individuals to make less carbon-intensive consumption choices.

Several models have been developed so far and each succeeds in making individuals directly responsible for the carbon they produce. The basic concept is a cap on emissions (at a regional or national scale), with emissions allocations or allowances distributed to the population. Carbon-intensive behavior requires individuals to acquire more carbon allowances to offset their consumption; those with less carbon-intensive behavior can sell their excess allowances on the market.1 The tracking of behavior and emissions activity would be managed through applications on smartphones for more active citizens—or for the less engaged or less technology-savvy citizens, tracking could be embedded through electricity bills, at the petrol pump, and at the supermarket counter. Citizens would be rewarded for choosing to ride their bike, take public transport, energy efficient housing, and consuming less carbon-intensive food.

Serious consideration was given to the introduction of personal carbon trading in the United Kingdom in 2008. However, the House of Commons concluded that due to public perception and implementation challenges it was “a policy ahead of its time.”2 Since 2008, two significant global shifts make this policy more viable: (1) significant improvements in data management and the increased uptake of personal smartphones, resulting in an unprecedented level of personal connectivity and access to information; and (2) enhanced private sector engagement in sustainable development, where companies that have a greater focus on sustainability are more profitable and are increasingly becoming the ‘norm.’3 These shifts can make personal carbon trading feasible today with technology and private-sector partnerships available to support its implementation.

A first step would be to trial personal carbon trading in Australia’s capital, Canberra. It’s a community with ambitious mitigation and renewable energy targets,4 and was recently nominated best city in the world to live in by the Organization for Economic Cooperation and Development (OECD).5 Introducing the scheme would require a contract between the business sector and local government on how the system would operate, backed by legislation. Compliance and the associated risk of fraud could be a challenge but one that could be managed and mitigated. For example, fraudulent misreporting by individuals of their transportation method could occur without any penalty. However, ‘peer-to-peer’ verification schemes borrowed from successful ‘collaborative consumption’ businesses could be introduced.6 For example, AirBNB’s peer-to-peer appraisal system maintains trust and credibility in the system. This appraisal system could be adapted to help monitor individuals tracking their consumption patterns within the personal carbon-trading system.


Paul Krueger
A personal carbon trading scheme would reward citizens for making less carbon-intensive consumption choices, such as choosing to ride their bike.

Information availability on the impact of various consumption choices is fundamental to the success of personal carbon trading. A small-scale pilot of personal carbon trading in the United Kingdom demonstrated that information was the major barrier to better carbon behavior.7 Through the pilot, the participants learned the extent to which relatively minor changes in their consumption patterns could result in significant reductions in their personal carbon emissions.

Another small-scale trial of personal carbon trading at Norfolk Island has demonstrated a direct link between better climate behavior health benefits, particularly in tackling obesity.8 This is due to the correlation between better transport choices and more physical activity, alongside less carbon-intensive food products, which are generally healthier. Moreover, the citizens in this trial became more active in their local community, improving their social and cultural capital. Another key benefit of personal carbon trading is that it is a progressive policy, benefiting low-income earners more, and will therefore help to address inequality.9

The key challenge facing the scheme is negative public attitudes and the idea that their privacy is being impacted.10 Resistance from business is also possible, due to the implementation potentially becoming an additional administrative burden. On balance, with political and business leadership support for the policy, and careful consultation in the policy’s design and implementation, personal carbon trading is likely to be successful in Canberra.

Personal carbon trading has the potential to spur genuine climate behavioral change, and become a critical driver in the overall shift in global production and consumptions patterns required to avoid dangerous climate change. With the major shifts required over the next decade, the world cannot wait for a global climate deal without implementing local solutions. Canberra is ripe for championing better climate behavior through being the first city to introduce personal carbon trading at scale.