Talk:Energy policy of the United Kingdom
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Out of Date
I'd like to suggest that much of the information on this page is slightly out of date and based on the 2007 Energy White Paper, rather than the 2009 LCTP and subsidiary documents (e.g. Renewable Energy Strategy). I've made some updates, but further work (e.g. updating the table on renewables, which is dated 2004, and to reflect e.g. the election of a new Government) may be useful.Betdud (talk) 08:09, 8 June 2010 (UTC)
Differentiation and overlap with Energy use and conservation in the United Kingdom
Due to areas of overlap in these 2 articles I did consider putting a
- the two topics are quite distinct and both quite large in scope. naturally there is some overlap, but that is always the case where one has a major article and subarticles due to the depth of the overall subject matter. let them evolve separately.Anlace 03:00, 3 June 2006 (UTC)
- I agree with Anlace. In fact I had also been thinking of starting this topic myself at some point. Since I don't have much time at the moment and the page is already underway, the following content ideas may be useful to someone:
- Loads of current stuff in the 2006 Climate Change Programme (but would also need to watch for duplication with United Kingdom Climate Change Programme [1]).
- For other content, how about: nationalisation and privatisation of the energy industries (Ofgas) etc; exploration policy in the North Sea; the policies behind the shortage of capacity in the 1950s and huge over-supply in the 1970s; reaction to the 1973 oil crisis (speed limits, Building Regulations etc); the decision to develop nuclear energy + associated waste disposal & decommissioning policy; the Severn Barrage; funding for Salter's Duck (and Wave power in general); the failure to spend the funds in the Major Photovoltaics Demonstration Programme; the Renewables Obligation; the Climate Change Levy; Carbon tax; licensing and planning of wind farms; influence on EU energy policy; etc..... Gralo 11:13, 3 June 2006 (UTC)]
- these ideas sound brilliant. what would format be? maybe subarticles are warranted for some of these topics, which sound extensive in their possible content. cheers Anlace 19:49, 21 June 2006 (UTC)
- I'd agree - a 'medium level' discussion on each topic area, broken up into suitable sections, so that it's easy to add links to more detailed articles for each in the future Gralo 17:48, 22 June 2006 (UTC)
- a medium level discussion seems ideal, but i think the tricky part is the organisational structure. optimally we dont want to have too many categories, so that perhaps some of the material could be grouped into say larger categories such as for example: deregulation vs privatisation, renewables, taxation and economic stimuli/ we already have sections on renewables , nuclear, coat so that those sections might be able to absorb some of the content related to those topics that you have advanced, what are your thoughts as to organisation? regards Anlace 06:20, 23 June 2006 (UTC)
- Not an easy one. Having thought about it a little, the main theme about government energy policy is that it's rarely been a proactive long-term plan, but more a combination of reaction to circumstance + a reflection of whatever general political conviction the government of the day happens to follow + the odd response to public opinion. Hence nationalisation and state control kick-off post war along with nationalisation of other industries; cold war + unbounded faith in technology (in general) in the 50s and 60s that lead to the vision/hallucination/propaganda/spin (?) that nuclear power would lead to electricity "too cheap to meter"[2]; oil crisis in the 70s leading to 1st efficiency measures; Thatcherism leading to privatisation; etc. Perhaps therefore an overall view of government policy could be under these types of headings. Then linked articles - on nuclear power, for example, could cover more of the detail as you suggest, for example by providing a narrative on industry-specific subsidy or whatever. But gets a little more complex since the start of climate change concerns, since there are now many more things that government are trying to control... Gralo 23:31, 29 June 2006 (UTC)
Is there a policy? Doesn't look like it... Global Citizen1 (STEERwiki) says:These are my attempts to get coherent government policy 1. quick summary of the state of play including practical insulation as at October 2006, then 2. a summary of progress, then 3. the main paper which outlines in a couple of pages how the Trade and Banking adjustments could work, maybe in the long-term those adjustments could be practical after what I now see as a 10 year stabilisation exercise using entirely government money and concentrating on insulation initially. Then the same kind of mechanisms can be used for the Major Works ( -ice refreezing, barriers, sustainability education, etc). Please forgive me for my unfamiliarity with Wiki and accept my congratulations for the whole wiki project. Every Town an Eco Town (works for cities too!) is available by email and has MORE easy figures and answers (from Ian.Greenwood [at] STEERglobal [dot] org. It works for hot climates as well as cold and there should now be a rapid global programme to get oil/gas usage down and extend its life - stabilising prices until renewable energy, hydrogen, electric cars etc. I'd be grateful for help to edit into a clear form for WIKI.
1. ONE A quick glance at this wiki page, having searched "energy use and conservation in UK" reveals a glaring omission - super insulation is not referred to.
SUPER-INSULATION consist of multi-layer foils which came over from France about 10 years ago, and applied externally dramatically improve the heat storage capacity of buildings - in the existing thermal mass.
On a full-scale project last year (and also another the previous year of the same size) about 60 sq m of wall was insulated and the cold side of our double-fronted house became the warm side! (we have a "thru hall"). We saved at least half of the energy in this side of the house. The wall itself was about 10 times as efficient as before and at least 4 times as efficient as the current UK building regulations of 0.35 W/sq m for every degree C difference between in and outside temperatures. This is because it trapped a full 9 inches of brickwork's thermal mass compared to only 4 inches in the currently popular insulated cavity walls. This works even for already-built cavity walls and also in hot climates. There buildings could "giant Cool stores" - if cooled overnight.
