Emissions trading hits the poor

Scrap this regressive fuel tax and let countries be prosperous and free enough to cope with the effects of climate change

Matthew Sinclair
guardian.co.uk, Friday 30 October 2009 09.00 GMT
When the Grocer magazine accused Ken Clarke of planning to increase the rate of VAT on domestic fuel and power bills in 1997 it was a political scandal.
He was quick to deny their report. But, as our study released this morning shows, the European Union Emissions Trading Scheme (ETS) is now effectively doing just what the Grocer accused Clarke of planning. The ETS is now costing British consumers £3bn a year – equivalent to around £117 per family, and a large part of that bill is coming through higher electricity prices. When combined with other climate change policies such as the Renewables Obligation, it now accounts for 14% of the average household electricity bill. Yet, what percentage of the population even knows these policies exist, let alone how much they’re paying for them?
The reason why increasing electricity bills has caused such a scandal in the past, and should be taken incredibly seriously now, is that the poor and elderly spend far more as a portion of their income on electricity. The 10% of the population on the lowest incomes spend more than three times as much, as a share of their income, as the richest 10%. Over-75s spend nearly twice as much as under-30s. We need to resist increases in VAT because it hits the poor hardest, but at least VAT is exempted or at least reduced for some items like food and children’s clothing. The ETS does precisely the opposite, pushing up prices on the spending priorities of low-income families.
The fact that a large share of the proceeds goes to energy companies as windfall profits rubs salt in that wound. Those profits are going to continue for some years to come as the scheme slowly moves towards auctioning allowances rather than allocating them for free. Even once full auctioning is in place, the ETS will still be a highly regressive tax.
Of course, the reason why we are supposed to accept such a regressive tax is that it will help to cut emissions. Unfortunately, the efficacy of the scheme is undermined by its inability to produce a stable carbon price. The price has collapsed a number of times since the scheme was introduced. As Oliver Tickell wrote for this website, “wild fluctuations create a risk that deters some investors altogether and makes others demand a significant risk premium, putting up the price of capital.” EDF Energy has called for a floor on the carbon price to “encourage investment in low-carbon energy like nuclear power”. This calls into question the whole point of the scheme.
That volatility isn’t going to end any time soon. The basic problem is that the supply of allowances is fixed (the “cap” in “cap and trade”) so shifts in demand are entirely reflected in prices. As firms and households find it easier or harder to improve their carbon efficiency, and as the economy grows more or less quickly, the number of allowances allocated by the participating countries will never be quite right and the price will continue to crash up and down.
That volatility doesn’t just undermine the efficacy of the ETS. It also makes the burden it imposes on households and businesses that bit harder to bear.
For those reasons alone, the Emissions Trading Scheme should be abolished. Instead, we should focus on making sure that developed and developing countries are prosperous and free enough to cope with whatever climate change throws at them. We should also directly support the development of technologies that can provide us with new options, ideally with the kind of rigorous prizes that have delivered dramatic results in the development of everything from agricultural machinery and private suborbital spaceflight. That will be far more effective and affordable than the current approach.
The ETS has been an expensive failure. Having been implemented through the EU without a real debate here, it lacks democratic legitimacy and it is imposing a significant burden on the poorest families while achieving very little. It should be abolished.

Coming clean about going green

Too many companies make spurious eco-friendly claims to sell their products, but there are alternatives
Laura Whateley

