The Conversation: Poor Getting Slammed by UK Climate Levy
Guest essay by Eric Worrall
The Conversation has noticed that climate taxes on energy used for home heating hurts poor people.
Poorest households hit hardest by UK climate change levy despite using least energy
March 2, 2018 10.58pm AEDT
Professor of Energy and Climate Policy, University of Leeds
Research Fellow in Sustainable Consumption, University of Leeds
The UK is one of the leading countries in addressing climate change. As well as signing international agreements, the country has its own target to reduce greenhouse gas emissions by 80% from 1990 levels by 2050. And as part of the effort to meet that target, the government has added a levy to business and household energy bills. The average household energy bill is around £1,030 a year and the levy costs an average of £132 (2016 figures).
The good news is that the levy is working. About 20% of the levy is spent on improving the efficiency of homes. This is done by funding schemes such as the Energy Company Obligation, which provides insulation and other energy-saving measures to low-income households. The average household energy bill would be £490 higher without these improvements. The money is also spent on research to improve renewable energy sources, such as wind and solar power, and help bring down their cost.
But is this really a fair way to raise the money? Our new research shows that the poorest households not only are hit hardest by the levy but also receive less money back in the form of home improvements than they contribute in the first place.
We found that, in a year, the richest households each consumed on average the same amount of energy that would be produced by 12.7 tonnes of oil, compared to 3.3 tonnes for the poorest households. But the poorest spent a much greater proportion of their income (10%) on energy than the richest (3%). And the energy used for heating and powering their homes – the part that their climate change levy bill is measured on – represented a much greater proportion of their overall energy use.
This means that adding the climate change levy to household energy bills hits the poorest households hardest. Energy bills account for a much greater share of their household income and more of their energy use is charged. In fact, the levy only affects a quarter of the total energy consumption of the richest households, compared to 53% for the poorest households. As a result, the richest homes use nearly four times more total energy than the poorest but only pay 1.8 times more towards energy policy costs.
The full research paper is available here.
This issue really upsets me. I’m not a fan of big government, but green socialists pushing policies which actually hurt poor people seems insanely cruel.
As a child and young adult I could always relate to the objectives of my socialist friends – better opportunities, helping the poor and vulnerable – even though as a right winger I thought their policy ideas and methods, their plan to rely on governments to do the right thing, was implausible and counterproductive.
Then something monstrous happened – the gentle socialists I knew suddenly stopped caring about the here and now, they became fixated on a hypothetical distant future none of them would ever live to see. They started demanding policies they knew would hurt the people they claimed to care about, but waved away all and any objections in the name of saving the world.
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