the [city carbon card] a feasibility study · 2008-06-04 · 1 management summary_____4 2 the...

The [City Carbon Card] A Feasibility Study

Title: The [City Carbon Card]; a Feasibility study

Version: 1.1

Date: May, 20th 2008

In assignment of: Belfast City Council and the Points Foundation

Subcontractor: Kampers van Hilten, Amsterdam & Kragerø

Copyright: Points Foundation, Amsterdam, 2008

of 2 Kampers van Hilten May 19nd 2008

Content 1 Management Summary ___________________________ 4

2 The challenges of our time_________________________ 5 2.1 Important relevant policy arena’s____________________________5

2.1.1 Climate chance and energy use_______________________________________ 6 2.1.2 Waste avoidance and separation ______________________________________ 6 2.1.3 Cleaning regional transport __________________________________________ 6 2.1.4 Strengthening regional economies_____________________________________ 7

2.2 Government instruments___________________________________7 2.3 Managing citizens’ behaviour _______________________________9

2.3.1 Householders buying _______________________________________________ 9 2.3.2 Businesses and sustainability _______________________________________ 10

3 Elements of a new approach ______________________ 11 3.1 Loyalty cards ___________________________________________11

3.1.1 Tesco Clubcard and Nectar _________________________________________ 12 3.1.2 NU Card (NU Spaarpas)____________________________________________ 12 3.1.3 Carboncredit ____________________________________________________ 14

3.2 CO2 offset _____________________________________________14 3.2.1 Green Credit Cards _______________________________________________ 15

3.3 Domestic Tradable Quotas ________________________________16 3.3.1 Domestic Tradable Quotas__________________________________________ 16

3.4 Complementary Currencies ________________________________17 3.4.1 Guernsey _______________________________________________________ 17 3.4.2 Commercial Exchange Networks and barter ____________________________ 18 3.4.3 Regiogeld_______________________________________________________ 19

3.5 Prepaid systems ________________________________________19 3.5.1 The Octopus card_________________________________________________ 20

4 The [City Carbon Card]; a first concept ______________ 21 4.1 Objectives _____________________________________________21 4.2 Concept _______________________________________________21

4.2.1 Which products, services and retailers are allowed? ______________________ 22 4.3 Target groups __________________________________________23

4.3.1 Citizens ________________________________________________________ 23 4.3.2 Retailers________________________________________________________ 23 4.3.3 (Semi)governmental services _______________________________________ 24

4.4 The Marketing __________________________________________24 4.4.1 Identity ________________________________________________________ 24 4.4.2 Place __________________________________________________________ 24 4.4.3 Distribution _____________________________________________________ 25 4.4.4 Promotion ______________________________________________________ 25 4.4.5 Price___________________________________________________________ 25

4.5 Organisation ___________________________________________25


4.5.1 Steering group of Founders _________________________________________ 25 4.5.2 Potential partners ________________________________________________ 25

4.6 Business model _________________________________________26 4.7 ICT ___________________________________________________26 4.8 Funding _______________________________________________27

5 Next steps ____________________________________ 29

Version management

version Date changes comments

1 May 5th, 2008

First complete version

1.1 May 21th, 2008

Adding paragraphs 1, 4.6 and 4.7

Changed paragraphs 4.2 and 4.4

After review by Belfast city council


1 Management Summary Modern societies cities face several challenges that need the involvement of all stakeholders, including citizens. Amongst others, important challenges include: climate chance, waste avoidance and separation, clean transport, and the strengthening of our regional economies in a flattening world.

Governments have several legal, financial and social instruments to encourage sustainable behaviour. These instruments are not enough to change the citizens’ behaviour. Therefore, the government is looking for new instruments. An incentive scheme can be this instrument. The core of the challenge is to change the citizens’ behaviour towards buying CO2-slim products, and towards the avoidance, reuse and separation of waste.

Looking for effective ways to successfully influence the behaviour of citizens, we can learn from successful approaches, like loyalty cards, CO2 Offset programs, Domestic Tradable Quota, prepaid systems and exchange systems.

We propose to introduce a [City Carbon Card] that aims at reducing the environmental impact of consumption in several cities. Focus points are the reduction of CO2, and the reduction and separation of waste. The program will realize a strong positive incentive on sustainable behaviour. Each Pound converted into a Carbon-point has a triple environmental-impact.

Consumers will earn carbon-points as a reward for green buying, separating waste, or using the public transport. Consumers can also buy carbon-points with a bonus, thus increasing their green buying power. Consumers can spend the points on green products. Shops can use the points to buy products themselves, or conditionally they can change the Carbon points back to traditional money. The tone of voice of the program has to be positive.

Green products and services are products with an environmental label, a low carbon value or containing little waste. The list with green products, services and shops, is a strong communication carrier that will function as a label for large parts of the consumers. The information on the potential purchase or behaviour has to be available at the moment of purchase.

The target groups are the householders in the city, retailers selling green products and (semi)governmental services, like the public transport companies, the waste companies, and the city marketing organisation.

To decrease the costs of further research, setting up and launching the card, it is feasible to apply for EU funding. We propose to execute the project in 3 to 5 North-West European Cities, with a size of 200.000 to 1.000.000 inhabitants. The partner cities need to have a strong commitment. Interreg has several budget lines that could co-fund 50% of the development costs. A steering group of Founders is responsible for the first development. After a kick start, the card will be independent, facilitating the different target groups at a fair price. The next steps are: writing a draft proposal, finding the partner cities and writing the Interreg proposal.

Rob van Hilten and Edgar Kampers, May the 20th 2008


2 The challenges of our time This feasibility study is written in assignment of the Belfast City Council and the Points Foundation (Amsterdam). This chapter describes the challenges for cities in our times. The second chapter shows several approaches to successfully influence the behaviour of citizens. In the last chapter we show the first ideas on the ‘The [City Carbon Card]’, a reward system for householders, retailers and cities.

2.1 Important relevant policy arena’s

Many current problems are global in scope. Our products and services come from international chains with tentacles all over. Climate change, unsustainable use of natural resources and the decline in biodiversity are just a few of the results.

