Please stop using the term "polluters" when you mean "families"

April 09, 2010 11:13 AM

DSC_1134 James Cameron (Vice Chairman of Climate Change Capital) has an article
in today's Times in which he completely misrepresents the reality of
who pays for the EU Emissions Trading Scheme (ETS).  The problem starts
with the article's title: "Use polluters’ cash to create a green bank",
in reality it is middle to low income families and particularly the elderly who
would pay for his plan.

In our report on the ETS we
outline the current situation.  Companies have to hold emissions
allowances in order to do various things that emit carbon dioxide, like
burning coal in a power plant.  That means those allowances are
valuable, as I write this blog they are worth €13.39.  Having to buy the
allowances pushes up the cost of doing things like generating
electricity and those costs are passed on to consumers in the form of
higher electricity prices.  At the moment those allowances are given
away for free, and the companies who get those free allocations make
windfall profits as they've been given something valuable.

In
order to stop that, governments are planning on starting to auction many
of the allowances instead of giving them away for free.  That will mean
governments get the windfall profits, still at the expense mostly of
ordinary consumers in higher energy bills, instead of companies like
energy generators who are currently being given free allocations.

Mr.
Cameron's basic plan is to use the revenues to government from
auctioning permits under
the ETS to capitalise an institution, his green bank, that would invest
in "green" things
like offshore windmills. To describe that money as coming from
"polluters" is completely misleading.  It is going to come out of your
pocket.

Another major problem with his plan is that the
politicians are already including the revenues from auctioning ETS
allowances in their spending plans.  The Government are planning on
using the revenue to reduce borrowing.  The Conservatives have announced
plans to spend it, mostly on building infrastructure to connect
renewable energy to the grid.  So if you want the funds for a green bank
then you'll need to cut back on other spending or pay more in taxes. 
Not only are the funds Mr. Cameron is talking about using coming out of
your pocket, using them in the way he wants will also mean an even
tougher fiscal
crunch
.

Finally, he sets up these plans as sensible investment
for the future, but he is talking about putting an awful lot of your
money (£40 billion is enough to give every family in Britain a windfall
payment of over £1,500) into some quite risky investments.  Private
investors are currently quite wary of investment in things like offshore
wind power and demanding high returns to justify the risk.  That's
because they know that their returns depend on huge subsidies from
taxpayers.  Citigroup Investment Research have warned about an
affordability crisis, as paying for a huge expansion in offshore wind
doubles electricity prices, which could see those returns slashed.  The
whole great scam could easily come crashing down if customers revolt at
facing such an increase in bills at the same time as a painful fiscal
adjustment goes through.  That was why I told readers of the Mail
on Sunday
to take care if they try to take advantage of feed-in
tariffs:

"Meanwhile, the Taxpayers Alliance
describes the subsidies - paid for by higher energy bills - as 'utterly
bonkers' and likely to cause outrage from other consumers when they twig
they are paying for them.

'Buyer beware,' says research director
Matthew Sinclair. 'If readers invest in the renewable energy scam on
the basis that the feed-in tariffs will pay out big over the coming
years, they could get a rude awakening if those subsidies disappear, or
are slashed after consumer outrage.'"

Mr.
Cameron's plan wouldn't be in the interests of ordinary families.  But
it might present an opportunity for "an investment manager and advisor
specialising in the opportunities generated by the global transition to a
low carbon economy", how convenient.

DSC_1134 James Cameron (Vice Chairman of Climate Change Capital) has an article
in today's Times in which he completely misrepresents the reality of
who pays for the EU Emissions Trading Scheme (ETS).  The problem starts
with the article's title: "Use polluters’ cash to create a green bank",
in reality it is middle to low income families and particularly the elderly who
would pay for his plan.

In our report on the ETS we
outline the current situation.  Companies have to hold emissions
allowances in order to do various things that emit carbon dioxide, like
burning coal in a power plant.  That means those allowances are
valuable, as I write this blog they are worth €13.39.  Having to buy the
allowances pushes up the cost of doing things like generating
electricity and those costs are passed on to consumers in the form of
higher electricity prices.  At the moment those allowances are given
away for free, and the companies who get those free allocations make
windfall profits as they've been given something valuable.

In
order to stop that, governments are planning on starting to auction many
of the allowances instead of giving them away for free.  That will mean
governments get the windfall profits, still at the expense mostly of
ordinary consumers in higher energy bills, instead of companies like
energy generators who are currently being given free allocations.

Mr.
Cameron's basic plan is to use the revenues to government from
auctioning permits under
the ETS to capitalise an institution, his green bank, that would invest
in "green" things
like offshore windmills. To describe that money as coming from
"polluters" is completely misleading.  It is going to come out of your
pocket.

Another major problem with his plan is that the
politicians are already including the revenues from auctioning ETS
allowances in their spending plans.  The Government are planning on
using the revenue to reduce borrowing.  The Conservatives have announced
plans to spend it, mostly on building infrastructure to connect
renewable energy to the grid.  So if you want the funds for a green bank
then you'll need to cut back on other spending or pay more in taxes. 
Not only are the funds Mr. Cameron is talking about using coming out of
your pocket, using them in the way he wants will also mean an even
tougher fiscal
crunch
.

Finally, he sets up these plans as sensible investment
for the future, but he is talking about putting an awful lot of your
money (£40 billion is enough to give every family in Britain a windfall
payment of over £1,500) into some quite risky investments.  Private
investors are currently quite wary of investment in things like offshore
wind power and demanding high returns to justify the risk.  That's
because they know that their returns depend on huge subsidies from
taxpayers.  Citigroup Investment Research have warned about an
affordability crisis, as paying for a huge expansion in offshore wind
doubles electricity prices, which could see those returns slashed.  The
whole great scam could easily come crashing down if customers revolt at
facing such an increase in bills at the same time as a painful fiscal
adjustment goes through.  That was why I told readers of the Mail
on Sunday
to take care if they try to take advantage of feed-in
tariffs:

"Meanwhile, the Taxpayers Alliance
describes the subsidies - paid for by higher energy bills - as 'utterly
bonkers' and likely to cause outrage from other consumers when they twig
they are paying for them.

'Buyer beware,' says research director
Matthew Sinclair. 'If readers invest in the renewable energy scam on
the basis that the feed-in tariffs will pay out big over the coming
years, they could get a rude awakening if those subsidies disappear, or
are slashed after consumer outrage.'"

Mr.
Cameron's plan wouldn't be in the interests of ordinary families.  But
it might present an opportunity for "an investment manager and advisor
specialising in the opportunities generated by the global transition to a
low carbon economy", how convenient.

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