We estimate the cost of insulating a typical UK "semi" at the side (or enclosing it with a sealed set-back accessway and storage rooms over shared between adjoining owners) is in the region of £10k - £20k. This can be beyond the reach of many average people, but with a government subsidy this could allow people in a job to take on a manageable loan to enable these kind of projects.
The remarkable opportunity for the governments all over the world is that by providing the State finance and a State subsidy the whole project could be self-financing and stimulate the right kind of investment. I estimate that the UK boom conditions of £50 billion - £100 billion of credit money should be restrained permanently by this means and about 50% of these values (initially) should be the limit on future money created, whether by governments, banking or commerce.
Notes: Condensation cannot be a problem with these super-insulation materials because the material itself acts as both a draught seal and as a warm surface.
Although rigid materials can serve the save function if sealed to the perimeter of each sheet the flexible super materials (One of the original manufacturers was Actis (Triso Super 10 are much shinier) and easier to use.
2. SECTION TWO: PROGRESS on fairer funding for conservation of energy, renewable energy, sustainable transport and sea barriers
Sept 2005: ETI Paper accepted by UK Cabinet Office as “interesting” “would need push by G8”
December 2005: Stern Review publishes STEER proposal – for an Environmental Tax on Imports (ETI) like VAT returning 50% share of the tax to each trade partner direct to projects against climate change in accordance with the great need to divert to avoid climate and energy catastrophe.
January 2006: Stern issues paper accepting the following key principles • International taxation strategy • “Free riders” must pay a greater proportion than they do • Substantial change required to assist poor countries and those with greatest need: mitigation and adaptation • Investment in renewable energy, conservation of energy and sustainable transport urgently needed to slow climate change (insufficient forecast of sea level rise)
April 2006: Incoming Environment Secretary David Miliband speaks in favour of “environmental contract as important for the 21st century as the social contract was for the 20th century” (little take up by media?)
May 2006: Appointment of John Ashton as Environmental Diplomat June 2006: Call from Treasury Select Committee for paper from STEERglobal
October 2006 Stern Report from UK Treasury puts figure for investment as 1% of global GDP based on underestimated sea level rise (a major step towards our estimate of need which we believe to be more like 3% of GDP half of which must be spent in developing and regions) No specific change to trade stated. Over reliance on carbon trading, clean dev mechanism etc. No specific practicalities on insulation to gain efficiency and no substantial increase in incentives.
December 2006: Professor Stern visits India. Noises came from there about the need for funds to be returned to those countries that are producing our manufactured goods which add to our increases in real wealth
How does this affect funding medium sized cities’ Mass Rapid Transit networks? If externalities are accounted for such as cost of future generations’ needs, congestion, noise and pollution then projects such as the MRT for those cities can easily be justified and more equality of funding to regions at various levels of deprivation would become possible, at the same time increasing sustainability and prolonging the life of energy reserves. Conservation of energy can also be more urgently implemented if properly incentivised. In the UK two measures would be “retro-eco insulation” and reversal of the “Beeching cuts” of the rail network. All these measures would tend to extend the life of fossil fuels and reduce prices.
The ETI proposal could bring within reach of the global community funding to support provision of sustainable transport, renewable energy (+energy conservation) R&D to solve the problem of sea level rise – all these - and eventually sea barriers. Because the proposal would eventually bring micro-power and comparatively free energy within the reach of ordinary people, some resistance might be from utility companies even though less pressure on them.
March 2007: Offer from FSB senior EU policy person to look at STEER ideas (FSB: 200k members) plus other contact with Trade officials and EU lobby groups achieved. New Economics Foundation invitation to meet to discuss the CMBA (below): we agree it should be hypothecated.
July 2007: Reply from UK Treasury acknowledging credit money creation – believed to be a first from a major power. The new Credit Money Banking Adjustment (CMBA) could be linked to ETI to mitigate the effects of a tax increase on either people or businesses hard hit. In future years there would be a greater fund slowly growing to a maximum - a transitional arrangement for credit money to bring down inflation/interest rates and real costs.
Harvard Business School (USA) Professor: “I like your ideas”.
October 2007 Publication of ETI proposal in Treasury Select Committee Report on Globalisation No 14.
The EU Trade Commissioner’s office acknowledges the need for WTO rules to be changed if ETI was to be accepted as a way forward.
January 2008: Discovery in Australia of documents supporting our argument that money reform is needed. The privatisation of 6 State and a Federal bank approximately doubled the amount of privately created credit money into circulation and has now caused inflation there on a similar scale to that in property prices in the UK that occurred after the de-mutualisation of Building societies - inflation noted in our new paper “Climate and Credit Reform” with supportive comments from another professor reproduced below . Also some of the bank profits are under threat from the other commercial organizations starting to do cash issuing and loans/mortgages but here is also a wider threat from a future explosion of credit money after the credit crunch as private equity becomes more powerful.
February 2008: Serious problems with the banking system as it starts to unravel. The reduced creation of money naturally reduces the prices people are prepared to pay. The decline of bank revenues from lack of mortgage creation starts to spread worldwide, as a global recession starts to be recognized as a possibility. After many “bailout” headlines to stabilize banks people begin to realize the extent of the systemic flaws.
By October 2008 the UK government has started to announce that spending will be required, but have yet to announce creation of Government loans for insulation purposes with accompanying subsidy on a wide enough scale to address the problems of Climate change and oil/gas/resource depletion. But the words INSULATION have been uttered by Gordon Brown (UK Prime minister) and some sections of the media. Last year in spite of our efforts both the Pre budget report and the Budget itself were deeply disappointing. We look again to government in the UK, but now to the public at every level and to governments across the world.
