What should the UK energy policy for the next 25 years+be

Martyn1981

OffGridLiving wrote: »

I hope you don't mind me moving the discussion onto here Mart, I've already been told off once by Eric for hyjacking threads.

I feel that securing national energy supplies is too vital to be left in the hands of private companies. Nuclear should never have been put into the private sector and with the delays, arguments and safety concerns, it's apparent why. As a public company, there should be no issues around unfair competition and subsidies.

I also feel that everyone in the country should contribute towards this sort of infrastructure investment via general taxation rather than through bills. it spreads the cost more fairly, proportionate on income rather than on useage of a particular energy source.

Don't mind at all, good move (in more ways than one).

As explained, it might not be possible to use general taxation, since that supports an industry, and may / will breach EU rules on such measures.

Also, a tariff on all leccy bills, is effectively a tax that everyone in the country contributes too. But I appreciate that it might not be distributed quite as proportionately as an income based tax.

Big question though - is that wrong? Shouldn't consumers (domestic, industrial, rich and poor) pay proportionately for a product they consume? I'm not stating a position here, as I struggle with this question heart v's head. Hmmm

Mart.

OffGridLiving

Martyn1981 wrote: »

Don't mind at all, good move (in more ways than one).

As explained, it might not be possible to use general taxation, since that supports an industry, and may / will breach EU rules on such measures.

Also, a tariff on all leccy bills, is effectively a tax that everyone in the country contributes too. But I appreciate that it might not be distributed quite as proportionately as an income based tax.

Big question though - is that wrong? Shouldn't consumers (domestic, industrial, rich and poor) pay proportionately for a product they consume? I'm not stating a position here, as I struggle with this question heart v's head. Hmmm

Mart.

I totally understand your position on putting the tax on energy bills and if we just used the cheapest (dirtiest?) method for generating electricity then I'd agree in principle with you that those who use more should pay more of the cost for infrastructure and distribution. However, if as a nation we decide that we would prefer to use an energy resource that is more expensive, but is much cleaner environmentally to generate, then I think it's fair that the burden of a national decision should be shouldered nationally and not put onto the shoulders of people who would otherwise have had a cheaper energy source but who have had the choice taken away from them. Essentially the burden is disproportionately distributed to pay for something we all benefit from.

Not sure if I'm making myself too clear here? I know what I mean but I don't think I'm expressing myself very well.

EricMears

Originally Posted by OffGridLiving
I hope you don't mind me moving the discussion onto here Mart, I've already been told off once by Eric for hyjacking threads.

I haven't actually "told anyone off". But I have reminded people (generally) when a discussion seemed to be getting even further OT than is our 'tradition'

Martyn1981 wrote: »

Don't mind at all, good move (in more ways than one).

. . . .

Big question though - is that wrong? Shouldn't consumers (domestic, industrial, rich and poor) pay proportionately for a product they consume? I'm not stating a position here, as I struggle with this question heart v's head.

Mart.

There's nothing wrong with 'Ad Valorem' taxes.

Tobacco tax has as one of its aims the reduction of tobacco consumption and (apart from a few heavy smokers) nobody quibbles about the principle of heavy smokers paying more than light ones.

Likewise alcohol taxes and (perhaps to a lesser extent) fuel taxes & VAT.

It must therefore follow that if the intention is to reduce electricity consumption collecting a payment proportional to electricity usage would be an appropriate instrument. No real point in quibbling about whether it's a 'tax' , a 'duty' or a 'levy' - they're just words that describe the method of collection.

And spending the collected monies on encouraging renewables seems a pretty reasonable way of addressing the longer term issues.

OffGridLiving

EricMears wrote: »

I haven't actually "told anyone off". But I have reminded people (generally) when a discussion seemed to be getting even further OT than is our 'tradition'

Sorry Eric, I intended putting a in there but forgot. I wasn't criticising your point as I agree with it.

EricMears wrote: »

There's nothing wrong with 'Ad Valorem' taxes.

Tobacco tax has as one of its aims the reduction of tobacco consumption and (apart from a few heavy smokers) nobody quibbles about the principle of heavy smokers paying more than light ones.

Likewise alcohol taxes and (perhaps to a lesser extent) fuel taxes & VAT.

It must therefore follow that if the intention is to reduce electricity consumption collecting a payment proportional to electricity usage would be an appropriate instrument. No real point in quibbling about whether it's a 'tax' , a 'duty' or a 'levy' - they're just words that describe the method of collection.

