From the UK Telegraph:

Lord Smith of Finsbury believes that implementing individual carbon allowances for every person will be the most effective way of meeting the targets for cutting greenhouse gas emissions.

It would involve people being issued with a unique number which they would hand over when purchasing products that contribute to their carbon footprint, such as fuel, airline tickets and electricity.

Like with a bank account, a statement would be sent out each month to help people keep track of what they are using.

If their "carbon account" hits zero, they would have to pay to get more credits...

Ruth Lea, an economist from Arbuthnot Banking Group, told the Daily Mail: "This is all about control of the individual and you begin to wonder whether this is what the green agenda has always been about. It's Orwellian. This will be an enormous tax on business."

Cue eerie flashback music and blurry fade to the past.  Admittedly in a slightly different context and with a slightly different goal, on November 1, 2006 I wrote the following:

There has been a lot of talk lately about raising the gas tax.  Call for a $1/gallon increase have been raised by the political and academic elite:  Al Gore, Greg Mankiw, John.  I'm in full agreement that gas prices are too low, and $1/per gallon may be in the ballpark of the right price increase.  But yesterday in class I was talking about pollution trading markets and their benefits and I inadvertently convinced myself that there is a better way to solve the gas consumption external cost problem.

The proposal I'm about to put forth is not new, nor is it polished.  Instead, it's a first attempt to generate a discussion.  Let's set up a gas credit market.  Here's how my version would work. 

1) Cap gas consumption at current level--hey it's a start.

2) Issue gas consumption cards (GCC) to the public.  Every U.S. citizen of driving age will receive a card (similar to a drivers license).

3) Credit each GCC holder with a monthly allotment of gas.  The total allotment is equal to the current gas cap established in 1).

4) Set up a GCC clearinghouse (similar to ebay) where GCC holders are free to buy and sell gas credits.

5) Every time a driver fills up, they must swipe their GCC and be deducted the appropriate number of credits.  This is in addition to paying for the gas itself.

6) Annually decrease the gas cap by 5% (or some percentage). 

7) Temporary GCC cards can be sold at gas stations to avoid any problems with running out of gas credits.  Sort of like buying calling-card cell-phone minutes.

Correcting market failures/externalities through efficient pricing of the associated goods is not Orwellian; it's prudent.  Failing to correct market failures is Mad Maxian.