Coalition environmental policy set to hit ordinary families in the pocket

May 13, 2010 1:46 PM

There is a significant section, in the document setting out the new coalition's programme, about environmental policy.  There is one bit of good news, they are going to scale back Home Information Pack regulation.  But the overwhelming direction of the changes they propose is to make the green rip-off established by the last Government even bigger.  Here are a few of the ways that you will pay higher bills because of their new policies:


"The full establishment of feed-in tariff systems in electricity – as well as the maintenance of
banded ROCs [Renewables Obligation Certificates]."


The first part of this is the policy of paying astronomical subsidies to small renewable installations - like solar panels on residential homes - that aren't economical.  Even George Monbiot in the Guardian has called it a rip-off.


The second part means paying more subsidy to the most expensive renewable energy sources.  As much as £100 per MWh for offshore wind.  As I said in the report Ending the Green Rip-Off, the Government has gone from picking winners to picking losers.  They should be finding the most affordable way of achieving their objectives, not the most expensive.


"The creation of a green investment bank."


In this video Julian Morris explains how these kinds of Government investment funds tend to lose taxpayers a lot of money:



More than that, as I wrote recently the green investment bank means putting taxpayers' money into bad investments that actual investors playing with their own money are increasingly wary of, thanks to the risk of a justified consumer backlash at high energy prices.


"The establishment of an emissions performance standard that will prevent coal-fired power stations being built unless they are equipped with sufficient CCS to meet the emissions performance standard."


This will stop coal power plants unless they are fitted with expensive carbon capture and storage technology.  It will either make our energy more expensive directly or indirectly by forcing greater reliance on imported gas, which means we are too exposed to potential spikes in the gas price.


We would be much better off replacing our old and inefficient coal plants with new, efficient ones.  This will stop that happening by making the perfect - in terms of greenhouse gas emissions - the enemy of the good.


"The establishment of a high-speed rail network."


The transport budget is almost certain to face cuts in the fiscal crisis.  Motorists are already getting a raw deal.  Expensive rail projects like Crossrail and the infrastructure for the Olympics are already planned.  All that will mean huge pressure on the roads and commuter railways that are most overcrowded and perform the vital task of getting people into work in the morning.  So what are the politicians doing?  Putting in new orders for expensive railways.


The interests of suburban commuters are being forgotten yet again.


"The cancellation of the third runway at Heathrow.


The refusal of additional runways at Gatwick and Stansted."


I've written about this quite a lot over at ConservativeHome.  I wrote here that the opposition to a third runway was based on a fragile coalition.  Part of that coalition is activists like Plane Stupid trying to make flying less affordable and convenient for British families - in an attempt to cut emissions - despite surely knowing it is nothing but a gesture in terms of climate change with China in the process of building 100 entire new airports.  The coalition also includes those opposed to the expansion of Heathrow out of a specific concern that it will create problems for their area, particularly increased noise.


The latter group are more electorally important, and probably the reason for Conservative opposition to Heathrow expansion.  But they aren't necessarily against the expansion of airports in general, they just don't want the airport in their backyard to grow.  It isn't like people in West London don't fly.


The coalition appears to have decided it is not just opposed to Heathrow but a part of the first group who are pretty much against all airport expansion.  They are stopping all increases in capacity at the major airports in the South of England where a burgeoning population want to fly for business or foreign holidays.  That will mean more delays on flights and, over time, more expensive flights.  Their position is dead against the interests of hard working families who want to enjoy a well earned holiday.


As I've discussed in earlier blogs, expansion at Heathrow is the only practical option to deliver the hub airport capacity that will keep travel affordable and convenient and the economy competitive:

"Heathrow is particularly important because it is a hub.  People fly to Heathrow then transfer to fly out somewhere else.  Those passengers can very easily travel via an airport in some other European country.  They will if Heathrow remains short of capacity.  Unfortunately, their traffic is very important in making travel more convenient for British families and businesses.

[...]

Transfer passengers make it economical for airlines to offer more flights, to more places, from Heathrow.  That means that someone who lives in, or near, London can fly directly (which is quicker and cheaper) to more places than someone living just about anywhere else.  They can also more easily choose a date and time to fly that suits their schedule.  This makes ordinary Britons' holidays easier – particularly if they are travelling to destinations off the beaten track.  It is also important to our economic competitiveness.  If they regularly have to fly out to Frankfurt or Paris before heading on to their final destinations, then over time business people will find it more convenient to leave London and move to Frankfurt or Paris, with their firms.  With the regulatory and tax burden in Britain increasing it would be a really bad idea to give business another reason to relocate.  Having Europe's most important hub airport in the city is great for London's economy."



"The replacement of the Air Passenger Duty with a per flight duty."


