Some years ago I read about Tradable Energy Quotas as a method of ensuring everyone has access by right to their fair share of fossil fuels yet their usage gradually declines.
The last week has seen flash floods in Greece, Southern Brazil, Bulgaria, Turkey, Hong Kong, Turkey, the Caribbean and Boston. Climate change is here with a vengeance.
Peter Victor in his 2023 book Escape from Overshoot says we now need to reduce emissions by 9.7% every year till 2030 in order to meet the Paris Agreement. So, aware that we were not going to make the necessary cuts to emissions in time to have a liveable climate, it’s certainly time to revisit the idea.
Years ago I discovered that not only had the idea lasted, but that there was a UK organisation called the Fleming Policy Centre promoting it. When the visionary green economist Dr David Fleming died in 2010, his friend Shaun Chamberlin set up the Fleming Policy Centre. Chamberlin carried on his work, finishing his two books Surviving the Future and Lean Economy.
Tradable Energy Quotas (TEQs) are rationing that works
Rationing had always appealed to me. As a child in rural Canterbury during the war, I remember taking ration coupons to the shop to buy sugar, clothing, butter and tea along with our money. Our parents managed the petrol coupons.
The government rationed petrol from 1940 to 1950. During the last three years of the war the restrictions were severe. New Zealand also rationed clothing, footwear and nylon stockings.
Then in the 1970s there were oil shocks. First the government tried limiting the speed to 80 km an hour. This worked well from 1973-1976.
But after the second oil shock in 1979, Prime Minister Muldoon introduced carless days. Everyone with a car had to nominate one day a week when they wouldn’t drive. You had to put a sticker on your car with Monday or Tuesday etc on it. Those in essential industries applied for an exemption sticker.
Carless days were unpopular and largely ineffective because a black market in exemption stickers arose, as did forgeries.
Moreover, it was unfair. Households able to afford to run two cars simply chose different carless days for each vehicle. Petrol rationing was threatened but never imposed.
Black markets avoided
The fact is that black markets will always appear when there is no trading allowed in ration coupons. If you ration with no trading allowed, then people will buy all the petrol they can and store it in all sorts of containers.
These included “califonts, kegs, kettles, demijohns, vinegar and whisky bottles, tins of all descriptions” as one account says. The government then made this illegal, which really encouraged a black market.
TEQs are ration coupons but they will come in digital form these days like Airpoints or Flybuys. The difference is that you can’t use them alone when you cash them. You will have to surrender them along with your cash when you buy petrol or gas or any fossil fuel.
Businesses have to pay for their Tradable Energy Quotas
Fleming worked it out that in the UK only 40% of petrol users were private individuals and the rest were businesses, governments and other organisations. Each year there is a set number of TEQs allowed. 40% are given to individuals in a weekly allowance.
This 40% private individuals figure is too high for New Zealand. Ours is more like 25% or even less.
Businesses, governments and organisations have to buy their TEQs. The TEQs registrar sets up a weekly tender arrangement and certain intermediaries tender for them. This sets the price for when people want to trade them.
Heavy users will effectively be able to buy TEQs from the Registrar. Low users will sell them to the Registrar. Buying and selling is as easy as topping up a mobile phone or Snapper or HOP card for bus trips.
Fleming argues that this method puts the onus on the users to find the best ways of reducing their fossil fuel use. This brings out the creativity in everyone, in every business and in every local authority. We all work towards the same goal.
Unlike ETS, with TEQs everyone is involved in the same mission – learning how to live with less fossil energy. It is a huge transition. It changes the way we work, travel and play.
You can understand that Fleming invented TEQs in 1996 in the UK before so much was known about our NZ emissions. We may not have known agriculture contributed nearly half our emissions in those days. New Zealand is unique in its high contribution from agricultural emissions.
TEQs for agricultural emissions shows how TEQs affect these emissions.
A great deal more information on TEQs are at https://www.flemingpolicycentre.org.uk/faqs. This will take a long time for you to get through. Skim it and come back and back. I recommend reading the 2011 All Party Parliamentary Report.
If you are a New Zealander and interested in asking government to investigate TEQs, please sign our petition.