Policy and data paves the way to a carbon light future

BLOG: 70 percent reduction of carbon emissions by 2030 is what Denmark seems to be aiming at with an incoming government. That is an ambition that calls for innovation in policies and regulation to unlock green finance and action at a scale that we have never seen before. One solution is a carbon wallet for everyone, writes Marianne Haahr, Director of Sustainable Digital Finance Alliance.

Focusing on a few sectors alone will not cut the carbon at scale needed. An ‘all hands need to be on deck’ approach is the only way to shift capital into green assets and projects and incentivize each and every one of us to enter into carbon light living.

Classical policy tools appear old fashioned and insufficient in themselves to deliver on the challenge. In addition, parliamentarians need to learn from the ways digital platforms succeed in establishing new behavioral norms at national and global scales.

Your Annual Carbon Return Form

Only focusing on classical policy measures such as a general tax on behaviors that harm the climate are inadequate in a world where everything else becomes more and more individualized and based on data harvested about your exact behaviors. We see it in health, your fitbit tells you exactly how many steps you are missing to reach your daily target. Giving you real time individuals feedback, it keeps motivation up and makes the new behaviors stickier.

Could we also make the formulation of individualized climate targets a citizen obligation? If you fail to formulate one, an individualized target will be defined for you annually.

Just like you fill out your tax form, you will fill out your annual carbon form. Voting, primary education and paying taxes are all part of citizen duties, but could it also be to plant a tree a year that can suck carbon out of the air and define targets?

Using the digital technologies that we already have and the data from credit cards, telcons and financial infrastructure to give each citizen automated feedback on the grams of CO2 attached to each behavior can help to make each one of us aware of exactly how to arrive at a carbon light lifestyle.

Most countries have the data available to give each citizen individualized data on the carbon footprints of their choices automated and in real time. It is data that sits in telcos, mobile wallets and with payment infrastructure providers.

Individual Carbon Wallets Scaling Elsewhere

In China they have been operating a carbon wallet for years that now has 500 million users. It rewards positively reductions in carbon footprint rather than punishing negative externalities, which means that when you take the bike instead of the car you automatically receive carbon points. Each user gets individualized carbon calculations on their behaviors communicated directly to them on their mobile devise together with advice on how to reduce their carbon footprint.

Carbon credits can be used to plant trees first virtually on the phone and when the tree reaches a certain size on the screen it is converted into a real tree on the ground.

All your climate friendly behaviors you can share with your social network and you can also water your friends’ tree on the platform or try to steal it – as a way of gamifying actions on the platform. It has established new behavioral norms reinforced by social recognition in social media networks making green lifestyle the new normal.

According to the Forestry Law of the Peoples Republic of China planting trees and protecting forests are the bounden duty of every citizen. People’s governments at all levels shall launch afforestation activities and mobilize citizens for planting trees on a voluntary basis.

Today this carbon wallet is for the first time crossing the Chinese border and into another country. The Ant Forest app (as the carbon wallet is called) is launched in the Philippines. What was seen to be a China specific approach based on the particular behavioral triggers in the country such as high levels of air pollution, a tech savvy young population and a duty to plant trees is now going to be tested in other populations, where people relate to climate change in different ways than the Chinese.

Gaming or Regulating to Change Behaviors

Could the same kind of carbon wallet also cross into the Nordics to bring about massive behavioral change? We actually have a few solutions already in the region that are using digital technology to nudge behaviors in a climate friendly direction. There is the Swedish fintech company Doconomy which has launched a new credit card (the DO card) that monitors the carbon footprint of its customers and the Finnish bank Ålandsbanken that has issued a completely new type of biologically degradable credit card that not only let users see the average carbon footprint of their consumption, it also gives them the option to make up for the footprint of their purchases.

Unlike the Asian carbon wallet these Nordic approaches do not gamify carbon credits, but they design behavioral triggers differently. The DO card has an in-build carbon limit and the card simply blogs when you hit the carbon max on your consumption.

Blocking your consumption for a while can prove to be as effective a way to make you aware of your carbon footprint and thereby incentivize behavioral change. It may also be a form of behavioral change design that suits the Nordics quite well as we have a long history of regulating for behavioral change, rather than gamifying climate action and planting trees such as the Asian model.

Carbon Behavioral Policies

In order to really motivate people to act and feel empowered to constantly strive for lower carbon footprint whether it is on one or the other type of platform. Politicians are needed. Just as the world came together to adopt the Paris agreement, which has given rise to the design of carbon markets for corporations to buy and sell carbon credits, politicians could design climate behavioral policies.

It would not be difficult to develop behavioral climate policies at national level assigning a carbon budget to each citizen and then developing a carbon trading scheme for individuals. If you manage to reduce your footprint to below the budgeted, then you can sell your surplus credits to citizens that are in need of more. Or you could give citizens benefits in return for carbon credits such as lower taxes or access to museums for free or other benefits that do not have a heavy carbon footprint attached to them.

We have a long history of nudging behaviors through policies, but the difference today is that we have a mix of the data and technology available and a string demand in the population to enable individuals to make a contribution to cooling the planet. Of course, this cannot replace the need to reduce carbon emissions at sector level, but it needs to go hand in hand with these efforts.

It could start out in a limited test zone to harvest feedback from citizens before it is scaled nationally. It could be a new way for financial service providers to contribute to moving the national into a carbon light future.