Wednesday, 27 November 2013

More increases on energy bills underfoot, as carbon price floor costs are revealed


Consumers woke up to the news that yet another level of taxation has been placed on their energy bills to the tune of adding around £13 per household per year, so that 1% pay rise you might have managed to get this year, will soon find its way back to the Treasury due to the carbon price floor. No this isn’t a set of low energy carpets or environmentally friendly linoleum, but a levy on carbon permits for UK industries only.
It is a cost that the Department for Energy and Climate Change did not request, the businesses certainly don’t want it, consumer forums in the UK are against and even Greenpeace feel it is a waste of time because it discredit green taxes.

A billion or two reasons for the increased costs

So why has the Chancellor of the Exchequer imposed it? Well I could give you a few reasons, but as this levy will enable the raising of £1 billion in 2013, £1.5 billion next year and £2 billion in 2015 for the Treasury, then I think we can all work out why it has been created.

Many UK firms are taking their responsibility to cut down on carbon emissions seriously, and they have to buy a pollution permit for every ton of CO2 gas that they emit. This is understandable particularly in light of current and future climate change issues. However, this system of permits is not really working because the permits themselves are relatively inexpensive. So companies use a cheaper but dirtier form of fuel i.e. coal and just get additional permits to allow them to burn it.

The Chancellor wants to make sure they get the message loud and clear about using cleaner energy and so to encourage them to invest in more renewable forms of energy he has artificially inflated the price of the permit. So the companies find themselves having around a 20% increase in their bills and of course in time this is passed down to the consumer in the form of a 1% increase to our household bills.

Carbon price floor has not got a green underlay

Some experts are concerned that far from encouraging UK firms to develop a green form of energy, this carbon price floor will only serve to shift carbon emissions elsewhere in Europe. Even the green lobbyists admit that environmentally, this form of taxation has very little to recommend it. Consumer watchdogs are taking a keen interest because yet again this hits the UK resident with more costs on household energy bills at a time when 1.3 million families are living below the accepted standard of living in relative poverty.

Just how much of the £1-2 billion pounds will see its way back to them?

There has got to be a better way to channel UK heavy industry towards use of more renewable energy and discussions around long term contracts are being proposed. But until then, don’t force try to squeeze more out of household budgets as the well is not only dry but there is a hole in all of our buckets.

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