3. SECTION THREE *** CLIMATE AND CREDIT REFORM
COMMENT on Climate, Energy and Credit Reform:
"From my initial impression (the last thing we need is yet another tax and mere tinkering with interest rates) I decided to give it a fair go and actually read it and the attachments in full. I am glad I did because I have changed my view to seeing that you do know what you are talking about. I now like your proposal because, whilst I do not think it fixes [all] the fundamental flaws in the current system, it mitigates some of the worst aspects of it, and so can buy us some more time. I think your critical analysis of the ill-effects of the current system covered and cited in your material is correct. I like the thrust of internalising some of the so-called externalities to approach a better financial accounting reflection of reality. I like the practical, pragmatic, expedient approach which comes from your scientific/engineering/technical background.
What you are proposing can be relatively easily bolted-on to the existing system to make it work better for longer” Jamie Walton Global researcher 2008
“We indeed are very concerned of the possibility of overlooked climate change prospect of sea level rises due to ice sheet land containment failures in Greenland and Antarctica.” Fellow of the Royal Geographical Society (2008) Responding to the STEERglobal funding proposals.
- Climate, Energy and Credit Reform ****
Steps to understanding : 1. The one-off cushioning effect of the floating ice has protected the planet from warming and sea level rise - when it is gone it is gone. Potential 80 m rise would devastate many towns and cities – it’s a climate and civilisation crunch! Long term planning would be good.
2. That we can do something about it if we act quickly - uniting to achieve somewhat less ‘frivolous’ consumption and energy/material waste via demolition (i.e. embodied energy and thermal mass. Because of the current waste, buildings should be modified, insulated and extended/improved in most cases rather than demolished). Plus individual savings. A moratorium should be placed on demolition through the Planning mechanism unless a sufficient case can be made after reasonable enquiry.
3. Revenue must also be directed as part of the system towards insulating the “hard to treat” buildings - it is no good having difficulties/time lag in applying for adequate funds/subsidy, long delays or stop-start – see quote below of funding, immense staff or bureaucracy costs.
4. The message from STEERglobal is that an equal dollar return must be made to the producer nation for their sustainability & energy efficiency. This can be achieved via an Environmental Tax on Imports (ETI) or ET. Credit money re-directed (the Credit Money Banking Adjustment) at the level of the base rate can then enable offsetting of ETI Tax (which the UK Cabinet Office said was “interesting”).
5. Additionally, now that the other proposal, the Credit Money Banking Adjustment (CMBA) has been devised, the revenue can flow - from where it has been inflationary (or held back in the credit crunch) to where it is necessary to achieve energy and resource sustainability, directly to projects investing in a sustainable future. Allowing these investments in a balanced way across the world would also create more stable finances and benefits socially, environmentally and politically. Confidence can then return.
“STEER (ETI) sounds like a sensible policy option for helping to make the market tell the ecological & social truth and thus move toward a more environmentally sustainable economy”
Earth Policy Institute 2004
“[CMBA proposal] … has excellent analysis. As regards the required alternative solution, the claim for the present system is that it allocates resources efficiently. This claim is nonsense but any alternative must show that it allocates resources much more efficiently and addresses the question of ensuring that productive capacity (and the associated consuming capacity) becomes more widely spread” Professor R. Shakespeare London and Jakarta. [It would be - by returning to the producer or consumer region where the work is done or the loans are raised (or the money spent) directly to the actual articles/projects needed, this would increase the retained income of the poorest working people via lower energy or transport prices– giving them hope and therefore increasing motivation, but at the same time reducing inflation, tax and cost in almost all sectors – the efficiency referred to. This would be a truly free-er trade partnership.]
CONTENTS: page 2 Introduction page 3 Climate change over the past decades has been suppressed by a little-known cushioning effect – the cooling effect of the floating ice. The vast need for funding to deal with this phenomenon and the end of fossil fuels give a clear incentive for credit money and trade reform. Without a specific investment mechanism, with sea level potentially 80 metres higher, inundation begins soon. A great deal of current civilisation and production is close to the sea in low-lying areas and rivers might dry up without melt-water, so this is a global problem affecting everyone. With the two reforms proposed - simple, efficient and transparent economics reduces poverty and increases motivation.
A mechanism for credit reform, to allow partial offset of green taxes - described on.. page 5 - is required because of an important and shocking inflation statistic: In the last 30 years property inflation has driven prices up in some areas by 20 to 30 times (3000%) in sharp contrast to Treasury targets of 3% pa which would total 245% when compounded 30 times. So there is no shortage of money if it could be better directed. Such a ‘tax’ would not be on all loans, only on any element of “free” money – i.e. that created by commerce. Any element of “free” money could and should attract a charge at base rate as there is no return to a depositor on it. The base rate could then be payable to the publicly owned central bank (Treasury) to be spent in the region where the loan and interest burden arises and carefully monitored. That way both the burdens – the interest burden from borrowing and of resource depletion (because of the return from the ETI/ET, described in the Appendix) would be more fairly shared. Credit Money Banking Adjustment proposal is simple: Bit by bit, each year on all new “money as credit/debt” issued by big banks (which might only be on the secured loans) government would reap interest at the base rate. This would tend to reduce taxes and prices . The banks’ profits can be reduced from this area, as they need only to be based on whatever interest they charge the customer over and above the base rate (in some countries the term “cash rate” is used). Most bank profits would remain. [Relatively risk-free secured loan, mortgage and cash issue and withdrawal service has been operated like this for many years by building societies].
