Britain’s Cunning Plan to Take the Political Sting Out of Massive Emission Cuts (1)

By Mathew Carr

 Dec. 9, 2020 — LONDON: Britain is tackling one of the hardest parts of its energy transition in the mid 2030s, and it’s finding a way to shield taxpayers/consumers/voters from the huge shifts in store for them.

Taken separately, some of the numbers look enormous, and politically scary.

The country is set to raise 27 billion pounds ($36 billion) a year via a 75 pounds a ton carbon price across most domestic sectors. That price is about double current levels — at the moment the country’s carbon price does not apply to transport and household emissions. It mainly covers electricity and industry and only raises about 3 billion pounds a year.

Eek. I can imagine the headlines in the red-top newspapers saying the government’s “green crap” will send us all broke.

But, wait a minute. The existing fuel duty is completely disappearing as the country zeros out emissions by the middle of the century. How much does that currently raise? 28 billion pounds.

WOW. That’s very close to the new carbon price’s 27 billion pounds.

So new costs for voters are coming, but old costs are going. So the total cost increase is tiny — less than 1% of output, according to official government adviser the Committee on Climate Change.

Here’s another example.

Electric vehicles are set to save customers 500 pounds a year in fuel costs. This will make transport potentially very cheap indeed. Everyone will head to the roads, clogging them up and causing congestion (at least we won’t have to breath in toxic exhaust as we sit in the tailbacks).

I can see the headlines again, saying how incompetent the government is for creating all this clean, cheap transport without investing properly in roads.

Britain has a cunning plan for that too, it can start a widespread road-charging system, which will prod people onto trains and electric buses where possible, cutting more emissions and helping protect the climate a little bit more. (London’s tightening its congestion charge. It now applies even on Sundays *Note to self — I paid 145 pounds for fines on Tuesday after not realising this).

“If we can line things up nicely, then there’s a good story,” said Mike Thompson, chief economist at the committee.

Instead of lumping consumers with huge costs, the country can tackle the problem through clever tax changes and some well-thought-out finance, even for the most controversial investments in private homes, he said in a phone interview.

“It’s about insulating the houses better. It’s about, in some cases, upgrading that radiators, and then sticking in a heat pump. Once you’ve done that once, well, then you can kind of leave the market to do the replacements in 15 years’ time, probably.

“That would be a legitimate investment programme. We know there’s a payoff at the end where we get more cost savings on our bills. So to borrow and do that — it’s not a crazy thing to do, particularly coming out of a recession when we need to stimulate the economy.”

Here’s an illustration:

U.K. Climate Change Committee.

The chart above shows that replacing the spacial heating could mean costs of 35 billion pounds a year, when added to existing fuel costs. But the other savings,help out to the tune of 25 billion pounds a year.

Effectively, the country — most countries — will have to replace their spacial heating systems completely while still using the old one for several years or even longer.

Politicians can work out how to keep voters’ eyes on the prize:

“In the long term, the energy costs are lower for everything,” Thompson said. “And by 2050, electricity is cheaper. Eating is cheaper, driving cars is cheaper. But it’s just that period in between when you’ve got this investment as well, you’ve got to pay for that — you need to get through.

“So to say we’ll borrow and we’ll spend on that as a national infrastructure program really — knowing that at the end, when you’ve got to pay back that borrowing, you’re also leaving people with with much lower costs. That’s potentially quite an attractive policy.”

The Climate Change Committee on Wednesday published its first ever detailed road map for a fully decarbonised nation, what it claims is a world first.

Last year, the U.K. became the first major economy to make net zero emissions law for 2050. The Sixth Carbon Budget (2033-2037) charts the decisive move to zero carbon for the U.K. because polluting emissions must fall by almost 80% by 2035, compared to 1990 levels–a big step-up in ambition. Just 18 months ago this was the U.K.’s 2050 goal.

This chart shows what Britain’s trying to do:

From the Climate Change Committee of the U.K. IAS=International Aviation and Shipping

The world is ramping up effort to protect the climate, but the fraught politics of shifting away from fossil fuels continues to slow progress.

The EU achieved emission cuts since 1990 because of a fall in the greenhouse gas output of lower-and-middle-income Europeans, charity group Oxfam revealed Tuesday. Meanwhile, pollution produced by the richest 10% rose.

Tackling an inequality of blame for the climate crisis is key to delivering the new EU 2030 climate target, which is due to be discussed by EU leaders later this week, Oxfam said in a report.

The EU is proposing an emissions cut of at least 55% below 1990 levels in 2030, while the U.K. is now going for at least a 68% reduction.

See this link for source documents.

(Updates with Oxfam at the end, adds comments, first chart.)

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