Eat Less Meat

Let me start out by saying I am not and have never been a vegetarian. Nor do I argue we should all go vegetarian.

It is true I had been gradually eating less meat but purely as a matter of gastronomical choice. I had been replacing part of my meat intake for a more varied diet simply because I had discovered there are a lot more (vegetable) fine tastes out there besides steak. There really are.

I mean, vegetarians are still human. They have no superhuman powers of persistence. You don’t imagine vegetarians would just sit by forever, eating everyday the same thing, do you? Besides what vegetarian food the rest of us eat, they have discovered new ones from other places, rediscovered old ones from our own backyard we had forgotten about, and invented new things that can be done with them or from them.

But there are other reasons to eat less meat. Besides being healthier and cheaper (well, usually it is at least), turns out eating less meat also helps protect the environment. Most people will probably say: ‘Of course. Because of people tearing down the rainforest to grow cattle and plant soy’. Well, yes. But that turns out to be the (smaller) tip of the iceberg.

The other two posts this week dwell deeper into this, but in a nutshell, it turns out that the production of meat is a major greenhouse gas generator. In fact, it might be the single largest contributor to global warming, depending on how you look at the figures. One thing is for certain, agriculture is by far the greatest contributor of Methane (40%) and Nitrous Oxide (62%) which are much more powerful greenhouse gases than CO2 (check the other posts for specifics), and 4/5ths of Agriculture is directly or indirectly linked to meat production. Add to this soil usage, which is to a great extent agriculture linked and you have close about ¼ of all emissions (bigger than either energy production or transportation).

As awareness grows in relation to the weight of our meaty tastes, movements have started to stir in the US and in some European countries, calling for meat consumption to take its due place in the list of environmental problems. In the Netherlands, for example, the Milieu- en Natuurplanbureau (MNP) called for a CO2-tax on meat to force emissions down, in view of the unsuitability of market mechanisms by themselves. Their report Nederland en een duurzame wereld helped a network of NGOs and grassroot organisations to oppose legislation allowing multi-storey pig rearing ‘flats’. It also brought support to limitations on soy-imports, taxes on meat and support for farmers who switch to environment-friendlier methods of production. Although not all ideas passed in parliament, discussions around the sustainability of meat production were brought to the political agenda in the country and will probably remain there for some time to come. Hopefully this will be followed in other countries as well.

As wrap up, although I don’t say we should all go vegetarian, I suggest if you want to fight global warming (and a number of other environmental problems too), the best thing to do is to:

• Instead of having meat at every meal, eat meat only one meal a day, and have one veggie day a week for example.

• If you will eat meat, prefer poultry (which is less damaging to the environment)

• If you will eat red meat, prefer pork

• and in all cases, but particularly if you can’t do without beef (the worst for the environment), cut the size of your chunk of meat or steak to half. I promise you won’t starve, or even go hungry. Nor will you miss it all that much. Add other things. You might be pleasantly surprised, like I was.

• Whatever you do, both in meat as in non-meat foods, if you can, go for organic produce (preferably locally grown), which besides being healthier, emits 40% less greenhouse gases, uses up 85% less energy and saves as much as 30% of water. The environment will be grateful, and so will your body

The stats of meat consumption's weight on the environment

Note: Most of the data below comes from the excellent February 2008 MO magazine from Belgium, which accounts for a certain Benelux focus. I don't claim authorship, (I only translated from Dutch and reorganised some of the information), but I thought the data was astonishing and convincing enough to try to give it some extra reading)

• meat consumption is responsible for more greenhouse gas emissions than the transportation sector, i.e., its time for a new diet: - less meat is not only good for our health, its good for the planet’s health!