And spending the collected monies on encouraging renewables seems a pretty reasonable way of addressing the longer term issues.

It depends on what you are trying to do. If you want to simply reduce energy consumption by encouraging heavy users to cut back, then it's appropriate to add a levy (the stick) but you then have to use that levy to assist people in doing so (the carrot).

The difficulty comes in the practicalities. I use electricity for cooking and to light my home and natural gas and a wood burner to heat it. My friend owns an apartment and uses electricity for everything. His electricity bill will be far higher than mine, even if he has a much more energy efficient home. Adding a levy to electricity would impact him far more than me, yet I might waste more energy. we would have to put a tax on all energy sources in order to level the paying field and make it fair across the board, but how would that be possible?

To make a tax on consumption fair we would have to 'level the playing field' and make it as expensive to heat a home with oil as it is to heat it with natural gas. Ditto with electricity.

EricMears

OffGridLiving wrote: »

Sorry Eric, I intended putting a in there but forgot. I wasn't criticising your point as I agree with it..

There was indeed a 'smiley in the original - I usually delete them from quotations.

OffGridLiving wrote: »

It depends on what you are trying to do. If you want to simply reduce energy consumption by encouraging heavy users to cut back, then it's appropriate to add a levy (the stick) but you then have to use that levy to assist people in doing so (the carrot).

The difficulty comes in the practicalities. I use electricity for cooking and to light my home and natural gas and a wood burner to heat it. My friend owns an apartment and uses electricity for everything. His electricity bill will be far higher than mine, even if he has a much more energy efficient home. Adding a levy to electricity would impact him far more than me, yet I might waste more energy. we would have to put a tax on all energy sources in order to level the paying field and make it fair across the board, but how would that be possible?

To make a tax on consumption fair we would have to 'level the playing field' and make it as expensive to heat a home with oil as it is to heat it with natural gas. Ditto with electricity.

The FIT scheme concerns itself only with electricity. Perhaps there ought to be other schemes that encourage thrift with other forms of energy. A 'renewable heating incentive scheme' has been "about to start" for several years now but all the draft proposals I've seen have been so complicated and offered so little incentive that I've lost interest.

I'd say that a scheme that aims to reduce all electricity consumption and encourage renewable generation is 'carrot & stick'. I have much sympathy with people who have to heat their homes with electricity because they've no access to gas (I have no gas supply either so have to use oil - which is a lot dearer than gas so there may be a slight typo in your final sentence) but the 'greater good' has been decreed to be reduction of electricity demand so they (like me) will have to put up with it (or perhaps move).

OffGridLiving

EricMears wrote: »

I'd say that a scheme that aims to reduce all electricity consumption and encourage renewable generation is 'carrot & stick'. I have much sympathy with people who have to heat their homes with electricity because they've no access to gas (I have no gas supply either so have to use oil - which is a lot dearer than gas so there may be a slight typo in your final sentence) but the 'greater good' has been decreed to be reduction of electricity demand so they (like me) will have to put up with it (or perhaps move).

I guess it depends on whether the person getting the stick can also get the carrot?

To go back to my example where I have a diverse range of energy sources to heat/light/cook in my drafty, energy inefficient house and my pal can only use electricity in his modern energy efficient apartment. He uses more electricity than me, but beating him with an electicity useage levy stick would not make him as electric energy efficient as me, it would just punish him for not being able to use wood or gas.

The stick for me would be increased electricity costs, the carrot would be for the levy to help me pay for LED lighting and a gas cooker.

The stick for my friend would be increased electricity costs, the carrot would be for the levy to help him pay for LED lighting, an air sourced heat pump and an induction hob and A rated cooker.

If the carrot for both of us is just LED light bulbs then my pal would be disproportionately taxed and the actual goal of promoting energy efficiency for both of us (if that is what the goal was) would not be achieved.

Martyn1981

OffGridLiving wrote: »

The difficulty comes in the practicalities. I use electricity for cooking and to light my home and natural gas and a wood burner to heat it. My friend owns an apartment and uses electricity for everything. His electricity bill will be far higher than mine, even if he has a much more energy efficient home. Adding a levy to electricity would impact him far more than me, yet I might waste more energy. we would have to put a tax on all energy sources in order to level the paying field and make it fair across the board, but how would that be possible?

To make a tax on consumption fair we would have to 'level the playing field' and make it as expensive to heat a home with oil as it is to heat it with natural gas. Ditto with electricity.

Yep, you've found the flaw in my master plan.

