Creating jobs and boosting the economy

Energy efficiency investment is one of the best ways to boost the economy, new research reveals.  GreenWise provides a good review of a new study from Consumer Focus in the UK.  The lessons from this, however, go well beyond the UK.

Carbon taxes could boost economy and lower energy bills

Investing money raised through carbon taxes on energy is one of the best ways to create jobs and boost the economy, according to a new report from Consumer Focus.

The study, ‘Jobs, Growth and Warmer Homes’, suggests that revenue raised from carbon taxes, such as the EU Emissions Trading Scheme, could be used to improve the energy efficiency of homes; delivering warmer homes and cheaper energy bills. It would also create 71,000 jobs by 2015 and 130,000 by 2027.

From 2013, the Treasury will receive billions of pounds in revenues from energy companies in the form of a carbon tax. But currently there are no plans to recycle the money to reduce carbon emissions.

Consumer Focus says the Government’s flagship energy efficiency policy, policy, the Green Deal, and the Energy Company Obligation (ECO), which will see consumer energy companies providing £1.3 billion a year in energy efficiency upgrades for low income and hard to insulate homes, could become much stronger through the use of recycling carbon revenues.
Overall this strategy would quadruple the impact of both the Green Deal and ECO and would cut household emissions by around 5.6 per cent by 2027, according to the analysis, by Cambridge Econometrics and Verco.

The report suggests this use of the money would be a more effective way of boosting the economy than using the money to invest in infrastructure, general Government spending or cutting fuel duty or VAT.

Fuel poverty

It also argues that it would be a much better way to tackle fuel poverty than current Government plans. Government estimates show the ECO will lift no more than 250,000 households out of fuel poverty – five per cent of households by 2023. But according to the analysis, if carbon revenues were used to support the programme as much as 87 per cent of UK households could be removed from fuel poverty by 2016.
Fuel poverty currently affects over six million UK households, and this is predicted to grow to 9.1 million households – more than one in three homes – as energy prices increase. Energy consumers will pay an additional £4 billion each year in carbon taxes through their energy bills by 2020.

“We need to make heating our homes more affordable, cut carbon emissions and achieve economic growth. Using carbon taxes to ensure our homes leak less energy represents a triple-whammy,” Mike O’Connor, chief executive at Consumer Focus, said. “This would simultaneously improve the quality of life of millions of people, slash carbon emissions and generate greater economic growth than other measures. Consumers will be paying these taxes through their bills. They can and should feel the benefit.”

“Marshall plan” to reduce energy bills

The new report, commissioned by Consumer Focus and a coalition of organisations called The Energy Bill Revolution, details a range of funding options from using 35 per cent of carbon tax revenue to 95 per cent and how this could cut fuel poverty by 75 per cent to 87 per cent depending on the level of investment.

“This is the Marshall Plan the UK needs to slash the energy bills of the most vulnerable and re-build the economy,” Ed Matthew, director of the Energy Bill Revolution campaign, said.  “Consumer Focus is urging the Government to carefully review this new research and the existing evidence from the Energy Bill Revolution, and consider this policy approach on energy efficiency. It would both help our economic recovery and give vulnerable households on-going benefits from warmer homes, lower energy bills and better health.”

The report is available from http://www.consumerfocus.org.uk/publications/jobs-growth-and-warmer-homes