Report

Teaser, summary, work performed and final results

Periodic Reporting for period 1 - PCCE (Pricing carbon with a dedicated currency to empower economic agents)

Teaser

When it comes to reducing energy consumption and fighting climate change, a classical economic problem occurs, that of free riding. Free riding happens when those who benefit from consumption of certain goods or services do not take the full cost and consume excessively of...

Summary

When it comes to reducing energy consumption and fighting climate change, a classical economic problem occurs, that of free riding. Free riding happens when those who benefit from consumption of certain goods or services do not take the full cost and consume excessively of that good. When it comes to fossil fuel use, we are all free riders: we all benefit from stable atmospheric CO2 concentrations, but rarely pay to maintain this stability (e.g. when emitting CO2 from heating and transport using fossil fuels). As individuals, we ask “why should I pay more for an electric car when my neighbour drives a diesel or SUV?” Companies, when asked to pay to offset emissions, fear loss of competitivity and threaten relocation and job cuts. Environment ministers may advocate high-level action but industry ministers counter that they are not affordable.
Another important barrier of many energy projects is the so-called rebound effect. “Buy a more fuel-efficient car, drive more1”. This is a significant consequence of projects about energy efficiency (EE), often underestimated. It characterises the negative relationship between technology and consumption2; technological improvements in EE induce increase in demand and therefore production, and consequently energy consumption.
Free riding and rebound effect critically undermine the Paris Agreement3, which seeks to limit global warming increase to 1.5°C, and EC policies that aim at reducing energy consumption. Large and attractive opportunities exist to reduce energy consumption through change of users’ behaviour.
Several economic approaches and business models (regulation, taxes, quotas and ETS) have been implemented to date. Despite all these we are unable to reach the objective of energy reduction. Even if existing country commitments are all met, global temperature is forecasted to rise by 2.6-3.1°C4. The risk for humanity due to climate change remains high, and the consequences expensive. Time is getting short to find the appropriate approaches that will allow to rapidly overturn this trend. The October 2018 IPCC report is calling for a radical change.
Can we really incentivize voluntary actions to change energy behaviour addressing the barriers that restrict long- term adoption, with a dedicated currency, an economic tool never tested so far ?

Work performed

450 is the SME operating and promoting a digital platform for the management of the CO2 digital currency (CO2s) based on the CO2 reductions achieved by a CO2Account owner.2028A CO2Account is held in the platform to register the CO2 consumption, to calculate the yearly reduction, and to2028provide the relevant credit, expressed in units of CO2. CO2 is the alternative digital currency which rewards the account owner by the verified reduction of 1 kg of CO2 emissions through the reduced use of fossil fuel in heating and/or transport. CO2s can be credited to, and debited from (notably with CO2Cards -payment card, or with a mobile App) the account. The CO2/€ exchange rate prices carbon.
450 is thus a “carbon central bank” with the aim of incentivizing millions of economic agents to reduce their CO2 emissions through currency innovation.
CO2 Coins is used in as a complement to Euro (thus not a replacement), and can be exchanged to euros, or spent within a ecosystem of players who accept it for payments. The widening of this ecosystem of players ensures the success of the CO2s and their wider acceptance by millions of users, resulting in a systemic change.2028In this feasibility study we prepared the expansion of CO2 coin usage by:
1. Enhancing current service: We designed a new website and neobanking mobile app simplifying the User eXperience (UX) to make it more attractive and engaging in the long term. This should also facilitate the circulation of CO2s among users and non- users (to enrol them -virality of the application).
2. We designed a new product, in the form of a CO2 loan to replace old fioul boiling heating systems with non CO2 heating systems (heatpump or biomass boilers). We teamed-up with 2 SMEs to build this CO2 Loan product, and are currently in discussion with a large industrial player for its commercial distribution. 2028
3. We continued our networking with regional stakeholders (who needed to promote climate action to their citizens) to promote and disseminate the service to a wider audience.
4. We registered on various blockchain our CO2 coin emission, drafted a CO2 coin white paper that would serve as a basis to create a CO2 foundation that would control CO2 coin emission, and we decided not to create a CO2 Coins Initial Coin Offering,

Final results

The sole platform for a new currency where supply of CO2s is totally decentralized, as it is created by individuals and businesses successfully proving emissions reductions as follows:
• A household or business opens, free-of-charge, an online CO2Account (at www.compteepargneco2.com);
• Online tools calculate baseline emissions (preceding 2 years-based on uploaded fuel bills and mileage records) from heating and transport, and simulate potential emissions reductions;
• Account holder invests in new heating system with lower CO2 emissions, insulation or less fossil fuel-transport);
• Online tools calculate and verify achieved reductions (compared to baseline,and according to UNFCCC and Government approved methodologies) based on new receipts submitted by the Account holder. CO2 reductions will be registered on a blockchain to avoid that the same household request many times to different operators CO2 coins for the same reductions (multi CO2 emission for the same reduction).
• the Account is credited with CO2s equivalent to the calculated reduction (1 tCO2 abated = 1000 CO2s). For example, replacing a combustion engine vehicle with electric, reduces CO2 emissions by approx. 2t thus credits of 2000 CO2s annually, for 10 years as long as the saving is maintained.
• A CO2card -pre-paid MasterCard- transforms CO2s to Euro (50 € per 1000 CO2s) allowing spending CO2s in shops. Alternatively, CO2s can be used for mobile payment, or may be exchanged over social networks.
As more households and businesses use CO2s on a daily basis, the more CO2s need to be generated, implying that more CO2 emissions reductions need to be produced. Increased usage of CO2s implies increased reductions in CO2 emissions, and thus an efficient mean to fight climate change. Monetary innovation could be an economic more efficient then those tried so far (regulation, taxes, quotas and ETS).

Website & more info

More info: https://www.compteepargneco2.com/.