There's nothing wrong with this change in itself.  But this kind of "reform" tends to mean higher taxes.  Later on the coalition pledge that any increase will be put into further increasing the income tax threshold, but voters should be extremely wary of that sort of pledge.  Increasing the income tax threshold can also be paid for with spending cuts and giving politicians a new tax to play with will often mean they avoid cutting spending and we wind up with higher taxes than we would have overall.


"The provision of a floor price for carbon, as well as efforts to persuade the EU to move
towards full auctioning of ETS permits."


As I wrote at Conservative Home when the Conservatives first announced this policy, it will mean higher electricity bills.  Given that Citigroup Investment Research already expect existing policies to double prices between now and 2020, and there will also be pressure on household budgets from the measures needed to get government deficits under control, this is a dreadful idea.  Politicians should be reforming policy to reduce the burden on families, not increasing it still further.


Further policies that push up electricity prices will also mean huge numbers of job losses in manufacturing industry.


"Measures to make the import or possession of illegal timber a criminal offence."


Would the civil servants involved in this case face a criminal prosecution?


"Mandating a national recharging network for electric and plug-in hybrid vehicles."


You know who will pay for that network?  You.


It is incredible how lightly politicians throw around these kinds of mandates, commanding companies to make huge investments, these days.  Those costs get passed on to consumers and further add to the fiscal crunch we're facing over the next decade.


"We are agreed that we would seek to increase the target for energy from renewable sources,
subject to the advice of the Climate Change Committee."


This is absolutely incredible.  As I mentioned earlier, under existing targets bills are set to double.  Britain is set to have to invest more in the energy sector than Germany, France and Italy combined in order to meet climate change targets.  Adding even more to that burden now, with all the financial challenges the country is facing, would be incredible.




There are some other measures in there, but those are the key ones.  They have fudged the issue of nuclear power and that won't give much confidence to potential investors.


The parties' pledges are all for more spending, more ambitious targets and mandates for companies - the cost of which will be passed on to consumers, higher taxes and generally expanding the green rip-off.  At some point, there will be a backlash from ordinary families paying such a high price for failing policies.  Particularly with countries that emit far more than Britain not following our lead, meaning that our attempts to cut emissions are entirely in vain.


The coalition clearly aren't thinking seriously about how to deliver affordable climate change policy.  Their pledges are the result of a perverse bidding war between the different parties trying to appease activists by putting the biggest burden possible on consumers.




There is a significant section, in the document setting out the new coalition's programme, about environmental policy.  There is one bit of good news, they are going to scale back Home Information Pack regulation.  But the overwhelming direction of the changes they propose is to make the green rip-off established by the last Government even bigger.  Here are a few of the ways that you will pay higher bills because of their new policies:


"The full establishment of feed-in tariff systems in electricity – as well as the maintenance of
banded ROCs [Renewables Obligation Certificates]."


The first part of this is the policy of paying astronomical subsidies to small renewable installations - like solar panels on residential homes - that aren't economical.  Even George Monbiot in the Guardian has called it a rip-off.


The second part means paying more subsidy to the most expensive renewable energy sources.  As much as £100 per MWh for offshore wind.  As I said in the report Ending the Green Rip-Off, the Government has gone from picking winners to picking losers.  They should be finding the most affordable way of achieving their objectives, not the most expensive.


"The creation of a green investment bank."


In this video Julian Morris explains how these kinds of Government investment funds tend to lose taxpayers a lot of money:



More than that, as I wrote recently the green investment bank means putting taxpayers' money into bad investments that actual investors playing with their own money are increasingly wary of, thanks to the risk of a justified consumer backlash at high energy prices.


"The establishment of an emissions performance standard that will prevent coal-fired power stations being built unless they are equipped with sufficient CCS to meet the emissions performance standard."


This will stop coal power plants unless they are fitted with expensive carbon capture and storage technology.  It will either make our energy more expensive directly or indirectly by forcing greater reliance on imported gas, which means we are too exposed to potential spikes in the gas price.


We would be much better off replacing our old and inefficient coal plants with new, efficient ones.  This will stop that happening by making the perfect - in terms of greenhouse gas emissions - the enemy of the good.


"The establishment of a high-speed rail network."


The transport budget is almost certain to face cuts in the fiscal crisis.  Motorists are already getting a raw deal.  Expensive rail projects like Crossrail and the infrastructure for the Olympics are already planned.  All that will mean huge pressure on the roads and commuter railways that are most overcrowded and perform the vital task of getting people into work in the morning.  So what are the politicians doing?  Putting in new orders for expensive railways.


The interests of suburban commuters are being forgotten yet again.


"The cancellation of the third runway at Heathrow.


The refusal of additional runways at Gatwick and Stansted."


