Days of Reckoning (Why the UK energy cap failed)
consciousnessofsheep.co.uk
consciousnessofsheep.co.uk
The problem is, of course, that high energy prices are a huge negative for those who can't afford them. All the proposed carbon tax schemes I've seen are a carbon tax and dividend - you tax carbon, and redistribute the profits to those who can't afford the higher prices.
Right now, we've got the carbon tax, but the dividend is going into the pockets of oil companies - exactly the people you don't want to be building up cash reserves in the fight against climate change.
The other issue we have in the UK (and maybe elsewhere) is that the cost of energy is borne by the tenant, but the cost of renovations would be borne by the landlord. This means that landlords have no incentive to improve the energy efficiency of their houses, and tenants have no ability to. We should be changing that - make landlords of energy inefficient houses pay for it.
High energy costs could be an incredibly powerful tool to drive changes in the UK housing stock. It's only when energy is expensive that the payback time starts to make sense. That would need sensible and cohesive policy decisions from people with a good understanding of high efficiency housing. Clearly we don't have that.
My 1930s house is a D, so I had an energy contractor round to cost up some improvements. All the obvious cheap-ish ones have already been done. The next ones on the list were things like solar panels which would take 15 years to pay off, solar water heating which would take 30 years and exterior wall insulation which would cost around £40k and take nearly 300 years to pay off! And arguably worse, they couldn't guarantee that sealing up the house wouldn't cause damp problems to emerge since the damp proofing and construction of old buildings can be inconsistent.
Even things like a heat pump would either need an incredibly beefy drop in boiler replacement, costing more than £30k, or I would need to install a hot water tank, previously mentioned insulation, larger radiators and upgrade my pipes - and even then savings would be marginal because electric costs so much more than gas.
Is it worth spending all this money upgrading old housing stock, or is it better spent on things like solar farms, wind farms and hydrogen (or synthetic natgas) generation. Even district heating might easier than trying to retrofit heat pumps to our old leaky houses.
Ultimately the goal is net zero. Insulation helps, all else being equal, but if the energy production is zero carbon then the energy efficiency of the homes is basically irrelevant. Given that, where is it more efficient to spend the money?
Sealing houses up without accounting for moisture can cause issues, but it's not insurmountable. Rather than ventilating through accidental means, you seal the house until ventilation needs to be intentional - and then you can do it using mechanical ventilation with heat recovery - which effectively keeps 80% of the heat in the air and transfers it to incoming fresh air. Equally insulating without moisture management can cause issues - but as long as the insulation is designed with vapour barriers and ventilation in the right place, it's perfectly doable. The problem is that it's very easy to do it wrong, and not realise until years later all the timbers are rotting because of condensation.
I'd argue that (at least in the UK) we have far too many old houses not to deal with them. Space heating accounts for 27% of our national energy consumption. So much energy, which could be useful, is just wasted.
I can't speak for your situation, but the costs you suggest for external wall insulation seem very high - eg https://www.checkatrade.com/blog/cost-guides/external-wall-i... suggests it's more like £6-£20k depending on house size.
Speaking as someone working in the energy industry, we are a very, very long way from zero carbon energy. Renewables only work intermittently - we don't have a solution to fill the gaps in dark winters or calm days. Batteries are at least a couple orders of magnitude too small, pumped hydro needs very specific geography, and all other energy storage methods are unproven or highly inefficient.
The reason costs are high is partially because costs have gone up a lot lately, and I'm in London. Even a new garden fence is going to cost me around £5k. But also, my house would need to have a brick cladding put on after the insulation to get it past planning. There would also be a lot of remedial work required before installing the insulation, such as removing the existing pebbledash render. And I don't even have asbestos to worry about (as far as I know), unlike a lot of other properties of similar age.
I agree we're a long way off net zero, but don't you think spending all this money on marginal improvements to old houses would be better spent on the generation side of things? Personally I can't see a future in the UK that doesn't involve some kind of hydrogen or synthetic natgas generation. We're going to need to solve the generation side anyway.
I had district heating which I had in my last place, which was great and had the footprint and plumbing was comparable to that of a regular gas boiler.
