Since, in the United States (for example), 32 per cent of all CO2 emissions are under the direct control of individuals/individual households, it makes sense to look for ways of modifying personal behavior so as to reduce this "carbon footprint". German Chancellor Angela Merkel has mused openly about restricting personal emissions, and a few have wondered about the feasibility of international cap and trade schemes for individuals (rather than states or corporate entities).
Well, Michael Vandenbergh and Anne Steinemann have a paper forthcoming in the NYU Law Review called "The Carbon Neutral Individual." (a preprint is available here) in which they extend this line of thinking in a number of interesting directions.
Some of their ideas are uncontroversial. For example they suggest that information should be disseminated re the "green steps" an individual can take that can bring some form of monetary pay-back (buying compact fluorescents), and they suggest establishing a regulatory regime to encourage greener behavior (anti car-idling by-laws, which I believe we have here in Toronto).
However, they also are big on the notion of personal "carbon neutrality":
Compliance with the carbon-neutrality norm does not require that individuals adopt other environmental beliefs, norms, or lifestyles that are inconsistent with their own. Moreover, it allows individuals to maintain control over the mix of behavior changes that they will use to achieve compliance.
Note that complying with the carbon neutral norm in this manner is all quite consistent with Capitalist philosophy and economics. Compliance is in the control of the individual, and a matter of individual choice.
They go on to suggest a number of proposals for making the notion of personal "Carbon Neutrality" more meaningful. For example, they advocate the creation of an Individual Carbon Release Inventory (ICRI) based on The Toxic Release Inventory (TRI), a "remarkably successful program focused on toxic emissions," which
...require[s] large industrial firms to quantify and report their toxic chemical releases on an annual basis.266 The EPA then compiles the data into a publicly available database and issues an annual report on changes in emissions by year, by chemical, and by region. The industrial TRI data release often triggers substantial media attention.267 The TRI data release also has facilitated NGO, government, corporate, and academic reports on industrial toxic emissions.268 Despite the absence of mandatory reductions, empirical studies have concluded that TRI reporting requirements have induced firms to reduce their toxic chemical releases.269
And yes, they suggest a kind of cap and trade system where individuals could purchase offsets on the open market:
A[n...] effort could leverage the carbon-neutrality norm by enabling individuals to purchase offsets from a program that directs funds to individuals who are at or near the poverty line. In addition to the benefits of compliance with the carbon-neutrality norm, those who purchase these offsets would gain the normative benefits of helping low-income individuals. Local community groups could serve as intermediaries, as could firms such as retailers of automobiles, appliances, and other equipment.294
Note that the two authors are fairly clear headed about the current state of the carbon offset industry, but seem confident that quantification and standard setting, even if this is done by the private sector under government oversight, can work well enough to facilitate the required changes to individual behavior.