By Lars Aagaard, 4. April 2007
The consumer no longer has any CO2 related incentive to reduce electricity consumption, according to one of the arguments in the debate on the European CO2 quota system. The Danish daily newspaper Information had a leader on the subject out yesterday. But the Danish Energy Association still believes that the green, energetic and thoughtful consumer has an important role to play.
The EU's internal quota system lays down limits on CO2 emissions for those companies that are covered by the system. Broadly speaking, this means major industries and light and power companies.
The quota system offers many advantages. First, it creates a ceiling for CO2 emissions. Second, the system is flexible within the established ceiling. This makes it possible for companies that need quotas to buy them from others that can gain a business advantage by selling the quotas rather than using them themselves. As the major industries have generally been allocated far more quotas than light and power companies, the typical scenario is for industries to sell part of their quotas to light and power companies.
The system is also flexible on an international basis. When the weather is dry in Sweden and they need electricity, Danish light and power companies buy quotas and use them as a basis for electricity production that is then sold to Sweden. They buy such quotas from other European companies that have lower CO2 emissions.
But in spite of the quota market, there are still important tasks for the green consumer. The EU's existing quota system does not include the transport sector, for instance, and this would be an obvious area to do something about. Replace the old petrol guzzler with a new vehicle that uses less fuel, or cycle to work – these measures would have a direct influence on the CO2 pollution of an atmosphere under threat.
The private consumer also has other opportunities to combat CO2 outside the quota market. Private gas consumption is another area not covered by the EU's quota market. By replacing an old gasfired boiler, the atmosphere could be relieved of 5 tonnes of CO2 a year. Quite considerable when we consider that every Dane is responsible for emitting an average of 10 tonnes of CO2 a year.
Air travel is also outside the quota system so reductions here would also have a direct effect.
But the consumer can make a difference even within the framework of the EU's quota system – by buying up quotas. This would mean that the industries and light and power companies that are entitled to CO2 quotas and would otherwise have bought them would be obliged to limit their CO2 emis-sions.
Even saving on electricity, which is in principle within the quota system framework, can actually be important. While it is true that consumers' savings here and now would lead to unused quotas, in the longer term the frugal consumer could help to decrease the demand for electricity and thereby also for CO2 quotas in Europe. This would make it easier for politicians to set up more rigorous targets for the CO2 quota ceiling after 2012.