Who gets free insulation these days?

People keep asking us this, and it's strange that it's so hard to find out the right answer. Hundreds of millions of pounds a year are spent on this, but it's not very transparent at all. If you want to know exactly who gets what, well then you have to pick through a bunch of horrendously complicated government documents. 

Anyway, we've done the work for you and here for the record is the answer. To be considered a "Priority Group" for energy saving, you must be :

1. Age 70 or over, or 
2. In receipt of 
• council tax benefit
• housing benefit
• income support
• an income-based jobseeker’s allowance
• an attendance allowance
• a disability living allowance
• a war disablement pension including mobility supplement or constant attendance allowance
• a disablement pension  which includes a constant attendance allowance
• state pension credit, or
3. Earn under £16,040 and be in receipt of
• child tax credit
• working tax credit

So there you go. There aren't actually any hard and fast rules about what you can get for free, exactly, but in practice if you're in one of the Priority Groups above, then you can usually get your insulation for free, and if you're not you can get about a third or a half of the cost paid for.

There are also some "Super" priority groups now too, but I think we'll come back to that another day.

Zero carbon homes - good policy, bad politics

Budget day today, and big news on Zero Carbon Homes. The best summary so far was from our friends at UK GBC, who said this at 5.30pm, when all the shouting died down:

“In the space of two weeks, this government has gone from a firm commitment on zero carbon homes, to a watered down policy. A zero carbon home will no longer do what it says on the tin. The world leading commitment that new homes would not add to the carbon footprint of our housing stock from 2016 has been scrapped despite a remarkable consensus between industry and NGOs in support of it. ... it is a backward step by a government that wanted to be seen as ‘the greenest ever’.” 

So, a bit of a surprise then? After all, it was only in February Grant Shapps had said "the commitment to Zero Carbon remains in place - there's no ambiguity about that" and then on 8 March, just a couple of weeks ago, The Carbon Plan from DECC was still saying things like "the government is committed to ensuring that new-build homes are zero carbon from 2016 and do not add extra carbon dioxide emissions to the atmosphere". So we might have been forgiven for thinking this one was in the bag, right?

But actually, I think not. It was inevitable that the Zero Carbon Homes objective would be watered down in some way, and here's why: this was a policy which genuinely seemed to say "let's incur cost now, so we can create benefits later - we may not be around to enjoy those benefits ourselves, but let's create them anyway, just because it is so important."

Well, I actually quite like the sound of that. And so do a lot of people. But not most people, and what most people seem to want at the moment is growth and less red tape. So from that point of view, Zero Carbon Homes was a good policy with bad politics - and relaxing it was, well, a bad policy with good politics.

Tant pis.

An unbelievable Christmas present

Happy Holidays! Over the past 2 weeks, every member of the US Congress (and every Governor's office around, and every state and local representative...) has received an unusual seasonal gift.

So what's the gift? A board game called This Way To Jobs. You can play it online, but let me save you a few minutes of your valuable time and tell you how it works.

Game Rules

• You choose a counter - CEO, Director, Entrepreneur, etc
• You roll the dice to move around the board - a bit like The Game of Life
• You start in a Ghost Town - tumbleweed blows across the screen
• Your goal is to get to Prosperity Park
• Dodge as many regulations as possible on your way around 
• If you get a regulation card, you move back 3 spaces, etc
• Look out for Financial Reform Falls, Labour Lagoon and Energy Edge ... regulation lurks at every bend in the road

Wow. A truly elaborate and creative campaign and targeting the Environmental Protection Agency in particular. Not surprising in itself, but guess who is behind this campaign, so out of tune with contemporary reality? Maverick Republicans? Big Oil? Swiftboat Veterans for Truth? No, the campaign is run by the US Chamber of Commerce itself. I am truly astonished. 

Have a look at some of the cards you can draw :

Snake Oil Awards will not help very much

Well, I used to enjoy David Mackay's Hot Air Oscars. So it made me chuckle to see that the US has come up with a bigger and better equivalent: Official 2010 Snake Oil Awards for Public Deception. Perhaps not surprising that BP is a nominee.

In general I am a fan of Repower America, the organisation behind the awards. But I wonder if what the clean energy movement needs right now is Corporate Villains? Clearly some movements for social change have benefited  from creating villains (e.g. anti-smoking), but others haven't needed to (e.g. road safety). Some  in fact have seemed to hold back on the blame game, even when there was more of a case for advancing it (e.g. Civil Rights, Quit India).