Next time you are in Tesco, or flicking through a magazine, try counting the number of products advertised as being eco-friendly, organic or natural. You will soon run out of fingers.
According to TerraChoice, a US marketing company, the amount of goods sold as “green” in the UK, US, Canada and Australia has risen by an average of 79 per cent since 2007. It also found that 98 per cent of products being advertised as green had some environmental failings.
In anticipation of the UN Climate Change Conference in December, Times Money exposes the worst offenders and offers some genuinely green, and often cheaper, alternatives.
Investment groups and banks
Consumers may be tempted to opt for “green” investments but first they should examine where their money is going.
Virgin Money, for example, has launched a climate change Isa, which, it claims, “invests in specially selected business” that have “a lighter environmental footprint”. However, the Isa has been criticised for supporting industries with questionable environmental credentials.
Virgin Money’s marketing literature says that the Isa “includes all industries — so you don’t miss out on lucrative sectors like oil, gas, electricity and transportation”.
Toby Webb, the founder of Ethical Corporation, a business intelligence company, says: “I had expected the fund to be investing in exciting new technology companies set to capitalise on the next green revolution.”
But Virgin’s definition of companies that fight climate change appears to be somewhat elastic, for example: “Companies taking positive action on the corporate responsibility front by promoting environmentally aware behaviour internally, such as encouraging recycling in their workplaces.” Mr Webb says: “So an oil company could get into the Virgin Money Climate Change Isa fund by encouraging employees to have a recycling bin in their office.
“Is that really green? No, not at all. And it doesn’t do a lot for the climate either, really.”
HSBC and Nationwide both flaunt their green credentials by offering customers the option to switch to paperless statements. While this is of benefit, it is not a brave environmental campaign: all online banking customers can request to go paperless; some online banks will not even offer you the option of paper statements. It also saves money for the banks, too.
Barclaycard Breathe, meanwhile, says that it will donate 0.5 per cent of customers’ spends to “projects that tackle climate change”.
But the card does not have a particularly competitive rate of interest, which cancels the benefit, according to Darren Cook, of Moneyfacts.co.uk. He says: “A better alternative may be to shop around for the best deal on the market and then make a cash donation to your chosen green charity.”
If you want to know that you are receiving more than vacuous green promises from your bank, Mr Cook suggests opening an account with the Co-operative and its online offshoot, Smile, Triodos or Charity Bank. “These banks offer customers transparency about which companies they fund, and promise not to lend to environmentally unfriendly organisations,” he says.
Triodos, for example, uses customers’ deposits to finance wind farms and one of the projects supported by Charity Bank is the installation of a hydro plant.
The Co-operative Bank states that it “will not finance any business whose core activity contributes to global climate change, via the extraction or production of fossil fuels”.
Energy companies
There has been a proliferation of “green” or “eco” energy tariffs on the market lately, but in reality these products do little to fight climate change.
Rob Reid, scientific policy adviser for Which?, believes that consumers are being misled about the true environmental credentials of their energy providers.
He says: “We are concerned about the way energy companies use terms such as ‘green electricity’, which we think is damaging. By law, energy companies must source 9 per cent of energy from renewable resources. Ofgem did a review last year, and found that many energy companies were simply repackaging their tariffs as ‘eco’ because they were following these guidelines.
“Ofgem ruled that energy companies can now only advertise tariffs as ‘green’ if they can prove they do more than they are legally obligated to.
“However, rather than increasing their percentage of renewable energy, companies often just donate to a green charity, or a carbon-offsetting organisation. Energy companies then charge customers a premium for such tariffs.”
Good Energy, for example, is one of the only companies that genuinely uses 100 per cent renewable energy, and Ecotricity invests more per customer in new supplies of renewable energy than any other in the UK.
There are also plenty of ways in which consumers can reduce their energy use without paying an electricity company for the pleasure.
Turning down a thermostat by 1C could cut a consumer’s heating bill by up to 10 per cent.
If only 50 families switched their washing machine temperature from 40C to 30C for a year it would save enough electricity to make a quarter of a million cups of tea, says Which?
Before buying a new electrical item, be it a fridge or a hairdryer, check its efficiency on energytariff.co.uk, a new website that allows consumers to compare brands and models against estimated hourly usage.
For more ideas on how to reduce consumption the Energy Saving Trust offers a free home energy check, which will give you tips on how to save up to £300 a year on household energy bills.
Cars
Whatever the ad men tell you, no car is truly green. Mercedes-Benz is the latest company to get into trouble with the Advertising Standards Authority for misleading the public about its environmentally friendly credentials. In an advert for a new model it stated that it was “a pleasure, but not a guilty one”.
Neil Wallis, of the Low Carbon Vehicle Partnership, says that consumers should look at how much carbon each car produces. “There are already significant financial benefits to buying a car with lower carbon emissions,” he says, “and they will become much cheaper in the future.”
However, buyers should not assume automatically that a hybrid-electric car emits less carbon than a small petrol engine. A large hybrid car such as the Lexus LS 600h petrol hybrid emits 219g/km of CO2, compared with just 99g/km emitted by the Toyota iQ three-door hatch, with a petrol engine, according to What Green Car.
Motorists can compare the emissions of new cars on the Act On CO2 website at actonco2.direct.gov.uk.
Buying a new green car is, of course, not the cheapest solution. Mr Wallis says: “You can get significant fuel savings from driving in a more sensible way, which costs you nothing. Tyre pressure is also very important.”
Friends of the Earth estimates that 80 per cent of car tyres are not properly inflated, which can increase fuel consumption by up to 5 per cent.
Reducing the amount you use your car is, ultimately, the greenest option. Liftshare.org organises car-sharing schemes and the charity Carplus.org is developing a network of car clubs and sharing schemes across the UK.
Household products
Tempted to pay more for the bottle of bleach decorated with a picture of a rural scene? Don’t bother. According to research by TerraChoice, British household, health and beauty products are some of the worst culprits for false green advertising.
Comfort fabric softener, for example, has been attacked for presenting its product as kind and gentle when in reality fabric softeners can pollute waterways and poison aquatic life.
The report also points out that household products often promote themselves as including “natural materials”, neglecting to make it clear that some natural substances, such as formaldehyde and arsenic, are harmful.
Directgov, the Government’s website, recommends that consumers buy genuinely environmentally friendly products from manufacturers such as Ecover, which offers cleaning products from washing-up liquid to limescale remover and laundry powder.
Ecover products are made using raw materials from vegetable and mineral sources that guarantee maximum biodegradability. Consumers should look for the European Union Ecolabel, which looks like a flower. This stamp is given to products that minimise their impact on the environment.
Ecover will, however, cost you slightly more than other products. A cheap alternative? Simply use less.
Of detergents and cleaning products Directgov says: “Don’t use more than the recommended dose, use the mildest cleaning product needed for the job and the minimum dosage for the hardness of the water in your area.”
Case study: Victorian listed house becomes ‘ecoparadise’
Mike Duff, 30, and his wife, Michelle Wilson, have spent the past year turning their Victorian Grade II listed house in Stratford, East London, into an ecoparadise. As a result, they have added £50,000 to the value of their home. As an urban design and sustainability consultant, Mike works to make cities more environmentally-friendly. He felt that it was time to apply the same logic to his own home.
The couple installed double- glazed, argon-filled windows and an air-source heat pump, which provides all their heating underfloor as well as their hot water. This uses about 25 per cent of the energy consumption of the most efficient combi-boiler. Mike says: “It is three times the cost of a combi-boiler; however, we planned to build this house as if it was our last, so are in it for the long haul. An air-source heat pump also has the added benefit of using a truly renewable fuel, air — and air can’t be taxed.”
Mike and Michelle also have a grey-water recycling system, which purifies the water from their sinks and showers enough to be reused in the garden and for flushing toilets. They grow their own vegetables and herbs, and compost all food waste.
Michelle cannot easily get to work on public transport so they decided to buy a 2010 Toyota Prius hybrid for her commute. Mike says: “This costs us less than the new version of our VW Golf would have cost. So far, we’ve driven 850 miles and filled the tiny 22-litre tank twice.”
Beyond carbon offset
A growing number of “green” insurance products are appearing on the market that promise to offset emissions caused by your driving with donations to carbon-offsetting schemes. The same applies to some “green” mortgages. Norwich and Peterborough Building Society, for example, offers a “carbon neutral mortgage”. For each green mortgage bought, 40 trees will be planted over five years.
However, environmental charities remain sceptical about the benefit of carbon-offsetting. Dan Welch, the co-editor of Ethical Consumer magazine, agrees. He says: “The very basis of carbon-offset is flawed.
If you want to support good organisations that are fighting climate change, there are plenty that offer better ways of doing it than through carbon-offset.”
He recommends policies that offer lower premiums to motorists with greener cars. Ecoinsurance.co.uk and More Than both offer cheaper premiums for fuel-efficient, hybrid or electric cars, for example. Naturesave offers discounts on home insurance for houses with green features such as solar panels and water butts.

