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Removing green levies from energy bills welcomed

January 22, 2022

By Paul Homewood

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London, 22 January — Net Zero Watch has welcomed the government’s apparent decision to remove green levies from energy bills, providing direct relief to hard-hit households and also to industrial and commercial consumers

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According to a report in the Times, “ministers have been considering scrapping green levies from energy bills. However officials have concluded that because the government is contractually obliged to pay them they would simply be moved from energy bills to general taxation.”

Direct subsidies for renewable energy investors – via the Renewables Obligation, the Feed-in Tariff and the Contracts for Difference systems – run to £10 billion a year, but there is a further £2 billion from the high system costs renewables bring to the grid.

Net Zero Watch has repeatedly called on ministers to remove these renewable energy subsidies from energy bills to help reduce mounting pressure on the general cost of living.

Cutting green levies from energy bills will also allow the Treasury, in the medium-term, to buy back these subsidy entitlements at a discount, and eventually cease to provide green energy subsidies in any form.

Steve Baker MP said,

Thank goodness we now seem to be making progress towards better energy policy. Setting out to make the public poorer and colder never seemed likely to survive contact with electors. We can only hope ministers now accelerate down the path to a policy which is socially, economically and politically viable.”

Dr Benny Peiser, Net Zero Watch director said:

It would appear that Rishi Sunak and his advisers in the Treasury are realising that billions in subsidies for renewable energy is no longer compatible in its present form, threatening the welfare of millions of households and undermining economic and political stability. Sooner or later, the Government will have to consider terminating all energy subsidies that are increasing costs and pain to consumers and businesses.”

If the Times Report is true, this is a step in the right direction. Going right back to Tony Blair’s government, a deliberate decision was made to force energy users to pay the cost of government climate policy.

Now it appears that government will have to take back the cost. If that means spending cuts elsewhere, so be it. If this had been done  before, the Treasury would probably have put the brakes on green subsidies  years ago.

But the real solution is to do away with them altogether.

40 Comments
  1. Matelot 65 permalink
    January 22, 2022 12:41 pm

    That will be the day! The Government doing something sensible? I must be in a parallel Universe

    • January 22, 2022 7:54 pm

      An alternative that looks like political oblivion would tend to concentrate their minds.

      • Matt Dalby permalink
        January 22, 2022 9:53 pm

        Given that Boris seems to be fighting for his political life let’s hope that he tries to improve his popularity by rolling back a lot more pointless green crap.
        Maybe in the end a lot of good will come from all those Downing Street parties.

      • Phoenix44 permalink
        January 23, 2022 10:29 am

        Politicians will always do stupid until it threatens their re-election.

  2. Vernon E permalink
    January 22, 2022 1:01 pm

    Juliet Samuel writes in the Telegraph today that control of the energy crisis lies with practical, technical solutions, not fiddling with VAT. Of course, reassigning green subsidies to general taxation is welcome but the single easiest move would be to adapt our CCGT gererators to dual fuel and fire them with kerosene or diesel. It is easily done and the necessary storage could be built before next winter. It will be cheaper. more fextible and more secure. Forget the CO2 emissions, as Paul has demonstrated we don’t have a dog in that race and the government needs to stop pointless virtue signalling and get on with creating prosperity.

    • Harry Passfield permalink
      January 22, 2022 1:28 pm

      Vernon, did you read the rest of Juliet Samuel’s piece? Especially where she added the usual cop-out: “I’m among those who believe that a shift to “net zero” energy production is necessary and that Britain can benefit from being at the forefront of it.
      That alone would seem to negate any logical conclusion she thinks she has come to.

      • that man permalink
        January 22, 2022 1:37 pm

        Indeed, Henry. It’s what I refer to (politely) as ‘journalist knee-jerk’, where the writer remains bogged down in net-zero ordure.

      • that man permalink
        January 22, 2022 1:40 pm

        Harry, I mean…

      • Vernon E permalink
        January 22, 2022 4:04 pm

        Harry: Yes I did read the whole article and yes there are the usual contradictions but what I took away was the convictioon that there have to be long term technical solutions not deck-chair moving financial fiddling

      • Phoenix44 permalink
        January 23, 2022 10:28 am

        How on Earth can sensible people think the UK should be at the “forefront” of this? It is quite stupid for the UK to do anything unless everyone else is also doing it and relatively stupid to do anything until we are sure that (i) we need to and (ii) what we do works. The costs of successful technologies always fall, often quite drastically, so it is sensible to wait until they do before adoption them. The idea that there’s a benefit from being a first adopter is simply false. Would you rather be Blackberry or Apple, Samsung or Nokia?

