The voluntary carbon offset market recently entered the ‘personal’ space, paving the way ahead for climate change policy innovation.

For the first time, a carbon credit was created by people – not for retiring timber concessions to stop the destruction of a rainforest or installing industrial gas capturing technology in a polluting plant, but rather, individuals making simple retrofits to their home and lifestyle to reduce their emissions.

Sick of ever-growing energy bills and keen on checking out government incentives for renewable options, Tami and Randy Wilson from Harrisburg, Pennsylvania, developed an emission curbing plan and a year later generated a $21.50 personal credit that was sold on the voluntary market.

To do it, then set up a baseline – or starting point – that they wanted to change. They installed photovoltaic panels on their roof, switched to compact fluoro and cut their energy demand.

The Wilsons accounted for their reduced carbon footprint by reviewing a year’s worth of reduced energy bills.

Bloggers obsessed with climate change policy, sustainability and renewable energy were quick to point out that few people will motivate to make big changes in their lives for $21.

But the case for change is not so short-sided.

Yes, the Wilsons invested $56,000. But they got $36,000 of it back in government grants, and with their system generating $2,000-$3,000 a year in renewable energy credits, they should come out ahead of the game in six years.

Looked at within the grander sphere of climate change policy, this development has several implications.

Research from MyEmissionsExchange.com, the website that helped the Wilsons formulate their plan, shows that most homeowners can save $50 a year in electricity bills by simply unplugging appliances when not in use. That sum goes up to several hundred dollars when a household engages in practices like adjusting the thermostat so that heating and cooling are only switch on when needed, or sun-drying clothes rather than using a dryer.

Not only does the money earned from generating and selling carbon credits trigger the first step of discovery, but it also sends a price signal. Individuals quickly comprehend the financial benefits of energy efficiency and demand management and can apply energy/carbon price signal observations in other areas of life.

For instance, when acting as a consumer, the avant-garde individual – your Tami or Randy Wilson – who understands the scale of energy consumption and its costs, will factor the ongoing operating costs of one particular appliance versus another. The same edification can evoke contemplation of a product’s embodied energy, and the influence of a future price of carbon on energy intense products.

Also, simply by participating in this exercise, individuals will have first hand experience with the inter-workings of an emissions trading scheme – a concept that otherwise brings images of a downtrodden plant worker standing at the forefront of a brown coal power station. What I’m getting at is that learning by doing will be much more successful than a politician reciting the notes from Ronald Coase’s seminal paper ‘The Lighthouse in Economics’.

The idea of personal carbon trading is not exactly new. The British government for years has placed emphasis on the concept in designing its elaborate and ambitious climate change policy. In fact, the government expects energy efficiency to account for more than half of Britain’s expected 60 percent emissions reductions from 1997 levels by 2050.

In 2008, during the exploration for potential policy options to drive emissions reductions, ministers from the British House of Commons Environmental Audit Committee recommended that the government implement a system of personal carbon credit trading. The result was a framework outlining how individuals would be allotted carbon credits, and guidance on how those with leftover credits could sell those credits to those whose emissions exceed their allotment.

Committee Chairman Tim Yeo made a strong case for the plan and asked the government to act “courageously” in the face of potentially strong public opposition at the start. In an interview with the BBC, he said that personal carbon trading had “real potential to engage the population in the fight against climate change and to achieve significant emissions reductions in a progressive way.”

In Australia, the potential for personal carbon credits is vast. Yet we can cut per capita emissions, which are highest in the world – higher than in the U.S. or China even – by simply using less energy at home. Studies show that energy consumption in homes can be reduced by as much as 35 percent with the adoption cost effective technology. That would mean a reduction of seven tonnes of greenhouse gases per year. Verifying these emissions reductions with a third party auditor and selling them on the ‘personal carbon market’ could generate a few hundred dollars of extra cash.

And that might just be the motivation Australians need to do a bit of research and modify their home or lifestyle. We just need that push.