President Obama has lately been busy advocating the comeback (after over thirty-five years!) of nuclear power plant construction, a policy wrongheaded in every respect – for our ecology, for our economy, even for our safety and that of our children and grandchildren. Instead of claiming to meet the climate change challenge by employing discredited “solutions” from the past, our cousins across the pond have, much more wisely, been looking to the future. The British government is doing what some mainland European governments (particularly Germany) are already doing and what governments everywhere should be doing: motivating people to use energy in a more sustainable way.
Following up on a policy it first made public in July 2009, the UK’s Department of Energy and Climate Change (DECC) recently announced the amounts of a new tariff, effective April 1, to help persuade their citizens to change their source of electricity from fossil fuels to renewables. This plan, called the Clean Energy Cashback, or the Feed-In Tariff (FIT), will provide families who invest in renewable energy systems – solar, wind, hydro or biomass – with a deal unprecedented in the UK’s history.
Not only would UK consumers be paid for any excess energy their homes contribute to the local grid, they would receive cash from the government for energy they use themselves. Participating households would receive a credit of 41.3 pence per kilowatt-hour (equivalent to about $.65), about four times the market value of the electricity, and would get a bonus 3 pence ($.05) for every kilowatt-hour exported back into the grid. In other words, householders can earn money as well as save it. The annual benefit in electricity savings would be equivalent to about $220 and the reward itself would come to about $1400. The amount would be adjusted over time for inflation. And it’s all tax-free, too.
Ed Miliband, the secretary of DECC, was quoted as saying, “The guarantee of getting an income, on top of saving on energy bills, will be an incentive to householders and communities wanting to make the move to low-carbon living.” One British family, the Colquhouns, spent the equivalent of $19,200 on their solar panel system and under the new policy, at a return of more than 8%, can expect to break even in less than 12 years. (The rate and duration of the tariff depends on the type of energy used and other factors.)
The policy is in line with the UK’s target of generating 15% of all energy from renewable sources by 2020. The government predicts that, by 2020, 2% of all electricity demand will be met by such small-scale renewable installations. The UK currently generates 5.5% of all its electricity from renewable sources, as opposed to 2% in the U.S.
The British public seems to have embraced the idea. According to one survey, 71% of UK homeowners said that they would think about installing a low-carbon system if they were paid enough. One of the side benefits of the situation is that some households that install renewable energy systems like solar may see the value of their homes rise: the houses themselves would generate energy income. Small-scale energy generators would also provide protection against rising fossil fuel prices. The construction industry is positively ecstatic: it is predicting a $42 billion dollar windfall (and lots of jobs) from new and retrofitted solar systems.
However, the policy has also met with considerable criticism on both the Right and the Left. Environmental groups object to it on the grounds that it doesn’t go far enough, because the tariff is too small. (The government claims that, since these incentives will be funded by a small annual extra charge to those who do not take part in the plan, it could not make the tariff higher because that would be unfair to non-participating households.) Dave Timms, of Friends of the Earth, was quoted as saying: “Ministers have been far too timid with a policy that could make a significant contribution to cutting emissions and boosting energy security.” Meanwhile, in a bizarre contrast to the situation in the United States, with its fanatical right-wing climate skeptics, UK Conservatives (“Tories”) have not only jumped on the FIT bandwagon, but have declared the policy “long overdue” and accused the current Labour government of “lacking ambition”!