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 deafening killer - why noise will be the next great pollution scandal

A growing body of evidence shows that noise can have serious health impacts too. 

Our cities are being poisoned by a toxin that surrounds us day and night. It eats away at our brains, hurts our hearts, clutches at our sleep, and gnaws at the quality of our daily lives.

Hardly a silent killer, it gets short shrift compared to the well-publicised terrors of air pollution and sugars food. It is the dull, thumping, stultifying drum-beat of perpetual noise.

The score that accompanies city life is brutal and constant. It disrupts the everyday: The coffee break ruined by the screech of a line of double decker buses braking at the lights. The lawyer’s conference call broken by drilling as she makes her way to the office. The writer’s struggle to find a quiet corner to pen his latest article.

For city-dwellers, it’s all-consuming and impossible to avoid. Construction, traffic, the whirring of machinery, the neighbour’s stereo. Even at home, the beeps and buzzes made by washing machines, fridges, and phones all serve to distract and unsettle.

But the never-ending noisiness of city life is far more than a problem of aesthetics. A growing body of evidence shows that noise can have serious health impacts too. Recent studies have linked noise pollution to hearing loss, sleep deprivation, hypertension, heart disease, brain development, and even increased risk of dementia.

One research team compared families living on different stories of the same building in Manhattan to isolate the impact of noise on health and education. They found children in lower, noisier floors were worse at reading than their higher-up peers, an effect that was most pronounced for children who had lived in the building for longest.

Those studies have been replicated for the impact of aircraft noise with similar results. Not only does noise cause higher blood pressure and worsens quality of sleep, it also stymies pupils trying to concentrate in class.

As with many forms of pollution, the poorest are typically the hardest hit. The worst-off in any city often live by busy roads in poorly-insulated houses or flats, cheek by jowl with packed-in neighbours.

The US Department of Transport recently mapped road and aircraft noise across the United States. Predictably, the loudest areas overlapped with some of the country’s most deprived. Those included the south side of Atlanta and the lowest-income areas of LA and Seattle.

Yet as noise pollution grows in line with road and air traffic and rising urban density, public policy has turned a blind eye.

Council noise response services, formally a 24-hour defence against neighbourly disputes, have fallen victim to local government cuts. Decisions on airport expansion and road development pay scant regard to their audible impact. Political platforms remain silent on the loudest poison.

This is odd at a time when we have never had more tools at our disposal to deal with the issue. Electric Vehicles are practically noise-less, yet noise rarely features in the arguments for their adoption. Just replacing today’s bus fleet would transform city centres; doing the same for taxis and trucks would amount to a revolution.

Vehicles are just the start. Millions were spent on a programme of “Warm Homes”; what about “Quiet Homes”? How did we value the noise impact in the decision to build a third runway at Heathrow, and how do we compensate people now that it’s going ahead?

Construction is a major driver of decibels. Should builders compensate “noise victims” for over-drilling? Or could regulation push equipment manufacturers to find new ways to dampen the sound of their kit?

Of course, none of this addresses the noise pollution we impose on ourselves. The bars and clubs we choose to visit or the music we stick in our ears. Whether pumping dance tracks in spin classes or indie rock in trendy coffee shops, people’s desire to compensate for bad noise out there by playing louder noise in here is hard to control for.

The Clean Air Act of 1956 heralded a new era of city life, one where smog and grime gave way to clear skies and clearer lungs. That fight still goes on today.

But some day, we will turn our attention to our clogged-up airwaves. The decibels will fall. #Twitter will give way to twitter. And every now and again, as we step from our homes into city life, we may just hear the sweetest sound of all. Silence.

Adam Swersky is a councillor in Harrow and is cabinet member for finance. He writes in a personal capacity.