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Rewarding consumer behaviour

By Kevin Cox - posted Tuesday, 5 September 2006

Carbon Credits/Permits (carbon taxes) are part of the solution to reducing greenhouse gas emissions. But we need to do better than just reduce emissions - we must reverse emissions and start to take greenhouse gases from the air.

There is a high probability that Sydney, New York and London will be among the cities flooded in the next century by the melting of the Greenland ice cap even if there are no more emissions. It makes economic sense to invest in keeping the ice in place. The real estate value of the area that is likely to be flooded multiplied by the probability of it being flooded is a very large chunk of change.

This means we should be thinking in terms of negative emissions not reduced emissions. We need to investigate and fund research into ways of increasing natural carbon fixing mechanisms. We need to have energy sources that can remove more greenhouse gases than they put into the atmosphere.


We need investment funds for research and development that are continuous and directed to the right places. Carbon credits and permits can provide the funds for R&D but we need a market mechanism to direct the flow of funds. We also need some way of changing consumer behaviour.

One way achieving both these goals is to use the tax collected from carbon taxes in a positive feedback loop where consumers are rewarded for changing their behaviour and the rewards they earn must be spent on greenhouse gas reduction investments.

This can be done by converting carbon taxes into rewards to give to people with low greenhouse gas behaviour. For example, a person can earn rewards by buying a public transport annual ticket, by not owning a car, by using less than the average amount of energy per person in their house and so on.

Rewards have a value and they can be transferred and sold BUT they can only be spent on greenhouse gas reducing technologies. Among other things they could be used to grow trees, or to develop bio fuels, or to fix carbon from the air, or to buy solar cells.

This approach will produce a virtuous feedback loop. Those that save greenhouse gases will be rewarded with funds that they can only use on ways of saving more greenhouse gases. Importantly we will have a market mechanism to direct carbon taxes to the technologies that give the best commercial return while still reducing greenhouse gases. This is better than governments and scientists trying to pick winners.

Rewards are a mechanism to transfer funds between consumers rather than being a punitive tax. This means it is possible to have a high tax without damaging the economy and without destroying existing industries. This is because the money is not diverted to consumption or unproductive activities but is used for investment in clean energy technologies. It is possible, if the system is designed well, that there is a boost in economic activity because energy consumption dollars are directed towards energy investment


The system can be put in place in any country and does not need agreements on carbon emission targets. It could be done at any level of government from local government through to the United Nations and it can be tailored to local conditions. It need not affect our export industries because the tax can be a local one on energy produced and does not affect the price of say export coal. The tax can be adjusted to provide the investment necessary to achieve negative emissions over a period of time. We can measure how well we are doing and either increase or decrease the tax.

The systems triples the economic effect of the single tax. There is the disincentive to use dirty energy, there is a reward in changing behaviour to use clean or no energy and there is a source of funds for investment in clean energy.

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About the Author

Dr Kevin Cox is an entrepreneur. Previously he has taught Information Systems in Canberra and Hong Kong and worked with computers for various multinationals in Australia, the USA and Indonesia.

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