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Unions the true conservatives?

Hats off to Redditch Council. The Conservative-run authority wants to use surplus heat from furnaces at the local crematorium to help keep nearby Abbey Stadium swimming pool warm. A brilliant idea, regularly found in Scandinavia. Judging by responses in local papers, pretty well received too by most residents, particularly as the Council think it will reduce overall fuel expenditure by £14,000 a year.
I suppose it is inevitable it is the unions that object. Listen to Roger Mackenzie, Unison’s West Midlands regional secretary who lambastes the idea as “sick”, “insensitive” and “an insult to local residents”.
He claims it demonstrates “yet again that the Conservatives know the price of everything, and the value of nothing.” Actually, it is cynics at whom that jibe is usually made. Far from being cynical, I think this is an excellent example of sensible, lateral thinking. So there. Trust the unions to be the true conservatives.

A criminal bonanza

Scoffers may not take the concept of trading carbon emissions seriously. But there is one lot of people who most certainly do. It is the international criminal fraternity.
The European emissions trading scheme was created seven years ago. It was meant to achieve two policy objectives. These were to get heavy industry to use electricity more efficiently. And to get the electricity industry to reduce the carbon intensity of its supply mix.
Given that there have been a) far too many trading permits issued and b) most of these have been made available free and gratis, it is not surprising the number of scoffers regarding the scheme’s actual impact has continued to grow. But now a new set of sceptics can join them.
The European scheme is proving a nice little earner for industrial companies selling on their surplus permits, usually at discount prices, to electricity generators. The generators then store these away, against two years’ time when they will have to start actually buying their permits. Meanwhile the generators have been making massive profits – worth €50bn according to WWF – from increasing their prices as if they had bought all their permits at the highest market rates. Rather than being given most free, and getting the rest on heavy discount.
Now into the mix have stepped some sharp-eyed members of the criminal fraternity, exploiting the lax on-line security arrangements operating in many of the 27 participating countries. And simply breaking into existing carbon accounts, to transfer, and then selling on the carbon credits to innocent purchasers. As almost anybody can set up – and then close down – a carbon registry, these intermediaries are proving very difficult to catch.
At least three million credits are officially acknowledged to have been stolen – from the large cement company Holcim, from the Austrian and Greek registries, from a bunch of Czech accounts. Consequently the entire system closed down for 16 days last month. The strong probability is this is just the tip of the iceberg.
Even if a generator or an industrial company has bought any of these stolen permits in good faith, they are then in receipt of stolen goods. In the UK, these will be confiscated, and returned to the original owner.
The US House of Representatives has just passed a resolution not to permit the development of a nationwide carbon trading scheme. This has been done primarily because of dubiousness about the science of climate change. A much better justification might be that the one such scheme in existence is turning into a complete criminals’ bonanza. Green fleeces, red faces.

Into the ministerial pot

For the past ten years, the Big Six electricity companies have been required by the government to help domestic consumers install energy saving measures. How they stimulate any installations to occur is entirely up to them, says the government. The companies simply have to show enough insulation or cfls and so on have been installed. Otherwise OFGEM the regulator will levy enormous fines.
The reason for this arcane arrangement is simple. Nowhere is it specified exactly how much needs to be spent to meet any official targets. Therefore the scheme is not deemed to be a tax. And so does not get included within the Treasury’s books. At least, up until now.
All this changed in last November’s Comprehensive Spending Review. The Treasury redefined such obligations as mandatory expenditure. It made an estimate of what each of the Big Six needed to spend to persuade householders to install these measures. It then declared that such obligations to be putative public spending.
This book-keeping alteration has significant ramifications. Not least for energy ministers, long fed up with all the kudos going to the electricity and gas companies. Now they think: if such schemes are henceforth going to be scored against their Department’s total, why should we not take the credit, by taking full control of any funds raised?
In 2013, a new scheme – called the Energy Company Obligation – will start. Ministers rather like the idea of simplifying this Obligation. The energy companies will continue to provide the money. But this time it will all go into a pot controlled by ministers. Who will determine how it is spent. And in that way will receive all the gratitude from the beneficiaries themselves. Who just happen to be voters.

Resisting the urge to delete

Ping. A press release arrives from Friends of the Earth Europe. I resist the temptation to delete. Instead I find it makes rather an interesting point. The European Union governments have signed up four energy-related targets for this decade. Targets which are binding upon, and therefore change policy, in all 27 countries.
Three of these – on climate change, on renewable energy, on bio-fuels – are all legally binding. The fourth is on energy efficiency. It is purely voluntary.  And, as a result, it looks as though the 27 governments will nowhere meet it: European Commission figures forecast a 9% rather than the 20% improvement aspired to. Even though as FoE acidly point out, of the four targets, meeting the energy efficiency one would be infinitely the best for the European economy.


James Pearson

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