Cities, places were hundreds of thousands of people gather together, are linked with specific problems, like waste, congestion and health problems.

In this feasibility study we will start with a short introduction of some of the main challenges for cities:

- Climate chance and energy use

- Waste avoidance and separation

- Cleaning regional transport

- Strengthening regional economies


To solve them we need:

- A behavioural change of householders

- To strengthen the social fabric building strong but open communities

- Strengthen local businesses to compete in the globalising world.

2.1.1 Climate chance and energy use

Climate change is amongst the greatest challenges of our time, and needs urgent solutions. More and more the general opinion is that CO2 will dominate global consciousness, government policy and business accountability for the next 50 years. Climate change can only become controllable when all stakeholders are involved, including citizens. New routes have to be found to incorporated citizens in decreasing CO2 offset by changing their behaviour.

2.1.2 Waste avoidance and separation

The European Union’s Landfill Directive says that by 2010 the UK will have to reduce the amount of biodegradable waste going to landfill to 75 per cent of 1995 levels. By 2013, that figure will drop to 50 per cent, and by 2020, the UK will only be allowed to send 35 per cent of 1995 levels of biodegradable waste to landfill. Despite the government’s efforts to raise landfill tax to £15 per tonne by 2005, rising by £3 per year after 2005 to a maximum £35 per tonne, government policy shows little sign of getting to grips with the problem.

All European countries handle waste on their own way. Belgium and the Netherlands have developed high standards for separating and reusing waste, which bring the above targets in sight. But: by consuming more, the householders produce more and more waste yearly. Only Belgium seems to have achieved a slight decrease of annual waste production. We urgently need instruments to avoid waste, and to improve reuse and separation.

2.1.3 Cleaning regional transport


The car is a normal part of our daily lives. We use it for work and pleasure. It gives freedom and flexibility. Access to cars means an upward social mobility for many. At the same time, private cars in city areas cause environmental and health problems. Cars drive on fossil fuel, contributing to global warming. There are also energy and raw materials needed for production, maintenance and waste treatment. Cars use parking space, absorbing land for recreation and green in the city. Cars emit micro dust and NOx. Furthermore they are noisy; the share of houses suffering from sound harassment (> 50 dB) increases. It is not getting better: the number of cars and the annually driven kilometres still increase.

In most of the cities, public transport is the main alternative for the car. Other alternatives are (electrical) cycling, taxi, car-sharing, and car-rental. To stimulate these alternative transport modes we need new and positive ways of promotion.

2.1.4 Strengthening regional economies

In general, free trade increases economic prosperity, enhances civil liberties and leads to a more efficient allocation of resources. This leads to lower prices, more employment, higher output and a higher standard of living.

But in a world flattened by globalised trade, outsourcing and supply-chaining, not all regions are winners. The level of trading activity in every part of the industrialised world is determined by the amount of money in circulation, money which generally flows into the region from outside. Unless that flow is adequate even jobs that local people could without any outside resources will be left undone.

Getting in more national currency is the most used strategy to cope with this. This can be done by selling more to other regions, attracting more tourists, getting more subsidies, etc. In practice this is difficult because every region is trying to do the same. If the region succeeds in selling more of its goods and services on outside markets, the additional money it earns will tend to flow out again as fast as it comes in. It is therefore better for the region to try to stop national currency from leaking away by making more of the goods locally. But even then, the link between the level of economic activity and the flow of money from outside remains; Only the ratio has changed. A region’s best option is therefore to make local transactions independent of the level of the external money flow by using a regional currency to carry them out.

2.2 Government instruments The government has an extensive arsenal of legal, financial and social instruments at its disposal with which to encourage sustainable behaviour. Over the last decades, the use of these instruments in the field of environmental policy has greatly changed. In the early 1970s, increased environmental awareness rapidly led to effective environmental policy, consisting mainly of regulations and legislation for industrial polluters. The emphasis was on end-of-pipe solutions and a top-down approach, starting from within the government.


In the 1980s, it became more and more apparent that many of the environmental objectives were unattainable without the efforts of civilians and consumers. The government therefore reconsidered the educational and informational activities it had aimed at the general public. Those activities endeavoured to lend depth to environmental policy. The underlying idea was that if civilians became aware of the effect of their actions on the environment, this would lead them to change their behaviour. Evaluations of the informational campaigns revealed that the knowledge of a large number of civilians/consumers about environmental problems had grown, as had the understanding that everyone must participate. However, this process of giving depth to the policy only resulted in changed behaviour in certain aspects.

That is why a two-pronged policy was adopted: in addition to the informational activities, a pricing policy would also be used as an instrument for influencing consumer behaviour. The costs of environmental pollution would have to be reflected in the prices of products. Moreover, the informational activities would be aimed more at tangible behavioural perspectives; for example, clearer environmental labelling on products would make it easier for consumers to make the right choices. However, the implementation of these policies resulted in numerous practical objections. Although a number of concrete steps were taken, such as the introduction of an energy label, the European flower label and duties on fuel and waste, on the whole, the environmental behaviour of civilians/consumers continued to prove difficult to guide.

The modern arsenal of instruments that governments can use is:

- Laws, licenses, taxes and fines, are the restrictive ways to steer the actions of citizens and businesses. An innovative example is ‘diftar’ (differentiated tariffs) in which citizens are charged for the amount or weight of there waste they. Diftar is a disincentives that was introduced in Belgium and part of the Netherlands as answer on the landfill directive and the failure to meet recycling goals. Furthermore, this punitive charging – certainly without corresponding action against those responsible for packaging, and without safeguards that prevent dumping – will influence the already distant relationship between governments and citizens.

- The government also conducts communication and information campaigns. It raises the knowledge and the attitude, but most of the time not the behaviour. By now, most people are aware of the fact that the environment and sustainability are serious issues. They often also know what they can do to help solve those problems, both as civilians and as consumers. In practice we see a very strong gap betweens humans in their role as ‘civilians’ and ‘consumers’. Civilians say that they are positive about various measures. However, as a consumer, they barely act, if at all. The behaviour of civilians/consumers is much less sustainable than one might expect, based on their knowledge and attitude.


