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 dog at the end of the lead may be small, but in fact what I’m walking is a hound of love

There is a new, hairy face in the Hovel.

There is a new, hairy face in the Hovel. I seem to have become a temporary co-owner of an enthusiastic Chorkie. A Chorkie, in case you’re not quite up to speed with your canine crossbreeds, is a mixture of a chihuahua and a Yorkshire Terrier, and while my friend K— busies herself elsewhere I am looking after this hound.

This falls squarely into the category of Things I Never Thought I’d Do. I’m a cat person, taking my cue from their idleness, cruelty and beauty. Dogs, with their loyalty, their enthusiasm and their barking, are all a little too much for me, even after the first drink of the day. But the dog is here, and I am in loco parentis, and it is up to me to make sure that she is looked after and entertained, and that there is no repetition of the unfortunate accident that occurred outside my housemate’s room, and which needed several tissues and a little poo baggie to make good.

As it is, the dog thinks I am the bee’s knees. To give you an idea of how beeskneesian it finds me, it is licking my feet as I write. “All right,” I feel like saying to her, “you don’t have to go that far.”

But it’s quite nice to be worshipped like this, I have decided. She has also fallen in love with the Hovel, and literally writhes with delight at the stinky cushions on the sofa. Named after Trude Fleischmann, the lesbian erotic photographer of the Twenties, Thirties and Forties, she has decided, with admirable open-mindedness, that I am the Leader of the Pack. When I take the lead, K— gets a little vexed.

“She’s walking on a loose lead, with you,” K— says. “She never does that when I’m walking her.” I don’t even know what that means, until I have a think and work it out.

“She’s also walking to heel with you,” K— adds, and once again I have to join a couple of mental dots before the mists part. It would appear that when it comes to dogs, I have a natural competence and authority, qualities I had never, not even in my most deranged flights of self-love, considered myself to possess in any measurable quantity at all.

And golly, does having a dog change the relationship the British urban flâneur has with the rest of society. The British, especially those living south of Watford, and above all those in London, do not recognise other people’s existence unless they want to buy something off them or stop them standing on the left of the sodding escalator, you idiot. This all changes when you have a dog with you. You are now fair game for any dog-fancier to come up to you and ask the most personal questions about the dog’s history and genealogy. They don’t even have to have a dog of their own; but if you do, you are obliged by law to stop and exchange dog facts.

My knowledge of dog facts is scant, extending not much further beyond them having a leg at each corner and chasing squirrels, so I leave the talking to K—, who, being a friendly sort who could probably talk dog all day long if pressed, is quite happy to do that. I look meanwhile in a kind of blank wonder at whichever brand of dog we’ve just encountered, and marvel not only at the incredible diversity of dog that abounds in the world, but at a realisation that had hitherto escaped me: almost half of London seems to have one.

And here’s the really interesting thing. When I have the leash, the city looks at me another way. And, specifically, the young women of the city. Having reached the age when one ceases to be visible to any member of the opposite sex under 30, I find, all of a sudden, that I exist again. Women of improbable beauty look at Trude, who looks far more Yorkie than chihuahua, apart from when she does that thing with the ears, and then look at me, and smile unguardedly and unironically, signalling to me that they have decided I am a Good Thing and would, were their schedules not preventing them, like to chat and get to know me and the dog a bit better.

I wonder at first if I am imagining this. I mention it to K—.

“Oh yes,” she says, “it’s a thing. My friend P-J regularly borrows her when he wants to get laid. He reckons he’s had about 12 shags thanks to her in the last six months. The problems only arise when they come back again and notice the dog isn’t there.”

I do the maths. Twelve in six months! That’s one a fortnight. An idea begins to form in my mind. I suppose you don’t have to be a rocket scientist to work out what it is. But no. I couldn’t. Could I?

Nicholas Lezard is a literary critic for the Guardian and also writes for the Independent. He writes the Down and Out in London column for the New Statesman.

This article first appeared in the 28 April 2016 issue of the New Statesman, The new fascism