There is definitely room for a lot of improvement in the UK housing stock but every possibility is poisoned by the large numbers of people it would affect. Not all Landlords are fat cats and not all tenants are poor, which is why things move so slowly.
Even in new-builds, the quality of insulation work can be somewhere between shocking and non-existent. What do you do? You need umpteen million new houses and don't have enough skilled tradespeople to be able to fire those that do a crappy job.
I think a much bigger win would be further back where we need to align incentives and opportunities for school leavers to the industries that are short of workers. It seems daft to me that people can choose "Health and Beauty" courses when we already have a million of those and a massive shortage of engineering trades.
In addition, as house prices are so high, owner-occupiers often don't have the means to make these improvements until they have been in the house for five or more years.
Landlords get to claim the cost of improvements as a business expense and can save an enormous amount of tax on making those improvements.
Owner-occupiers have to pay out of their net income. So if it costs me 10k, it only costs a landlord 6k. But they still don't do it.
Forcing rented accommodation to have EPC E or better is a really low bar. I think it should be compulsory for landlords to carry out all EPC recommendations to a certain value within a sensible period.
> You may not deduct the cost of improvements. A rental property is improved only if the amounts paid are for a betterment or restoration or adaptation to a new or different use. See the Tangible Property Regulations - Frequently Asked Questions for more information about improvements. The cost of improvements is recovered through depreciation. [0]
Please explain your post.
[0] https://www.irs.gov/businesses/small-businesses-self-employe...
"alterations due to advancements in technology are generally treated as an allowable repair rather than an improvement, if the functionality and character of the asset is broadly the same. For example, when single glazing is replaced with double glazing"
So a more efficient heating system, better windows, better external doors, replacing loft insulation with material with a higher R-value are all within the scope of "allowable repair".
If you don't mind, I wonder if you might expand on this? For me it seems a bit blithe. For instance, we know that higher energy prices cascade into many, if not most, consumer end items, and so I think it follows this decreases the standard of living generally.
I understand the important consideration of negative externalities, and how fossil fuels negatively impact 3rd parties (the world generally/climate change). I think the economic argument that there should be a carbon tax to account for these externalities is quite right. This is true regardless of climate change. So let's assume for arguments sake, we're going to tax above and beyond that to account for climate change as well.
Are we hoping then, by hiking the cost, it ushers in a new discovery of lower cost energy, with fewer externalities? And if this turns out to be the case, then these austerity measures if you like, turn out to be transient, and the temporary lower standard of living sacrifice is made for the betterment of posterity. Or is it simply we must accept a lower standard of living permanently lest we allow climate change to continue unabated, as it were?
Sorry if this distracts from the main point you were making.
My question was probably too vague. Maybe more directly, is raising costs across the board as a matter of policy more effective in our fight against climate change than other interventions? Like subsidizing research into renewable energies, etc. Have we given up on those?
I am far from qualified in judging the effectiveness of alternatives, I just wonder if these taxes are draconian, and if so, have we given up hope on these alternatives.
This was besides the point the parent was making, however, so I am regretting my digression now.
If we don't reduce fossil fuel use will that negatively affect the ability of the planet to support humanity? If so, isn't that lowering your standard of living?
To your second question, I suppose I would argue that it lowers my standard living now, but _may_ raise the standard of living for posterity, since obviously climate change time scales are vastly greater than the effect of a tax now. However you could rightly argue that by UK citizens reducing their carbon footprint now, 3rd parties downwind directly benefit now by being less harmed by UK pollution, yes.
Think about how many people drive half a mile to the shop. They don't care about hidden costs even though all of those short trips might add up to $50 a month that they didn't need to spend.
Visibility of prices is OK on a Smart Meter but it is still disconnected from where energy is used e.g. not obvious that having your 80" TV on all night uses up a tonne of energy although only a little at a time.
And then you have a lot of people, as mentioned elsewhere, who are paying because their landlord won't spend the money on improving the insulation on the house. You can't always vote with your feet so although some people can and do sort things out, a lot of people don't.
Then they complain that the government should help them out!