Conclusion and suggested relationship to the ETI page 6
(The next couple of pages are all you need to read to understand the credit adjustment)
Appendix 1: Environmental Tax on Imports (ETI) - Abstract 6 The importance of floating ice as a latent heat cushion 7 Currency exchange rate advantage 7 E T I - Charts existing and proposed 8 Feedback comments from an economist 10 Appendix 2: Back-up quotes on credit money creation 11
“I like your ideas…” Professor Lodge, Harvard Business School in response to ETI proposal.
“CMBA is the right way to reform the banking system and by far the simplest, having some of the features of a land tax, this could be the solution we have been looking for” -Land Tax expert whose suggestion was that it could also be called the Credit Creation Charge as policy reform.
***Climate, Energy and Credit Reform **** Main Paper
Introduction: The overwhelming response by government and business to impending climate change and its effects could be likened to the attitude of one Dickens character, Mr McCawber, who is convinced “something will turn up”. The only thing sure to turn up is the temperature since we are coming out of an ice age, bringing with it very disastrous effects, across the world, but also close to home. Biding our time is not a valid option in the face of much worse effects than have been predicted so far. Action needs to be taken. The more we invest in carbon reduction measures and cut frivolous consumption in the short term, the better off the world will be in the medium and long term. There is one source of funding that could provide the capital for much of this investment, whilst not affecting the global economy detrimentally if directed for the best long-term purposes. This paper states a compelling case for taking swift action, and offers a clear, just and easy route to liberating billions of pounds for investment in making our future sustainable, globally. Lastly, we show how this step, if taken, could have beneficial side-effects, for example by reducing over-target inflation (footnotes 2, 3 ) carbon usage, an underlying cause of climate change and potentially to defend against the sea.
Climate change over the past decades has been suppressed by a little-known cushioning effect. As Arctic floating ice over the past decades has melted, it has absorbed vast amounts of latent heat that would otherwise have contributed to a further rise in global temperatures. During the 30 years that it was possible to measure the thickness of the floating ice, it reduced by almost half (endnote ). The corresponding surface area is considerably less in summer (endnote ) so as it disappears; a great deal of extra heat will be available to warm up the planet. It is the ice on land that, in melting, causes sea level rise, sea ice just shrinks into its original volume of displaced water. Once the floating ice is gone, more heat will be acting on a much-reduced area of ice on the land, so as this melts it will add to sea levels with increasing speed. As the speed of melting has already contributed to water shortages in Africa, what is the future for river water in Asia, Europe and America or even Australia? [Danish research has recently revealed that the floating Arctic ice surface reduced by 25% in a single year (2006-7), ten times the rate of the previous decade ] Do we need any further confirmation about the above-mentioned cushioning effect and the melting - reinforcing the need for swift action now? Jim Hansen of NASA believes the IPCC had “scientific reticence” driven by fear for their career by some scientists, holding back a clear action statement from them and recent conversations with their senior staff indicate that these factors may not have been sufficiently included.
Without a clear mechanism to release sufficient funding for wide-scale action and solution to the sea-level problem, the government is likely to be trying to play down predictions on climate change as much as possible. However, the Stern Review stated that action now would cost a twentieth of inaction (en - see also STEER progress summary). Government needs to create substantial incentives for ordinary people to take costly actions in the right direction (fn ). Government itself needs to act similarly as well as take much more seriously the conservation of conventional, convenient energy sources in existing buildings (see our Every town an Eco Town paper). The rise in prices could lead to investment by power companies if regulators do their job, but Governments also need to incentivise the right investments to help the public and business to act more quickly. On the current trajectory each saving or improvement is going to be wiped out by higher consumption if blind ‘economic’ and monetary growth continues to be the target. This brings us to the presentation of the desirable source of funding for some of the investment required, which would cost the general taxpayer nothing. The change proposed would reduce some of the (inflationary) pressure for ever-higher consumption in the wealthier sections of society. The mechanism would essentially redirect bit by bit some of the money-as-debt created by banks. The current “bank money” situation and how it came about is difficult to describe briefly but a new video Money as Debt does it well (footnote giving link below and see Appendix 2 for some very interesting quotations supplied by the author of the video). A chief accounting strategist described it as “fascinating”.
This new video Money as Debt describes very clearly in the first few minutes and in an entertaining way how the system of extra money via loans and interest payments thereon grew up over more than two centuries, (leading to instability in 2007). Banks became used to reaping immense profits from creating paper money and then later from the interest payments on extra money created as lent ‘on-screen’ - based only on the customers’ ability to pay. The extra money created caused price rises because of the demand for goods, particularly real estate, and particularly in the wealthier countries such as the UK and USA etc. This level of money, known also as “bank” money grew to an annual figure ten times greater in the period between the 1946 and 2006. Whereas other products are tangible in some way and cost the companies selling them more effort and/or materials to produce, credit these days is simply invented the moment the numbers are tapped into the computer. In feeding interest (>higher prices) back into bank profits people keep working longer to service higher and higher amounts. As described in the video the money from the loan money issued comes back from someone else as the purchase transaction has occurred and shows up on banks’ reports as a deposit. This can add to excess consumption affecting climate change. So the banking system operates as a loop. Banks then also make further profit from many other areas: fees, charges, penalties, interest mark-up on depositors’ “real” money and investments etc. So we are not talking about an impossible task to redirect some of the interest on this new ‘credit’, ‘bank’ or “quasi” money. It would be a very fair adjustment desirable for ethical reasons and some of it could be contributed to sustainability. Adjusting the direction of it would help to level the playing field for other businesses such as start-ups (or those competing for the best staff ) and the spending of it on long-term capital projects would reduce inflation (footnote 2, page 2 above), the cost of living and taxation. So this adjustment when clearly put across could be hugely popular.