• one steak generates as much CO2 equivalent emissions as 70 km in an average car

• before it gets on the plate it used up 5000L of water

• An average american eats 120Kg of meat per year. Belgians consume 102Kg, which compares to 1919 when they ate 30kg per year only (and survived fine!). The top5 meat per capita consumers: US, Spain, Denmark, France, Belgium

• Particularly worrying in this respect is that countries where meat consumption was not a great part of gastronomical traditions, are switching to western types of diet. Brazilians, Argentinians and Chileans may be consuming more meat as they grow richer, but they always did have a ‘meat tradition’. India’s increased consumption, on the other hand, has not only to do with increased wealth but also with changing dietary patterns (which, ironically are actually less healthy, since we all know that obesity, high cholesterol, diabetes, heart problems, and other health problems are linked, at least in part, to excessive consumption of meat)

• The explosive growth in production has required industrial animal farming, which put enormous strain in the environment. The FAO’s Livestock’s Long Shadow. Environmental Issues and Options (2006) points to greenhouse gases, water scarcity, landgrabs, and loss of biodiversity as effects directly linked to the current intensity and setup of meat production.

• The same report indicates that meat production is responsible for approximately 20% of greenhouse gas emissions, in CO2 equivalent. The main culprit is Methane, which is released in great quantities during digestion, especially by bovines, and Nitrous Oxide, which is released from manure. A few things must be stressed here:

  • Methane warms faster than CO2 – although its warming potential is 23 times that of CO2 if averaged over 100 years, it rises to 72 times, when averaged over 20 years, i.e, while averaged over 100 years, current meat production is responsible for 20% of global warming, in the short term the weight of methane, and therefore of meat production in global warming is still much higher. (If anyone can get precise numbers for this, feel free to send them through so I can post them)

  • Nitrous Oxide is even more powerful, at 296 the global warming capacity of CO2, and amounts to 2200 million tons CO2-equivalent.

  • To this we have to add the extra CO2 emitted from deforestation, energy usage in agriculture (warming of greenhouses, energy usage by machinery and transportation of feeds, animals and meat, etc etc).

• Furthermore the Belgian Onderzoeks- en Informatiecentrum van de Verbruikersorganisaties (www.oivo.be – Consumer Organisations’ Research and information Centre) has recently published a report (Stijgende vleesconsumptie: het milieu betaalt de prijs) highlighting that meat consumption is actually a enormously inefficient and round-a-bout way of obtaining sustenance. Obviously, meat and dairy products are important sources of protein, but when it comes to calories they are extremely wasteful:

  • On average, including all energy used along the process of production, it costs the input of 33 calories to produce 1 calorie of meat. How would you like to put your money into an investment that gave you this return of 3 euro per 100 (-97%) invested?

  • This compares to 0,46 calories to obtain 1 calorie of potatoes (+217%).

  • For growing poultry, the most efficient of meats, you need 3 kilos of feed for every 1 kilo of meat. For pork, 5,1 Kgs for each kilo of meat. For beef, it gets even worse.

• Meat production is also a gigantic water user. 1 Kg of pork requires 9700 Litres of water. Beef requires three times as much. This compares again to 150 Litres for potatoes and 106 for wheat. On average, 1 Kg meat requires 100 times more water than 1Kg fruit or vegetables.

• Since conditions for feed and cattle production are best where there is space, water, and heat, much of this production has been competing with rainforests, sensitive areas in terms of biodiversity, and small farmers supplying local markets in the developing countries who get kicked out to make way for huge expanses of agribusiness monoculture.

• In all of this bleak picture, the only solace for meat eaters is that there are ways of eating meat but be less damaging. Organic farming turns out to emit 40% less greenhouse gases (from different production methods but also because animals fed naturally produce less methane during the digestion process) and uses as much as 85% less energy. One should also think that non-industrial meat production, even when not fully organic, besides being more environmental promotes the animals’ well-being which not only is ethically sounder, but also improves quality and safety of meat.

The stats of meat consumption and food scarcity

• Ironically, meat production is the main culprit for the looming food crisis:

  • Intensive meat production depends on feedstocks like cereals (in particular maize), soy, manioc, fishmeal, and byproducts from the food industry.

  • Over 60% cereals produced, including the major ones such as Maize/Corn, Barley, Wheat and Rice, are use as feed in meat production.

