Miliband's challenge: can you freeze energy bills and cut carbon at the same time?

The Labour leader may need to move some of the cost of energy efficiency schemes from consumer bills to taxation.

Ed Miliband has made a seemingly impossible promise. Energy bills will be frozen while the UK invests billions to stop burning gas and coal for power. What was he thinking? Implementing his plan may be more radical than it seems.

For years the established energy mantra has been "choose your poison". Bills can go up with rising gas prices or the cost of new wind-farms, but either way, they’ll go up. As the prediction has morphed into reality politicians have tried to find a way out.

Fracking - it’s said - will flood the market with cheap gas or energy efficiency will be so effective, so quickly, that households won’t even notice the extra costs. Neither idea currently looks like it will work.In a recent submission to Parliament, Bloomberg argued UK shale gas would cost about what we currently pay - just to get it out of the ground. And if what you are trying to do is cut global carbon emissions, fracking seems an odd way to go about it given that shale gas is a fossil fuel that releases carbon pollution when burned.

Officially, at least, the government still thinks home insulation will mean bills are lower in 2020 than they are now. Yet that can only happen if households have spent to insulate their homes (or consumers have been charged through their bills to subsidise it). The Green Deal was meant to square that circle, but it is manifestly not (yet) working.

Underlying the seemingly intractable problem is a silent assumption that all the costs of energy policy should be paid for almost entirely through bills, at market rates, with the help of the big six. It’s hard to freeze bills and invest billions if you insist that every cost you impose must be passed directly on to the consumer at rates of interest higher than the average mortgage.

It’s especially difficult if you insist on putting implementation for your policies into the hands of an group of firms who have very little to gain but much to lose if things go wrong. And it’s almost impossible if consumers don’t see any way of sharing in the profits on the investments they are paying for. These assumptions have their own logic, but it isn’t about freezing bills. If Miliband wants to fulfil his promise, it’s that set of assumptions he may have to break.

Some of the costs levied on bills go straight to the Treasury. The government’s Carbon Price Floor, for example, drives up the cost of power, supposedly in a (so far unsuccessful) attempt to make coal more expensive than gas. It’s expected to raise around £2bn for the Treasury by 2017, and more after that. But, if you are committed to cutting carbon out of the energy mix, a carbon tax on power plants is hardly a long term deficit fix.

Miliband could scrap it - replacing it with regulation to phase out carbon emissions from coal plants. Or he could use the money to pay for efficiency schemes - or simply to give every household a flat rebate on their bills.

More controversial would be measures which effectively move some of the cost to taxation, rather than bills, arguably a fairer way to pay for new infrastructure since it would enable the government to protect the most vulnerable people in society such as the fuel poor. The main way to do this would be to underwrite loans at low rates of interest - something the Germans already do. Loans for the government’s Green Deal energy efficiency scheme start at around 6 or 7%.

Reducing them to something closer to inflation would cut the cost to households and reduce the need to subsidise insulation measures through bills. The same logic applies to investments in clean energy.The cost of borrowing money helps determine how much consumers pay for the power but right now it can be too high, partly because investors worry about the government changing its mind.

Instead of paying investors to make up for their uncertainty the government could take on more of the risk itself (through the Green Investment Bank, for example) reducing the cost of borrowing and encouraging stability in energy policy. And just as we currently use taxpayer money to fund roads the treasury could invest in a new north sea grid which could benefit the whole economy and lower the costs of energy.

R&D and the development of new heat and sea based technologies could also come from taxation. The investment is relatively small and doesn’t just benefit bill payers - if they work - the technologies could provide exports for the whole economy, indeed we already fund renewable heat this way.

But cutting costs can’t just be about taking risk away from the private sector, or switching the burden away from bills. It could also be about challenging the perceived monopoly of the big six utilities and institutional investors by encouraging the UK’s regions and individuals to invest in its new energy infrastructure. By comparison, in Germany most of the investment in clean energy comes from individuals and local authorities and not the transnational energy giants. This needn’t be just about village based community projects. Why shouldn’t the City of Newcastle, for example, be an investor in the wind farm which provides it with power and jobs? Some policies are there - but not the funding.

Local projects, backed by residents through crowd-sourcing schemes, cooperatives or local authorities may also face fewer delays, driving down costs. And if local authorities, communities or individuals invest in clean energy then the returns go back to those communities - opening up the potential for the money to be used to cut bills further.

New entrants may be particularly important if the existing energy retailers become reluctant investors as a result of policies to freeze bills. In the short-term, a spike in the price of gas - due to war overseas, for example - will put pressure on energy firms to push up bills.

A two year freeze may be possible - by forcing firms to buy more of their gas on long term contracts. The main risk, for companies, would be that their customers switch away - but the industry isn’t exactly known for it’s fast customer turnaround. Labour has also suggested the cap may be moved in the event of extreme events like a war.

