The Green Party Policy on Energy Prices

Over 1.5 million children are growing up in cold homes. Illness relating to fuel poverty costs the NHS over £1 billion every year, and we have a higher number of people struggling to pay their energy bills than every European country other than Estonia. Meanwhile, the profits of the Big Six energy companies doubled between 2008 and 2010.

For the past two years, the Green Party MP for Brighton Pavilion, Caroline Lucas, has been a vocal supporter of the Big Six Energy Fix campaign, which is calling for a price cap and a public inquiry into the large energy companies.

We welcome the current party political and public debate about soaring fuel bills, and the structure of the UK energy market. Energy efficiency and transition to renewables should be central to the Government’s plans for the whole economy. The following paper sets out the Party’s vision for a low-carbon, affordable energy future, and summarises our position on the key policies announced by Labour and the Conservatives.

The Green Party’s vision for a low carbon, affordable energy future

We believe it is a scandal that the big energy companies are increasing bills and making large profits when many people are struggling with high bills and cold homes, and welcome the growing support for this view, sadly, by focussing on headline grabbing schemes, both main parties are sidelining meaningful solutions to the energy bill crisis:

Super Energy Efficiency

The only permanent solution to the energy bill crisis is to make all homes much more energy efficient – easy and cheap to heat so they become fuel poverty-proof. Doing so would also create hundreds of thousands of much needed jobs.

The Association for the Conservation of Energy has compared a range of policy options and found that installing energy efficiency measures could save a typical household over £500 each year – vastly more than the short term savings promised by either the Coalition or Labour.

We need a massive increase in energy efficiency schemes. The Green Party supports the Energy Bill Revolution campaign (Child Poverty Action, Age UK, Consumer Focus, Shelter and the GMB).

The campaign calls for carbon tax revenues – which currently disappear into the Treasury’s coffers – to be used to invest a major programme of home insulation and other energy efficiency measures.

The Green Deal has barely scratched the surface of the action needed. The latest figures show that only 1,173 households had Green Deal Plans in progress at the end of October, of which only 219 were ‘live’ (i.e. all measures installed).

We need a nationwide programme to make all homes super-energy efficient – with full insulation, modern boilers, and renewable energy sources such as domestic PV, solar hot water, or biomass heating. Such a programme, if funded through ‘recycled’ carbon taxes, could bring an estimated nine out of ten homes out of fuel poverty, quadruple carbon savings, and create up to 200,000 jobs across the UK.

Mandatory efficiency standards are crucial. Around seven in ten people in fuel poverty live in properties with the lowest energy efficiency ratings (E, F, or G). A genuine fuel poverty strategy would commit to lifting all properties to at least Band D standards by 2020, and raise the rest of our housing stock to today’s new build standards by 2030. In particular there must be a minimum efficiency standard in the private rented sector.

Weaning ourselves off gas and onto renewables

The failure of both main parties to get behind serious energy efficiency measures is a key reason that energy bills remain high. But another is the UK’s over-reliance on gas. Even the government’s own advisers say wholesale gas prices have been the main underlying cause of bill increases over the past decade. We therefore need to see much more ambitious policies on energy conservation and home grown renewable energy to reduce our reliance on expensive gas and improve the UK’s energy independence.

Renewable energy can go hand in hand with affordable energy and help cut our exposure to volatile fossil fuel prices. In Germany, increasing deployment of wind and solar has been a key factor in driving down wholesale electricity prices. However, investment in UK renewable energy industry is hampered by political and policy uncertainty.

Transforming our energy market

We need to create a radically better energy system – one where cooperative, community and independently owned local renewable energy schemes flourish, local people benefit from the energy generated, and profits can be reinvested back into the community for example in energy efficiency projects to cut bills further.

Anyone serious about diversity in the energy market, and cutting costs, would support the Green Party’s calls for renewables to be given priority access to the Grid, and for a regulatory framework which allows communities to buy the electricity they generate at wholesale costs, freeing them from the rip-off retail market. We need a target for community energy, a requirement for the grid to give priority connection to such projects and more democratic and decentralised ownership of distribution networks.

Labour’s price freeze and “market reset” proposals

A Labour Government in 2015 would, Ed Miliband says, take immediate action to freeze prices until January 2017. This would be a temporary measure and would be followed by the implementation of policies to “reset the energy market”, set out in a Green Paper published on 29 November.

