The solar panel theory of socio-economic unfairness

In his 1993 novel Men in armsthe late, great comics writer Terry Pratchett used one of his characters to present what would become a famous economic theory: “A man who could afford fifty dollars had a pair of boots that would still keep his feet dry ten years from now. ' time, while the poor man who could only afford cheap boots would have spent a hundred dollars on boots in the same time and still have wet feet. This was Captain Samuel Vimes' 'Boots' Theory of Socio-Economic Dishonesty.”

A similar phenomenon threatens to undermine the net-zero transition. A solar panel theory of socio-economic unfairness, if you will.

Solar panels and other clean technologies reduce household energy and fuel bills, while minimizing exposure to future energy price increases and air pollution. A recent analysis from the Energy and Climate Intelligence Unit calculated that the average household that improved its energy efficiency, installed solar panels and a heat pump and switched to an electric car would enjoy running costs almost £2,000 per year lower than a household without electricity. clean technologies available. That's great, but like Pratchett, you can only access those savings if you can afford to deploy the technologies in the first place. Meanwhile, poorer households spend thousands of euros more on their energy bills and still feel cold.

To compound this unfairness, it is lower-income households that are most exposed to the higher food and insurance costs resulting from worsening climate impacts, not to mention the inherently regressive short-term tariffs imposed on energy bills to help finance the necessary upfront costs. investments in cleaner energy infrastructure that should limit costs in the long term.

Of course, the costs and benefits associated with solar panels aren't as simple as Pratchett's expensive boots. When it comes to climate change, we really are all in it together. Everyone benefits from better air quality, less fossil gas imports and lower CO2 emissions. But even if there are net gains for the economy as a whole, it remains true that the financial savings will be most immediately visible for those who can afford to deploy clean technologies relatively early in the transition. Although, to be clear, this injustice is no more the fault of the solar panels than it is of Captain Vimes' boots. The problem is policy design and economic inequality, not the product people would like to buy.

Environmentalists and clean technology advocates are often reluctant to discuss these issues because they are routinely weaponized by climate skeptics and other opponents of the net-zero transition. These critics rarely have workable policy proposals to help lower-income households, nor anything you might call a track record of fighting poverty. But that hasn't stopped them from trying to stir a backlash against a net-zero transition, which they wrongly characterize as an elitist concern that does nothing for poorer households.

As such, a new report this week from the Nuffield Foundation on so-called 'transition poverty' is an important contribution to a debate that needs to be had.

The report does not call for a dilution of net zero targets, but recognizes that the transition is essential for Britain's long-term prosperity and competitiveness. But it does emphasize that the way in which the costs and benefits associated with the transition are shared is a policy choice. And it calculates how the current government's approach risks pushing 40 per cent of households into 'transition poverty', leaving them locked out of the financial savings and wider economic benefits that decarbonisation can bring, while exposing them to a disproportionate share of the costs.

There are several important things to note here. First, the problem may be most acute for the poorest households, but it is not limited to them. Just as the cost of living crisis is having a noticeable impact on all but the wealthiest people, millions of middle-income households are currently unable to afford the clean technologies that could lower their energy and fuel bills. If this is a problem for 40 percent of households (and that is probably an underestimate), then it extends far beyond households living on the bread line.

Secondly, in fairness to the government, there are several subsidy schemes and support mechanisms designed to help poorer households improve their energy efficiency and deploy clean technologies that can make their homes warmer and reduce their energy bills. There are many case studies of, for example, social housing projects switching to heat pumps and the rollout of insulation. Grant schemes are often structured to be more generous to those who can least afford to finance home improvements on their own.

But as today's report highlights, these schemes are still scarce, while others routinely require additional financing beyond lower-income households. There is a long track record of wealthier and older people with more time on their hands being the first to take advantage of subsidies and subsidy schemes, such as the Feed-in Tariff incentives that caused the first boom in solar panels, the Plug-in Car Grant Scheme for electric vehicles, or the more recent Boiler Upgrade Scheme. Meanwhile, policies that would benefit poorer households, such as stricter energy efficiency standards for private rental housing or increased general tax funding for energy efficiency programs targeted at social housing, have been shelved or remain seriously underpowered.

It is easy to label subsidies to wealthier households as unfair, but there is a legitimate reason for the government's approach. From the first cars to TVs and mobile phones, consumer technologies are typically first embraced by cash-rich early adopters, before being normalized by the middle class who drive the economies of scale that drive down costs and then make technologies available to everyone. . This is what is already happening with clean technologies, and there are compelling arguments for the government to invest extremely modest amounts in the grand scheme of things to speed up the process.

But there is a political risk in an unbalanced policy program that is seen as excluding poorer households from the benefits that clean technologies can bring, while asking them to contribute to the costs. A political risk that then encourages politicians to delay a transition that will benefit everyone in the long term, leaving those same lower-income households most exposed to the volatile fossil fuel prices that have caused the recent energy crisis.

Fortunately, there are numerous solutions that can help tackle this 'transition poverty'. This week's report highlights the key role that citizens' councils, local authorities and just transition councils can all play in helping to develop local policies that ensure lower-income households and carbon-intensive communities are part of the net-zero transition. A greater share of energy efficiency financing should be targeted at fuel-poor households and public buildings through local government-led programs that can help reduce costs. Companies also play a crucial role in creating green jobs and helping workers transition to clean technologies through various incentive schemes.

But the main message is for whoever forms the next government.

Populist parties around the world are trying to weaponize net-zero policies and blame them, often unfairly, for the costs and industry changes that disproportionately impact those who can least afford them. Public support for stronger climate action remains overwhelming, but could quickly be eroded if the fruits of the transition fall to the wealthiest.

The net zero transition promises to benefit everyone through lower energy bills, greater energy security, green investments and huge environmental and health gains. But politicians must invest time and energy to show that this is the case. And they must ensure that the transition is enabled through progressive taxes, fair regulation and a clear plan to ensure that clean technologies are quickly available to all. As this week's hearing in the Supreme Court shows, it is highly questionable that the current administration is pursuing such a strategy.

#solar #panel #theory #socioeconomic #unfairness

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