Miliband plans carbon trading ‘credit cards’ for everyone

Every citizen would be issued with a carbon “credit card” – to be swiped every time they bought petrol, paid an energy utility bill or booked an airline ticket – under a nationwide carbon rationing scheme that could come into operation within five years, according to a feasibility study commissioned by the environment secretary, David Miliband, and published today.

In an interview with the Guardian Mr Miliband said the idea of individual carbon allowances had “a simplicity and beauty that would reward carbon thrift”.

He acknowledged the proposal faced technical difficulties, but said ministers needed to seek ways of overcoming them.

The idea was floated in a speech in the summer, but the detailed proposals show Mr Miliband is serious about trying to press ahead with the radical idea as a central part of his climate change strategy.

Under the scheme, everybody would be given an annual allowance of the carbon they could expend on a range of products, probably food, energy and travel. If they wanted to use more carbon, they would be able to buy it from somebody else. And they could sell any surplus.

The study was prepared by the Centre for Sustainable Energy for the Department for Environment, Food and Rural Affairs. It argues that firms like Tesco have shown that complex computer schemes logging billions of transactions are feasible. “Tesco Clubcard is collecting, storing and analysing some 50bn pieces of data a year,” it says.

The study also claims that individual carbon trading is less regressive than carbon taxes, as the poor emit less than the rich. Instead of flat “green” taxes it proposes a hybrid system using permits and taxes, with the permits possibly issued, tracked and traded through the existing banking system using pin and chip technology. Carbon allowances could be treated as bank accounts.

The report admits huge questions would have to be resolved, including the risk of fraud, the relationship to ID cards, and costs. However Mr Miliband said “bold thinking is required because the world is in a dangerous place”.

He said: “It is a way of pricing carbon emissions into individual behaviour and it would recognise carbon thrift, as well as economic thrift. Twenty years ago if I had said 8 million people would have a Tesco loyalty card, no one would have believed me.” The scheme will be discussed at a special cabinet committee on the future role of the state convened for today.