  • This means 670 million tons of cereal used for meat production, half of which goes to industrialised nations, i.e. To 1/5^th of the population

  • For example, 100% of EU Maize production in 2004 was required just for the meat production in the EU, and this still was not enough for own consumption, requiring imports of extra meat. As example, the Netherlands, an agricultural powerhouse, would have needed to use up 4 times its own size to grow enough feed for its meat production. Just referring to Soy, the EU as whole had to import 39 million tons of soy, mostly from Brazil just to feed its livestock.

  • If we count the space required for the cattle itself and for growing its feed, we come to the conclusion that 78% of agricultural surface is dedicated to meat production

  • To compare, while a vegetarian person requires an average of 180 Kgs of cereals in a year to live, a meat eater requires 930Kgs. That’s 5.16 times more. And this means at least that much more water and ground too.

  • Despite a record harvest in 2007 (2316 million tons according to the Wordwatch Institute Vital Signs 2007-2008 report, i.e., 4% more than the year before), cereal stocks have reached their lowest point in 30 years. This is, however, only partly related to population growth. Although population doubled since 1961, production of cereals has tripled.

  • The problem lies in the growth in meat production, which is supplied by feeds which in 80% of the cases consist of foods that humans also eat. As example, through meat consumption, each American consumes an average of 1230 Kgs of foods, which compares to 90 Kg for the average Zimbabwean.

  • Adding to this is now the Biofuels rage which according to the Worldwatch Institute used up 1/6^th of cereal production in 2007.

  • This raises the question: Shall we feed our cars, cattle, or humans? Several UN reports show this to be a main question in a saturated world. Compassion in World Farming,an organisation, has been using this data to call for 1/3^rd decrease in meat and dairies consumption in rich countries by 2020, and 1/2 by 2050 as a way to a sustainable future.

Starting with a crazy idea V 1.1

How to: - Give people cheaper fuel

- Empower people to fight global warming while getting an extra source of income

- Decrease emissions by private individuals

- Give people an incentive to cut down energy consumption and emissions by giving everybody the chance of directly making money by doing so

- And open the possibility of increasing the income of those people worse off through simple market mechanics

Without: - Necessarily making governments unpopular

- Necessarily generating a budget deficit or increasing taxes

- Cutting down on other public expenditure

- Putting strain on the economy

- Setting binding limits to individual choices in energy use, transport etc

While: - Promoting investment in cleaner technologies

and innovation

- Promoting upgrading and renewal of household appliances and transportation equipments by households

- And generating a possible alternative source of revenue for energy companies

Context and some conditions to be filled

It is a well known fact in social sciences that individuals will give more weight to something immediately present than to something distant, either in time or space, even if the magnitude of the latter far exceeds that of the former. Due to this well documented phenomenon, individuals (and groups) will tend to procrastinate when making decisions. Unless the difference between present event and distant event is very significant, the choice will value more highly what is immediate but relatively mild or limited in scope, than what has more dramatic but is further away. In other words, when faced with the choice between avoiding mild pain today or strong pain in the future, individuals and groups will tend to choose to avoid mild pain today unless the difference in pain exceeds a given threshold, which is different depending on the person. Adding to this, the further away the ‘strong pain’ is, the less weight it will receive and, therefore, the bigger the perceived difference in ‘pain’ necessary for someone to accept milder pain today in exchange for the stronger but more distant pain.

Arguably, the current situation concerning global warming is a textbook example of this phenomenon in action. When faced with the perceived pain of foregoing comfort now in order to avoid consequences on a biblical scale in an undefined future, most of us weigh the present more and the future less. After all, one can reason we will not even be around anymore to feel the consequences, and in the meantime someone might find a holy grail sort of solution. So, when coming to a decision on what to do, our societies as a whole end up procrastinating.

Even when the scale of ‘future pain’ leads individuals to accept the need to do something, the decision on what to do is skewed towards favouring the present. Why? Because the perception of the present pain (less comfort or extra effort) is amplified while the perception of the future pain (annihilation) is diluted by distance and uncertainties like faith in technological solutions, talking down of dangers by media and lobbies, lack of confidence in individual ability to make a difference, etc.