Currency issue has been reserved to the central bank in the UK since the 1940s but credit money and the interest thereon was never similarly treated. It has grown post-war to a much larger proportion. Therefore it’s hardly surprising that credit is pushed on the public from all sides, and companies seemingly from all backgrounds are now touting credit cards, store cards and finance for payment in instalments. In some cases, large retailers are taking over the function of banks for this very high profit role while adding further cash and inflation to the system. By re-issuing “cash-back” the till service in a supermarket saves cash handling charges, but their new role of credit money issue - loans and mortgages – unsurprisingly threatens the banks. With so much virtual money in circulation the real sector has declined. So to be fair on banks the proposed adjustment must include the same redirection of a proportion of this money from all organisations undertaking similar activities. There are also other possible ideas - tracked minimum savings rates could be paid to small depositors at “base rate” helping government targets for savers. Interest rate charges could be regulated for different kinds of risk by banks. These are not mentioned further here. Obviously a more stable currency could take some pressure off pensioners, the retired, or those on fixed incomes.
By having a simple proposal that is self-evident to fulfil a need that is easily accepted both by the public and the banks themselves, incremental change can be introduced. Even former bankers have described the current relatively obscure process as unsound (see Appendices). To understand money creation it is first necessary to realise that the government does not create credit money which is 95% of the money supply - this is an advantage mainly to commercial banks and shared with investors. Credit Money has grown ten-fold since the 1940s in the UK.
The Simple Proposal: For all new credit money issued, the government would reap interest at the base rate, and the bank’s profits would be reduced from this area, as they need only to be based on whatever interest they charge the customer over and above the base rate (in some countries the term “cash rate” is used). This will reduce inflationary tendencies built into the system. It could also be arranged that the interest on debts already existing could be divided more evenly between the government and the bank, but the threat of this might only be retained as a negotiating lever in the event of serious resistance by the banks or if an even greater need for funding by government could be shown, for example in the event of climate catastrophe. Some politicians have already coined the phrases “the war on climate change” and “the war on inflation” following “the war on terror”. Probably it would be sufficient to levy the base interest rate in increments, unilaterally in the UK, allowing time for a close study.
A new Credit Money Banking Adjustment (CMBA) would initially provide the government with finance to invest in measures that protect its population and economy from the adverse effects of impending climate change. In the long term, it would also reduce the need of the government to rely on expensive credit to cover budget deficits. It would be best if the funds were to be directed only to specific and relevant targets - hypothecation. In addition to the climate needs, other projects could be credit stabilisation funds. There could be many additional advantages to introducing this measure – for example the recent need to refloat the building industry and housing market – a mainstay of the economy. Less incentive for credit except initially for home insulation improvements would make people less likely and able to become heavily indebted. The re-focus on real growth would reduce the need for companies to continually “push” consumerism or credit for inflationary house purchase/high street consumption on people thereby creating inflation. This would bring down to some degree the excesses that dominate sections of society - a new enlightenment helping global security. It would also have a significant positive effect by stabilising future inflation in the housing market, restraining a future “bubble” giving time for wages to catch up, and the government would be at liberty initially to waive part, or all, of its share of the interest to any sectors of the market it chose to, such as first-time buyers or those who only own one property, to give some examples.
Conclusion It has become apparent from a very detailed analysis of the banking and trade system that use of money and resources has become more frivolous in recent decades, not only because of the big banks’ relatively unregulated activities but because of, in part unjustifiable financial “growth” via the free part of the money supply worldwide. By creating additional competition for other industries over profitability, short-term-ism has crept in. Rather than further regulation a simple adjustment of the system is proposed. In recent years retail price inflation has only been held down by the availability of cheaper imports, an effect soon to be over as prices in developing nations rise. Meanwhile house price inflation has continued unabated over a prolonged period up to 2006/7 and may re-ignite after the credit crunch. To deal with this the simplest means is to divert part of the interest (CMBA) on additional money created by the big commercial banks and other players at the level of the base rate towards anti-climate change initiatives (or at least initially) as an offset payment to those most affected by environmental taxes such as the Environmental Tax on Imports. ETI is vitally needed, has found some support, but is stalled waiting for a push by the G8 (ETI would be like VAT and is described in Appendix 1). Could the time for it be now?
CMBA could be easily understood and relatively easily achieved, bringing some of the element of free money into the public purse. An offset to ETI/ET could then simultaneously be brought in bilaterally and both measures could improve financial stability, reducing tendencies for future “boom and bust” or inflation. Please request by return email the STEER progress paper - summarising progress so far with governments and organisations (and send for the original CMBA, case study, STEER money, etc see these mentioned below in an economist’s feedback). Also send in your comments.
Ian Greenwood +44 (0)121 449 0278 March 2008 End doc –see ORIGINAL PAPER - appendix 1 and endnotes.. STEERglobal Group
Appendix 1: Logical investment for reduced inflation of prices and possible sea barriers – the ETI tax incentive “E T I proposal” Oct 2005 revised 2008 to include offset.
ETI Proposal Abstract. The need to invest heavily against climate change is accepted (see the 2006 Stern Report, 1). It is proposed in our much shorter paper here that even the level in that report was underestimated and should lead to reform as stated above. Via credit reform the opportunity exists for the following:
(a) for global energy stability to subsidise renewable energy and conservation of it by insulation. (b) to return environmental tax funds equitably across the world – initially with an offset of the tax. (c) to direct substantial funds against threats to civilisation such as resource shortages or sea level rise.