- Last there is positive stimulation, with grants and contests. Examples are tax deductions and subsidies for environmental investments on insulation or household renewables.

One of the barriers that civilians/consumers encounter in changing their behaviour is that the desired behaviour is often ‘punished’. This is due to the social dilemma: “I can decide to drive less to reduce traffic congestion, but if I am the only one, it doesn’t help; it would be nice if everybody else did it so I can drive without barriers”.

These present governmental instruments seem not to be enough in changing citizens’ behaviour. Where many instruments are situated on the supply side or at the information level, there are hardly effective instruments on the demand side. Therefore, the government is looking for new and innovative instruments. An incentive scheme can be this instrument.

2.3 Managing citizens’ behaviour The core of the challenge is how to change the citizens’ behaviour towards the procurement of CO2-slim, and towards the avoidance, reuse and separation of waste as much as possible.

2.3.1 Householders buying

The purchasing power of consumers increases further and further, broadening and deepening the amount of products and services we buy. And thus, the amount of CO2 and waste grows at an equal speed.

In recent years the market for environment-friendly products and services has grown, but it does not go fast enough. The so-called pioneers and trendsetters are largely responsible for this growth. However, the trend-followers, being the largest group of consumers, do not structurally purchase sustainable products. They may do so occasionally and/or for a limited number of products.

Similarly the patterns of daily behaviour (the use of goods and services rather than the purchase) of most consumers are unsustainable. Civilians will have


sustainable thinking and behaviour, but in isolated issues, not in an integrated manner. For example: they do use public transport to go downtown, but never separate waste fractions, or they do buy saving bulbs but dry their clothing in the electrically heated dryer. In all, we can say that most consumers have unsustainable consumption patterns.

There are a number of causes why consumers do not consume sustainable goods and services, among others:

- Sustainable products are usually more expensive than the non-sustainable alternatives due to the small market mass.

- The information about the sustainability of products often does not meet the specific needs of the trend-followers. Furthermore information campaigns do not lead to results if the 'behaviour change costs' are (relatively) high.

- It often takes more efforts to purchase sustainable products than their unsustainable equivalents.

- The image of sustainable goods and services are unfavourable compared to unsustainable products and services. For many consumers, sustainability evokes an image of problems, limitations, scantiness and thrift, conflicting with their perception of quality of life.

There are also a number of reasons why consumers do not normally behave sustainably:

- Many consumers lack practical perspectives for sustainable patterns of action.

- Changing daily behaviour often takes a lot of effort. - Most consumers have not internalised sustainability into their thinking. - The public attention for environmental issues declines. Primary aspects

of the ‘quality of life’ for most consumers are health, freedom of choice, safety, luxury and comfort. Environment is secondary.

2.3.2 Businesses and sustainabil ity

Although CO2 offset is hip in business life at present, CO2 poor products and services remain scarce. Many more businesses do offer some sustainable products, but with little or no exposure. Among others, reasons for this are:

• Price competition is dominant. • Adequate information is missing or hard to get. • Consumer demand is latent. • Marketing strategies may not consider environmental aspects. • SMEs are too busy surviving to be able to develop a policy with regard

to sustainable product sales.

In short, entrepreneurs may see costs and problems, but no (immediate) benefits.


3 Elements of a new approach Looking for new, effective ways to successfully influence the behaviour of citizens, it is interesting to make look at some successful approaches. In this chapter we briefly describe:

- Loyalty cards

- CO2 Offset

- Domestic Tradable Quota

- Prepaid systems

- Exchange systems

3.1 Loyalty cards Shop or retail groups create loyalty programs to get and hold loyal customers. Most of the programs use loyalty cards collecting rewards: swipe, barcode or chip cards that identify the cardholder as a member in a loyalty program. They stimulate their (potential) customers to shop with them by rewarding the desired behaviour with points. These points can be redeemed on specific desired items. Cardholders receive (e.g.) 1 point for every £1 they spend, getting double or more points on special offers. These points are saved and can be spend for all products or a limited list, in the shop, in another shop or a printed or online list of presents. The psychological basis of these programs is found in the fact that humans like to be rewarded for their actions. It gives them the feeling of being acknowledged for their actions.

The private sector has long-time experience in changing consumer behaviour. The primary goal of a loyalty card scheme is to improve their customer relationship management. Companies gather information in massive databases on customers so that they can target them more effectively with marketing communications.

Research in this field shows that reward systems working towards specific targets motivate individuals strongly. People working towards specific targets work harder and realize more than people without targets. When people are supported in realizing their goals artificially, they show a stronger commitment to reach this goal.

In 2002 50% of the Dutch families were active in the Air Miles program. The return on investment on the Dutch Airmiles program in maturity phase was a factor 4 (the annual costs of running the program were recuperated 4 times year after year).

Loyalty programs were first started to attract new customers and to make existing customers loyal to the shop. This marketing exercise allowed high investments and high management attention. Later, almost every national retailer chain introduced a loyalty card or became part of a multi vendor program, from a ‘me-too’ perspective. Through time the companies behind the programs start judging the programs differently. What once worked as an attractive USP, had changed in a need-to-have cost driver. With the direct consequence that loyalty programs are put on so called ‘operational excellence’ strategies: delivering as much perceived value at as low cost as


possible. And by that, the rewards become less interesting for the audience (e.g. only one-way tickets and bookings need to be done months in advance).

We see another trend: more and more consumers are looking for meaningful content, also in company presentations and loyalty schemes. New and existing loyalty systems need to find this contact to keep a relationship with these consumers.