In this way, even environment conscious individuals will tend to do too little too late. Or at least, less than what they would if global warming’s effects were directly present in their everyday life. They might perhaps switch to saving lamps and insulate their house better, but still drive to work instead of car pooling or cycling to the nearest train station. No matter how environmental one is, more likely than not, there are things we could do better. And I say this with no holier-than-thou intended because I am the first to have to admit to misbehaving on occasion. (For the record, I did a few of those carbon footprint tests and came out in most as needing 1,6 planets if everyone lived like me. Hey, at least I am not like the average Luxembourger who needs something like 12 planets according to the Human Development Index comments)

Governments face their own procrastination problems. Losing an election tomorrow, or having to face demonstrations related to price increases, restrictions imposed on movements, rationing consumption, tax increases or any other unpopular measures, will far outweigh calls against global warming, lobbying by environmental movements or the weight on politicians’ consciences due to the disappearance of a coral reef in a faraway atoll. Or of the atoll itself for that matter. It is much easier to put into question the causality links, and focus on more immediate concerns like employment and security, which are more present in people’s minds and for which it is easier to show progress. The consequences will fall to other governments far in the future anyhow.

Individuals, societies and governments face similar problems. Even if more and more people do join the ranks fighting global warming, it is and it will always be an uphill battle. It will be difficult to convince more people to act, but, perhaps even more importantly, it will be difficult to convince individuals and governments to act in the scale needed. Even people who ‘care’ will go on holidays to exotic places instead of closer to home, hesitate in using an extra sweater at home in order to put the thermostat a notch down, choosing green energy if it is too expensive, remembering to cutting the power to the TV, the PC and the DVD player instead of leaving them on standby, pulling chargers out of the power sockets when not in use,etc etc.

All in all, the focus on immediacy and the tendency for procrastination are prevalent effects of societies and individuals in general, and, whether market focused politicians and theoreticians want to or not, the market will not create an appropriate response by itself. The market is a short-sighted machine that has a strong inertia. When the consequences are long term, and therefore measures to address them also need to have a long term perspective, the market will simply ignore them until such time as they are inescapable. As the Stern Report showed, this will actually be terribly inefficient as the cost of not acting now is much higher than the cost of acting.

And that is why the market needs a helping hand to take into account future costs in its workings today. We can hope for goodwill as much as we want, and goodwill will certainly help, but fighting global warming will always be an uphill struggle unless we find some way to redress this imbalance in the market and in our mental and social dynamics.

Fortunately, what works for pain, also works for pleasure. Present ‘pleasure’ will be weighed higher than later ‘pleasure’.

Therefore, the holy grail of the fight against global warming should be to bring forward and make the benefits of taking action against global warming more immediate. If most relevant players benefit now from acting (or at least do not see costs), this will tilt the decision for more individuals and governments towards action. If the market reflects now more of the future benefits of acting, its mechanisms will start working against global warming, instead of working as a driver for more warming.

The objective, therefore, must be to make it materially worthwhile (at least to most) to make the effort of reducing greenhouse gas emissions. This means:

• Governments must be spared financial costs and unpopularity costs.

• Citizens must have the possibility of a gain, namely financial, that will be more relevant to them than the lost ‘pleasure’ of continuing as before. Put differently, citizens must have to possibility of, depending entirely on themselves, receiving a financial gain from actions that help restrain global warming. Furthermore, since an increasing amount of people do ‘care’, but feel powerless to make a difference, it would be useful if they could feel empowered in their anti-warming efforts, instead of frustrated at the lack of results.

• Business must not feel threatened as a whole, and preferably, should see moneymaking possibilities in fighting global warming not only in the long-term but already in the short and medium-term.

• We need a framework that leads the market to take into account more long-term costs and benefits, but allows it the freedom to find the most efficient and effective ways to maximise the benefits and minimise the costs.