A new ‘VAT style’ tax could be placed on sales of imported products and the funds invested in projects mitigating against climate change and adapting to its effects. Uniquely, the proposal is to return an equal share of the funds direct to these projects in the producer nations which would otherwise be unable to afford them. Thus the tax proposed, the Environmental Tax on Imports (ETI) could levy in excess of $500 billion per annum if adopted worldwide and be a major stability fund. This could be an opportunity to keep oil and gas prices under control, limit shortages, as well as reduce the frequency of disasters. The STEERglobal paper “Climate and Credit Reform” describes a credit reform measure that would enable offsetting of such a tax, protecting vulnerable businesses, households and individuals.
1. The importance of floating ice It is a well-known basic scientific fact that floating ice displaces its own mass of water. Floating ice shrinks back into an equal volume of water when it melts. The melting of Arctic floating ice has, in the last few decades, reduced in height by about half. This has added nothing to sea levels: relatively small rises are due to other land-supported ice melt or expansion. In the next few decades it will have substantially disappeared in the North and therefore will not be there to absorb (as it has done) large amounts of latent heat, a cushioning process that has been shielding the planet from sea level and temperature rises. Accelerated rise is expected with the full rate of melting of land-supported ice discharging into the sea, requiring sea barriers and other plans soon because trapped energy in the summer months in the Northern hemisphere inevitably means more energy feedback into the smaller area of land ice. Accelerated action will require an efficient funding mechanism, but government subsidy has been held back by certain economic thinking, some of which has been ably illustrated by Tim Harford in The Undercover Economist (Abacus 2007).
2. The currency exchange rate advantage
If the necessity of action was recognized a mechanism could be developed that would free existing financial resources to fund strategic actions in the area of environmental sustainability. Such a mechanism could use some of the great profits from the more highly polluting activities. One concept that provides scope to source these funds is the currency advantage (or import advantage) that wealthy countries automatically have when they spend their valuable currencies in ‘poor’ countries. (A similar ratio has been used in past studies to allow for the reduced comparative cost of living in poorer countries in dollar or sterling terms, that is: the purchasing power of the stronger currencies.) The traders who benefit most from the currency exchange rate advantage are frequently the same ones who cause enormous pollution and resource depletion by transporting goods between poor countries of production and rich countries that provide the market for the goods, for example by air.
Although these activities contribute to economic growth, the current trade and finance system tends to avoid contributing to the cost of pollution caused and little allowance is built in to allow for resource depletion or the research needed to avoid such depletion, develop alternatives or defend against sea level rise. Therefore only wealthy countries can do this research or benefit from clean technology and clean transport, and so on. Using the advantage as a guide (recognising differing labour rates, costs of living and production), the difference between the cost of comparable goods and the value released when resold in the importing country, companies and traders operating in this way would be subject to a levy designed to protect future resources (and to tend to moderate consumption) which might be named the Environmental Tax on Imports (ETI like VAT see Fig. 2). The revenues from ETI would be split equally between the country of production and the country of destination of the product. It would not be enough only to have a piecemeal approach to taxation as suggested by schemes such as airline fuel taxes or carbon taxes alone although they could contribute to a reduction in un-necessary consumption needed to extend the life of fossil fuels. Using the ETI funds substantial incentives could then be given by government to subsidise retro-fitting of more efficient insulation to existing buildings (for example those which been developed with multi-layer foils). In this way carbon neutrality via natural air-conditioning utilizing thermal mass, renewable energy and less waste could result.
2.1. ETI implementation The body responsible for the collection and use of the ETI levy would then allocate it direct to projects promoting long-term environmental sustainability, such as renewable energy and sustainable transportation improvements some of which can be used as barriers to the sea where these are necessary to protect townships. They could also be foundations for renewable energy projects or built in conjunction with port re-design. With the ETI in place some of the inherent imbalances between poor and rich countries in terms of investment against natural disasters and in such technology could be reduced. By reducing the imbalances using a stable system of allocation in these areas an actual boost in healthy trade and investment should occur. There would then be an increase in the return to poorer counties, tending to reduce borrowings for essential infrastructure. The funding allocated towards such things as organic sea barriers (which might eventually be needed as land ice melts and sea levels rise) could be of great interest to governments and to the insurance and re-insurance industries. Figure 1 shows in a simple form the existing situation, Fig. 2 the change. The burden would be fair, shared between consumer, retailer, importer and government and only a few percent each on imported goods. A corresponding alteration in credit money issued by banks can simultaneously be diverted to moderate the effects of a tax on vulnerable businesses and individuals on lower incomes. These could be unilateral or bilateral measures, avoiding the need for international agreement which has held up other proposals, such as Kyoto protocol or Doha trade negotiations because these would have limited benefit.
Fig 1, Existing simplified trade split (see larger text in fig 2):
Fig 2 The Currency Advantage – difference in purchasing power as exports are re-valued (often a paper process - transfer pricing) before “import” could justify the proposed shared burden of taxation for investment directly to specific environmental/energy projects in a balanced way across the world.
2.2. Benefits of ETI
Existing production would be relatively unaffected, so the proposed solution is an ideal way to ensure that resource users pay a fairer contribution. As an addition to such measures as carbon taxes or trading, ETI (operating like VAT) could be used to stimulate renewable energy and conservation in both producer and consumer regions of the global economy, introducing a more stable funding regime independent of the vagaries of consumer or financial markets. The UK or EU Treasuries have the potential to understand how such an adjustment to international trade could return some of traders’ profits in a more managed way and in the process reduce economic shocks, the problems of climate change and unsustainable loss of industry in ‘developed’ regions. ETI could also reduce the current dependence on interest rate rises as the main controlling mechanism of monetary policy and reduce otherwise inevitable property price inflation. Currently interest rates rises should be seen as a rather blunt instrument as they suppress healthy business investment, for example in research and development.