It the following paragraphs some loyalty programs will be described in more detail. We introduce the words ‘green’ and ‘grey’ to identify the kind of consumer activity: ‘green’ means environmental and climate friendly; ‘grey’ is used to identify an ordinary procurement. We will describe:

- Tescos Clubcard and Nectar (grey procurement brings points that can be spend on grey products)

- NU Spaarpas (green procurement brings points that can be spend on green products)

- Carboncredit (grey procurement brings points that can be spend on green products)

3.1.1 Tesco Clubcard and Nectar

The loyalty card market in the United Kingdom is one of the most significant in the world, with most major chains operating some form of reward program. The Tesco Clubcard rewards consumers with points in its own shops. These points give vouchers that can be used in the shop at par or for premiums making it 4 times as much worth. Nectar was launched in the autumn of 2002 by the Air Miles company. It is a partnership of suppliers including the supermarket chain Sainsbury's, the credit card American Express and the petrol distributors BP. The Nectar Card scheme was changed in 2007 to a gift based program.

Both Tesco and Nectar started recently with green initiatives. Nectar Greenclub offers a few green items to collect points, like reusing mobiles, and these points can be redeemed for plants or all the other grey products. Besides this, they give green tips on eco driving, energy saving, etc. Tesco's Greener Living Points is more or less the same. Points are given for reusing bags in-store, mobile phone and cartridges recycling. And there are tips too. Point can be redeemed for the normal products. None of the systems gives extra rewards for greener shopping, nor do they have green premiums to redeem the points.

3.1.2 NU Card (NU Spaarpas)

The NU-card was a demonstration project funded by the EU (LIFE) in the second largest Dutch city: Rotterdam. The operational part of the project ran from May 2002, until August 2003. At the end 11,000 households possessed a NU-card, and more then 100 businesses (mostly independent shops) participated. The partnership consisted of three different departments of the municipality of Rotterdam (environment, waste management and public transport), the co-operative Rabobank, and the Points Foundation.


The aim of the NU-card was to test the effect of loyalty-programs in the public domain. The NU-card was an incentive card for sustainable purchases of consumers combined with so-called personalised (non-general) subsidies for sustainable behaviour. The card had two moments with a positive incentive for sustainable behaviour: 1) saving the points with sustainable (purchasing) behaviour, and 2) spending the points on sustainable goods and services. Hence each Euro spent has a double impact. Enterprises (with a focus on SME) and governmental organisations issued and redeemed the points. Consumers could subscribe at several places in town. For the sake of simplicity one NU-point had the communication value of one eurocent.

Points were easy to earn and to spend. Points could be earned with separation of waste by bringing large waste-factions to waste-collection stations situated around the city. Furthermore points could be earned purchasing products and services of the participating shops. Purchasing green (sustainable) products

was rewarded with a quadruple incentive. Sustainable products included labelled organic, energy-efficient and fair-trade goods, bicycles, green financial products, renewable energy, rental, repairs and second-hand goods.

The points could be cashed for e.g. public transport, culture and arts, the zoo and education. Cardholders could also spend these points for green specials in the participating shops. This made the program green for green.

The project showed that stimulating citizens to behave in a desired manner works: rewarding cardholders changed their behaviour strongly. At average a cardholder the waste-collection stations 1,5 times more then before. Furthermore the program showed SME retailers a selling-market for


sustainable goods. By the end of the project different retailers had changed a part of their assortment in favour of sustainable products.

The NU card was set up as a demonstration project. At the end of the project, when the success was recognized, the political and economical situation in Rotterdam had changed considerably, due to the political murder on Pim Fortuyn and change of the global landscape after 9 September 2001. Furthermore, the program was selected as one of the best 10 LIFE-funded projects.

3.1.3 Carboncredit

CarbonCred (www.carboncred.it) is similar to retailer loyalty card schemes. Every time clients make an online purchase at any of the 1,000 online retailers that accept CarbonCred, they earn points. This purchase does not have to be 'green' in order to earn credits. The points can be earned in many online shops, including Marks & Spencer, John Lewis, Argos, Dixons and lastminute.com. The possibilities include poker, non-renewable electricity and flying.

These points can be used to claim green products or services that can reduce the personal carbon footprint, including home electricity on a green tariff, energy efficient boilers, folding bicycles and energy saving light bulbs. Alternatively, people can choose to invest their credits in global carbon offsetting projects. There is almost no information on the offset program, but CarbonCred claims it uses the WWF Gold Standard.

3.2 CO2 offset Currently, there are many offset programs for CO2 emissions. The purchase is made CO2-free, by compensating the product. This is done by a payment to a specific fund, which takes care of the compensation by planting trees, or running project to prevent the (future) production of CO2. The compensation normally has to be between 0,1% and 8% per purchase, depending on the domain / product group / product. The average is expected to be around 1%. Climate offset also shows the consumer how much CO2 is produced for specific products.

The concept is based on the idea that it doesn‘t matter where CO2 is emitted in the air, or were CO2 is withdrawn from the atmosphere. If it proves to be too difficult or expensive to lower the CO2-emissions of an activity, then the same quantity of CO2 can be prevented elsewhere or fixed in nature. In principle all products and services can become climate-neutral. Making products and services CO2-free is much easier for one product than for the other; garden plants are easy (energy supplying greenhouses, bio plastic pots, bio diesel transport), climate-neutral petrol is more long-term (bio fuels, H2 or electric in the future).

Offset programmes give consumers a clear possibility to act, to do something themselves against climate change. By creating an appealing perspective for ordinary consumers, a new non-traditional market is reached; a market were interested consumers get a concrete choice to buy products and services CO2-free.