The Proposal in a Nutshell

The proposal is, in a way, the application of an adaptation of the emissions trading scheme to the genral public. Naturally, the measure does not intend to be the solution to global warming. Measures in other sectors, technological advances and other types of measures will clearly have a role to play. However, in view of the fact that the residential sector makes up a considerable part of total emissions, in particular through transportation and residential warming, lighting and use of electrical appliances, measures that provide energy savings and increased efficiency at this level will be an important part of any package of solutions.

The scheme, which could be called ‘Flexible Redistributive Allowance Scheme’ for example, has the State calculate an average required consumption of energy by an individual for specific purposes (ex: road transportation or residential electricity and heating).

It gives each individual in an area the right to buy that amount of energy at a discount, namely through charging a lower tax on that energy. In compensation, it establishes an environmental surcharge on all the consumption above that threshold. But it does so with a caveat. Individuals are allowed to freely buy and sell these discount allowances, i.e., people who save will be able to sell their allowances at a market established price, thus making a profit, and people who spend too much will have to pay extra for that luxury. At the end of the year, the state will buy back any unused allowances at a set price, which thus becomes the lowest market price for allowances.

If we accept the idea that lower income individuals use less energy, namely because even though they may have older and less efficient cars and houses, they will probably have smaller and fewer of these, then the conjugation of these measures should provide a transfer of resources to the poorest in the economy without budget deficits or extra taxes.

If the market dries out of allowances, the State will receive extra taxes from the surcharge which will compensate the lost revenue and the extra expenses (from ensuring the buyback of unused allowances, maintenance costs, etc). If the system has been adequately set up, of course. At the beginning of each year, the system is restarted, hopefully at a lower level of available allowances in order to promote a continuous energy saving effect.

A Practical Example

Virtually al governments charge fuel taxes. Many have increasingly been using this as a sort of eco-tax. I believe, however, that this tax’s potential has been underused. It is a stick, but there is no carrot attached. And, as everyone knows, you catch more flies with honey than with vinegar.

Take road transport for example and this is how the scheme would work. This proposal tries to change this.

Let us imagine that studies have shown that every adult in the country travels, on average, 30000 Km in a year. With this information in hand the government would move to defining how much fuel an average citizen would require for these 30000 Km. Since the objective is not to stay the same but to decrease emissions, the government would calculate the fuel consumption using a relatively efficient car. Not the most efficient in the market, but something better than average. One suggestion could be to use the average consumption of B-type cars for example, but the appropriate criteria would always be a technical and political decision. In Europe, we could look to the 120 mg emission standard and work from there to define the average yearly consumption required.

For simplicity’s sake let’s say that would mean a consumption of 5 litres per 100 Km.

We could then say that on average, ceteris paribus, each person would require 1500 litres of fuel per year.

With this done, the government would define a percentage discount of the tax paid on fuel. Again, for simplicity’s sake, we could assume a discount of 10% of total tax.

All adult citizens would be able to buy fuel at this reduced rate up to the limit established, which I suggest should be close to, but below average consumption. This should minimise public resistance but still create a positive environmental effect. In the example above, people would have an allowance of 1500 litres of fuel that they would be able to buy at a 10% discount of taxes. Past this level they would still be able to buy fuel (the objective is not to ration energy after all), but they would need to buy it at a surcharge, for example 50%.

The system would then allow citizens to sell their allowances on to others, with the price fluctuating freely on the market; or to the State at a Guaranteed Buyback Price. As such, the market would establish an allowance price fluctuating between this buyback price and the surcharge value (which increases with the market price of fuel).

At the end of each year, the State would automatically buyback any unused allowances anyway, and would credit the bank accounts of their holders. It would be important to do so instead of allowing citizens to accumulate allowances as this would risk eliminating decreases in emissions one year by higher emissions in subsequent years.

In order to facilitate the functioning of the market, it would be interesting to allow for exchange brokers, a bit like those that exists for currencies. The easiest would be to allow fuel stations to perform this task. Whether to allow anyone else who wished to be registered as a broker to also do so would be a purely political decision. Allowing it would create another area for the financial market, but it would also risk speculation, which in turn might damage public perception of the system.

