Green Subsidies - A Gift to the Well-Off?

[st13phil]

In the news today is the announcement that households will be offered subsidies of £5,000 from next April to help them make the switch from a gas boiler to a heat pump, as part of the policy to reduce CO2 emissions. Predictably, there are already loud voices telling us that it is insufficient and the the scheme should be bigger, but on reading about it it struck me that, like so many other "green" incentives, this is effectively a bung to the well-off - something which seems to be a feature of pretty much every scheme that is set up to encourage the uptake of "green" solutions. I'll elaborate...

If we cast our minds back to the grants available to install PV Solar Panels, they benefitted people who could afford to invest up to £10k of their own funds in doing so, and as a result of the generous feed-in tariffs those early adopters enjoy a handsome, index-linked, return on their investment.

The subsidy available for buyers of electric cars benefits those who can afford to buy a (relatively expensive) new car and, while there's an argument that on disposal by the initial owner those cars will "prime" the used market, the combination of rapidly changing technology and uncertain lifespan of batteries (plus their high replacement cost) means that just won't happen on any meaningful scale. But it's worse than that because those who cannot afford to buy a new car are increasingly hit with daily charges to enter low emission zones.

On the subject of heat pumps, it is estimated that the total cost of a retrofit installation, including additional insulation and larger radiators to suit the lower flow temperature is in the region of £10k to £18k so leaving the householder with up to £13k to find after the grant, instead of the (say) £3.5k cost of a replacement gas boiler.

Something else that doesn't get as much attention as it deserves is that roughly 25% of domestic electricity bills goes on "environmental and social" levies - mostly to fund "green" schemes such as insulation subsidies and subsidies for "green" generators. When one considers that the poorer members of the population spend a much greater proportion of their income on keeping warm than the wealthy do, it's hard to argue that this isn't a massively regressive tax. And furthermore, it is planned to shift those levies from electricity to gas, "to encourage the shift away from gas heating".

All things considered, the shift to "green" looks awfully like a well-structured scheme to transfer wealth from the poor to the already well-off.

So how could we do things differently? How could we speed the shift to green solutions without the less well-off subsidising the already wealthy? I don't know, but we have some smart people here so maybe someone else does?

Please avoid turning this into a political discussion so as to avoid having the thread closed.

 

[190]

All things considered, the shift to "green" looks awfully like a well-structured scheme to transfer wealth from the poor to the already well-off.

So how could we do things differently? How could we speed the shift to green solutions without the less well-off subsidising the already wealthy? I don't know, but we have some smart people here so maybe someone else does?

I've always thought the same. Some of the early subsidies on solar panels were an outrageously generous use of the publics money and there is a wealthy gentleman "farmer" near us with a huge wind turbine in his field which I'm sure we all contributed to.

The heat pump initiative won't have much impact until the electricity they use can be guaranteed to be from renewable sources. I suppose it's a start and of course it will look like we are doing something which is a big part of the reason for doing it.

As for alternatives, I hate to say it but insulating Britain might have been a better use of the money. It needs doing anyway if heat pumps are our future.

 

[John N]

On a cold foggy winters morning (or night for that matter) there is no Wind, the Sun is off on Holiday and we failed to harness Tidal Power Generation!

Where does the Power come from to keep these "Heat Pumps" working?

 

[Deleted member 159894]

On a cold foggy winters morning (or night for that matter) there is no Wind, the Sun is off on Holiday and we failed to harness Tidal Power Generation!

Where does the Power come from to keep these "Heat Pumps" working?

The air.

 

[Nicebutdim]

Whilst the climate may be changing (it has done this throughout the Earths existence) i have yet to be persuaded that the current change is man made.

We are poised to bankrupt ourselves by chasing this CO2 rainbow and there is absolutely no assurance that our misguided efforts will have any effect whatsoever.

It is the biggest, costliest, misguided gamble humanity has ever taken.

If our reduction of CO2 does not stop climate change (as I believe it won’t) the environ mentalists will claim we didn’t act soon enough.

I fully appreciate the desirability of moving away from fossil fuels because of their increasing scarcity. This is a logical approach.

The answer would seem to be nuclear power and I’m happy to support this.

 

[BPD07]

You’ve got have early adopters otherwise the cost per unit to manufacture will never come down. 40” plasmas TVs cost £5/£6k 20 years ago, within five years they were a grand, now a 60” LCD can be had for what £600? No doubt people said, these idiots who bought at £5k should have waited a few more years…. Without realising that if no one buys then the manufacturers don’t make.

 

[st13phil]

You’ve got have early adopters otherwise the cost per unit to manufacture will never come down. 40” plasmas TVs cost £5/£6k 20 years ago, within five years they were a grand, now a 60” LCD can be had for what £600?

How much in the way of taxpayer funds did early adopters of plasma TV's get gifted?

