September 2008 - The DANGERS of over-insulating the energy providers

Those people shouting loud in September (John Cruddas, Michael Meacher and Tony Woodley have been!) for a windfall tax on the big energy providers were, I imagine, bitterly disappointed by Gordon Brown’s domestic energy announcement.

The NEW interest in the announcement was Brown promising to SWITCH ON “a sea-change in energy efficiency and consumption” by legislating to require the big power companies to pay for £910 million worth of domestic energy saving measures (full costs for older people and the lower waged and half costs for everyone else). So it isn’t a windfall tax but is this a fudged policy alternative or a “sea-change” approach to rolling out loft insulation?

Compass argued for a windfall tax as such:
“We believe that the moment is right for the government to levy a sensible one off windfall tax to guarantee social and environmental justice both now and in the future.”
http://www.compassonline.org.uk/campaigns/campaign.asp?n=2773

It’s true a one off tax would give government the means to extend exponentially the government Warm Front scheme and encourage people to insulate their homes - probably alongside transferring money to help with utility bills (the primary objective of many of the tax’s supporters). If such a windfall tax produced turbo-tangible outcomes on home energy efficiency then it would be a robust move showing strong government leadership on the issue. However it would also be bad for three reasons:

1. It is just a one off
2. The power companies sadly are probably better at ‘selling’ the take up
of insulation
3. Companies would NOT be paying the carbon costs UPFRONT and
BUILT-IN to their business models

Doing TAX and GRANT means the Power companies can leave it to the public sector to ‘think’ whilst they remain insulated and operating to a pre Climate-Change-Conscious Logic.

What Chancellor Darling says of the proposal
"I suspect that we have got rather more out of the energy companies than we might have done out of a windfall tax."
Remains to be seen! And the OUTCOMES have to judged but the intention has to be right that these Companies have got to bear a much larger share of Carbon Costs Up Front – and Built-In to their Business models. Corporate responsibility too often has meant corporate minimum standards. The Global Financial Crisis that shows deeper wounds the longer September runs, shows profoundly, that Business can no longer assume that PROFIT is their only responsibility.

TF