Actually, in my defence, what I posted was a cut down version of a 'VAT weapon' argument I suggested some time back, possibly a year, not sure.

So to look at it in more detail, I did originally mention that allowance for heating, medical issues, social issues would also need to be considered. And that low users should actually get zero rate (carrot) medium 5%, high 10% (so hopefully at this point receipt neutral) then 15% or 20% for very high (stick).

Taking your points on heating, on board, obviously a similar move would also have to be applied to gas (and any other non-renewable heating source that gets a low VAT rate).

The more you expand on it, the more administrative, and difficult it would become. More of a thought exercise, unless some sort of easy rating scheme could be devised, but I'll hold my hands up, and say 'not likely'.

Regarding earlier comments about deciding nationally to use more environmental fuel, it's not really a choice we have, it's an international recognition that there are additional costs that we simply haven't included in the price of our fuel.

This is very similar to the price rises we saw when generation and other industries had to add scrubbers etc to reduce NOx and SOx etc. The costs were always there, just borne by people (or countries - Scandinavia) down wind. So the price increased to match the true(r) cost, the cost didn't actually rise, it just wasn't been paid by the polluter.

If we didn't have to worry about CO2, then subsidising renewables, and nuclear would make no sense. We'd just wait till they became economic naturally, and burn lots of coal instead.

Mart.

OffGridLiving

Martyn1981 wrote: »

Yep, you've found the flaw in my master plan.

Actually, in my defence, what I posted was a cut down version of a 'VAT weapon' argument I suggested some time back, possibly a year, not sure.

So to look at it in more detail, I did originally mention that allowance for heating, medical issues, social issues would also need to be considered. And that low users should actually get zero rate (carrot) medium 5%, high 10% (so hopefully at this point receipt neutral) then 15% or 20% for very high (stick).

Taking your points on heating, on board, obviously a similar move would also have to be applied to gas (and any other non-renewable heating source that gets a low VAT rate).

The more you expand on it, the more administrative, and difficult it would become. More of a thought exercise, unless some sort of easy rating scheme could be devised, but I'll hold my hands up, and say 'not likely'.

Regarding earlier comments about deciding nationally to use more environmental fuel, it's not really a choice we have, it's an international recognition that there are additional costs that we simply haven't included in the price of our fuel.

This is very similar to the price rises we saw when generation and other industries had to add scrubbers etc to reduce NOx and SOx etc. The costs were always there, just borne by people (or countries - Scandinavia) down wind. So the price increased to match the true(r) cost, the cost didn't actually rise, it just wasn't been paid by the polluter.

If we didn't have to worry about CO2, then subsidising renewables, and nuclear would make no sense. We'd just wait till they became economic naturally, and burn lots of coal instead.

Mart.

I wasn't trying to find flaws, really just trying to look at the relative pros and cons. I can't really see any fair way to encourage people to use less energy that doesn't impact someone disproportionately. I guess in some ways, the fact that we are now a net importer of energy will do the job for the government. Energy will get more expensive naturally, without having to add green incentives.

As the blame for higher bills will then rest with the fact that we are not self sufficient, rather than people being able to blame a small green levy, then perhaps more of the population would get on board with the idea of securing our energy supplies and energy independance as a matter of national priority, with a levy on income tax to pay for it?

Martyn1981

OffGridLiving wrote: »

I wasn't trying to find flaws, really just trying to look at the relative pros and cons. I can't really see any fair way to encourage people to use less energy that doesn't impact someone disproportionately. I guess in some ways, the fact that we are now a net importer of energy will do the job for the government. Energy will get more expensive naturally, without having to add green incentives.

Hiya OGL, don't worry about me, the flaws are totally valid. To get around them, you'd need to apply varying levels of VAT depending on the CO2 intensity of the fuel source. At this stage it appears that I'm just trying to re-invent the wheel, or more accurately carbon taxes, with a high use punitive element.

I think it's S. Korea that have prices that rise depending on consumption, contrary to our (daft) two tier system that drops the price as people use more. Whether we could ever adopt a punitive system is questionable.

My concerns are that applying any element of energy prices to general taxation is detrimental to energy savings, energy efficiency investment, and competing/new energy sources. This creates an impossible dilemma, where we need to make energy consumption 'painful' to reflect the damage it does, but also want to help those who struggle to pay their bills.

My suggestion of pushing prices higher, then ring-fencing the additional funds for those on lower incomes (via changes to tax brackets, subsidised energy savings etc) is of course a gamble!

Mart.

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