emission trading through a complementary currency system

We have found that an individual climate gas quota is needed for each of us and that this can be traded. Now a currency is needed for this newly created market. In the medium term, of course at global level, but for the time being also at European level, we should start by introducing a complementary monetary system for greenhouse gas emission - the "ECO" Earth Carbon Obligation).

How does this work in detail?

1. Introduction of the ECO as CO2-equivalent

First of all an Agreement is needed as multinational as possible, to introduce this complementary resource currency, called the parallel currency "ECO", which represents the CO2-equivalent of our consumption. This is needed because our normal money is not able to reflect our actual carbon footprint.  Because everything has two prices, one economic and one ecological. These two values do not necessarily have to correlate. An item can be produced economically for a very low price, but it can be very damaging to the environment.

2. Establishment of private climate accounts

Since all world citizens have an equal right to use the resource "atmosphere" by emitting greenhouse gases through their personal consumption, every citizen of full age receives a personal climate account at the climate bank to record and account for his consumption. This account is topped up monthly in the form of an agreed ECO amount equal to each person.  Just as with our conventional account, we also have to ensure that it does not run out through unreasonable consumption.

3. Establishment of ECO clearing accounts for industry

The commercial enterprises receive an ECO clearing account to be able to pay for fossil energies with the corresponding amount of the parallel currency in addition to their price in normal money:

• the raw material producing industry pays to the climate bank
• fossil energy-consuming companies pay to the raw materials industry
• all entities involved in production, transport and other sub-processes along the entire value chain, calculate the amount of ECO consumed for their sub-process and invoice this amount to the next entity.

4. Establishment of a climate bank

Personal climate accounts or commercial Clearing accounts are managed by the climate bank. This bank transfers exclusively to natural persons a monthly equal amount of the parallel currency ECO. This climate-compatible budget can:

• be consumed free of charge itself
• sold proportionately to someone who wants to or has to consume more than the quota of greenhouse gas to which he is entitled
• if necessary, topped up by purchasing from someone who does not (or does not need to) use his or her entire quota.

5. Establishment of a climate exchange

Since citizens are entitled to trade their ECO, a climate exchange will be established for this purpose. Even ECO that are not used can be sold for money or additionally required ECO can be purchased. Companies are not allowed to trade on the climate exchange in order to prevent distortions through incorrect pricing for the purpose of enrichment. The resource currency ECO should not degenerate into an investment or speculative object, but should reflect the real ecological value of our consumption. This removes the incentive for industry to charge higher ECO amounts than those actually spent. On the contrary: this ban gives companies an incentive to buy raw materials and products from preliminary stages for as little ECO as possible and to optimize the energy efficiency of their own processes in order to pass on as little ECO as possible and thus be able to place their own products on the market more attractively. The operator of the climate bank and climate exchange could be the United Nations (UN), for example.

6. certification of fossil primary energy sources

The fossil fuels coal, oil and gas do not contribute to the greenhouse effect to the same extent. In order to be able to compare them nevertheless, the term CO2-equivalent (CO2e) was defined. It describes a unit of measurement for standardizing the climate impact of the various greenhouse gases in relation to CO2. The different CO2-equivalents also result in different ECO costs. From now on, the ECO amount of the subsidized amount of fossil energy sources must be transferred to the supranational climate bank. The amount of fossil fuels extracted is subject to a market economy limitation due to the closed loop system of the resource currency, in which no more may be spent (extracted) than can be paid with the limited currency. Within this cycle, the costs for the extraction of fossil fuels must ultimately be covered by the payment of the consumers. The resource currency circulates in a closed system, between the climate bank, the climate accounts of the consumers, across all instances of value creation, up to the extraction of the fossil primary energy sources. A limitation of emissions, from now on, results automatically, through the reduction of climate-damaging consumption, due to the rationed parallel currency ECO.  

What are the advantages? 

• The ECO price of the products or services is determined automatically and simply by market economy mechanisms.
• For this reason, the concept manages with a minimum of administrative measures by the state, because it very effectively tackles the bottleneck of the entire value chain, namely the promotion of fossil fuels.
• The parallel currency creates a desirable transparency, which means that people can now also assign a price to the CO₂-equivalent of their consumption. In this way, they value what they have in a language they understand.
• The speed of the regulatory mechanism, results from the immediate impact of changes in demand, on the production processes of the industry and consequently on emissions.
• The alternative climate concept is very detailed, because really all instances of value creation, down to the smallest screw, are included.
• It is exemplary fair, because every citizen is allocated the same emissions budget, in the form of the parallel currency. There is also a social justice aspect in the fact that it can be traded. There is a balance between poorer and richer people, which helps to narrow the prosperity gap.
• And it allows a maximum of personal freedom of choice, but within clearly defined limits for everyone. After all, every citizen decides for himself for which consumption his personal budget will be used.

But the truth is also true:

It is true that the necessary transformation of industry requires investment, which is of course passed on to products via the value chain and thus to end consumers. However, the ECO does not require any ADDITIONAL regulatory increase in the price of our consumption, as it is with the CO2 tax and the EU ETS.

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