So what do we think? Is clean energy hard to deliver because Bad People in Big Companies have conspired to hide the truth from us (as perhaps was the case with smoking)? Or is it because we have behavioural habits that are deeply engrained (like speeding and drink driving)? I believe the latter, therefore Snake Oil awards, though potentially amusing, will not help much.

Watch the latest video from Al Gore

Interesting video from Repower America, the environmental campaign group backed by Al Gore. More evidence that US organisations of this type are far ahead of their counterparts in the UK, where 1 in 3 of us still believe the whole climate change thing is bunkum. Watch the video, and look out for a cameo appearance by Alec Baldwin (from The Departed) and a few other celebs you know. Kris Kristofferson is in there too.

Our electricity could be gone for months

Earlier this summer I blogged about High Impact, Low Frequency events, unlikely occurrences but which could knock out the power grid. It sounds fanciful, but it's a real issue - dangerous electro-magnetic pulses could be caused by solar flares, electro-magnetic storms or by man-made nuclear explosions at high altitude.

So, very pleased to hear  Radio 4's Today Programme covering this topic today, with an interview of Avi Schnurr at the EMP Coalition. It's a risk we face that didn't exist a hundred years ago. The interview has not been posted yet, but should appear soon on the i-player (but for UK internauts only I believe).

We should charge electric cars at petrol stations

Just a short post to link to my article on electric cars in the Guardian today. Seems to have caused a bit of a stir - in any case, it currently has the second highest number of comments on the environment pages, just behind "Live online: Post your questions to No Impact Man".

Hard to compete with that, I guess ... but let's see if we can catch up by tomorrow morning.

Tax breaks for fossil fuels worth $9.1 billion

You couldn't make it up! A report from the OECD shows we're spending $9.1 billion on tax subsidies for fossil fuels. That's about $7.50 / year for each of us, just in the few selected industries that the report has looked at.

They're still working on figuring out the total, which is likely to be much larger. See the helpful comment below from Ron Steenblik, one of the authors.

Similarly, The Global Subsidies Initiative (an interesting institution in itself ...) suggests that fossil fuel subsidies outside the OECD are worth around $400 million, or getting on for $15 per person every year. As shown in the table, that's nearly 10 times the total subsidy available for renewables.

Finally, the OECD team has also estimated that removing subsidies to fossil fuels across all developing and emerging economies (I think this is the region where they have the best data) could cut global greenhouse gas emissions by 10%. And as we've seen before on this blog there are not many policies with that kind of potential.

Click here for the report this table comes from.

High Impact, Low Frequency?

The BP oil spill has got us all thinking about low frequency, high impact events. But some people have been thinking about these things for quite a while, including the team at NERC - the North American Electric Reliability Corporation. Who knew such an institution even existed? Their job apparently is to worry about unlikely events that would be really, really bad if they ever came about.

The latest NERC report includes a detailed section on geomagnetic storms:

The analysis indicates that the [geomagnetically induced current] in over 350 transformers will exceed levels where the transformer is at risk of irreparable damage...  Such large scale damage could lead to prolonged restoration and long-term chronic shortages of electricity supply capability to the impacted regions, arguably for multiple years.

In other words, a really big storm could roast enough components (70-80% of transformers in some states) to put the lights out for years. A version of this event happened in March 1989 and knocked out parts of the Canadian grid for most of a day. But since then, the grid has been developed in ways that make it more vulnerable than before: essentially, higher voltage transmission means geomagnetically induced currents can travel further and do more damage.

From a different angle, we could perhaps get a similar effect from a high altitude nuclear explosion. Here's a photo of the last time we had a go at one of those. This one was 400km in the air but the electromagnetic pulse was enough to blow out the streetlights in Hawaii, 1500km away.

(This is the 1962 Starfish Prime explosion.)

Why energy policy has failed

This year's Godkin lecture by John Deutch is worth watching. Deutch was US Undersecretary for Energy in the 1970s, so he has some interesting long term perspectives. He reminds us for example of Carter's target for 20% of energy to be generated from renewables by the year 2000. We continue to set similar targets as if this was a new idea. As Deutch says: "Aspirational goals are rarely accompanied by serious analysis that indicates how the goals will be credibly achieved."