    • Ray Sanders permalink
      January 23, 2022 10:54 pm

      West Burton A (coal fired) is due to close in September this year and even one unit a Ratcliffe on Soar (also Coal) is similarly due to shut down then as well So that’s 3GW gone – will Boris or anyone else over ride those closures? Hinkley Point B is due to shut by August so another 1GW gone and they cannot delay that closure. There are also some doubts over whether either Hartlepool or Heysham 1 can make it much longer. The winter 2022/3 situation is looking exceptionally dire as no-one is actually building any firm generation.
      Any shortage of gas next year will lead to desperate situations.
      So yes in a roundabout way(!) I agree entirely, we should be stockpiling Diesel/kerosene from now for burning in adapted CCGT (and OCGT). If only we still had the old oil burners (Littlebrook D etc) we would be in a much more secure position.

      • Peter Lawrenson permalink
        January 23, 2022 11:41 pm

        I believe that running a certain on diesel is possible but the volume needed is enormous. At Rustons now Siemens in lincoln BP wanted an extended test on a 4Gw set and 120 tons of diesel were required per day. The test ran for only 1 week. The turbines were destined for offshore where there is effectively free gas.

      • peter permalink
        January 24, 2022 12:19 pm

        Sorry. It of course should be a 4mw generating set.

  3. Harry Passfield permalink
    January 22, 2022 1:24 pm

    Just how many (covert) Greens are working as advisory staff (or even in the Permanent Secretariat) in the Treasury? We really ought know. (And the same goes for BEISS).

  4. that man permalink
    January 22, 2022 1:29 pm

    Well, one-and-a-half cheers for ‘due process’.
    In the words of W.S.Gilbert (Iolanthe, Act 2):
    But then the prospect of a lot
    Of dull MPs in close proximity,
    All thinking for themselves, is what
    No man can face with equanimity.

  5. sid permalink
    January 22, 2022 1:33 pm

    It ant done till its done

  6. Neil Sherry permalink
    January 22, 2022 1:39 pm

    Can we also have our money back which was invested on spurious propositions in expensive and pointless green energy companies, all without consultation or public consent?

    • Phoenix44 permalink
      January 23, 2022 10:30 am

      Back from who? Taxpayers?

  7. Phil O'Sophical permalink
    January 22, 2022 1:42 pm

    Like trying to squash a balloon, it will come out elsewhere. Until they abandon the drive, shifting the costs is irrelevant, and hugely cynical. When it was expedient to push up bills to ‘encourage’ consumers to cut their fuel usage, they did not care about hardship. But it has long passed the point of public passive acceptance and is now an electoral liability, so they will pretend to be on our side whilst hiding the costs elsewhere. Look out for more such goodies until after the May council elections.

    Who would have thought an illicit Christmas party or two could have so affected the principles of the Tory leadership? No, me neither. Along with scrapping Plan B it is welcome as far as it goes but I don’t think that will be far for either. It is utterly for short term gain.

    • Phoenix44 permalink
      January 23, 2022 10:33 am

      Because politicians and civil servants have an illusion of control. They believe they can nudge up energy bills and we will cut consumption line with their little models. Then they discover it was never under their control.

  8. Dave Ward permalink
    January 22, 2022 1:52 pm

    “The government is contractually obliged to pay them”

    More than enough companies have reneged on “Contracts” over the years, so I don’t see why the government can’t do the same…

    • dave permalink
      January 22, 2022 3:03 pm

      “…costs and pains to consumers and businesses…” will be shifted to taxpayers?

      Rather obviously, I would have thought, they are the same people, namely everyone!

      We are not even at the end-of-the-beginning of all this. Helpless people dying in droves, winter after winter, is the delightful prospect. Together with a thousand lies a day while it is going on, from the perpetrators. As the comment of History will be, ‘ It was worse than a Crime, it was a Folly!’

    • Martin Brumby permalink
      January 22, 2022 3:24 pm

      Quite right, Dave.

      Our Beloved Leaders have repeatedly imposed “Windfall Taxes”, notably on Gas and Oil, not even to mention the taxes they put on coal to make it more expensive than oil, then gas, then wind.