Example of climate offset in KG CO2 per Euro,

used by VISA GreenCard

CO2-factor

(kg CO2 / €)

Automatic teller 0,0

Banking and insurance 0,2

Medical services 0,6

Restaurants, cafés 0,7

Train travel, car rental (excl. fuel) 0,8

Hotels, travel agencies 1,0

All other transactions 1,1

Fuel 2,7

Flying 4,0

Public services (excl. water) 7,3

There are many offset programs, from voluntary systems, like Trees for Travel, KLM or BP - via companies compensating there production, like Dole has in Costa Rica - to more complex systems lake the offset programs of several Credit Cards. Underneath we will shortly explain the credit cards with offset possibilities, that are of interest for the [City Carbon Card]:

3.2.1 Green Credit Cards

Theire are several offset programs using credit cards. The credit cards compensate the carbon footprint of products and services purchased with the card. For every purchase, the impact of the product or service on the environment is calculates, with the unit of account being the amount of carbon emissions. The emissions are compensated, without additional costs for the consumer, by investments in sustainable energy, afforestation projects and innovative environmental-friendly technology. The ones we know are:

- The VISA GreenCard, launched in the Netherlands in 2004, and introduced in several countries already. It was the first credit card in


the world with a built-in calculation and compensation mechanism to make all purchases CO2-neutral. The card holders can indicate their preferred projects for investment To calculate the CO2 emissions, Visa GreenCard closely cooperates with independent Dutch institutes, such as environmental consultancy firm CE Delft and scientific research institute TNO. The entire calculation process is assessed by PriceWaterhouseCoopers.

- The Climate Card of the Dutch Rabobank, introduced in March 2007 for their 1.1 million cardholders. The climate card is the first outcome of a three-year partnership between the WWF and Rabobank. Rabobank will invest directly in ‘Gold Standard’ climate projects to cover the CO2 emissions that are linked to all credit card purchases. ‘Gold Standard’ is a standard for sustainable energy projects (solar, wind, water and biomass) that are primarily carried in developing countries.

- Also the U.K.-based Barclay Bank with the Breathe card, and the Bank of America started with eco-friendly credit cards.

3.3 Domestic Tradable Quotas Another popular concept is to extend the carbon trading for industry to the consumer. In 2005 the writers of this report were co-writer of the report ‘Kyoto for All’ for the Dutch ministry of Environment. In this report they gave an overview of several ways to force or attract householders in Kyoto type agreements. One of the models described was developed in the UK: Domestic Tradeble Quotas.

3.3.1 Domestic Tradable Quotas

Domestic Tradable Quotas (DTQ) are a proposed policy instrument to reduce greenhouse gas emissions from energy users in which the end-purchasers of energy surrender emissions rights. Dr. David Fleming, a London-based policy analyst, who first published the idea in 1996, proposed Domestic Tradable Quotas. In Domestic Tradable Quota, citizens are given CO2 emission rights, and required to record all transactions via a card. It is not a partnership approach, but a mandated approach. It would work best on global level, but it seams very unlikely that this can happen.

Domestic Tradable Quotas can be broken down in three steps.

Step 1: Setting the carbon budget: The carbon budget is the maximum quantity of greenhouse gases that the nation can emit from energy use during any given year. Carbon budgets are reduced year-on-year so as to meet nationally and internationally agreed emissions targets. Each budget is divided into carbon units, with 1 carbon unit representing 1kg of carbon dioxide equivalent.

Step 2: Surrendering carbon units: Fuels and electricity are assigned a carbon rating based on the quantity of greenhouse gases (measured in carbon units) emitted by the combustion of a unit of fuel and the generation of a unit of electricity. When individuals and organizations purchase fuel or electricity, they surrender the number of carbon units corresponding to their purchase.


For accounting purposes, these units are passed up the supply chain and on reaching the primary energy producer or importer are, surrendered back to government.

Step 3: Acquiring carbon units: Individuals eligible for units receive them free and on an equal per capita basis. The proportion of total carbon units allocated to individuals is equal to the proportion of total energy emissions arising from individuals by purchase of fuel and electricity (currently around 40% in the UK.) Individuals may purchase additional units on a national carbon market and organizations are required to purchase all of their units on the carbon market. The carbon market consists of primary sellers, final buyers and intermediaries who facilitate trading between them.

In November 2006, DEFRA published a report, entitled ‘A Rough Guide to Individual Carbon Trading’, which considered the issues around personal carbon allowances – a mechanism for delivering carbon emission reductions through ‘enforced’ personal responsibility. The idea of individual carbon trading involves providing members of the population with a carbon dioxide emissions allowance. Those persons who need or want to emit more than their allowance have to buy allowances from those who can emit less than their allowance. In considering a mechanism for introducing personal carbon trading, DEFRA reviewed the use of the personal loyalty cards as utilised by the main UK supermarkets. DEFRA concluded that Tesco’s Clubcard scheme shows the scale at which card-based systems can be developed to operate with little inconvenience to the consumer. In addition, DEFRA acknowledged that by utilising the resulting consumer monitoring data, patterns of behaviour can be more easily identified enabling tailored services or ‘offerings’ to be made to specific consumer groups.

3.4 Complementary Currencies Complementary currencies are a wide group of ‘alternative’ money programs that function as medium of exchange on their own. Complementary currencies work from the basis that money is ‘just’ an instrument to facilitate economic activity. When there is enough reason and basis, currency programs can be put in place to fulfil specific needs. These currencies lie outside the nationally defined legal realm of legal tender and are not used as such. Rate of exchange, scope of circulation and use in combination with other currencies differs greatly. At present 1.000’s of different programs active, with a total annual trade volume of over 200 billion dollar. Some complementary community currencies incorporate value scales based on time or the backing of real resources (gold, oil, services, etc), others use promises or contracts. The list of systems is wide, ranging from non commercial neighbourhood systems like LETS or Time Dollars, to global operating corporate barter systems.

3.4.1 Guernsey

The islands Jersey and Guernsey since long issue their own currencies on a non-debt, non-interest basis. The results are remarkable. The Guernsey


system dates back to the period just after the Napoleonic Wars, which had seriously damaged the island's economy.

Today, if someone uses a bank on the island to cash a cheque or draws money from an automatic teller with a plastic card, they will receive Guernsey currency that the banks obtained from the States' Treasury in exchange for a sterling cheque for the same amount. The treasury then returns the sterling cheque to the bank which issued it to be lodged in a deposit account in the States' name. Each Guernsey note in circulation is therefore backed one-to-one by its British equivalent.

In 1994 there was 14 million pound worth of notes and coin in circulation. The sterling on the bank is an interest-free loan or a deposit that gives interest.

