Labour has been accused of giving the impression it is trying to tackle climate change by pledging to look at offering everyone "carbon allowances".
People would buy and sell carbon rations
Environment Secretary David Miliband says he can see merit in people being able to buy and sell their quotas as an incentive to cut pollution at home.
Under the scheme, people would be given carbon points to spend on electricity, gas, petrol and air travel.
But the Lib Dems say the plans are "years away from being possible".
Mr Miliband unveiled his thinking in a speech at the Audit Commission's annual lecture.
He says he could see a time when people could be personally involved in and better informed about reducing domestic emissions.
And the scheme would be fair because personal carbon allowances would only offer financial penalties to those who go above their entitlement.
"Imagine a country where carbon becomes a new currency," he said.
"We carry bank cards that store both pounds and carbon points. When we buy electricity, gas and fuel, we use our carbon points, as well as pounds.
"To help reduce carbon emissions, the government would set limits on the amount of carbon that could be used.
"People on low incomes are likely to benefit as they will be able to sell their excess allowances.
"People on higher incomes tend to have higher carbon emissions due to higher car ownership and usage, air travel, tourism and larger homes.
"It is more empowering than many forms of regulation because instead of banning particular products, services or activities, or taxing them heavily, a personal carbon allowance enables citizens to make trade offs."
'Blue sky thinking'
Chris Huhne, the Liberal Democrats' environment spokesman, welcomed "any discussion about household carbon allowances".
But he stressed: "What David Miliband must realise, however, is that proposals such as these are years away from being practically possible.
"Rather than using blue sky thinking to give the impression of doing something, green action is needed now.
"Green taxes have fallen to their lowest level since Mrs Thatcher was prime minister. This is a shocking indictment of a government that claims to care about the environment."
The government is also investigating the potential for carbon loyalty cards, league tables, and awareness-raising through labelling and carbon calculations to get people involved in saving their planet.
The Department of Communities and Local Government along with the Departments of the Environment, Trade and Industry and the Treasury are looking at the role of "community level" approaches to mobilising individuals.
The study will report back its findings to ministers during the first half of 2007.