Why only carbon rationing can lead to true energy saving 23 October 06

[First, apologies for the continued technical problems: I know people can’t comment at the moment – the good news is that we have a relaunch date of 3 November when all this will be rectified.]

[cof let’s make that the 10th. sorry. Will (not mark’s fault!)]

A new Energy Saving Trust report out today reveals that British people are the most energy wasteful in Europe – a finding which has generated considerable media attention here. See, for example, this BBC News report, or my own interview on Radio 4’s Today Programme this morning. All important stuff – but is EST’s message the most appropriate one? This is ‘energy saving week’ apparently: we are all being urged to ‘save our 20%’.

Two things worry me, however. One is that EST’s constant focus on monetary savings from energy efficiency isn’t actually terribly motivating for people. If we all cared about saving £5 per year by changing our lightbulbs we’d be very parsimonious people indeed. Instead people are motivated largely by spending money – note the willing expenditure by millions of adults of tens of thousands of pounds so that they can drive a car which makes them look and feel good.

The second thing relates to the first, and that is that energy efficiency doesn’t necessarily lead to cuts in carbon emissions. This is simple economics: if we all use less energy, there will be less demand for energy and its price will fall. If energy is cheaper, then more of it will be used. In reality our economies are already getting more energy efficient each year, but emissions overall keep going up because these savings are swamped in the increase in overall energy use that comes with economic growth.

Hence, the only serious solution, as my cover story in this week’s New Statesman argues, is carbon rationing, where individuals are allocated equal entitlements to emit on an annual basis. These entitlements gradually reduce to sustainable levels, and will be fully tradeable to make the system economically efficient. It’s radical, but it’s fair. And unlike carbon taxes or any of the other proposals currently on the table, it would actually solve the problem.