3.4.2 Commercial Exchange Networks and barter

A ‘trade exchange’ or barter is a commercial organization running a bookkeeping system for its members or clients. The members buy and sell products and services among each other using an internal currency. For centuries, barter has been an effective way for businesses to work together. It used to be “direct trade” when people swapped one item for another. However modern day barter has evolved considerably to a banking-method, used to realize increasing sales, conserving cash, moving inventory, and making use of excess production capacity for businesses around the world.

Next to their normal pound-business, bartermembers earn trade credits (instead of cash) that are deposited into their account. They then have the ability to purchase goods and services from other members utilizing their trade credits. The exchange plays an important role in providing the record-keeping, maintain transaction records and broker services to each member. Commercial exchanges make money by charging a commission on each transaction done.

Globally, around 500.000 businesses are involved in a barter exchange. There are approximately 600 commercial and corporate barter companies serving all parts of the world. Around 100 of the better exchange systems organised themselves in the IRTA (International Reciprocical Trade Organisation), a branch organisation assuring the accountability of its members. Most exchanges are members of international trading networks that provide them with opportunities to access larger, global marketplaces to buy and sell within using trade credits. The Universal Currency or "UC" is one such network.

Exchange systems provide new sales and higher volumes of business, conserving cash for essential expenditures, exchange of unproductive assets for valuable products or services, reduction of unit costs, and opening new outlets for excess inventory and unused capacity. Reciprocal trade finance enables a firm to buy using its incremental cost of production. So long as incremental revenue exceeds incremental cost, it is worth it for a firm to trade using a barter exchange.

The first exchange system is the Swiss WIR Bank. It was founded in 1934 as a result of currency shortages after the stock market crash of 1929. "WIR" is both an abbreviation of Wirtschaftsring (meaning: “cooperative”) and the German word for "we", reminding participants that the economic circle is also


a community.Only SME can join WIR. Its purpose is to encourage participating members to put their buying power at each other's disposal and keep it circulating within their ranks, thereby providing members with additional sales volume.

WIR has grown up to 62,000 members in 2007, trading approximately the value of 3 billion Swiss Franc. The offering of goods and services for WIR is promoted by the fact that every official participant is obligated to accept payment in WIR for at least 30% of the first 2000 francs of the selling price, and every loan holder must amortize his/her debt by selling goods/services for WIR.

3.4.3 Regiogeld

Regiogeld (Regional Currency) is a group of community currencies in Germany being used in several regions and towns. ‘Regios’ are accepted by several local shops and businesses in town. The idea is that regiogeld helps the regional economy by promoting local shops that have to compete against corporate supermarkets and chain stores. Most Regiogeld programs focus on the cultural sector, non profits, organic food and renewable energy.

There are now 16 regions in Germany where “regional currencies” are currently in circulation as a cash substitute for the euro. The best known system is Chiemgauer in Bavaria. In this system notes of 1, 2, 5, 10, 20, and 50 ‘Chiemgauer’ are issued, having parity with the equal Euro value. Non-profits purchase 100 Chiemgauer at 97 euro and resell them at 100 euro to the general audience, therefore earning 3 euro to be spent for their own activities.

Chiemgauer can be spent at local businesses at face value, therefore helping both local non-profits and businesses without any further cost. Businesses can spend them for their own purchases or exchange 100 Chiemgauer into 95 euro, losing 5% for commission but earning more by attracting Chiemgauer members to their products and/or services. Of this 5%, 2/5th is used for administrative costs, and remaining replaces the original discount to the non-profit. To keep the Chiemgauer circulating, there is a demurrage fee of 2% every three months. Demurrage is a hoarding tax, a tax on keeping the currency in your pocket. Concrete: each 3 months holders of a Chiemgauer note need to buy a stamp to be glued at the reverse site of the note.

3.5 Prepaid systems There are many prepaid systems in the world, were a card, scripit or voucher contains the balance available. Phone cards are the best known example, were the balance is read by the public pay-phone machine when it is inserted into the machine's card reader. The information can be stored on the magnetic stripe, but nowadays chip cards are prevalent. For the purpose of this report, we like to mention one very note worthy system: The Hong Kong Octopus Card.


3.5.1 The Octopus card

The Octopus card is a rechargeable contact less stored value smart card used to transfer electronic payments in Hong Kong. It is seen as the world's leading automatic fare collection and contact less smartcard payment system. Debuted in 1997, the Octopus Card instantly became widely used in the public, as it simplified the payment. It is used to pay public transportation fees, and also by retailers, restaurants, the on-street parking meters, car parks. Aside from consumer transactions, Octopus cards can also be used for access control in buildings and for school administrative functions. There are now over 10 million Octopus Cards in circulation, which exceeds Hong Kong's population of 7 million. The cards are used by 95 percent of the population of Hong Kong aged 16 to 65, generating over 10 million daily transactions worth a total of about HK$29 billion (US$3.7 billion) a year.

Cards are personalized or anonymous. The personalized cards contain personal information about the holder. The anonymous cards have no personal information, bank account, or credit card details are stored on the card, and no identification is required for the purchase of these cards. If an owner loses a card, only the stored value and the deposit of the card are lost.

Payments are made by holding the card against an Octopus card reader. The reader will acknowledge payment by emitting a beep sound, and display the amount deducted and the remaining balance of the card.

In 2005, the Octopus Rewards program started, that allows cardholders to earn rewards at merchants that are partners in the program. The rewards that the program offers are in the form of points stored on the card. Once a card is registered for the program, the cardholder may accumulate reward points by making purchases at participating merchants, and payments may be made in the form of cash, credit cards, or Octopus cards themselves. The rate at which reward points are earned per dollar-amount purchase differs by the merchant. Saved points may be redeemed as payment for purchases at partner merchants.


4 The [City Carbon Card]; a first concept The elements introduced above, show the way to a potential card program that combines loyalty, prepaid, exchange systems and CO2 offset. Such a program is a strong carrier for changing citizens’ behaviour in favour of sustainability. The working title is: ‘The [City Carbon Card]’.

