The CCC recommends we need 2.3 million domestic heat pump installations by 2030. At the current rate of 450/month by 2030 we will have 108,600 - just 5% of that target. |
When it comes to large ticket items like heating, people tend to choose on the basis of cost and at the moment heat pumps are more expensive than gas central heating. The running costs are comparable - very roughly gas is a third the cost of electricity and heat pumps are three times as efficient. However, a typical replacement gas boiler will set you back £2300 whereas an air source heat pump will cost £7,000 to £11,000 [3].
Fuel prices indexed to 2010, from [4] |
The CCC's scenario is based on steadily increasing fossil fuel prices but history tells a different story. The price of oil has been particularly volatile. Assuming the world as a whole meets the Paris commitments demand for fossil fuels will drop further, which surely means prices will drop too. This makes reliance on wholesale prices to drive demand for low carbon heating a very bad bet.
Carbon taxes are all the rage. Across the world, 13% of emissions are covered by some kind of carbon price system [5]. In fact we already have a sort of tax, but it only affects some users. Industrial fuel users (including power stations) pay a minimum carbon price called the Carbon Price Floor. Commercial fuel users pay the Climate Change Levy. However, domestic users are exempt from all these taxes. Increasing the carbon price floor makes heat pumps even less economic for home owners because it makes electricity more expensive but does not affect other domestic fuels!
Any kind of tax is generally unpopular, but if the money raised is redistributed fairly carbon taxes mean poorer households gain more than they lose. They use less energy (on average) so they pay less tax but they would benefit just as much, if not more (see WikiLeaks reveals that Clinton considered a carbon tax — but her campaign missed something.) Plus experience from Canada and the UK shows that carbon taxes do not harm the economy [6][7]. (See also Welfare versus Carbon Tax.)
Relying on commodity prices to drive the transition to low carbon technology will never work. Carbon taxes can work - and at the same time they can benefit the poor with no harm to the economy.
[1] Sectoral scenarios for the fifth carbon budget - technical report (Committee on Climate Change) Nov 2015
[2] RHI Deployment Data September 2016 (ONS) Sep 2016
[3] Prices from the Energy Savings Trust
[4] Quarterly energy prices (ONS) Sep 2016
[5] Continuing Momentum for Putting a Price on Carbon Pollution (The World Bank) May 2016
[6] The impact of a carbon tax on
manufacturing: evidence from microdata (LSE Research online) 2014
[7] British Columbia's carbon tax - the evidence mounts (The Economist) 2014
It's hard to think of a good reason against a carbon tax, but the political momentum just isn't there. People hear the word "tax" and automatically assume it's an extra tax and that it will cost more. Trying to float a new form of taxation is an uphill battle, even more so in the UK with its neo-lib media who are certain to shout it down as yet more green crap.
ReplyDeleteThat is why the Citizens Climate Lobby have been calling their scheme a 'carbon fee and dividend', avoiding the word tax. But I don't think too many people are fooled. I notice Canada is talking about a carbon price and leaving it to the states how they implement it. http://www.cbc.ca/news/politics/canada-trudeau-climate-change-1.3788825
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