2.3 Critique It has been claimed that any tax or fiscal change could lead to price rises. But this does not apply in the areas of highest profit . Understanding of the market and of how high prices or interest charges/costs cause inflation, shows that those re-sellers with considerable profits achieve sales at prices that the market will bear. Then taxes tend to be absorbed. If hidden profits or sources of very high profit are targeted as in the above two proposals, then the general taxation/inflation can come down with a tendency to reduce prices overall.
3. Conclusion The proposal outlined in this paper touches briefly on a number of topical and ethical issues including the subjects of economic and energy rationalisation. It proposes a practical way of implementing what would effectively be a global ‘Marshall Plan’ (which has been suggested by a German organisation of this name that has received wide support, ref 2). Yet it is not suggested that the funding should come entirely from the USA (as for the original Marshall Plan) but that the idea of using the currency advantage of wealthy countries to support directly the necessary projects needs to be urgently implemented — otherwise resource shortages will be very fast upon us as has already begun with the 2008 oil and food price increases. It will be necessary for people to do their bit to get behind ETI as a practical proposal both by informing and by lobbying MPs, MEPs and other officials. It is suggested that: “All of the world would get all of the benefit from all of the ETI” via economic and energy supply stability. Time is short to turn the world from its unsustainable path and the investment cost to each sector: consumer, retailer, importer and government is only about 3% of the final price on international trade. A small price to pay for security and sustainability ? Updated paper first issued to Cabinet and Stern Review 2005/6 REFERENCES 1. See http://www.hmtreasury.gov.uk/independent_reviews/ stern_review_economics_climate_change/stern_review_report.cfm 2. See http://www.globalmarshallplan.org/ 3. See www.carbonneutralbritain.org.uk
As submitted to the Institution of Civil Engineers With thanks to Richard Sands for some editing
Civil Engineers, London UK
Briefing note (Proceedings)
Engineering Sustainability
Ian Greenwood is an engineer of structures without a vested interest in stimulating the market for major projects and has been saving energy for 30 years at a practical level. Adding to his broad career, areas of investment and overland travels, he researched the STEER idea for sustainability in trade and resources and founded STEERglobal.org
Support is being gathered from government, other organisations and the public.
Some notes from a global economist, lecturer and barrister: Professor Rodney Shakespeare
Ian Thanks for writing. These are excellent, practical papers which are highly relevant to the need for policy change.
Case study for renewable energy
You are right that lower cost is the main way to get clean renewable energy. You then point out that governments are short of funds for subsidy and you propose a tax to provide the funds. There is nothing wrong (and everything right) in what you say except that the scale of the problem is such that it is doubtful if there is any real solution without a colossal change of paradigm and associated large-scale new financial solutions etc. Obviously we must work together to get the change and the required new financial policies.
ETI proposal
Much splendid stuff here -- I like the organic sea barriers. The world will pay a heavy price for mangrove destruction
CMBA Treasury
This has excellent analysis. As regards the required alternative solution, the claim for the present system is that it allocates resources efficiently. This claim is nonsense but any alternative must show that it allocates resources much more efficiently and addresses the question of ensuring that productive capacity (and the associated consuming capacity) becomes more widely spread. Just getting the interest money back to the Treasury insufficiently answers the questions of how to spread productive capacity and get going the environmental capital projects etc. But your proposal is certainly a step in the right direction and is part of the new thinking seeking new answers.
STEER money.
Yes, the need is for people to unite behind a single, main idea.
Depriving the banks of interest is a positive idea -- well done -- but it should not deprive the banks of administration cost (and administering banks are required in modern economies). At the same time the banks should be used to administer interest-free loans for developing and spreading productive capacity etc.
I think the comprehensive scale, humaneness and originality of your thinking and look forward to further contact when you are back from Australia.
I would be delighted to receive a copy of the Treasury letter (if you have one) saying that the banks create money
Rodney Thanks Rodney - CMBA does partway return the money for climate change investment, but I agree that the rest of it needs to be hypothecated (specifically attached to relevant projects). What about another area being loan funds for stabilisation at interest of any wobbly banks, guaranteeing against a run, so depositors can never lose money, only banks can lose if a loan defaults which was not based on re-issued deposits? We may need a system to “tag” deposits?
Endnotes follow and some comments on the origin of credit money from as far back as 1690s
Appendix 2 Relevant quotes from bankers and former Treasury officials "Banks lend by creating credit. They create the means of payment out of nothing." ~ Ralph M. Hawtrey, former Secretary of Treasury, England
"The decrease in purchasing power incurred by holders of money due to inflation imparts gains to the issuers of money.” ~ St. Louis Federal Reserve Bank, Review, Nov. 1975, p.22
“Bankers own the earth. If you wish to remain the slaves of Bankers and pay the cost of your own slavery, let them continue to create deposits. “…but as long as banking remains legal, a man would be a fool not to be a banker.” ~ SIR JOSIAH STAMP, (President of the Bank of England in the 1920's, then the second richest man in Britain)
Where, why, how and by whom was this made legal?
"When plunder becomes a way of life for a group of men living together in society, they create for themselves in the course of time a legal system that authorizes it and a moral code that glorifies it." ~Frederic Bastiat, 1801-1850, The Law
“The bank hath benefit of interest on all moneys which it creates out of nothing.” ~ William Paterson, founder of the Bank of England, c1694.