We are in support of the relief that a temporary price freeze would bring, and Caroline Lucas voted in favour of Labour’s motion in their Opposition Day Debate. But we also need a much more ambitious and coherent approach, which transforms the way our energy is sourced, and sees a radical change to the ownership of our energy supply. It is disappointing that Labour seems reluctant to ask the broader questions about ownership and control of our energy infrastructure.

The Government’s Approach

‘Green crap’ Following an announcement that the Government would consider how to “roll back green levies” on fuel bills (reportedly dismissed as “green crap” by Downing Street),The Department of Energy & Climate Change (DECC) has announced measures including:

Changes to the Energy Company Obligation (ECO), including reducing the Carbon Emissions

Reduction Obligation element of ECO by 33 per cent .

Allowing energy suppliers to insulate easy to treat cavity walls and lofts as part of their ECO targets

Funding the Warm Homes Discount from general taxation rather than energy bills.

The attempt to focus debate on ‘green levies’ is a cynical, misleading and irresponsible move. It is designed not just to score party political points, but also to deflect attention away from the real causes of high bills: the failure to invest seriously in home energy efficiency; our unhealthy dependence on gas to generate power and heat our homes; and the unhealthy dominance of the profit-hungry big six energy companies in the UK energy market.

DECC’s own analysis shows that the main cause of higher bills over the past decade is the

increasing wholesale price of gas – and that the amount added to each bill to pay for social and environmental schemes is very small in comparison.

For all the Government’s spin, the measures represent a watering down of the ECO. The Green Building Council has said they are “bad news for people who cannot afford to heat their homes, especially if they live in solid walled properties, and bad news for thousands of construction industry workers who may well be joining the dole queue this Christmas.”

We agree. Green MP Caroline Lucas has said it is extraordinarily irresponsible, as well as counterproductive, for the Government to claim it is reducing energy bills by slashing

the very scheme that is designed to bring them down. Watering down our energy efficiency commitments at precisely the time they are most needed will mean more cold homes, more winter deaths, and job losses in the construction industry.

The only credible response to the current energy bill crisis is a massive increase in energy efficiency

programmes, prioritising the homes of the fuel poor, alongside minimum efficiency standards for UK housing stock.

Fracking

There will soon be a new tax regime for shale gas, with the effective tax rate reduced from 62% to 32%. This new ‘dash for gas’ will increase our reliance on fossil fuels, as well as busting our climate targets. The Green Party believes it is utterly irresponsible of the Chancellor to be offering tax breaks to companies extracting a new source of polluting, unpopular source of fossil fuel at a time when between 60 and 80 per cent of existing fossil fuel reserves must remain in the ground if we are to have any chance of avoiding catastrophic climate change.

Furthermore, leading energy industry consultants say it is unlikely that shale gas extracted in the UK will have material impact on prices between now and 2025. Likewise, Deutsche Bank, Chatham House, and OFGEM are all warning that UK shale gas won’t bring down prices.

Summary:

Ten things the Green Party would do to move us to a low-carbon, affordable energy future Carbon tax revenues used to invest a major programme to make all homes super-energy efficient :

Greater support for existing energy efficiency schemes, which could be funded from the estimated £150 million in additional VAT revenue that the Treasury will receive as direct result of higher energy prices this winter, and from a windfall levy on energy company profits

Reinstatement of the Government’s duty to eliminate fuel poverty,which a Government amendment to the Energy Bill is seeking to remove)

To meet this duty, robust minimum energy efficiency standards for households on low incomes,

comparable to those for new-build homes

An end to tax breaks for fracking

A programme to phase out fossil fuel subsidies, which cost the UK £4.3 billion in 2011

Measures to make the energy market fair for community-owned renewable companies, including giving them priority access to the Grid

Measures for a regulatory framework which allows communities to buy the electricity they generate at wholesale costs

Stronger incentives for larger scale renewable companies, set at adequate levels to remove the current policy uncertainty which is deterring investment

A commitment to a binding EU-wide target on renewables, aiming for 45% of our energy sourced from renewables by 2030

The Figures quoted in this article are all from House of Commons library. In 2008 the Big Six collectively made £2.2 billion annual profit. In 2012 they were nearly £3 billion

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