As with currencies, these ‘allowance exchange offices’ would be able to have a spread between buy and sell prices as way of compensation for their part in facilitating the market.

Possible caveats

• Special criteria and clear objective rules would be required in order to make possible providing extra allowances for special situations. The most obvious example that comes to mind is that of workers living far from their workplace and not having a suitable transportation alternative. People who would have to spend 3 hours using 3 buses, 2 trolleys and a train should not feel discriminated against for the simple fact of having to commute to a difficult place. Naturally, as a result, this type of commuting should then also be excluded from the calculation of average kilometres per person leading to a lower standard amount of allowances per person. Put simply, in order to guarantee that the system does its job of lowering emissions, extra allowances given to certain groups of people should be ‘diverted’ towards these groups, and not ‘created’ as new allowances for the purpose.

• Parents would also be provided with a certain amount of extra allowances per child to compensate for the probable extra travelling, for example, 300 extra litres per child. Eventually, some governments might wish to decide on the amount of extra allowances taking other issues into account, such as promoting natality. Again, these extra allowances for parents should be ‘diverted’ and not ‘created’ for the purpose.

• I personally would tend to give the same amount of allowances to individuals not owning a car as to everyone else. The extra income would be a prize for their probable lower emissions and act as an incentive towards the use of more public transport and for more sustainable travelling. It would therefore forward the general objectives of the system. Naturally, this is a politically charged issue. Others would argue for a lower allowance, or even no allowance for people without cars.

• People using lower emission transportation should be able to save allowances. This can be done, for instance by weighing fuels by emission. Ex: 1 allowance for two litres of LNG.

• In the same way, when extending the scheme beyond transportation and applying it to homes, ‘green-sourced’ energy should also be excluded. This would automatically support the development of renewable energies without direct subsidies.

What the scheme will do for individuals

• Provide cheaper fuel to cover most people's needs. Even for heavier energy users, the cheaper fuel should cover a significant part of their consumption. In the end, everyone who is not far above the average consumption can end up saving money.

• It will create awareness - Citizens will be made aware of their responsibility by seeing more clearly how they contribute to global warming and pollution in general. The allowance level will act as a benchmark making it more apparent to people how well or bad they are performing environmentally. This will make the challenge of lowering emissions more concrete, and therefore, easier to work towards.

• It will empower citizens

  • to profit directly from their efforts, both in terms of changing habits towards less energy intensive patterns as in investment in more efficient technology. It will depend solely on each person’s individual decisions how much he or she saves (either through less travelling, through travelling more efficiently, or through choosing other means of transport), and therefore, it will be in each person’s hands exactly how much ‘profit’ they might make. Obviously, this ‘profit’ can be maximised by choosing the appropriate moment to sell excess allowances, but everyone will be guaranteed at least the fixed buy-back price, so some financial gains will always be there.

  • To have a double impact in the fight against global warming - Citizens more concerned with global warming than with financial gains will be able to retain their saved allowances instead of selling them on. By keeping these allowances from the market they reduce the total allowances available and make non-savers pay the full surcharge more often. This effectively allows individuals to have a double effect by saving and by also directly sanctioning non-savers. The fact that the State will have to buy the allowances from them should actually be a good deal for the State, as the more people cash in the more people will be likely to have to pay the surcharge. (Note: any extra taxes beyond paying for the scheme’s costs should be applied also in environmental initiatives such as sponsoring switching to more efficient cars and appliances for low income groups, support for renewables, etc.)

• It will use market mechanisms to redistribute wealth to lower income groups

  • In principle, lower income citizens will be less likely to have cars, and if they do, they are more likely to have smaller and fewer cars. They are also more likely to travel less for leisure for example (as well as have smaller houses with less appliances, in case the system gets applied also to residential energy use). If one accepts this tenet, then it is clear that through this scheme, they will be somewhat rewarded for the fact that they pollute less in absolute terms. Because they pollute less they will use up less allowances and will therefore be able to receive an extra income, and this income will be higher the harder they work at saving energy themselves, namely, by changing habits.

