Low carbon future: making it fair

The Labour Party’s consultation document, A Greener Britain, seeks proposals about different aspects of environmental policy. In this series of articles, Redgreenlabour supporters offer their thoughts. Please comment on these contributions which the authors may well revise and submit to the consultation in due course. We also urge you to submit your own responses to the Party – whether as individuals or through your branches, CLPs, unions, SERA or other environmental groups. The deadline is 24th June.

Q:How can a future low-carbon energy system be made to work for consumers?

Britain has an ageing population and nearly a decade of Tory cuts to public services has had a devastating impact, creating a crisis in housing, social care and the NHS. A Corbyn government would end austerity and aim for a well-funded public sector with local council, health organisations and community groups working in better partnerships with each other, writes Jay Melia-Jones.

Britain has ambitious targets to tackle climate change – an 80% reduction of carbon emissions by 2050. To realize this we need to take control of our energy network, bringing it into public ownership and giving power to local communities to reduce rising inequality.

The privatization rip-off

Britain’s electricity grid grew from demand for electric street lamps and tramways during the second Industrial Revolution. In the Victorian era the energy network was run by a patchwork of different companies including local councils.

The first modern power station was built at Deptford in 1891 by a London company with Tory politicians as the main shareholders. The first power station built for industry was at Neptune Bank in 1901 by a Newcastle company led by Liberal reformers. In those days only the rich had electricity at home at this time.

The system was very inefficient; and there were calls for regulation due to safety concerns. In the 1920s the government created a central standard system, the early National Grid. Low income households were encouraged to modernize when local councils offered affordable loans for discount electrical goods and Assisted Wiring Schemes. This was a period of modernization and expansion with slum clearances and the building of council estates. In 1948, the Labour government merged thousands of public and private companies into a fully nationalized system. Originally its mission was ‘to keep the lights on’; energy security over profit.

As part of Thatcher’s privatization agenda, in the 1990s the National Grid was broken into pieces and sold off. One part was privatized and became today’s ‘National Grid Plc’. The bits for power generation were sold to various foreign firms. This resulted in an energy cartel ‘The Big Six’ which profiteered billions of pounds in the 2000s. The Competition and Markets Authority investigated and proposed price-caps for all customers which was cut back after lobbying from the cartel.

More recently, the government opened-up the market to competition by giving new small suppliers advantages such as being exempt from the ECO scheme, which aims to tackle fuel poverty and improve energy efficiency. A range of new companies have developed and people are increasingly rejecting the Big Six and switching to them.

Although many of the new energy companies have high levels of customer satisfaction, this is not true for all. The government had to ban a new company, Iresa, one of the cheapest suppliers, from taking on new customers because of complaints about customer service.

Market failures: The Green Steal and ECO Scam

For most consumers, green energy tariffs are a niche product and make up a tiny fraction of the market. They are not always cheap when compared to a mixed energy supply.

The costs of energy policy are being paid through bills and these costs will rise over the next decade. As more people adopt energy saving measures, those left behind end up paying more. Funding low carbon programmes through levies on bills put the burden on those least able to afford it.

Tory attempts to fund energy efficiency through the ‘Green Deal’ were doomed to failure and unfair in that private tenants end up paying for the landlord’s home improvements through their energy bills. The government has recognized this in the Clean Growth Strategy to improve energy efficiency regulations for the private sector but there are concerns these costs will be passed on to tenants in some other form like higher rents.

The ECO scheme is what the Big Six energy suppliers are supposed to do to improve energy efficiency for low income households. The companies are paid billions in advance and often fall behind on targets. The scheme is funded by all consumers through bills but spending is decided by energy companies themselves, who want to run it in the most cost effective way. There is very little awareness about the scheme and low income households are often denied access to it.

Labour should pledge to-cap all energy bills as well as pledging to take the network back into public ownership.

Municipal utilities

Publicly owned energy has made a comeback through the launch of the first municipal energy companies since 1948. Labour councils launched not-for-profits like Bristol Energy and Robin Hood Energy in partnership with local councils. They work to reduce fuel poverty by offering cheap energy. Bristol also supports local renewables and offers a green tariff. A higher renewable fuel mix and the offer of green tariffs should be an aim for them all but this would needs government to decarbonise the fuel mix of the National Grid with new renewable projects like tidal, solar and wind power.
And if a Labour government changed the license conditions for private operators, municipal energy companies could buy back the network assets over time giving public ownership to the local community.

Trade unions and local councils are organizing collective switching schemes; using the power of collective bargaining to negotiate cheaper deals. This could increase the affordability and popularity of green tariffs. And a campaign to switch to municipal not-for-profits could provide the possibility for expansion – into energy infrastructure and/or to multi-utilities providing both energy and telecom services.

Electric vehicles are about to go mainstream but they need infrastructure and charging systems. There is opportunity during this transition for publicly built and owned EV charging points and local councils could lead and take advantage by licensing new electric taxi cooperatives instead of Uber.

Public sector and community tackling fuel poverty

By increasing the scale of Affordable Warmth Partnerships, public sector and voluntary organisations can work together to promote energy saving and tackle fuel poverty. There should be a massive public health awareness campaign with a well-funded NHS and other local services to reduce fuel poverty and stop cold deaths and stress for vulnerable people.

Councils can work in partnership with housing associations, landlords and businesses on a mass retrofit scheme targeted to areas in need, by creating ‘warm zones’ with energy efficiency services like new boilers and insulation. For new developments, local areas can improve planning regulations and ask the property developers to fund other energy measures with the Community Infrastructure Levy.

The next phase of ECO scheme is being drafted, local authorities have some power to engage with energy companies to help them make the improvements for low income residents. Through the Flexible Eligibility mechanism, local councils can provide funds for energy improvements.

Many local municipals have pledged to join Clean Energy Action Partnerships and with solar and battery costs falling there are plenty of opportunities to develop new Smart Grid networks which are public owned.

A Green Investment Bank was founded by the coalition government in 2012 with state funding and then privatized in 2015. It would be easier to repurpose the already public owned Royal Bank of Scotland with a low carbon mission, Corbyn has proposed breaking up the bank in to local public banks which could help in this aim. The creation of a National Investment Bank would provide the vision necessary for a low carbon future by starting projects and making suitable investment products for the private sector, from which everyone would benefit.

These should be funded through taxes as an urgent national priority, there must be an end to tax loopholes for millionaire property owners and tax breaks for corporations which underfund public services for everyone.

Further reading:


Leave a Reply

Your email address will not be published. Required fields are marked *