Not just discovery. We already have plenty of measure to either use energy more efficiently (such as improved insulation in a home) or things like renewable energy. And as you say, the cascade of energy use into many more aspects of the economy than people expect should trigger a realignment of consumption to means that are less likely to have energy-based externalities somewhere in their supply-chain or operation.
> Or is it simply we must accept a lower standard of living permanently
Depends upon the implementation. If we are replacing existing taxes (like corporate or income tax), or refunding the amount (via a citizen dividend or similar) the net impact shouldn't be a lower standard of living, though the distribution will affect people differently.
However, in most cases comfort isn't proportional to energy expended. For a given heat, a well insulated room is as comfortable as a badly insulated one - but with less energy input. A modern computer is as useful (more so) than a Pentium 4, but with less energy input. An LED bulb provides as much light as an incandescent, but with less energy input. When energy becomes expensive, it makes energy saving worthwhile, which makes the return on investment higher, which draws in R&D money.
Honestly - I don't know for sure whether high energy costs will drive innovation, or just lower living standards for everyone. However, it's pretty clear that relying on fossil fuels isn't a good long term strategy, and that at historical energy prices (which don't take into account externalities at all) there's essentially no headroom for new energy saving R&D. High energy prices make efficiency improvements and novel energy production highly lucrative - and then capitalism can do the rest.
You're right, and I think these are compelling examples. And climate change need not even be considered for these to support a carbon tax.
Thanks for the response.
I actually disagree with this. There are factors beyond air temperature, such as air movement and radiation.
Air movement is pretty obvious, if your house is draughty, 20c may still feel chilly.
But radiation is commonly ignored and in my experience contributes more to comfort than air temperature beyond a certain level. If your room is at 20c and your walls are 12c, there's a good chance you will still feel uncomfortable compared to a building with well insulated walls. I've been in old buildings where even at 25c it still felt a little chilly. Worse, if only the exterior walls are cold, you might find one side of you is too hot and the other is too cold!
This is commonly experienced as "why is my house still cold in winter even though the thermostat is at 22c, when in the summer it's too hot even at 18c?".
Out here in the midwest US, high propane and natural gas prices have caused a massive spike in the installation of wood heating. Our bill went up by nearly 50% this winter due almost entirely to supply issues.
Unfortunately, heat pump installation is still too expensive (many years payback) and electrical heating isn't particularly green (resistance heating a house at -40 degree wind chills off of coal and natural gas at night is the worst outcome possible short of burning petrol generators).
We are much better off saving residential heating for later and focusing on other carbon priorities until the grid itself is greener, I think.
What is happening in Europe is of a different magnitude. Gas prices on variable price contracts have tripled here in Belgium. See graph here:
https://callmepower.be/nl/energie/gids/tarief/prijs-gas#gasp...
UK energy bills are something like this. About 15% of a dual fuel bill goes both on subsidising renewables and social payments.
> The other issue we have in the UK (and maybe elsewhere) is that the cost of energy is borne by the tenant, but the cost of renovations would be borne by the landlord. This means that landlords have no incentive to improve the energy efficiency of their houses, and tenants have no ability to. We should be changing that - make landlords of energy inefficient houses pay for it.
All rented properties (unless with an excemption) will have to achieve a EPC rating of "E" by 2023 and by 2025 will have to achieve "C". The intention is for that to rise to "B" by 2030: https://assets.publishing.service.gov.uk/government/uploads/...
Right now, you only have to spend £3500. If it costs more than that to get to the required EPC rating, you can get an exemption. There is also the "seven year payback test", which is as it sounds.
What this means is yes, this may drive your landlord to install LED bulbs and thermostatic radiator valves, and maybe some double glazed windows, but it's not going to trigger a mass drive towards modern insulation and solar panels.
Personally I think we should just force landlords to bear the cost of heating to 18c.
If prospective tenants knew the energy costs of the different options when looking, a place with higher energy costs would then attract a lower monthly rent (commensurate with the difference in energy bills) than an otherwise identical place with cheaper energy costs. Tenants would ideally see the combined cost of rent+taxes+energy+bills when comparing places.
Edit: perhaps this could be an idea for a website.