      Now is exactly the time to impose a “Windfall Tax” on the Wind Subsidy Farmers, to reflect the true costs to taxpayers and the economy as a whole of their evil lies and incompetent virtue signalling.

      And follow that with a “Sundown Tax” on the photovoltaic crooks.

      As a short term measure, a 50% VAT rate would give the barstewards something to think about.

      Money raised could be used in part to recruit some non-woke lads to provide some ‘marshals’ to assist the XR supporters in avoiding causing any “offence” to ordinary British people going about their lawful business and to get fracking going.

      Would be excellent. Don’t hold breath.

      • January 22, 2022 3:40 pm

        And what about an Emergency “Toothless” tax on anyone called Gummer?

    • Phoenix44 permalink
      January 23, 2022 10:33 am

      They’d lose in every court in the country.

  9. Vernon E permalink
    January 22, 2022 3:59 pm

    Sorry but in my post above I did not make clear that by “dual fuel” I meant gas or liquid fuel (such as kero or diesel). The “Secondary Fuel Oil Obligation in Ireland” sets out clearly the methodology and incontestable. It forseees exactly what we atr up against now.

    • January 23, 2022 3:46 am

      Does anyone know how much of the CCGT capacity currently has fuel storage (i.e. can burn a liquid fuel) or what the plan is for a natural gas shortage in Great Britain; do we have enough non gas generation for rota disconnection to even be a possibility?

      Why have CRU in Ireland addressed this but OFGEM have not done so in Great Britain?

      Also how hard technically would it be to make the remaining coal (hopefully we can reopen the closed 1 yet to be demolished) & biomass generator (but covert them back to coal or use heavy fuel oil if that is more thermally efficient since we need every MW of non gas capacity we can get) 1st-tier baseload generators.

      As well as review measure to extend the life of the remaining of AGR reactors e.g operating them only in the winter & reducing the operating temperatures to give us more time (early 2030s) to build new nuclear from a proven tested design like the CANDU not the EPR & at least 3 months gas storage with an aim for 6 months so we can buy LNG in the summer.

      Then we need to ban the use of uncontrolled by the grid operator electricity for space heating (i.e heat pumps) anywhere that has access to the gas grid (with help to switch to gas or heating oil) and immediately remove all carbon taxes, VAT & energy levies from coal, natural gas, electricity, heating oil & motor fuels to address the inflation/ cost of living crisis.

      • Ray Sanders permalink
        January 23, 2022 11:04 pm

        You can forget the idea of extending the lifespan of AGRs when the cracks go beyond a certain point. The cracks can prevent retracting the control rod mechanisms and nobody, but nobody, would ever run that risk. The most likely event is that the remaining AGRs will close sooner than their current scheduled closure dates.

  10. jimlemaistre permalink
    January 22, 2022 5:29 pm

    First . . . The whole Climate Change . . . CO2 ‘problem’ must be eradicated. Global public sentiment arising from the Al Gore’s and the Gretta Thunberg’s must put back into their place. REAL Science MUST rise in Public Sentiment . . . or we are doomed to follow the ‘Big Green Propaganda Machine’ down into the Rabbits Hole with our hair on fire . . .

    Every intelligent reader of Paul’s already knows this . . . It’s time to break the ‘Glass Ceiling’ of the Media . . . Some angry Mob saying . . . ‘We Ain’t Gonna Take it No More’ !!

    Some Politician somewhere holding up ‘PROOF’ of collusion at the BBC on matters of climate change.

    I have spent the last 5 years proving that Electric Cars cause at least 15% more CO2 to be burned per mile driven than Gas Cars . . . the evidence is Scientific FACT . . . but obviously I am deluded and and must have just crawled out from under a rock . . . because Electric Cars are ‘Emissions Free’ . . . EVERYBOBY knows that !!! . . . FALSE !!

    https://www.academia.edu/64085546/Electric_Cars_The_Untold_Story_
    https://www.academia.edu/62574334/Tesla_Versus_Toyota_Camry
    https://www.academia.edu/49057069/Electric_Cars_Burn_31_More_Energy_than_Gas_Cars

    Until Truth comes to the mases Through the public Media and Politicians . . . Our societies will continue to crumble and implode under this giant pile of trumped up Lies . . .

