Gordon Brown’s Lightbulb Moment
by Jo Abbess
6th September 2008
While we’re waiting with excitement and trepidation for the Renewables Consultation to close on 26th September, we have the Fuel Poverty Windfall Bonanza saga to focus our minds on.
The argument goes like this (if you’ve not been following closely) : various factors have been strongly influencing the price of Energy in the last couple of years : two of them being the European Union Emissions Trading Scheme (EU ETS) and the speculation about Peak Oil fundamentals.
Then there’s the not-so-small matter of electricity. Power doesn’t grow on trees : power plants have to be constructed and maintained. Over the last ten years or so, virtually all electricity generation in Europe has become privatised, and private owners have shown enormous reluctance to invest in repairs and replacements. Obviously. They want to keep their profits for their shareholders.
Then there’s the Climate Change issue : new power generation should obviously be as Low Carbon as possible, and Renewable Energy technologies (apart from Wind Power) are somewhat under-developed.
Some have dallied with the Nuclear Power Renaissance movement, that was launched in the USA. Some have seen the solar/wind light. Some are still pushing for British Sea Power, and that’s not the pop band.
Whichever route the Government wishes to take on future Energy Provision, the costs of Energy will continue to mount. And all this adds up to increasing Fuel Poverty : the inability of the poorest and most needy to pay for the Energy they need.
Bright lights flicker on in the minds of a couple of Gordon Brown’s advisers : if the Energy companies are making more money, they can pay for Fuel Vouchers for the poor. Brilliant wheeze ! A windfall tax on the profiteers to redistribute to the poor. It will keep trade in Energy ticking over and qualm poverty activists.
Trouble is : “Robin Hood” money circulation schemes such as these are anti-business, in the sense that they don’t allow the companies to continue to make the levels of profit that they need to guarantee a healthy rate of return to their shareholders.
And Big Energy has been fighting back on this idea with venom and vengeance and manipulative tactics, strongly suggesting that they will back away from financing new Energy plants if they are arm-wrestled into coughing up for any kind of tax, windfall or otherwise.
OK then : how about selling Carbon Permits, you know, raising the proportion of our National Allocation Plan under the EU ETS that we Auction to Big Carbon Emitters ? Raising that percentage to the maximum allowed in this phase of the EU ETS, 10%, should net the Treasury roughly £500 million, and that can be used to help the fuel poor.
Problem with that too : it’s too late in the game to start shuffling this idea about in Europe. And anyway, charging for Carbon will always end up raising the prices of Energy for everyone, not just the fuel poor.
Big Energy doesn’t want and doesn’t need a Carbon Tax right now, especially given that Gordon Brown wants his shiny new nuclear toys being built.
Gordon Brown wants to relaunch the New Labour project this month. His ideas about trying to revive the property market got dowsed by a flood of dismissal, what about his Energy policy ?
If nothing can be hammered out between the Government and Big Energy pretty soon, he will be reduced to having a “lightbulb moment” : vague promises and petty cash for Energy Efficiency measures, Insulation, Insulation, Insulation and switching to compact fluorescents.
If Gordon Brown really wants to help the fuel poor, he could improve the incomes of the lowest paid by legislation, and introduce larger tax breaks for the poorest, especially those who are retired.
With Energy and fuel bills rising, the effective cost of living has sharply increased, and therefore, so should indexing on benefits and allowances.
He could knock VAT off the bills of those whose household income is less than £350 a week and justify it on the basis that Energy is an essential, not Added Value.
Whatever wealth redistribution Gordon Brown might dream up, it won’t stop Fuel Poverty, as Energy prices will continue to rise, and deny more people access to Energy.
Gordon Brown appears to still believe that charging for Carbon will reduce demand for Carbon. When will he and his posse of policy tinkerers realise that the attempts to control Carbon by creating a price for Carbon is bound to fail ?
The notion that you can create behaviour change by pricing Carbon is so quaint. It’s based on the idea that you can tax an “environmental bad” out of existence.
But the price of Carbon isn’t reducing Energy or fuel demand by very much. It could be argued that the Credit Crunch, billed as a mini-Recession, is doing that far more effectively.
Pricing Carbon as a strategy in an attempt to reduce Greenhouse Gas Emissions is clearly not working anywhere it is being tried.
The underlying reason is that the whole Economy is based on the use of Carbon Energy. Up the price of Carbon Energy and you up the price of everything. It’s called inflation.
Carbon is an embedded problem.
As a product, it probably has to be treated like tobacco. They couldn’t stop tobacco being sold : there was too much invested in tobacco.
What had to happen was the establishment of a zero tolerance for tobacco. It started with advertising and sales.
Why have the Big Energy and Big Oil companies increased their advertising budgets this year ? Surely it has nothing to do with competition with their so-called competitors. The customer base remains the same size.
Are they in fact trying to sell the idea of Carbon Energy, in order to remain in business ?
Gordon Brown could act on Climate Change in this area very effectively. Stop the blanket advertising for cars, travel, electricity, gas, consumer goods, electrical gadgets.
Another strategy to restrict the flow of oxygen to Carbon : take investment and pension funds out of Carbon. Start the exit somehow.
In the end, controlling Carbon comes down to legislation and regulation. Businesses should be told that they need to drop their Carbon investment, lose their Carbon stocks.
Make the Carbon Trust compulsory viewing, not voluntary engagement.
The framework is : Less Carbon. The message to business is : if you can’t deliver Less Carbon, you won’t be doing business here.
Stop fussing about pricing and assets and investment. Tell Big Energy “You’ve got five years to get out of Carbon. Full stop.” Then watch the feathers fly.