• It will provide an extra source of income for the general public - in principle, the allowances should be set at a level that will not be as low as to discourage individuals from actually trying to be more energy efficient. This means that it should be possible at least for a middle-class person to actually profit financially from the system, given an acceptable amount of effort. This does not, of course, negate that the system tends to favour those most needy.

• It will internalise, at least in part, the cost of polluting. In this sense it is an approach to implementing the polluter-pays principle. The cost to society of fighting global warming is purposefully unevenly distributed so as to penalise more the higher polluters (either through demanding a larger improvement in efficiency, or through taxing them for the luxury of polluting).

for governments

• It leads to internalisation of pollution costs in the most efficient way, i.e., through the market. It does not require the State to micromanage this internalisation through legal acts and a heavy bureaucracy. Furthermore, the market penalises bad performers, instead of the State having to impose legal challenges in court, or instituting administrative procedures.

• It can be set to be a zero-sum game if that is deemed necessary – It is a method for governments to lead the fight against global warming which does not cost an inordinate amount of financial resources. It is a matter of finding the equilibrium between the amount of allowances, the buyback price, and the levels for the discount and the surcharge that:

  • will have the total cost of the system equal the extra income generated, (i.e., the administrative and technical costs, the cost of buying back the allowances at the end of the year, and the decrease in revenues from the discounted price of fuel equal to the total surcharge paid). Notwithstanding, the State might weigh the calculations positively with estimates of the value-added from the expected decreases in emissions. In this way, although it will not be zero-sum in financial terms, it will include the non-financial gains as part of the calculations.

  • will provide enough of a carrot and of a stick to achieve the desired improvements in emissions and fuel usage.

• It is a scheme that requires a limited amount of administrative and technical resources – once the system is set, all should work pretty much automatically. The only administration required would concern assessing requests for extra allowances and acting as clearing house for the allowances market. In technical terms, the State only needs to create and maintain a database with the allowances, through which they can be exchanged, and a network of exchange points (namely in fuel stations), which might even be paid for by the ‘brokers’. Frequent statistical studies will of course also be required.

• It will lead to a higher usage of public transport leading to extra revenues for public transport organisations and a better usage of transportation infrastructure. Overall, one would expect a decrease in the saturation of roads and therefore a lower need for investments in them (in maintenance, in construction and in upgrading). Some areas will also reach a situation where where public transport infrastructure and services will reach critical mass and/or economies of scale, thus increasing their efficiency.

• It will tend to lead the economy towards less energy and carbon intensive paradigms (see below what the scheme does for business).

for businesses

(note: this scheme will be most beneficial for businesses when it is not restricted only to transportation but is also applied to residential energy usage)

• It will lead to extra demand for newer and more efficient products, increasing the rewards for innovation that cuts down energy usage and emissions. Especially if the system gets applied to electricity and heating, the system will make viable and more attractive many investments which would perhaps be put off otherwise. It basically makes it more profitable to save, and more expensive not to do so.

• It will reward innovative companies who supply these more efficient products

• It will create a new group of financial products and attached business opportunities.

• It will mean that the population shares more of the burden of decreasing emissions, instead of demanding businesses to do it alone.

for the environment

• Awareness building in relation to how people harm the environment and how they can avoid doing so.

• Lower emissions in a short period of time without necessarily heavy investment, draconian restrictive measures, or unknown technological leaps - ideally the system should be set to give less allowances than what would be necessary to maintain the current situation. Decreasing emissions is, after all, the objective. Therefore, either through higher awareness and altruism or through simple market dynamics and greed, emissions would tend to be decreased. If they are not, then the State will have extra income, which it can then direct towards other measures lowering emissions, i.e., the environment either wins, or it wins.

• Especially if applied to the home and not only to the road, it should lead the economy in the direction of less polluting sectors of the economy

• It should promote environment-friendly innovation