The UK government is championing policy that means – according to the Sunday Times – that household energy bills are ‘set to double’. This makes a good headline, but relies on the assumption that household consumption remains steady as the price of energy doubles. The intention of course is to cut consumption; more expensive energy makes people careful with what they use. As the cost of energy rises, we should be looking for solutions that hold household bills in check through greater efficiency and frugal behaviour recognising that energy is a valuable and limited resource.
All professionals involved with buildings, infrastructure and industrial processes need a compelling reason to be frugal with energy. Future energy bills will be affordable, not through holding prices down but through using less energy. The logic is inescapable but politics is not a rational process. When the energy market pushes prices higher, it is accepted as beyond the politician’s control. When politicians set policy that will drive energy prices higher, politicians get the blame.
The announcement of an overhaul of energy policy expected this week comes hard on the heels of energy price rises. The rational reaction is to support tough policy because the recent increase in the cost of energy is an indicator of massive price hikes to come as energy supplies are stretched. Of course we need to move quickly to reduce consumption; that means policy to support investment; first, in energy efficiency (the biggest win), second, in generating low-carbon energy. The policy has to be to push energy prices higher; it is disingenuous for observers to argue otherwise.
Opposing tough energy policy is like lemmings opposing calls to slow down as the mass migration flocks towards the cliff edge. We are enjoying cheap energy; it makes no sense to keep it cheap and ignore the fact that the balance of supply and demand will drop off a cliff unless we take action soon.
The government should give people credit for having more intelligence than a pack of lemmings and ignore reports in the press to hold back on high energy prices. The rational silent majority expect higher energy prices; there will be complaints but people know this is the future. Let us have clarity; high energy prices are just around the corner; all decisions must be based on this unambiguous foundation to policy.
This stick policy could do with a carrot to go with it, Peter.
ReplyDeleteA national building insulation policy to, say, PassivHaus levels of insulation, paid for by the government printing the money, could save 80% of the fuel we currently use in buildings. This would have a huge positive affect on the nation's balance of payments, could reduce fuel poverty to virtually zero, leave a legacy of well insulated, fuel efficient buildings, would boost employment and boost the economy at a time when it is flagging.
If the money to pay for it were printed by the government, rather than borrowed from the banks, and then taxed back from savings in fuel bills it would not be inflationary. The banks would benefit by the increased throughput of cash in people's accounts but the government, and us, wouldn't be saddled with unjustifiable interest charges on bank loans. The banks don't have the money to lend anyway and would write the money into existence in the form of a loan, as they usually do.
If the government are to reach their policy requirements of an 80% reduction in fossil fuel use by 2050 such a scheme will be necessary as the new Warm Homes Scheme will not provide anywhere near enough impetus or cash to succeed. To get the costs down large area contracts need to be let rather than individual house contracts as are happening now.
A few people are using cash in the bank to pay for their houses to be insulated and are getting a much better return on capital through their fuel savings. Most people don't have enough capital, though.
To reach the government targets we need to be insulating several houses a day from now until 2050 not the several a year that is happening at the moment. Only a national scheme can come up with the goods.