I've written about this quite a lot over at ConservativeHome.  I wrote here that the opposition to a third runway was based on a fragile coalition.  Part of that coalition is activists like Plane Stupid trying to make flying less affordable and convenient for British families - in an attempt to cut emissions - despite surely knowing it is nothing but a gesture in terms of climate change with China in the process of building 100 entire new airports.  The coalition also includes those opposed to the expansion of Heathrow out of a specific concern that it will create problems for their area, particularly increased noise.


The latter group are more electorally important, and probably the reason for Conservative opposition to Heathrow expansion.  But they aren't necessarily against the expansion of airports in general, they just don't want the airport in their backyard to grow.  It isn't like people in West London don't fly.


The coalition appears to have decided it is not just opposed to Heathrow but a part of the first group who are pretty much against all airport expansion.  They are stopping all increases in capacity at the major airports in the South of England where a burgeoning population want to fly for business or foreign holidays.  That will mean more delays on flights and, over time, more expensive flights.  Their position is dead against the interests of hard working families who want to enjoy a well earned holiday.


As I've discussed in earlier blogs, expansion at Heathrow is the only practical option to deliver the hub airport capacity that will keep travel affordable and convenient and the economy competitive:

"Heathrow is particularly important because it is a hub.  People fly to Heathrow then transfer to fly out somewhere else.  Those passengers can very easily travel via an airport in some other European country.  They will if Heathrow remains short of capacity.  Unfortunately, their traffic is very important in making travel more convenient for British families and businesses.

[...]

Transfer passengers make it economical for airlines to offer more flights, to more places, from Heathrow.  That means that someone who lives in, or near, London can fly directly (which is quicker and cheaper) to more places than someone living just about anywhere else.  They can also more easily choose a date and time to fly that suits their schedule.  This makes ordinary Britons' holidays easier – particularly if they are travelling to destinations off the beaten track.  It is also important to our economic competitiveness.  If they regularly have to fly out to Frankfurt or Paris before heading on to their final destinations, then over time business people will find it more convenient to leave London and move to Frankfurt or Paris, with their firms.  With the regulatory and tax burden in Britain increasing it would be a really bad idea to give business another reason to relocate.  Having Europe's most important hub airport in the city is great for London's economy."



"The replacement of the Air Passenger Duty with a per flight duty."


There's nothing wrong with this change in itself.  But this kind of "reform" tends to mean higher taxes.  Later on the coalition pledge that any increase will be put into further increasing the income tax threshold, but voters should be extremely wary of that sort of pledge.  Increasing the income tax threshold can also be paid for with spending cuts and giving politicians a new tax to play with will often mean they avoid cutting spending and we wind up with higher taxes than we would have overall.


"The provision of a floor price for carbon, as well as efforts to persuade the EU to move
towards full auctioning of ETS permits."


As I wrote at Conservative Home when the Conservatives first announced this policy, it will mean higher electricity bills.  Given that Citigroup Investment Research already expect existing policies to double prices between now and 2020, and there will also be pressure on household budgets from the measures needed to get government deficits under control, this is a dreadful idea.  Politicians should be reforming policy to reduce the burden on families, not increasing it still further.


Further policies that push up electricity prices will also mean huge numbers of job losses in manufacturing industry.


"Measures to make the import or possession of illegal timber a criminal offence."


Would the civil servants involved in this case face a criminal prosecution?


"Mandating a national recharging network for electric and plug-in hybrid vehicles."


You know who will pay for that network?  You.


It is incredible how lightly politicians throw around these kinds of mandates, commanding companies to make huge investments, these days.  Those costs get passed on to consumers and further add to the fiscal crunch we're facing over the next decade.


"We are agreed that we would seek to increase the target for energy from renewable sources,
subject to the advice of the Climate Change Committee."


This is absolutely incredible.  As I mentioned earlier, under existing targets bills are set to double.  Britain is set to have to invest more in the energy sector than Germany, France and Italy combined in order to meet climate change targets.  Adding even more to that burden now, with all the financial challenges the country is facing, would be incredible.




There are some other measures in there, but those are the key ones.  They have fudged the issue of nuclear power and that won't give much confidence to potential investors.


The parties' pledges are all for more spending, more ambitious targets and mandates for companies - the cost of which will be passed on to consumers, higher taxes and generally expanding the green rip-off.  At some point, there will be a backlash from ordinary families paying such a high price for failing policies.  Particularly with countries that emit far more than Britain not following our lead, meaning that our attempts to cut emissions are entirely in vain.


The coalition clearly aren't thinking seriously about how to deliver affordable climate change policy.  Their pledges are the result of a perverse bidding war between the different parties trying to appease activists by putting the biggest burden possible on consumers.




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