 

[zipdip]

Well many of these ideas will just not work,we are crazy to even try them,the cost will be immense ,the use of Hydrogen in boilers is a dangerous option,but above all that whatever we do will not make the slightest difference,if everybody in this country used every green measure they could for a whole year what pollution we save would be polluted by China in one afternoon,so until China stops polluting it is madness for us to bust our economy .

 

[Deleted member 159894]

Well many of these ideas will just not work,we are crazy to even try them,the cost will be immense ,the use of Hydrogen in boilers is a dangerous option,but above all that whatever we do will not make the slightest difference,if everybody in this country used every green measure they could for a whole year what pollution we save would be polluted by China in one afternoon,so until China stops polluting it is madness for us to bust our economy .

So we do nothing until China does?

Is that how it works?

 

[190]

China is the biggest polluter on the planet but as noted in another thread China is already doing things. Unlike our own efforts what they do will make a huge difference to the planet, yet in spite of that you can be sure they will be pragmatic enough not to seriously damage their economy in the process. That's the big difference between us and them. Their actions are driven by real need while ours are at least in part about virtue signalling. It's not our direction and intent that gives me a problem but the signs of lack of realism and pragmatism. And that's why we always end up with green subsidies for the well off while the real burden of the zero carbon initiative falls on the less well off in the form of the 25% energy levies pointed out above. An unprogressive tax, and that's what it amounts to would be condemned if introduced in general taxation yet it's deemed acceptable for green initiatives I think that's outrageous.

As an aside, the one thing I did like about todays announcements was money to develop factory built modular nuclear power plants.

China to activate world's first 'clean' nuclear reactor in September

 

[Nicebutdim]

For years China has been portrayed as the bogeyman of CO2 reduction.

in the last few days we learn that actually China has done more to reduce CO2 than the whole world put together.

Forgive my cynicism but something doesn’t smell right. Perhaps it’s because the Chinese have no intention of attending the COP summit. A large dose of buttering-up?

 

[ChipChop]

 

[MrGreedy]

My view is much more simplistic than the climatard. I think we shouldn't recklessly and needlessly waste the planets resources. Full stop. When over the course of 200 years we have stripped the earth of all the fossil fuels and had progress at lightening speed, when the cheap easy fuel runs out, we're going to have some issues I guess. My next door student neighbours have the heating on all day and night and windows in the house open nearly all of the time. A waste of valuable resources for example.

Anyway, back to the question.

Whilst this grant might be a bung to the wealthy (£5k out of a £15k setup cost), the alternative is giving a £15k bung at the other end of the wealth spectrum, and that will only be 1/3rd as effective. It might not be fair or equitable, but it is better at getting more heat pumps installed.

Secondly, and I've mentioned this on another thread, I think insulate Britain are barking up the wrong tree, at least initially. But draftproof Britain is probably less catchy than insulate Britain.
Homes are not correctly draft proofed even when all the energy saving upgrades are fitted, thereby rendering them useless. The carbon required to build and install the insulating measures is quite high, whereas the carbon required to correctly execute technically difficult but small draft proofing measures is small. But it is technically difficult and thrown large amounts of cash at visible things that don't work properly, looks better in the public eye.

So my vote is spend money on draft proofing homes for the first order of magnitude saving, then insulate, then 'heat pump type' technologies. By which I mean aircon because it costs £5k not £15k, but some don't like aircon for heating because it can be drying.

 

[MikeInWimbledon]

I haven’t gone into the heat pump numbers properly but my first impression was that the Chancellor is only “giving away” some money which he wouldn’t have received otherwise.

My suggestion being that the tax man is only conceding some taxes that the punter would not have paid in the first place. (VAT, corporate taxes employment taxes, NI etc). Correct me if I’m wrong.

It’s easy to see that heat pumps are the right direction, but unclear if the right tech is there yet.

As for insulation and efficiency, some sympathy there, but the raw savings are there if people spend the money. It doesn’t need a tax break to achieve real savings in a Norther European country that prides itself on its obsolete inefficient homes and buildings

I upgraded the insulation and renewed the boiler of my twenty year old house a year ago and the process was going to pay for itself in four years, now maybe even less, given the way energy prices have gone this quarter.

Energy efficiency? The fastest path I can see is to knock down great chunks of the UK and rebuild. With all due respect to Victorian buildings, like Parliament and most London homes, they’re obsolete tech long overdue for replacement, rather than simple fettling.

 

[Dryce]

You’ve got have early adopters otherwise the cost per unit to manufacture will never come down. 40” plasmas TVs cost £5/£6k 20 years ago, within five years they were a grand, now a 60” LCD can be had for what £600? No doubt people said, these idiots who bought at £5k should have waited a few more years…. Without realising that if no one buys then the manufacturers don’t make.

Well if 40" plasma TVs had been subsidised you might have a case.

But as they were not then your example actually *counters* the need for green subsidies because the market adapted and developed without them.