4.1 Objectives The first objective of the [City Carbon Card] is to reduce the environmental impact of consumption in the participating cities. Focus point is the reduction of CO2 and the reduction and separation of waste.

To ensure a broad acceptance of the card, it is important that the card is (much) broader than CO2 and waste alone. With the same card the following objectives can be added (for example):

- Promoting the regional economy

- Promoting public transport

- Promoting the cultural sector (museums, theatres, etc.)

- Promoting sports and healthy food

4.2 Concept The following concept is a possible and viable form of organising the [City Carbon Card]. The card engages citizens, shops and the (local) government to take an active role in doing the right thing: consume cleaner and greener, choose better forms of power and transport, eat healthier food, etc.

The [City Carbon Card] will use recent technology. The prime communicator will be a card, although other media like phones, internet etc. will be used as well.

There are several possibilities for giving a meaningful value to the points.

- One point could be valued in legal tender, for example 1 pound or 1 pence. This is a transparent choice, but it lacks a direct connection with CO2 or energy use.

- One point could equal the value of the actual market price of one kilogram of CO2. At present this would be around 0,016 Pound per point. It is expected that this value goes up in time, probably to 0,027 pound per point in 2020 (prices 2008). To avoid hoarding a demurrage seems to be wise. The main advantage is the direct connection between the point and the goals.

- One point could equal the value of one Kilowatt Hour. At present this would be around 0,01 Pound per point. It is expected that this value goes up in time. To avoid hoarding a demurrage seems to be wise. The main advantage is the direct connection between the point and the goals.


There are several ways of bringing [City Carbon Points] into circulation:

- By the shops: Carbon-points are given away as loyalty points, e.g. 1% value for normal products and 5% value for green products. The shop pays for the points issued.

- By the city: Carbon-points are issued as a reward for doing good, e.g. separating waste, or using the public transport. The city pays for the points issued.

- By the Consumer: Carbon-points can be bought online at the going price with a bonus of e.g. 5%., giving an increase of green buying power for the consumer.

Consumers can use the points to get green rewards, or in other words, to buy green products and services. This can be: climate neutral products, green premiums in participating shops, culture and sports, local environmental taxes, etc.

Shops can use the points to emit to cardholders, or to buy products themselves at wholesalers or producers. Under certain conditions they can change the Carbon points back to traditional money.

The program will realize a strong positive incentive for sustainable behaviour: when saving points, when spending points, when shops spent points at other companies etc. Hence each Pound converted into a Carbon-point has a double, triple or even quadruple environmental-impact; it will keep circulating within the CO2-slim and waste-slim product network, until it is converted back to a Pound. With this, shops and consumers are more and more stimulated to ‘go green’.

The program can further support this process of ‘greening’ businesses. All points in circulation are backed by Pound Sterling / Euro, deposited in a fund. The fund can be used to issue loans, or to do investments in organisations / companies in their effort to realize CO2 neutral and waste-poor products and services.

4.2.1 Which products, services and retailers are allowed?

Green products and services are products with an environmental label, a low carbon value or containing little waste. In order to realise a broad basis for these criteria, they have to be decided upon in a broad stakeholder dialogue. At present different organisations are building criteria that products and services need to meet in terms of sustainability. It already has been done for large parts of the market.

This list with green products, services and shops, is a strong communication carrier that will function as a label for large parts of the consumers. The information on the potential purchase or behaviour has to be available at the moment of purchase. Therefore the [City Carbon Card] will have to make


itself visible, to a certain extent as a label. This label can also have an effect on non-participating consumers.

4.3 Target groups The program recognizes several target groups. These groups use the Carbon Card to their individual advantage.

4.3.1 Citizens

The target group of the Card are all householders in the area covered by the program. This large group can be divided in three widening circles:

- Cultural Creatives. Research shows that there is a high potential, ”critical field” (being 15% too 30% of the European householders) poised to participate in moving forward to a renewable energy, CO2 - and waste slim economy. They are already on the way and are magnets to others.

- Mainstream customers. Their interest is: no hassle, easy to understand, cheaper, flexibility in choice, better for the environment.

- The General Public. Not only in the area were the initiative takes place, but also in the rest of the country and Europe we will gain interest.

Added value for householders

Householders will participate because they: - Are rewarded for sustainable (purchasing) behaviour, - Get a new and practical perspective for sustainable action and - Learn more about the sustainability of products and services.

4.3.2 Retailers

Where cardholders are into buying green products and services, businesses are targeted to sell these products. This group can be divided in three groups as well:

- SME retailers. Small and medium sized companies having one or some shops at the street.

- Internet shops.

- Large companies and retail chains.

We propose that no company gets exclusivity in the program. Exclusivity is part the competitive paradigm. The goals (climate change and lowering the impact of waste), the story behind de card (lets us act together), and early target groups (cultural creatives), share a cooperation paradigm based on inclusiveness. In reality this means that retail chains will be hesitant to join.

In this phase, the program does not consider producing companies as a direct target group. This group will be influenced though by the changing market conditions.


Added value for retailers

Enterprises participate because they will:

- Increase visibility with a positive tone of voice.

- Increase turnover.

- Retent customers.

- Get connected to a strong Direct Marketing instrument (which is not affordable for independent retail).

4.3.3 (Semi)governmental services

The government uses the [City Carbon Card] as instrument to reach policy goals. Examples for are:

- The public transport companies can use the [City Carbon Card] to stimulate public transport, car share projects, cycling, etc.

- The waste companies can use the Carbon Card to stimulate waste avoidance and separation.

- The city marketing organisation can use the card for strengthening the regional economy with the loyalty system.

Added value for the city

- Gets access to an innovative policy instrument,

- Triples the effect of subsidy Euros.

- Gets valuable policy information.

4.4 The Marketing

4.4.1 Identity

In a later stage the identity, branding and marketing of the card will be further developed. For now we know that the tone of voice of the program has to be positive. Keywords are personalized, fun, easy to achieve, modern, light, clear. The concept gains strengths if community elements are brought in.

