Introducing A New Currency: The Carbon

This is a guest post from kiashu.

I have decided to create a new currency, the Carbon. You can spend it and earn it, but cannot exchange it between people, because it's a transaction between you and the Earth. The symbol for the carbon currency is ¢. In earlier times, currencies were physical commodities, or their value was tied to them. For example, the British Pound was called a "pound" because it was set as equivalent to a pound of silver, and around an ounce of gold. This made it easy to know what you could get for a pound, and what it was really worth. So I have set ¢1.00 as worth 1.00kg of carbon dioxide equivalent in greenhouse terms. 1kg methane, for example is worth about ¢23, since it has a greater effect on the climate than does carbon dioxide.


Climate change, our bankruptcy
The reason to express it as a currency is that with money we have a simple idea which everyone can grasp: you cannot spend more than you earn. If you get into debt and can never pay it back, you're in trouble. Likewise, if we emit more greenhouse gases than the Earth can absorb, we get into trouble; if we spend more Carbons than we earn, we get into debt. Some people find it difficult to grasp the idea of climate change because, they say, the pollutants we humans produce are so small compared to the whole system, how can they have an effect? Well, imagine that in a town of 1,000 people every single household spent just a few percent more than they earned - every year for a century. That town would be in trouble, right?

We have been spending more than we earn. When you do that with money eventually you get declared bankrupt and the court writes off your debts. That's possible with debts in dollars, but not debts in Carbons Instead of bankruptcy we get climate change. The debt just grows and makes our lives more miserable and difficult. Our spending is greater than our income.



Carbon incomes
But what is our "income" with Carbons? As I see it, our income is the amount we can emit without causing global warming, according to the scenarios in the IPCC 2007 report. I described my reasoning here, that to keep global warming to a reasonable level we need to reduce global emissions by 50-85% - we need to reduce how much we add to our carbon debt by 50-85%. Current world emissions are each year about 49Gt CO2e - spending ¢49 trillion.

A 50% reduction would be to ¢24.5 trillion, an 85% reduction to ¢7.35 trillion. But this spending must be spread amongst 6.67 billion people today, and a top population of about 9 billion in 2050. So that gives us ¢1,100-¢3,700 of spending we can do each year for each person. I've also noted that of all our emissions, all our spending of Carbons, about half are things we can control directly in our daily lives - how we get our electricity and how much of it we use, how we transport ourselves, what we eat and so on. This gives us a range of ¢550-¢1,850 of spending we can each do.

To be prudent it seems wise to choose the lower figure, but set against this is the fact that the IPCC-reviwed scenarios all assumed gradual reductions up till 2050. They expect us to take forty years or more to change. But of course, many changes are things we in our households can do very quickly, or within a few years at most. We don't need forty years to find a house closer to work or work closer to home so we can walk there, five years would be plenty. We don't need forty years to eat only 12kg of meat a year instead of 120kg. We don't need forty years to turn the heater off and put on a jumper.

Now, greenhouse emissions are also like a debt in that if you can pay it off earlier, you pay less overall. Just as paying an extra $1,000 off a mortgage today is better than paying off $2,000 extra in $100 lots over 20 years, if we could get the world to reduce by 50% overnight and then not change at all for forty years, that'd actually be better than reducing by 85% by 2050, 2% a year. Less greenhouse gases would be emitted overall. Given that, in the ¢550-¢1,850 range of spending, it seems reasonable to pick one in the middle, a nice round ¢1,200 a year. Thus the one tonne CO2e lifestyle, which we might rename the ¢1,000 lifestyle. The example was a ¢1,447 lifestyle, but the example person earned $600 through planting trees.

It's easiest to think of "allowed spending" as "income". It isn't really, but it's easiest to think of it that way. We get ¢1,200.


¢1,200 a year to spend
So, each of us gets ¢1,200 to spend each year, or ¢100 monthly. If we spend more than we earn, we get into debt, and if debts are not repaid there's trouble.

What are some things we can buy for ¢100? About nine gallons of diesel, 76kWh of electricity from coal, a quarter of a laptop computer, the right to produce a couple of bins of waste going to landfill, ten big beef steaks - any one of those things causes about 100kg of carbon dioxide equivalent emissions, and so costs us ¢100. But ¢100 also buys us a cross-continental trip on a train, 2,000kWh of electricity from wind turbines, three times our bodyweight in fresh fruit and vegies or grains, and so on. The Carbon thus turns out to be just like the dollar, it can be spent well or badly. I can spend $50 on a single meal, or $100 to feed myself for a month, $100 to fix the leak in the roof or $3,000 to ignore it and then replace everything damaged after the flooding, $10,000 on cigarettes then $20,000 on operations for lung cancer or $0 on not smoking.


