Green with envy: The politics of decarbonisation

Adam Bell

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Just about every party, barbecue and village fete across Middle England will have at least one knot of middle-aged folk trading stats. It may sound a little like this: “Four point five kilowatt array! A cop of two point nine! Guaranteed charge of at least 80 per cent!” 

These competing well-heeled revolutionaries will brandish their phones to illustrate the finer details of the performance of their air-to-water heat pump or some other piece of low-carbon technology. But all of the players of this game are already winners, and the reason why lays bare one of the key challenges confronting the politics of decarbonisation in the wake of the cost of living crisis. 

Those who have invested in low carbon technology are able to ignore at least part of the painful increases in energy prices that have blighted the nation since Russia’s invasion of Ukraine. They perhaps have an array of solar panels covering their roof, producing considerably more electricity than their average demand. They may have a heat pump, which takes that electricity and uses it to capture environmental heat, removing the need for an oil or gas boiler. They may have a battery to store the electricity from their solar panels for use at night. Or they might capture the output of their heat pump in a large thermal store – traditionally a hot water tank, but also a range of more advanced materials that achieve the same thing for a much smaller footprint. And the chances are an electric vehicle will sit in the drive – one that can be charged from their solar panels or cheaper nighttime electricity from the grid. 

With all of these assets in place they will have reduced their bills to a few hundred pounds while the rest of us pay several thousand. One might say that they deserve their lower outgoings; they have placed their capital at risk by buying new and unproven technology and so should be able to reap the rewards of doing so.  

While this is to a degree true, none of these devices are in fact that new. The photovoltaic effect on which solar panels rely was discovered in 1839 by the 19-year-old Edmond Becquerel who had been permitted to mess about in his father’s laboratory. Set free to play with various bromides of silver, Becquerel simultaneously changed the future of power generation and provided an excellent argument for hands-off parenting. Heat pumps were invented in 1748 by William Cullen as a means of providing artificial cooling.  

The claim that heat pumps cannot work in Britain is tantamount to claiming that your refrigerator is lying to you and that the laws of thermodynamics only apply to other lesser nations

The claim that heat pumps cannot work in Britain is tantamount to claiming that your refrigerator is lying to you and that the laws of thermodynamics only apply to other lesser nations. As for the electric vehicles nesting in the driveways of our revolutionaries, the UK accidentally became the world’s biggest market for electric vehicles for most of the 20th century by mandating that urban delivery vehicles be non-polluting after the first world war.  

In fairness, the devices that are underpinning this new electrical self-reliance have grown considerably in sophistication over the last two decades, and each of us can now run our entire personal power grid from an app on our phone. And, by consuming so much of their own power, our revolutionaries leave more for the rest of us and do therefore reduce costs at the margin. But, despite their low carbon virtue, they are almost the perfect illustration of the deep unfairness of a system that is happy to impose significant costs on the capital-poor masses while leaving the better-off the option of buying their way out of difficulty.  

This particular piece of injustice is not going to prompt the proletariat to rise up against capitalism, but it does create a very real risk for the UK’s low carbon transition. Many of the policies that are critical to decarbonisation are not funded by a traditional tax, but a levy on the bills of consumers. The amount a consumer pays under these levies is not determined by their income or their wealth, but by the amount of energy they consume. These costs are about £157 a year for a bill-payer with a tariff set at the price cap. This is less than 10 per cent of the overall bill, as average bills remain north of £1,800, but still a considerable outgoing for the least well-off. And it is not a fixed cost; the more you consume the more you pay. 

This amount pays for support mechanisms for onshore and offshore wind, large-scale solar farms, various energy efficiency schemes and the Warm Home Discount; the latter is a fixed discount to bills for the worst off. This means that someone at the struggling end of the middle classes pays the same to give their poorer neighbour a discount as someone with a lovely pad out in the country, and considerably less than our green revolutionaries. This is manifestly unfair. 

To understand how this state of affairs came about, one must reach back to the 1990s and the period immediately post-privatisation when it became very clear that none of the new private energy companies wanted to take on Britain’s ageing nuclear power plants. The Conservative government found this rather churlish and after creating a new publicly-owned company to own the nuclear plants it put in place the Non-Fossil Fuel Obligation. This required the privatised energy companies to buy power from these plants at a fixed price, a price which the private companies obligingly passed on to their customers.  

Without really noticing it, the Government had created an instrument that meant very little to the public but a great deal to Whitehall: a tax not controlled by the Treasury. This proved a far-too-tempting option for generations of officials and ministers after this, as it was much easier than getting the Treasury to unlock its purse strings. The Treasury, recognising that this was a very large source of expenditure that could stay off its books, became complicit in perpetuating this deal. Our green revolutionaries are only not tax avoiders because the entirety of Whitehall has agreed that this state-mandated payment is not a tax.  

This state of affairs cannot continue. As more and more of our better-off fellow citizens opt to electrify their lives, the cost of this levy will be concentrated on fewer and fewer people. We have to decarbonise our economy, but we cannot do it on the backs of the poorest. These costs must be moved to general taxation. 

There is a precedent for this. The Renewable Heat Incentive was a 2010s-era policy that provided an ongoing payment to people who installed renewable heating. This was intended to develop a market in heat pumps, but – notably – failed to do so, and instead has paid billions to people who burn wood pellets for heat while at the same time managing to accidentally bring down Stormont through the cash-for-ash scandal.  

This particular set of accidents was paid for by the taxpayer, rather than via a levy on bills. We can perhaps hope that the coming decade will see the government move to progressive payments for all decarbonisation, even if only by mistake.

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