World’s tigers seen facing potential extinction

Tigers could become extinct in the wild in two decades unless the world ramps up conservation efforts to halt the decline in their population, wildlife experts said on Wednesday.

Barely 3,500 tigers are estimated to be roaming in the wild in 12 Asian countries and Russia compared with about 100,000 a century ago, experts and conservationists said.

Tigers are being illegally killed for their body parts and Asia is a hotspot for the illegal wildlife trade which the international police organization Interpol estimates may be worth more than $20 billion a year.

Skins sell as rugs and cloaks on the black market, where a skin can fetch up to $20,000 in countries like China.

Habitat destruction and depletion of prey base were other perils facing the “Asian heritage”, conservationists said.

“A business as usual approach in tiger conservation will doom the tiger population in the next 15 to 20 years,” Mahendra Shrestha, program director of the Washington-based Save the Tiger Fund told Reuters on the sidelines of a conference on tiger conservation.

He said law enforcement, patrols to stop poaching and the preservation of remaining habitat would improve the situation.

“There is hope. We can do it. It is not rocket science. It does not require a lot of new activities,” Shrestha said.

“But there has to be strong political will to conserve tigers and also strong global international support for the activities of the tiger range countries.”

Tigers still roam terrain in Bangladesh, Bhutan, Cambodia, China, India, Indonesia, Laos, Malaysia, Myanmar, Nepal, Russia, Thailand and Vietnam. (See left)

John Seidensticker, chief scientist at the Smithsonian National Zoo’s Conservation Ecology Center, said tiger habitat had declined by 40 percent in the last decade due to destruction of forests.

“Our challenge is to make landscapes with tigers alive worth more than landscapes where tigers have been killed,” Seidensticker said. “I think we have a decade from where we will slip from being caretakers to undertakers.”

Source:
Reuters, “World’s tigers seen facing potential extinction“, accessed October 29, 2009

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