"That's not much, can we earn more?"
Yes, by planting trees. That's it. Forget the carbon offset schemes, I've said before. Most of those are based on paying other people to reduce emissions. We seem to imagine that greenhouse gas emissions are different to other forms of pollution. Imagine that you live downstream from a gold mine spewing arsenic into the river, and imagine they pay another gold mine not let arsenic out of their tailing ponds. How's your river now? Still poisoned? Why do we expect that greenhouse gases are any different? Helping my friend budget and reduce his mortgage does not help me with my debts - they're still there. Likewise, with greenhouse gas emissions.

The Earth has a natural cycle which takes up carbon dioxide. Trees are part of that. Oceans are the biggest part, but there's not much we can do about them, let's focus on trees. Across the world, deforestation is a major problem. Trees and their lack is why children in Haiti are eating mud, but people in the Dominican Republic across the border are eating well, or why South Korean children are all taller than their parents but North Koreans are shorter than their parents and lost a tenth of their population to famine in the 1990s. They cut down their trees. About a fifth of greenhouse gas emissions are attributed to deforestation.

Each tree you plant will in its lifetime absorb between half and two tonnes of carbon dioxide, it varies a lot between species and local climate. Realistically, we can't be sure that the trees we plant will last, especially if we live in some urban area where we might move house every few years, maybe the local council will cut it down to extend the road or whoever owns the house after us will decide the stress of raking leaves is just unbearable. And trees do get sick and die. So I say that planting a tree earns you ¢150, provided you're around to care for it. If you pay some company to do it, or plant it somewhere miles from home where any idiot could knock it over, it's only worth half as much, you have to plant two trees for it to count as much as one you plant yourself and care for.

Also, if you have a garden or containers where you harvest fruit and vegetables, the whole process takes a bit of carbon out of the air and into the soil. So each 1kg you harvest is worth ¢0.25 of income.

Aside from that, it's all spending we do.


"Sounds like book-keeping's involved"
Luckily these days we have spreadsheet programs which makes it all easier. I've prepared one which you can use (see below). There are some notes about it which you can read in the file itself. Various figures used are not accurate for every place in the world, they represent an average, some may really be higher or lower for your particular place. Over the course of a year with a normal mix of spending, you can expect that it'll be overall accurate to within +/- 10%. The exact figure is not really important, what's important with the Kohle as with dollars is that over time your spending should go down and your income go up, and that if you cannot get out of debt, you should at least reduce how much you're adding to your debt.

The other reason to express it all in currency terms is that we get a different impression of things based on how we measure them. If I say that "our greenhouse gas emissions are half the national average" that sounds pretty good. If I say, "we emitted 6.25 tonnes of carbon dioxide each last year" that doesn't sound so good. And if I say, "we emitted 5.05 tonnes more carbon dioxide than the Earth can handle" or "we increased our debt by ¢5,050 each last year, about ¢15,000 for the whole household," that sounds worse still. But the statements all have the same actual emissions behind them.

I want to present it in a way that people can easily grasp - income vs spending, they should balance - and in a way that encourages less emissions. This will, by the way, also mean less use of fossil fuels - which given they'll likely peak in world production soon and then drop off, is a good thing - and also more equitable distribution of resources and the right to waste, which is also good.


My carbon account in FY2008/9
This year I will begin keeping a carbon account using that spreadsheet. My aims will be to,

  1. Keep the best account I can of all the things which contribute to our household carbon emissions, and,
  2. Have each month with less carbon spent than the last - even if just by ¢1.00.
  3. The medium-term goal (2 years) is to balance my carbon budget, spending no more than I earn
  4. The long-term goal (5 years) is to earn as much as an average household spends - to be absorbing not emitting carbon

This sort of thing is hard to do on your own. The first one is essential, I can't do the rest without it. You can't change where you're going if you don't know where you are! So it'd help if some people would join me just in that first one. I'm not asking anyone to reduce their carbon spending or set any kind of goals, just to keep track of it, and with me, publish the results after each month.

You can find the Carbon Account here [42kb .xls, go to that link, click on File --> Export --> xls and then you can download it to your hard drive]

The Carbon Account Challenge: can you balance your books?

Any takers?

Cross posted from GWAG.

Some quibbles about timing and coverage if I've understood this correctly. If that tree has a 100 year lifecycle then maybe your dollar credit should be $1.50 a year. That's after deducting carbon costs such as the trip to the nursery. Also if the tree burns down say 10 years later that's a debit of $15 though maybe some carbon in the roots will be left behind.

Also what about the carbon debt embodied in houses, cars, TVs etc? Perhaps we should depreciate that over their average lifetime, say 50 years for houses and 10 years for cars. If a car embodies 900 US gallons of gasoline that may be (this is arguable) equivalent to around 8,000 kg of CO2. Over 10 years that is 800 carbons a year which doesn't leave much for anything else.

