How can we afford green energy?

November 3rd, 2013 by Kate Griffin Leave a reply »

I’ve heard the same argument a lot recently, phrased in slightly different ways:

“How can we afford green energy taxes when people can’t afford to heat their homes?”
“Why are you focusing on climate change when fuel poverty is killing people?”
“Green taxes are an insult to people who can’t pay their energy bills.”

If you’re campaigning for a sustainable energy future, you’ll have heard this argument too. You’ll hear it from people who are justifiably angry about the suffering caused by rising fuel prices – sometimes too angry to listen. It’s not always easy to gather your thoughts in that kind of situation, so here are some ready-made answers.

“How can you say green energy is more important than keeping the heating on?”

Nobody’s actually saying that, because it’s not one or the other. It’s not an either/or choice between the green option and the staying-warm option. Green politics and social justice go hand-in-hand; for example, the UK’s Fuel Poverty Action group fights for affordable energy and to safeguard the climate. Sustainable energy is about supplying energy at a price people can actually afford as well as keeping the lights on (without wrecking the planet in the process).

“We can’t afford to invest in renewables.”

Most green campaigners accept that the UK’s future energy supply has to come from a mix of sources – although there’s fierce debate on what exactly that mix should be! We’d prefer to see more investment in renewable energy and less in fossil fuels, for two reasons:

1. There’s a limited amount of fossil fuel left on Earth. That means it’s not an economically sustainable energy source, because it’s running out, and scarcity pushes up prices.
2. Fossil fuels aren’t an environmentally sustainable energy source either – if we extract and use  the remaining fossil fuels, it will without a doubt push the world into runaway climate change.

Point 1 is about the long term, but it also applies to the short term. A representative from the UK’s sole shale gas producer, Cuadrilla, recently admitted that even a boom in shale gas wouldn’t actually drive down prices. So destroying the countryside with fracking might not make any difference to your bills.

Contrast that with solar energy, where the price of a typical panel (including installation) has dropped from around £10,000-£12,000 to about £7,000. That will save the average household about £150/year on electricity straight away, as well as making money for the occupants from feed-in payments. Which is doing the quickest job of driving down household energy prices: fracking or solar?

“You keep asking people to switch to a green energy supplier. Don’t you realise that some of us have to watch every penny?”

Again, it’s not an either/or choice between green energy and saving cash. As I explained in a recent post about Ecotricity, most people in the UK are still on a standard energy tariff, despite all the hoopla about switching. Ecotricity promises to undercut the standard electricity tariffs of the “Big Six” energy companies, which means that most people in this country could save on their electricity bill by switching to Ecotricity.

Of course, the “Big Six” invest in green energy too – reluctantly, through the “green levies” they’re obliged to pay. Which brings us to the next question…

“How can you support green taxes when people can’t pay their bills as it is?”

When people talk about “green taxes” or “green levies” on energy bills, they’re usually talking about the Energy Company Obligation (ECO). The energy companies are obliged to pay this, so they charmingly pass on the costs to customers. ECO payments make up 9% of a customer’s bill. 3% is invested in renewable energy, 5% is spent on energy efficiency schemes and 1% is spent on the European carbon emissions trading scheme.

Let’s look at that 5% again. This goes to pay for home insulation subsidies, other home energy-efficiency subsidies and the warm-home discount for pensioners. In other words, it goes towards measures to help people keep their homes warm – including people who couldn’t otherwise afford those measures. It’s correct in one sense to class it as a “green levy”, because it helps people to use less fuel – but it could just as accurately be described as a “fuel poverty help levy” or a “social justice levy”.

The Department for Energy and Climate Change calculates that all these energy efficiency schemes will bring energy bills down in the long run, making them lower than they would have been without the “green levies”. So that so-called “tax” is saving you money, long-term.

“Well, how come energy bills are going up?”

There’s no doubt that price rises are happening. The average British Gas dual-fuel customer will soon see bills go up from £1,190 to £1,297. Is that anything to do with green investment? Well, data is available for how much money energy companies actually spend on investment in renewables. So we know that British Gas spends just £7.55 per customer on renewables investment. We also know (from the parent company Centrica’s own annual report) that £49 of the average customer’s annual bill is pure profit. I’m not saying they should heat our homes for free; I am saying that to blame price rises on renewables is ludicrous.

The idea that “green energy” and “affordable energy” are two opposing concepts is damaging, because it undermines the efforts of people who are fighting for both. I hope I’ve shown why it’s simply not true. A final thought: who benefits from the false idea that energy can’t be affordable and renewable?

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