What on earth are carbon taxes?

Energy is a huge political and household issue. The dual fuel bill for an average household is £1315 per year, and that’s before the current round of price increases.

What we’ve learned this week is that Secretary of State Ed Davey wears a jumper to keep warm at home, and that British Gas is increasing its prices by 9.2%. We also learned from the Scottish Nationalists that if Scotland voted for independence and if they were to be in Government, they would cut prices by removing the social and environmental obligations on energy suppliers, and instead pay for fuel poverty programmes with the proceeds from carbon taxes.200x160_gas_hob_g_main

These carbon taxes come in two forms, and are levied on the industries emitting the largest amount of greenhouse gasses, principally carbon dioxide. The idea is to push these industries into using non-polluting energy – energy generated from wind and tides and other renewables, and from nuclear sources. The EU Emissions Trading Scheme is one of the carbon taxes and applies to all members of the EU, though the revenues go to the national governments.  

The Carbon Floor Price is a British initiative which started modestly in April this year, and will be ramped up over time. Soon, these combined tax receipts will be delivering £4bn a year to the Treasury. Some Governments? In other European states? Yes – Governments in other European states and elsewhere have proposed to use some or all of these revenues to fund fuel poverty programmes, as the SNP are promising in Scotland.

The  energy companies agree are massive users of fossil energy and pay a large part of these carbon taxes, which of course then get passed on to all of us as energy customers through our household bills. It seems only fair to use the revenues accruing to help people in fuel poverty to improve the energy efficiency of their homes, so that they have the opportunity to keep adequately warm at an affordable cost.  

An impressively large coalition of organisations (including Age UK) called the Energy Bill Revolution is arguing precisely for this. So far the Chancellor has been deaf to this call, and instead the Government policy is to drive forward energy efficiency programmes with other levies on the energy companies, which also, in turn, feed into the household bills we all pay.

So one of the questions at the heart of the political fight over energy policies (and there are many big questions) is whether this strategy – to levy carbon taxes which drive price rises with no benefit to fuel poor consumers – (not sure which strategy is being referred to?) is fair and equitable. Not being able to keep properly warm and making choices to go without food or other essentials is a desperate situation, but one facing millions of households, and their number is set to rise as prices for energy climb remorselessly upwards.

This winter 24,000 older people could die from the cold – that’s 200 deaths a day that could be prevented. Find out more about Age UK’s Spread the Warmth campaign to help keep older people keep warm and well in winter. 

One thought on “What on earth are carbon taxes?”

  1. Everyone was happy to climb on the ‘Green@ bandwagon, believe only one side of the Global Warming / Climate Change debate and join in vilifying ‘carbon’. When the sun was shining and the economy booming (an end to boom and bust had been declared) it all seemed such a good idea, didn’t it? Now we see what happens when we believe ‘the science is settled’ and the government knows best. The climate hasn’t warmed for the last 17 years (despite the fact that CO2 levels have continued to rise) and we could be in for more of the terribly harsh winters. When we experience the coldest days in winter (days settled high pressure) the wind rarely blows and all these expensive windmills don’t only not turn but the taxpayer has to pay to compensate the owners. Due to government indecision and EU policies over the last decades we face the real prospect of power outages. The tax payers and the old and poor are paying for this folly. We have coal and gas aplenty and we can have new conventional low-emission power stations on stream far quicker than nuclear (although we need that too).
    Anyone still for ‘green’ when we are freezing to death and unable to afford to heat our homes?

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