As the article says at the end, clearly the Torys are not going to do this, and Labour will be very quiet about this as they need to play the middle ground if they have any chance of gaining a majority. But, if they were to win in the next general election we will see increased calls for them to act on the aspirations of the left of the party to nationalise these things.
It will be an interesting time.
There are some obvious reasons to want to renationalise critical infrastructure like water and power, particularly given the absolutely piss-poor job done by the private contractors. And in many areas - like the trains - the "private enterprises" running the services turn out to be commercial arms of other European public sector bodies anyway, and are not private sector in any meaningful sense.
I don't think this is Left vs Right any more. If the Tories want red-wall voters and broad appeal, they have to move a lot more than Labour needs to stay in the middle ground. Left vs Right does not capture the complexity of what's happening here.
The idea that competition can have any real meaning on a highly constrained and contended single resource - like railways - is a bit laughable, so the market doesn't really offer much opportunity for optimization. Equally though, the old British Rail was nothing to get excited about. We just don't seem to have a decent economic model for running loss-making services with positive general externalities for the benefit of society.
On the other hand, we tend to have rose-tinted memories of how cheap everything was in the old days, which I don't think is true. For the level of subsidy that our railways have, they are probably not actually that bad. Many people have said before that even places like France might do well on the high speed lines but their secondary routes can be as rough as ours and they get much more investment.
Of course not. The Tories always meant for it to be a vehicle through which they and their mates could extract rents.
That's always the point of privatization.
https://en.wikipedia.org/wiki/Scottish_Water
"Scottish Water has been ranked the best UK water company and utility for customer service"
The British political system incentivises short-termism - our politicians largely see no point in implementing a policy that will benefit the entire country in 10 years time when someone else may be in charge, hence the sell-off in the first place. In an ideal world we'd have gone the same route as Norway [0], and could possibly have still done so if Corbyn had won. Now though, that ship has sailed and we've sold short-term selfish thinking to the public, have a "left" party that is almost indistinguishable from the right, and all of them are pushing populism above all else.
[0] https://www.lovemoney.com/news/85476/norway-oil-reserves-nor...
What would be the top few policy positions that make Labour right wing in your opinion?
I think the trouble here is that the only way Labour could win is by aggressively moving towards the centre, which as you describe they are doing. Loosing Scotland to the SNP has completely cut them off at the knees.
What we really need is complete electoral reform and moving to a proportional representational system. Exactly as you describe we no longer have a simple left and right to our politics, Brexit proved that. It will be painful while the main parties shrink and smaller parties grow but I believe the outcome would be a more effective and representative government. Trouble is neither main party could push it though as it would result in them having less power, that's a hard sell.
I did read that each time Labour got in government, it would have occurred irrespective of the parties the Scottish MPs represented. That because the swing within England was so great as to make the Scottish votes an irrelevance (England being about 10x the population of Scotland).
Can I ask why you think the government can run utilities better than a private company? (Not trolling - actually interested in other opinions). My understanding as to why trains [0], etc moved to private ownership in the past was because a lack of competition, unions, and other factors caused massive inefficiencies. Looking at the NHS right now, no matter how much money the tax payer pours into it, it simply isn't efficient enough.
Basically I remain unconvinced the government can run a utility company better than a private organisation can which has efficiency as a primary goal.
[0] Now trains seem bloody expensive to me - but were they in the 80's? Or were they subsidised by the tax payer...
If you run the electric grid or the last mile water pipes privately competition is essentially impossible so there's no reason for the owners not to just neglect it and milk customers dry.
With trains the really criminal part was that the land around stations got sold off for cheap to hedge funds who made a LOT of money. Japanese trains can be run at a profit despite taking losses on tickets because they didnt do this.
It's hard to compare, but there is no specific evidence that the NHS is noticeable less efficient than the healthcare system in any other developed country – so this is a weird thing to say. https://www.bmj.com/content/367/bmj.l6326
Also sometimes trains are subsidised by the taxpayer and that's ok. Like here in Belgium the train runs a loss tho the fares are comparatively cheap. I'm damn sure it can be optimised if some overpayed management was replaced, obvious inefficiencies worked out, the weird splitting of services required by the EU reversed, etc
But they also provide a huge societal boon despite that subsidy because we lose boatloads of money on roads like the ring around antwerp and brussels being the most congested in europe which can only get exponentially worse given how much commuting happens here.
