The Chancellor will give his autumn statement on Thursday.  

Since the economic shock in 2008, any statement from any Chancellor has had the ability to send chills down the spine.  We've had announcements about cuts (which have hit environmental institutions hard), about spending on new infrastructure (not all likely to be benign to the environment) and also rhetorical attacks on environmental regulations (which have just about survived intact).  

While the green shoots of recovery are visible to some, there is still a reason for trepidation before Thursday's announcement - it is clear that politicians are still looking to remove any perceived obstacle to economic recovery and address the so-called "cost of living crisis".  Particular focus will inevitably be on energy bills.

In the past two months, electricity bills have (unlike last month's UN climate change talks in Warsaw - which our man, John Lanchbery covered here) dominated the headlines and there has been some rather loose words said and written about the relative contribution that green taxes play in keeping electricity bills high.  Fortunately, the BBC has produced a simple explanation about what causes electricity bill rises (see here).  You'll note that environmental and soclal measures make a very small percentage of our bills and are likely to help bring prices down over time.

So, I have to say that I was somewhat relieved to read the joint article from the Prime Minister and Deputy Prime Minister this weekend which gave some reassurance that green commitments are not going to be abandoned.  The war of words on energy pricing has intensified to such a level that it is difficult to know what to believe especially when reported through media that have their own editorial position on climate change.  But, one can only assume what Messrs Cameron and Clegg have written is what they intend to do.  Here is what they said about energy prices in the Sun on Sunday (with thanks to our Head of Communications for forwarding the article, ahem).

"There are bits that government can control — the parts of your bill that go to helping the poorest families heat their homes and to making Britain more energy efficient. Some say we should drop these commitments entirely but we do not agree. As we approach winter, we refuse to turn our backs on the worst-off families.

 

“And if we abandon our green commitments, it is our children and grandchildren who will pay the price. This Coalition Government has never pursued quick fixes today when they’ll hurt people tomorrow — and we’re not going to start now. So we are going to stick to these commitments but we are not going to ask you to pay for all of them through your bills….. to make sure we carry on cutting enough carbon, the Government will pay for new incentives for people to insulate their homes. Alongside the Green Deal, when you buy a new home you could get up to £1,000 from Government to spend on energy-saving measures — equivalent to half the stamp duty on the average house — or even more for particularly expensive measures. It is an all-round win. Better insulation means cheaper bills, it will cut carbon emissions and boost British businesses who provide these services.”

 

No doubt, the detail of the changes to bills and energy saving measures will emerge this week.  It may be a little while longer before we know if this will help or hinder our fight against climate change.

 

The bottom line is simple: we need to find ways of using less energy weaning ourselves off fossil fuels.  And that will inevitably require investment in energy efficiency and renewable energy.  And while we, of course, need to find ways to protect the vulnerable from higher costs, these investments, will pay in the long term.  Nick Stern's review of the economics of climate change (which remains as relevant today as it was when published in the late 2000s) made the case for why it was cheaper to act today than wait to clean up the consequences of climate change.  

 

I for one, would be happy to see my bills rise if investments led to reduction in greenhouse gases and the vulnerable in our society protected.  As it, I use Ecotricity, which not only supplies me with electricity generated from renewable sources but has also promised to undercut standard tariffs of the Big Six energy companies.  Oh, and yes, this a shameless plea for you also to switch supplier as the RSPB receives £60 for every customer that joins (see here).

 

Let's see what this week brings.

  • This isn't a complicated situation at all: what is crystal clear is that fossil fuel prices are going to go on rising. We've got to substitute with viable alternatives (which may need subsidies now but could soon be cheaper than current mainstream fossil fuels) but even more importantly reduce our energy use - and that is the big one in every respect, because we can afford some pretty hefty rises if we're cutting use even faster.

    The myth here is the fantasy world of the economy vs greening: yes, you might save a few pounds as an election sweetener now but in the long run the George Osborne view of economics is going to leave us poorer and poorer and less and less competitive as the years go by:  this is not a country that can afford an economy based on low rates and cheap natural resources, to have a place in the world of the future at anything like our present standard of living it is imagination and innovation we must depend on - and there's no better place to start than in the way we treat energy.