4.4.2 Place

The project will preferably be executed in 3 to 5 European Cities with a size between 200.000 and 1.000.000 inhabitants. Smaller cities will have problems in handling / financing a project of this size; the can follow later. Larger cities tend to have more complex decision making, and the promotion campaign has to be very large to have enough effect.


4.4.3 Distribution

At the official launch of the project, enough shops in the participating cities will participate in the program. They will be acquired in the preparing phases of the project. It is expected to be relatively easy: all retailers want to have the extra buying power of the cardholders.

All inhabitants of the city will receive a card from the city-authorities by post. The card needs to have enough meaningful functions to get ‘a place in the wallet’.

4.4.4 Promotion

The Card will have a high visibility by using different communication channels. The first focus will be visibility within the participating cities. Next to this, a strong focus is put on promoting the instrument to other municipalities and countries in the EU.

4.4.5 Price

- The basic card will be free of charge for all citizens. It is an option to offer citizens upgrade possibilities as a paid service. Possible upgrades are: extra incentives, personalised cards, the option of forming sub-communities, credit card possibilities, donating to a NGO, etc.

- For shops, governments, semi-governments and other interested organisations, the card program is a paid service. A flexible price plan with a set up fee, recurring fees and a price per point will be developed.

4.5 Organisation The program will be set up in such a way that after its kick start, the card will be (financially and political) independent, facilitating the different target groups at a fair price in realizing different aims.

4.5.1 Steering group of Founders

A steering group of Founders is responsible for the first development of the project. Than the project will be carried over to an executive company. The steering group presently consists of: the city of Belfast (chairman) and the Amsterdam based Points foundation. With the development of this document the search for other founding partners has started.

4.5.2 Potential partners

The steering group looks for the active involvement of 3 too 5 European cities, preferable located in North-West of Europe, with a size of between 200.000 and 1.000.000 inhabitants. Each partner will have to step in with a strong commitment to:

- The Budget;

- The Timetables;


- Participate in governing, setting up, introducing and maintaining the program;

- Participate in the Card for a minimum period of 4 years.

The potential partners will be found in Western Europe, in cities of which the council, the mayor or the eldermen have chosen to adapt CO2, waste, clean air etc. as a priority.

4.6 Business model The model is designed to pay for itself. The organisations using the model pay for the service in a couple ways:

1. A setup fee. A one-time fee for connecting the organisation to the model;

2. A recurring fee. An annual, bi-annual or monthly fee for the basis services of the organisation (being listed, being mentioned in the different materials etc.);

3. A fee per point brought in circulation;

4. A fee per redeemed point;

5. Different fees for add-on activities, like special marketing activities.

All fees cover the costs of the activity that is bought, and have a margin on top of it.

After the setup and after having established enough clients, these incomes will cover all costs of the organisation and will bring a profit margin. This profit will be enough to recuperate specific investments.

4.7 ICT The model uses different ICT tools for its operation. Many of these tools are already in operation and can be used as a service. Building the specific tools-set for the City Carbon Card is more a matter of combining and connecting existing tools than to develop new tools. The following tools play an important role:

- Customer relationship management (sales and contract management)

- Participation management (registration and managing participating businesses, shops and citizens)

- Community management (bringing the different participants together)

- Payment management (online bank-accounts, payments: paper, phone, SMS, VRS and bank-terminals)

- Marketplace management (what can be bought where)

- Bookkeeping (e.g. invoicing)


- Campaigning (digital marketing)

- E-shops

All the tools are internet-based and are designed to interoperate with other software.

The important development issue in the ICT domain is connecting to the national payment-terminal clearing network. These networks are different per country. Although we have European banking rules, we find different terms of legislation, technical standards and security.

4.8 Funding Most of the programs mentioned in chapter 2 show that it is realistic to build a financial interesting (read: independent) business case. In order to achieve this, in several stages a business plan will be developed, based on actual learning and experience in running the [City Carbon Card]. Together with the commitment of the founders, it will be feasible to build the organisation and recuperate the investments done.

To decrease the costs of further research, setting up and launching the card, it is feasible to apply for EU funding. Interreg has several budget lines that could co-fund 50% of the development costs.

Interreg 4b Northwest Europe is an advance notice of the programme covering the whole of the UK, Belgium, Ireland, Luxembourg and parts of Germany, France and the Netherlands, and by special arrangement Switzerland. Funding of 50 per cent of projects is available for projects between these countries.


In this area cities include:

- Aberdeen (UK)

- Antwerp (Belgium)

- Birmingham (UK)

- Brussels (Belgium)

- Cardiff (UK)

- Cork (Ireland)

- Dublin (Ireland)

- Freiburg (Germany)

- Gent (Belgium)

- Glasgow (UK)

- Liege (Belgium)

- Liverpool (UK)

- Munich (Germany)

Intereg 4c is more flexible, an not bound to a regional focus. Potential cities outside this area are:

- Copenhagen (Denmark)

- Grenland (Norway)

- Hamburg (Germany)

- Krakow (Poland)

- Oslo (Norway)

- Stockholm (Sweden)

- Warsaw (Poland)


5 Next steps With finalizing this feasibility study the following steps can lead to the future introduction of the [City Carbon Card]:

Phase What When

Writing draft A short draft potential for the project

May - June 2008

Writing proposal

Partner search

- Grant proposal with budgets

- Find partners for the proposal

Summer 2008

Working conference Realize final commitment of partners

September 2008

Build Interreg application

Realize the proposal how to introduce the program in the different partner cities. Including implementation, project plan and budgets

Fall / winter 2008

Next deadline Intereg 4b NW Europe: 10th of October

Next deadline Intereg 4c: end of January 2009.

Project preparation Preparing the introduction of the program

2009 – 2010

Project execution Executing the project as described in the proposal

2010 – 2011/12

Project consolidation After finalizing the project, the standing organisation will be transferred into a organisation that can take care of itself.

2012/13

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