However there is another wee problem. Consumer electronics tend to get lighter and smaller and use less material. So compare the weight of one of those 40" plasma TVs with a modern LCD. Cars on the other hand use substantial weight of material as do EVs - and thre is no real sighn of them gettting lighter - and there is an issue with supply of the materials they need.

The subsidies represent a massive moral imbalance. And those in government at all levels seem to ignore that fundamental.

 

[Dryce]

Energy efficiency? The fastest path I can see is to knock down great chunks of the UK and rebuild. With all due respect to Victorian buildings, like Parliament and most London homes, they’re obsolete tech long overdue for replacement, rather than simple fettling.

I would go a different path.

I would set a per-capita energy allowance. Every adult citizen gets the right to buy energy at standard taxation rates (depending on source) up to that allowance. Parents get a child allowance.

Once you use your allowance higher levels of taxation taxation system kicks.

But - as a kicker ... I'd allow private individuals to trade their unused allowance or get a rebate by giving back to the state.

So you carry your citizen energy allowance card - if you don't use it then the taxation rate is high on petrol or your household energy or your EV charger. If you use your card you get a lower rate of tax applied and there is a deduction from your citizen energy allowance.

Costly system? Well maybe. But then against the cost of smart meters, green energy subsidies, or any other scheme - maybe not.

Assuming the technical implementation was acceptable - there would be another showstopper ? I suspect that issue of it being a *citizen* based allowance.

 

[zipdip]

So we do nothing until China does?

Is that how it works?

Well yes thats what we should do,for our energy needs we should build nuclear power stations,we need to stop fooling ourselves,China is without doubt the biggest polluter but plenty of Asian countries also add to the pollution along with the US and other countries like Russia.
These green measures rolled out are crazy,heat pumps do not work for ordinary properties be they ground or air,the use of Hydrogen in boilers is very dangerous,the storage of Hydrogen is at a very high bar somewhere in the region of 400 bar against say LPG at 25 bar and natural gas at 2 bar or less.
If we wanted to cut our pollution then stop Drax,stop people burning wood in their stoves,cost nothing, but people would be up in arms about it,and so we enter the loonie period in our lives where for maybe 5 years we will waste money until the little boy manages to get the attention of those in power, to point out we can see their exposed backsides and the pollution is worse than when we began.

 

[MikeInWimbledon]

I would set a per-capita energy allowance. Every adult citizen gets the right to buy energy at standard taxation rates (depending on source) up to that allowance. Parents get a child allowance.

Excellent. But as someone retired, who doesn't "go to work" any more, and who aims to spend half the year in the EU and RoW, I would say that.

Tough on anyone living in the cold North who needs to drive 15,000 miles a year, but it's equitable. Those who use the most energy are taxed, and everyone's encouraged to live in Cities for energy efficiency.

And just fine canny types who burn wood as a workaround or who evade energy fines by driving company EV's

.

 

[markjay]

...But it's worse than that because those who cannot afford to buy a new car are increasingly hit with daily charges to enter low emission zones....

Not disagreeing with your post in general, but the specific point you make regarding low emissions zone is incorrect.

In London, the following applied to ULEZ:

"Virtually all petrol cars sold from 2005, plus some registered between 2001 and 2005, petrol vans sold after 2006 and motorbikes registered after July 2007 are ULEZ-compliant"

The issue with ULEZ isn't about being able to buy a new car, instead it's about owners clinging-on to their Diesel cars due to the believe that they are more economic to run.

TfL also runs a scrappage scheme where it offers grants of between £1,000 and £2,000 to people wishing to scrap old Diesel cars in favour of petrol.

(In fact, two people I know have just bought old petrol cars - both Hondas, a 52 reg and an 04 reg - and both are ULEZ compliant)

So ULEZ isn't a poor-vs--rich issue, it's strictly a Diesel-vs-petrol issue.

For this reason, ULEZ shouldn't really be bundled with EVs, where clearly any grant on a new purchase will only benefit those who can afford to buy or lease a new car that is eligible for the EV grant.

(That said, the EV grant only applies to cars costing up to £35k, so while those benefiting from it will obviously have to be reasonably well-off to afford one, it still won't apply to the wealthiest in society who are unlikely to buy or lease a sub-£35k car).

 

[Gollom]

Whilst the climate may be changing (it has done this throughout the Earths existence) i have yet to be persuaded that the current change is man made.

We are poised to bankrupt ourselves by chasing this CO2 rainbow and there is absolutely no assurance that our misguided efforts will have any effect whatsoever.

It is the biggest, costliest, misguided gamble humanity has ever taken.

If our reduction of CO2 does not stop climate change (as I believe it won’t) the environ mentalists will claim we didn’t act soon enough.

I fully appreciate the desirability of moving away from fossil fuels because of their increasing scarcity. This is a logical approach.

The answer would seem to be nuclear power and I’m happy to support this.

IMHO you are partly right. I think it is indeed nature but being accelerated by man?