    Sadly, to date, no self-respecting Media Representative or politician facing reelection wants to risk the Ire of their Peers or the Mandarins ruling the Environmental Movement or The Purveyors of Globalization in our New Social Construct. ‘For they are Brothers-in-Arms’, so to speak. Who wants to be the one to open Pandora’s Box? . . . It would be like pulling Hans Brinker’s finger from the Dyke or Killing the Goose that Lays the Golden Egg . . .

    Change MUST come . . .but it MUST be ‘Shocking’ and ‘Groundbreaking’ or . . . Nothing.

  11. January 22, 2022 5:52 pm

    Paul: there are headlines in the press that wind power is now reducing our electricity bills. We could do with an explanation (and no doubt debunking) of this, as the information available is not easy for the layman to understand. Would it be possible for you to look into this and tell us what is really going on?

    • It doesn't add up... permalink
      January 23, 2022 1:55 pm

      There are four different arrangements for wind farms.

      Small turbines such as you might see on a farm benefit from Feed-in Tariffs, which are inflation indexed mostly generous prices (though more recent installations do get much lower prices that are below current wholesale market levels there are very few of them – new installations dried up 6 years ago in consequence and the scheme for new installations ended altogether in 2019 – see the data here https://www.ofgem.gov.uk/feed-tariffs-quarterly-statistics ). Details of the tariffs can be found here – add the export tariff to the underlying tariff to get the wholesale value:

      https://www.ofgem.gov.uk/publications/feed-tariff-fit-tariff-table-1-april-2021

      The overall capacity is small – about 600MW – and some of the output is in any case consumed by the owner saving retail priced electricity, just as with rooftop solar.

      Next come wind farms subsidised under the Renewables Obligation scheme. They sell into the wholesale market and get market prices for their output, but also benefit from varying levels of entitlement to Renewables Obligation payments with each certificate being worth around £56/MWh in practice currently – entitlement varies between 0.7 and 4 certificates per MWh depending on age of installation, onshore/offshore/floating. This is the group that is making outrageous profits currently.

      Next are those who are operating under CFDs that effectively guarantee them a fixed price almost whatever happens to market prices (they do not get compensated for the negative element of prices when they go negative). 90% of this is offshore. The average prices for these wind farms are shown in this chart

      These prices are below current market levels, which have been very volatile, but average about £200/MWh over the past quarter. It is this element that the papers are referring to.

      Finally, there is a small group of wind farms that are producing during “commissioning” but are not yet operating on CFD terms who get market price for their output with no subsidy or penalty. It remains to be seen whether they will ever emerge from “commissioning” while market prices are higher than the CFD price they agreed to. Triton Knoll is one farm to watch on this.

      The last three groups are also entitled to sell Renewable Energy Guarantees of Origin – REGOs – that are “greenwashing” certificates, which have been selling for a little over £6/MWh recently, and are also a backdoor subsidy.

      Market prices are mostly dependent on costs for CCGT generators, who tend to be the marginal source for balancing the grid. Part of those costs comes from the carbon taxes they pay, which have been worth £20-30/MWh in recent months. That effectively is a general tax adding to market prices, which boosts the windfall profits of the ROC generators who of course do not pay the tax.

      • It doesn't add up... permalink
        January 23, 2022 3:42 pm

        It’s perhaps worth pointing out that Drax and Lynemouth have continued to get subsidies under their CFDs because the price used to benchmark what they are paid are baseload prices set a season at a time in advance. That was before prices went truly berserk. The payments to biomass offset a substantial chunk of the payments by intermittent wind generators which are based on day ahead hourly prices. I can foresee that this may result in Drax not generating in the future if their benchmark price goes way over their CFD while market prices collapse. I somehow doubt that OFGEM and BEIS and Natiobal Grid have their eyes on the ball over this.

