Britain’s resolve to become more energy efficient is about to be tested
With Britain facing an energy squeeze and a new carbon tax, the country’s attitude to energy efficiency is about to be tested
In the coming weeks, the closure of coal and oil-fired power plants is expected to reduce the amount of electricity generated in Britain by 10 percent. Although shortages are not expected, government experts say the country will have to import significantly more gas in the coming years, at a time when prices are expected to rise on world markets. Electricity prices are already due to rise this year because of a new carbon tax on utilities.
To some extent, the punishment is self-inflicted – plant closures could have been delayed for another three years. However, the government estimates that with “socially cost-effective investment”, Britain could be consuming 11% less energy by 2020 (196 terawatt hours), equivalent to the output of 22 power stations.
There is certainly room for improvement – half of the nation’s 27 million homes are not properly insulated, for example – but indications are that it will be something of a challenge to persuade households and businesses to invest in energy efficiency.
One problem is that the majority of people don’t think they can do anything about rising energy prices. Instead, they blame electricity companies for making excessive profits, even though margins in the power sector tend to be thin.
Then there is the “hassle” cost, which is also seen as putting a brake on investment, especially in companies which are reluctant to disrupt production for building works.
A third obstacle is in the commercial rental market, where landlords have little incentive to invest in energy-saving improvements because it is the tenants who have to pay the electricity bills.
The government’s approach has been to introduce incentives for households and business. The most recent is the so-called “Green Deal”, where households and businesses can pay off energy-saving improvements in installments.
Consumer groups say the test of the government’s commitment to energy efficiency will be determined by how much of the carbon tax it actually spends on energy-saving measures, such as upgrading the homes of poorer households.
One study, from Cambridge Econometrics, goes so far as to suggest that, properly deployed, revenues from the carbon tax could boost Britain’s economy, eradicate “fuel poverty” (defined as households which spend more than 10% of their income on heating), and make a significant contribution to reaching Britain’s carbon-reduction targets.