Another problem is the carbon allowance for public goods eg sending a Minister to an anti-whaling conference in Chile. Do we all have to chip in for that and cut back on other personal items to meet our allowance? I prefer the global target of 350ppm CO2e for all of us lumped together.

When you buy carbon credits from some tree-planting group, they usually claim that trees absorb 500-2,000kg CO2e over 100 years. So that'd be ¢5 to ¢20 a year.

Realistically, we can expect that at most a third of the trees will be allowed to get to their full growth, and that the survivors will probably only last a generation, 20-40 years. That's because over a generation land tends to change in use - 40 years ago my suburb was half fruit orchards.

So I just chose a middle figure which seemed reasonable. If you find a figure you think is better, then on the spreadsheet you can unhide the 'B' column and change it.

For all things, I thought it better to charge them when they came to their first use. If you say, "well, my plasma screen TV is a 500kg CO2e, but will last five years, so that's ¢100 a year," what happens if you replace it after two years, or six? What if you split with your missus and she leaves the tv, how much does she pay? What if you bought 40lt of fuel expecting it to last a week but it lasts two, or vice versa? It gets confusing. Easier just to pay upfront, the way you have to do with $ money.

Yes, cars, houses and so on then become extraordinarily expensive in ¢. Just like in $. And in fact it's true that if we want to achieve 350ppm - or even avoid 1,000ppm - then we are not going to have everyone on the planet buy a new car or build a new house every ten years.

Concerning public goods, I already said,

I've also noted that of all our emissions, all our spending of Carbons, about half are things we can control directly in our daily lives - how we get our electricity and how much of it we use, how we transport ourselves, what we eat and so on.

Households control about half of total emissions directly through their own actions. The indirect stuff we don't worry about, that's another issue, write to your MP and tell him to take the bus.

The idea is to have an approach which encourages reduced greenhouse gas emissions and consumption of depleting resources. This would do it, dealing with half of all emissions and consumption. I think if widely-adopted it'd have flow-on effects - less cars driving means less maintenance of roads, and so on.

Kiashu, after a first quick read I am very impressed. You've come up with an approach that is simple enough for people to understand and to use day to day. I am sure there is room to refine some of the details and no doubt plenty of TOD members will suggest improvements. Also no doubt someone will object to a climate-focused posting on TOD. I am just delighted that you have put forward a practical offering for us all to think over and contribute to. Great work!
Cheers, Mark

I'm glad you liked it.

As I understand it, ANZTOD is a bit more climate change-focused than is TOD as a whole.

But as I said in the article, even if you don't care about climate change, most of the ways you'd reduce your Carbons spending - less or no driving cars and plane flights, get wind-derived electricity, etc - would also reduce consumption of fossil fuels.

I can certainly imagine lifestyles where you'd use very little fossil fuels and still cause lots of greenhouse gas emissions - for example if you do slash and burn agriculture, or eat lots of beef - but I cannot imagine a lifestyle where you use a lot of fossil fuels but do not also cause lots of greenhouse gas emissions.

So that all low-¢ spenders will be low fossil fuel consumers, but big ¢-spenders may be low or may be high fossil fuel consumers.

Thus, even though my focus was on avoiding or mitigating climate change, aiming at being a low ¢-spender would mitigate peak fossil fuels, too. And I think all sections of TOD, excepting only a few doomers with fantasies of gunning down hordes of cannibal suburbanites, are in favour of making peak fossil fuels not hit us as hard as it could.

Oh, and...

Something that troubles me about the one tonne lifestyle is that it smacks of Puritanism, yet we're headed that way regardless. Check out Hobart airport and you will see a lot of frequent-flyer greenies, no doubt with bellies full of steak. But hey they offset. Maybe this degree of self denial would sell better if there was some kind of public recognition, like Medieval monks wearing sackcloth and ashes. If people go this way it's mainly to pay the bills, not because anybody notices. It doesn't change the fact deep down they still want to travel by air and eat steak. Maybe if there were half as many of us we could have a two tonne lifestyle.

Did you even look at the one tonne lifestyle? The example guy has a weekend away in the country once a month, or a cross-continental annual holiday each year. He eats meat, cheese every week - just not a lot of it. He uses plenty of electricity, 10kWh a day by himself - twice the Aussie per person average. He buys books, CDs, clothing each month. Every week he visits friends, goes out, and/or does some hobby.

He also cycles or walks about 70km a week and has a little garden, so he's fit.

And he can drink and smoke and shag as much as he likes.

That's "Puritanical"? That's "sackcloth and ashes"? Why? Because the guy takes the Ghan Melbourne-Perth and has a nice sleeping carriage and restaurant meals three times a day while travelling instead of flying?

"Normal life"

"Sackcloth and ashes"

Seriously, WTF?