Global Energy Rewards
Global Energy Rewards
GER gives energy consumers rewards if they reduce their emissions of green house gases by reducing their energy consumption below a set level per head or if they reduce their consumption from previous levels. Consumers who use more than their allocated level pay more for their energy, which in turn funds the Energy Rewards.
GERs are electronic tokens that are transferable and can be sold, but may only be redeemed (ie spent) on designated projects that will assist in the reduction of greenhouse gases. These could range from the purchase of energy saving devices for the home through to direct investment in sustainable technology development.
The system helps to change consumer behaviour by encouraging people to consume less; by discouraging consumers from using more than their allocation because of higher prices; plus it increases energy investment by requiring that the extra funds generated be spent on sustainability measures.
GER will give billions of consumers funds that may only be spent on projects that help to reduce greenhouse gases. The amount of funds will vary between countries but it can be set at whatever level is required to fund the infrastructure needed to reduce greenhouse gases and it can be set at whatever level each country deems desirable.
GER requires no global agreements but does need governments to facilitate the system. A government imposes a surcharge on all greenhouse gas producing technologies. It also legislates that this money must be returned to consumers via a rewards program. How the money will be returned will be the role of the GER which could be controlled by an elected board where the electors are all consumers who join in the GER system. All monies collected in a country can be spent within that country, so it requires no transfer of funds between nations. As the system enhances efficiency and productivity of energy for each country that adopts it, GER is likely to find wide acceptance.
The system will create a market for greenhouse-reducing technologies which will all compete for funds for their project. Projects have to sell themselves on economic as well as greenhouse reducing ability to potentially billions of customers. It can be expected that the methods that reduce greenhouse gases for the least cost will be the systems that will get the most investment funds.
The generation of funds will contribute to the reduction in greenhouse gases because people only earn rewards if they reduce their energy consumption. Also high consumers of energy will be encouraged to reduce their energy consumption because of higher prices.
The concept behind GER is being trialled for water at the not for profit www.waterrewards.org
Economic Assertions for Rewards vs Permit Trading
Increasingly, trading schemes are advocated as the economic tool of choice to allocate public goods efficiently and to alleviate public bads. Two well known schemes are Carbon Permits for reducing greenhouse gases and Water Permits to allocate water. These schemes work by creating artificial commodities to represent the problem being solved such as the limited supply of water and the high level of greenhouse gas emissions. For water, a cap is set for the consumption of water from sources such as rain and ground water. The cap is then apportioned between members of society and the allocations can be traded. For greenhouse gases a cap is set on emissions which are represented by carbon permits (the allocations allowing people to emit greenhouse gases). These permits can be generated by different activities that either reduce the amount of carbon emissions or that produce energy or other products which are emission-free.
A Rewards scheme works in a different way. People are paid to reduce their consumption, with payment coming from a surcharge on those who use excess water or whose activities emit greenhouse gases. Rewards may only be spent (or redeemed) on ways to solve the problem being addressed.
A measure of economic efficiency for both Permit Trading schemes and Rewards schemes is the total amount society pays to achieve the desired result. For water it is the total cost paid by the community to remove the need for water restrictions. For greenhouse gases the measure is the total cost to reduce greenhouse gas emissions to the desired level.
It is asserted that a Rewards scheme is at least twice as economically efficient as a Permit Trading scheme, as measured by the total amount of money needed to achieve a desired result.
Rewards schemes are the more economically efficient method because:
They pay people to help achieve the desired result. That is, there is a direct economic benefit to the consumer from reduced consumption.
They change behaviour through both higher costs and through incentives.
They foster and enhance trading systems for technologies that help solve the problems being addressed.
They deal in real products that are not subject to manipulation and to abuse which may in turn cause economic inefficiencies.
They ensure that money collected over and above the cost of production is spent addressing the problem being solved.
They cost less to administer.
It is asserted that a Rewards scheme will require less than half the amount of money to be spent to solve the problem being addressed, compared with a Permit Trading scheme. For example, if society wishes to reduce carbon emissions to 20% of the current level then a Rewards scheme will produce that reduction for less than one half of the cost of a Permit Trading scheme. Furthermore, if an urban community wishes to remove the need for water restrictions then a Rewards scheme will achieve the desired result for one half of the cost of a Permit Trading scheme.