More storage, greater European regulation of the market, and moves to split firms up so they don’t buy and sell gas from themselves may help - as would the very retro and highly unlikely notion of state support at times of price spikes. Whilst gas is a big part of our energy mix action, these measures may keep prices stable on average - but the ride will be bumpy - both up and down. Ultimately, freezing bills probably means not just changing how we fund our energy infrastructure but changing what we use to generate the power and the heat we need.

Damian Kahya is editor of Greenpeace Energydesk

Ed Miliband gives a radio interview next to a giant ice cube representing Labour's energy price freeze at the party's conference in Brighton last month. Photograph: Getty Images.

Damian Kahya is editor of Greenpeace Energydesk

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The most terrifying thing about Donald Trump's speech? What he didn't say

No politician uses official speeches to put across their most controversial ideas. But Donald Trump's are not hard to find. 

As Donald Trump took the podium on a cold Washington day to deliver his inauguration speech, the world held its breath. Viewers hunched over televisions or internet streaming services watched Trump mouth “thank you” to the camera, no doubt wondering how he could possibly live up to his deranged late-night Twitter persona. In newsrooms across America, reporters unsure when they might next get access to a president who seems to delight in denying them the right to ask questions got ready to parse his words for any clue as to what was to come. Some, deciding they couldn’t bear to watch, studiously busied themselves with other things.

But when the moment came, Trump’s speech was uncharacteristically professional – at least compared to his previous performances. The fractured, repetitive grammar that marks many of his off-the-cuff statements was missing, and so, too, were most of his most controversial policy ideas.

Trump told the crowd that his presidency would “determine the course of America, and the world, for many, many years to come” before expressing his gratefulness to President Barack Obama and Michelle Obama for their “gracious aid” during the transition. “They have been magnificent," Trump said, before leading applause of thanks from the crowd.

If this opening was innocent enough, however, it all changed in the next breath. The new president moved quickly to the “historic movement”, “the likes of which the world has never seen before”, that elected him President. Following the small-state rhetoric of his campaign, Trump promised to take power from the “establishment” and restore it to the American people. “This moment," he told them, “Is your moment. It belongs to you.”

A good deal of the speech was given over to re-iterating his nationalist positions while also making repeated references to the key issues – “Islamic terrorism” and families – that remain points of commonality within the fractured Republican GOP.

The loss of business to overseas producers was blamed for “destroying our jobs”. “Protection," Trump said, “Will lead to great strength." He promised to end what he called the “American carnage” caused by drugs and crime.

“From this day forward," Trump said, “It’s going to be only America first."

There was plenty in the speech, then, that should worry viewers, particularly if you read Trump’s promises to make America “unstoppable” so it can “win” again in light of his recent tweets about China

But it was the things Trump didn't mention that should worry us most. Trump, we know, doesn’t use official channels to communicate his most troubling ideas. From bizarre television interviews to his upsetting and offensive rallies and, of course, the infamous tweets, the new President is inclined to fling his thoughts into the world as and when he sees fit, not on the occasions when he’s required to address the nation (see, also, his anodyne acceptance speech).

It’s important to remember that Trump’s administration wins when it makes itself seem as innocent as possible. During the speech, I was reminded of my colleague Helen Lewis’ recent thoughts on the “gaslighter-in-chief”, reflecting on Trump’s lying claim that he never mocked a disabled reporter. “Now we can see," she wrote, “A false narrative being built in real time, tweet by tweet."

Saying things that are untrue isn’t the only way of lying – it is also possible to lie by omission.

There has been much discussion as to whether Trump will soften after he becomes president. All the things this speech did not mention were designed to keep us guessing about many of the President’s most controversial promises.

Trump did not mention his proposed ban on Muslims entering the US, nor the wall he insists he will erect between America and Mexico (which he maintains the latter will pay for). He maintained a polite coolness towards the former President and avoiding any discussion of alleged cuts to anti-domestic violence programs and abortion regulations. Why? Trump wanted to leave viewers unsure as to whether he actually intends to carry through on his election rhetoric.

To understand what Trump is capable of, therefore, it is best not to look to his speeches on a global stage, but to the promises he makes to his allies. So when the President’s personal website still insists he will build a wall, end catch-and-release, suspend immigration from “terror-prone regions” “where adequate screening cannot occur”; when, despite saying he understands only 3 per cent of Planned Parenthood services relate to abortion and that “millions” of women are helped by their cancer screening, he plans to defund Planned Parenthood; when the president says he will remove gun-free zones around schools “on his first day” - believe him.  

Stephanie Boland is digital assistant at the New Statesman. She tweets at @stephanieboland