    • Jordan permalink
      January 23, 2022 2:57 pm

      “headlines in the press that wind power is now reducing our electricity bills”
      … from people who do not understand security of supply.
      Energy supply needs to be “on-demand” and not “on-average”. On-average is not acceptable because it is bad for productivity (idle assets and jobs lost) and bad for welfare (suffering and death). Energy must therefore be supplied on-demand, and the costs are high.
      Recent UK Governments have made this mistake, and are now reaping what they have sewn. It’s not going to be a comfortable or quick recovery. Good decisions will need to be made, and quickly.
      Security of supply is expensive because it needs designed-in reserve (redundancy) at all stages of the supply chain. Single points of failure need to be avoided to achieve a low risk of supply failure. Loss of Load Probability has to be down to a few hours a year.
      We are to have a significant portion of wind in the mix for the foreseeable future, and availability of wind resource has been shown to be a single point of failure. Windless days are quite frequent, and longer windless periods are only a matter of lower frequency of occurrence – but they definitely exist. This is a Europe-wide characteristic of this resource, so interconnection isn’t the answer.
      Diversity of supply starts at primary energy resources, and the UK needs to have alternatives to deal with the vagaries of wind resources, without there being single point of failure risk in the alternative. We are learning that lesson right now
      The UK needs to have at least two responsive fuels, meaning both GAS and COAL in the mix, in roughly equal measures. The decision to ban coal was a bad mistake and needs to be reversed without delay.
      It will now take the UK over a decade to achieve a suitable level of diversity in primary energy supply. Coal fired power stations do not come in the back of a grey Amazon van after a boozy eyed moment of self-indulgence on a Saturday night.
      Nuclear will take much longer to deliver and demonstrate the latest designs. Claiming nuclear is the answer is no better than those who call for an increase in renewables. Neither will address the lack of diversity in UK energy supply that we will now be living with for the next 20 years.

      • Ray Sanders permalink
        January 23, 2022 11:19 pm

        All of which makes you wonder if converting aviation turbines to kerosene generators is not such a silly (if somewhat desperate) idea.
        https://www.ge.com/news/reports/ge-oil-gas-just-turned-worlds-largest-jet-engine-65-megawatt-power-plant

      • Vernon E permalink
        January 24, 2022 11:07 am

        Ray: Some confusion here surely. Aviation gas turbines run more or less exclusively on ATK (Aviation Turbo Kerosene).

      • Vernon Evenson permalink
        January 24, 2022 11:36 am

        Jordan: Why on Earth do ypu want to see coal as the alternative? OK, if there are stations still running on coal, keep them but most have been demolished. It is in conceivable to build new coal capacity. Meanwhile kerosene and diesel are in surplus and can easily be used in existing installations and even new installations built relatively quickly.

      • Jordan permalink
        January 24, 2022 5:53 pm

        Vernon
        Liquid fuels are very much more expensive and very much less abundant than coal.
        Coal and gas compete head-to-head with each other for market share in world markets, and this locks their prices (per GJ) together in the medium term. (This is the so-called Law Of One Price.) This happens as long as there is sufficient switching capacity in the market to substitute between the two and allow the pricing pressures to operate.
        Having significant capacity to consume both and substitute to the lower priced alternative, we gain improved energy security because we have access to a much greater supply of primary fuel (increased overall abundance).
        Right now, with 5GW of really ageing coal-fired capacity in GB, we don’t have effective fuel switching capability for flexible generation. We need to bite the bullet and build more coal fired capacity and reach for 10-15GW of modern (clean and more efficient) flexible coal fired capacity.
        We might not have quite realised this at the moment, but it’s only a matter of how much we have to make ourselves suffer before we get there.

    • It doesn't add up... permalink
      January 24, 2022 1:44 pm

      Worth adding in this chart of real numbers of CFD net subsidy. Although market prices in general have soared, the highest prices occur when there is little wind generation, and we were even seeing negative prices over the warm new year when there were also strong winds. In January to date, we’re back to subsidising offshore wind again!

  12. John Peter permalink
    January 23, 2022 8:46 am

    “Paul: there are headlines in the press that wind power is now reducing our electricity bills.
    Perhaps because gas is now so expensive that wind ‘might’ look cheaper when it actually produces energy if you know how to ‘work’ the numbers.
    Whatever they work out, it can never be true as wind is variable and always will need a substantial dispatchable backup to cover the whole of installed capacity when there is no wind. The cost of dispatchable redundancy is part of the cost of having wind installations.

  13. Athelstan. permalink
    January 23, 2022 5:46 pm

    As long as the corporate blob can virtue signal their green credentials by using compulsory purchase and buying up good agricultural land to covering it with less than useless photo voltaic arrays. A government fixated on green trash ie the new window tax and banning conservatories, going gung ho for more bird choppers. In the same moment as, threatening to subtract the green taxes from consumer bills. While the left hand is not communicating with the right hand of what is termed ‘government’ – the carbon horlicks just keeps going bananas and less will mean less. A nation teeters on oblivion, people need the **** to wake up to it.

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