With thanks to Paul Grignon who collected the above quotes for Money as Debt A large amount of the wealth lodged in offshore havens and numbered bank accounts can be attributed in its origin to gains from the banking industry. Tax havens have recently been in the news with unwelcome publicity for Lichtenstein over their role, but alterations needed at the base of the wealth creation system to prevent feeding so much money to the top would be more productive than standard systems of taxation as referred to by Professor Rodney Shakespeare above. This would enable the re-direction of revenue to the problem of climate change at its source – and away from frivolous consumption and free money to a certain segment of society.
Hope you enjoy the video (see link in footnote on P2 above)!
Appendix 3 Further Comments See also Economist EU comment above
1. Solartwin – a very low cost simple solar collector for hot water in colder climates
The following quote was received from Solartwin, relevant to the UK and elsewhere in March 2008: “The government’s appointed grant administrators have over complicated the process and dropped grant levels to ensure the already low levels of funding last until the planned grants closure in 2010. We, as a UK manufacturer of an innovative technology, have not been able to offer grants for the past 20 months which has of course impacted our sale volumes. We are one of the few success stories [because of the simplicity of the product] as at least we are still in business where many others have fallen by the wayside”.
2. Ms MacTiernan, Western Australian Minister for Planning and Infrastructure, in The West Australian, 1 September 2007: “There has never been adequate analysis of who actually made the money out of the property boom”. Ms MacTiernan also noted “That a tax increase will not affect prices when profits in excess of 150% are being made”. [This particularly supports the ETI proposal in response to claims that a tax will be passed onto consumers. Only competition and efficiency can bring those prices down.]
3. “…it is possible to reduce inflationary pressure of public expenditure by directing it towards long-term, rather than current, consumption..” Dr N. Zubanov (Economist working in government office in Europe).
4. “Ian has developed what I think is a pragmatic proposal to potentially deliver better outcomes now, using the current conventional framework” Jamie Walton (ex Local Authority Civil Engineer now on global issues) Previously Jamie Walton said "oh no, the last thing we need is yet another tax and mere tinkering with interest rates!", as that seems to be the globalist orthodox finance economist's 'solution'.
But I decided to give it a fair go and actually read it and the attachments in full. I am glad I did because I have changed my view from my initial reaction to seeing that you do know what you are talking about. I now like your proposal because, whilst I do not think it fixes [all] the fundamental flaws in the current system, it mitigates some of the worst aspects of it, and so can buy us some more time. I think your critical analysis of the ill-effects of the current system covered and cited in your material is correct. I like the thrust of internalising some of the so-called externalities to approach a better financial accounting reflection of reality. I like the practical, pragmatic, expedient approach which comes from your scientific/engineering/technical background. What you are proposing can be relatively easily bolted-on to the existing system to make it work better for longer, rather than requiring the mass-psychological breakthrough of paradigm-shifting proposals..”
5. “We indeed are very concerned of the possibility of overlooked climate change prospect of sea level rises due to ice sheet land containment failures in Greenland and Antarctica.” Fellow of the Royal Geographical Society (2008) Responding to the STEERglobal funding proposals. Steerwiki (talk) 14:19, 21 October 2008 (UTC) Ian Greenwood STEERglobal +44 (0)121 449 0278
Suggest this is linked to Climate change, Bank reform, sea level rise, energy conservation, saving money
In need of an update - May 2008
I wonder if folks agree with me this article could do with more work
- the lead paragraph citing the 2003 Energy White Paper gives the impression the article that follows may be out of date (as indeed some, though not all, of it is)
- There is little easily summarised historical context, a History section might help readers understand the evolution of policy
- Primary Energy Sources has no subheading or consideration of the second largest energy source, Oil.
- Issues not thoroughly addressed by UK policy might more usefully be restyled Criticism of UK policy – though it would need careful editorial control to ensure this section stayed true to Wiki principles, reporting from a NPOV well documented and referenced criticism.
Your thoughts? It is my intention to address and edit this article directly. I thought I would invite comment while I am still researching the subject. --Sunbite (talk) 10:16, 31 May 2008 (UTC)
I have made a start by
Inappropriate tone/style
I've added the "reads like a review" template to two sections. These sections are not written from a neutral-point-of-view and statements are made without attribution to sources.
"Issues not thoroughly addressed by UK policy"
e.g., criticism of a "[lack] of emphasis of energy conservation by reducing over-illumination, especially in commercial buildings."
No source is provided for this criticism. To give another example:
"The Energy Challenge: The Energy Review Report 2006
In the event, the Energy Review Report 2006 came out as a broader and more balanced document than critics (in advance) had expected."
No source is provided to substantiate this statement. Enescot (talk) 21:09, 6 September 2009 (UTC)
No energy policy
The British government hasn't got an energy policy. Its only policy is to leave everything to the private sector. As the private sector will do what's best for the private sector, not what's best for the country, we can expect prices to go on rising. Biscuittin (talk) 22:58, 24 November 2014 (UTC)
- Here is an example. Both producers and industrial consumers are private sector. The government seems to have no involvement at all. [3]. Biscuittin (talk) 09:41, 25 November 2014 (UTC)
Spelling of "sulfur"
Sulfur has been the correct spelling of the element in the UK for a very long time. The RSC has endorsed it since 1992 and here on Wikipedia we have the policy
- Sulphur is generally accepted as the British English spelling, including by most scientific journals. This is also not a chemistry related article; the chemistry is auxiliary to the point, which is energy policy. 2A00:23C4:D12B:AB01:CC24:D98B:D431:C816 (talk) 07:49, 10 April 2024 (UTC)
Article needs severe pruning and updating
but I don't have time to do it. Anybody? Chidgk1 (talk) 19:05, 25 October 2020 (UTC)