Sometimes consumer outrage is muted simply because no one can get their heads around a complex issue. Take energy prices and the EU’s emissions trading scheme.
Ofgem, the energy watchdog, popped up last week to suggest that we are being overcharged to the tune of £9bn because of a glitch in the scheme.
There weren’t many screaming headlines in the tabloids, which was a surprise. Maybe it’s because most people have filed the ETS under: "Must read up on it….one day".
The way the scheme works is that companies which produce emissions must obtain permits to offset their impact on the climate. Eventually, as of 2012 – the details will be discussed by the EU on Wednesday – they will have to pay for most of these permits. In the meantime, to get things up and running, they have been given most for free.
But the twist is that people’s bills have been rising to take account of the existence of the permits. This is because the wholesale price of electricity must be high enough to convince generators to run power stations instead of closing them down and selling the permits they would otherwise use. The ETS is said to account for about £9 in the current electricity price of about £53 per megawatt hour.
Surprisingly, no political party is trying to drum up a ruckus about this £9bn windfall – which Ofgem thinks should be given back to the public in the form of energy subsidies.
Some MPs believe the situation should be resolved, however. Among them Elliot Morley, former environment minister, who calls the windfall "obscene".
Colin Challen, chair of the All Party Parliamentary Climate Change Group, says he agrees with the principle of a windfall tax on the energy companies. But he reckons the cash should be put towards renewable energy rather than lower bills.
"Ofgem’s duty is to try to get prices down for consumers and put the environment on the back burner," he said. "My view is that the money should be invested in climate change mitigation. That is whole point of the European Union’s ETS. If people recognise that the extra money they are paying goes to environmental causes it would make it far more acceptable to the public."
The energy companies were likely to claim that they were already putting substantial resources towards renewables, says Mr Challen. But this is only true up to a point, he adds.
Another option would be to cut taxes on low-carbon cars, for example, to encourage more sustainable lifestyles. That was the suggestion of the Select Committee on Environmental Audit in a report last March.
The subject should be topical with the energy bill having its second reading in the Commons on Thursday. But for now – until the Treasury admits there is any problem with the ETS – these concerns will be treated as so much hot air. Unfortunately.
Jim Pickard
Kiran Stacey
