A Green Future

Wednesday 15th June, 2011
I'll be as brief as possible, in a desperate attempt to keep interest...this is important.

Currently, in the UK, the US or anywhere else in the world...electricity demand exceeds our means to produce it by renewable means. Until we have enough solar panels, wind turbines, tidal generators etc. the ONLY way we can generate enough power is by burning fossil fuels. The more power you use, the more power we need to generate.

Buying an electric car increases the power that you use. Buying such a vehicle would double my electricity usage, double my bill, and double the emissions from the grid related to my usage. It won't magically make the world a better place, it just moves the problem from the exhaust pipe to the power station.

Making electric cars cheaper, by offering subsidies, doesn't help. It just encourages people to buy them, adding more demand to an already over-used National Grid and increasing overall emissions. You've got a solar panel on your house? So what? That panel is connected to the National Grid, you get paid a substantial bonus for that, and is intended to help reduce emissions on the grid...not offset some of the extra load generated from your car.

The only way to improve the situation is to either a) use less electricity (preferred) or  b) generate more of our electricity from low emissions sources. The government sort of helped recently, by taxing power companies more for power generated from non-renewable sources but, ultimately, they've just passed this cost on, pushed up the wholesale cost of electricity and all our domestic bills are going up.

Taxing the power companies will always have limited effect, they just pass on the costs. What we need to do is tax the users.

Currently, domestic electricity is charged at a reduced 10% rate of VAT in the UK, compared to the standard 20%. Waving the mighty "if I were in charge" banner, I would remove this reduced rate and charge "normal" electricity tariffs at the full rate of 20%. This would hurt consumers, seriously hurt, and properly make them aware of their usage. People would make more efforts to use low energy light bulbs instead of clearing the shelf every time they find stock of old style 100W bulbs. But they would also have an alternative...

So called "green" tariffs, that only supply (actually cross-charge) electricity sourced from renewable suppliers, like wind turbines etc., would still be eligible for the reduced 10% rate of VAT - forcing green energy to be cheaper. So, if we say that the current ex. VAT price of one unit of electricity is currently 10 pence, and 11 pence inc. VAT then, under my proposed system, we'd see prices of 11 pence inc. VAT for green tariffs but an increased 12 pence inc. VAT for non-green (brown) tariffs. Basically, if consumers wanted price parity, they would be forced onto a green tariff.

Of course, the price of brown electricity has increased dramatically over recent times, as it faily closely follows the wholesale price of fossil fuels. This doesn't mean that at any point the renewable price has become cheaper - the renewable producers know when they're onto a good thing and are quite happy to make a few more quid at every possible opportunity, after all. So, in parallel with my VAT changes, I'd introduce legislation that would force renewable energy providers to charge 10% less for their green tariffs. They wouldn't simply be able to absorb the VAT reduction and make more profit, they'd be forced to visibly charge less than the brown price.

Excuse me, sir! Can I introduce you in switching to a renewable electricity tariff? It's 10% cheaper than your current one.

This, readers, is what you call a no-brainer and they would queue around the block to sign up.

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