In the UK, the tracks are owned by Network Rail (publicly owned) and the trains are private, who get to bid on the services.
Things can be run just fine by public institutions; the BBC is an example of that - despite the occasional inefficiency, it has managed to deliver high-quality content to pretty much everyone over the decades, and even spearheaded new technologies (from BBC micro to iPlayer). Which, incidentally, is why Tories hate it with such a passion.
As long as there is accountability and a degree of oversight, with an engaged public, state-run enterprises can do well. The problem is that the political classes have skirted their responsibilities.
There have been three elected labour leaders since 1950: Wilson, Callaghan and Blair. Wilson was the most left wing of the bunch, and most would consider him soft left at best. Blair was fairly centrist or even centre-right by historical standards and, until he destroyed his reputation with the Iraq War, was likely one of the most popular leaders Labour has ever had. I think if it wasn't for the war, he would still be held in extremely high regard.
I'm not even sure Labour is or ever has been fundamentally a socialist party. They are a trade unionist party, and the types of people in unions in the UK aren't especially socialist. Atlee was, in some ways, a deviation from the norm, in a highly unusual historical context.
The most popular prime ministers of the latter half of the 20th century are arguably Churchill and Thatcher.
https://webcache.googleusercontent.com/search?q=cache:pRc1gq...
How should this be fixed, well like taxation it should be scaled and a usage threshold per person in which you pay X amount and over that, you pay more for your fuel usage, so the more you use, the higher it gets that you pay and not sadly as we have, the reverse.
Sorry but whole subject a bit of a personal issue when my local MP sends out election voting paraphernalia stating how he has saved households money on their fuel bills when the reality for me was the polar opposite and again, he ignored that. But I shall have my day soon upon this.
Of course, no model is ideal, though when we see initiatives for solar and electric cars that learn towards those who can afford such items over those who can not and those that can not paying for such subsidies, you do feel the brunt of unfairness and why the rich get richer (not saying having solar or an electric car makes you a rich person, but for those who don't own their own house and rent or use public transport, relativity does become a factor)
Now, that's nothing to do with the fact that fundamentally energy prices are the result of long term government policy in terms of how they fund our national grid and invest in building power plants. It's got nothing to do with the price cap that the UK government failed to build (enough) Nuclear power plants and it certainly has nothing to do with the fact that the whole of Germany went insane and shut down all their Nuclear plants just in case Germany suddenly became geologically unstable as forewarned in the factual documentary Geostorm.
The real problem is a combination of the fact that the UK government has failed to really tackle its long term energy strategy, and the fact that given this crisis it has chosen some really weird levers to pull to help people, choosing to give out loans and lower council taxes temporarily rather than use the actual benefit systems that they just spent the best part of a decade re-designing.
The cap was mostly there to stop some people from being fleeced in specific situations when they were on a standard variable-rate tariff or prepayment plans. It was already set at a pretty high level.
Given that, its not really worth reading.
One thing is for sure, we desperately need to ween ourselves off natural gas. Switching to heat pumps etc. for heating can't come soon enough.
The privatization of energy companies in the developed world to me is a giant failure and a classic example of how public-private partnerships like this just end up privatizing the profit while underwriting the losses and it's sold to us on supposed "efficiency" gains.
If you think about it energy consumption is basically a hugely regressive tax. The cost of heating 2000 square feet doesn't change much depending on if you're poor or a billionaire.
I'd honestly support nationalizing these companies, cover grid connection through taxation and provide resident individuals (not corporations) a rebate for $X every year in their tax return to cover expected usage.
I worked for the railways immediately before and after privatisation. I can't speak for the whole network but there were a few of us who enjoyed the work and a whole load of people who were happy to sleep through most of their night shift (including the Managers). The awful truth is that money is a powerful motivator for Directors and shareholders although clearly with the danger of moving too far the other way.
I'm not sure there are any decent models that could get the best of both worlds. They tend to be nasty bureaucratic PPP type deals which bring more mess than they clean up.