What to learn from the Australian EPC?

Here is an Australian Energy Performance Certificate. You can compare the UK version here. Some obvious differences are:

• More, small scale / easy recommendations (good)
• Includes water efficiency (good)
• Linked to a govt loan programme (good in principle)
• Happy-smiley design (bad!)

Oh, and wait a minute - worth mentioning that the Australian government pays ~£120 for each certificate. Sounds good, but in practice it's been a nightmare for everyone involved. The $10,000 loan element has since been withdrawn - too expensive and too complicated, apparently. A lesson for any new UK government thinking of launching a similar scheme.

Lib Dems adopt Reverse Pricing

Great news, the Lib Dems have committed to introduce reverse pricing in energy. I believe they are the first major political party to do so, let's hope the other parties follow suit.  Here's what the Lib Dems say:

Protecting low income households is a good idea, but not with a social tariff. It would be better to help low income households consume less energy (e.g. by switching away from electric heating) than to subsidise prices. For more info read our article of 26 March which introduces the reverse pricing idea.

Energy prices double, but suppliers lose money for 5 years. So how on Earth does that work?

A picture is worth a thousand words. Have a look at this, an excellent piece of work from Ofgem:

The chart shows the average net margin on a dual fuel energy account, and goes a long way to explaining the mysterious behaviour of the UK energy market. It's a classic case study in sticky prices: the retailer is 'caught out' by steeply rising prices in the wholesale market, and can't push prices up to consumers quickly enough. Net margins turn negative around August 2004 ... and they don't recover for nearly 5 years.

Horrendous industry, you might think. But the flip side is a 20-fold increase in generation profits. So as long as you are in generation and retail, none of the above matters. What the chart really tells you is that energy retail is just a hedging option for generators, against inevitable periods of low wholesale prices.

So what of the sticky prices thing? One way to think about those is as a barrier to entry for future competitors. As the chart shows, a challenger must be prepared to lose money for a pretty long time. And who's got the cash to do that, if you don't happen to have a generation business in your back pocket? If you saw what happened to BizzEnergy then you know the rest of the story. 

Nobody believes the strategy will work

We do like the new government strategy for household energy management, we just don't think it's going to make much difference. But who cares about us, what does everyone else think?

Here's one way to find out. Today's chart shows the Centrica (i.e. British Gas) stock price since Ed Milliband launched the Warm Homes strategy on 2 March. According to the Minister, we are going to cut household energy demand - about 1/3 of Centrica Group profits - by 29% in 10 years. What did the market make of that? Hmmm. Centrica stock is up 4%.

(OK, so I admit, this one is just for fun. We could have looked at SSE, whose stock price has gone the other way in the same period. But the point is that the new strategy doesn't seem to have made a jot of difference to utility stocks. I'm pretty sure this wouldn't be the case, if analysts really believed that household energy demand was going to be down 30% within 10 years. Or if they expected the government to introduce a policy with a more dramatic impact, such as reverse pricing.)

Time to Reverse Pricing

So, what to do about the fact that household CO2 continues to increase? We posted a statement of the problem yesterday, so today we post a suggestion on what to do about it. We think the government should require that domestic energy prices increase as you consume more energy, not the opposite as happens at present. Look at the charts: the left hand side shows how electricity tariffs work today, the right hand chart shows how they would work under reverse pricing. The average price is the same for the average user (4-5 MWh / year), but the marginal price would be 2 x higher - halving the payback time of a typical energy saving investment.

You can read more in our article on this in The Financial Times, or click here to download a more detailed explanation of the idea. We would welcome your comments!

£1 billion bank is nothing new

So, yesterday we heard the Chancellor put £1 billion of our money into a green investment bank.

But did you know we already spend much more than this? The Carbon Emissions Reduction Target (CERT) creates an obligation for energy companies to spend money every year to encourage us to buy less energy from them. The cost of this program (paid for by each of us, with small increases in our energy bills) is about £1.3 bn every year. It's mostly spent on subsidising loft and cavity wall insulation and a few hundred million low energy light bulbs.

Unfortunately this very expensive program isn't working: we'll do a post to explain why that's the case later on. I don't know why nobody writes about this in the press.