Sustainability - Climate change policies: who really pays?

Rachel Howell writes about a triple injustice for low-income households

'...increasing economic inequalities and may place further burdens on poor people who already have to choose between eating well and staying warm' | Photo: Photo: Images_of_Money / flickr CC.

At Yearly Meeting Gathering in Canterbury in 2011 Friends committed to become ‘a low-carbon, sustainable community’. I was strongly moved, at the time, to minister that we also need to focus on collecting information to help us discern what climate change-related policies to advocate and support.  Climate change policies, I pointed out, can be more or less fair, depending on their impacts. The policies the government chooses will depend, in part, on what ideas are available and well-supported when they are willing to listen. So, we need to be proactive, otherwise policies to tackle climate change may have negative impacts on other things we care about, like economic justice.

This concern seems to be justified by a report published by the Joseph Rowntree Foundation (JRF) in 2013. The headline message of the report is that low-income households currently face a triple injustice when it comes to policies to reduce carbon emissions. They contribute least to the problem, benefit less from many carbon reduction policies than richer households, but pay proportionally more of their income to help finance such measures.

Emissions and the poor

Poorer people tend to have lower carbon footprints. The richer a household is, in general, the higher its carbon emissions. The richest ten per cent of households (the top income ‘decile’) emit twice as much carbon dioxide from energy use in the home as the poorest ten per cent. Their emissions are over eight times as high as the lowest income households from car use and nearly nine times as high from international flights. Putting together household energy consumption with all forms of travel (including public transport), the richest ten per cent of households are responsible for over three times the emissions of the poorest ten per cent.

Poorer households, however, lose out from climate change policies. The JRF report says that they expect the average annual household energy bill in England in 2020 to be eight per cent lower than it would be without any climate change policies in place. Energy efficiency and renewable generation measures cut bills. But the costs are usually met by levies on all energy bills, not just those of the people who benefit financially from the policies.

So, although households who receive support to install energy efficiency measures or renewables at home will have lower bills than otherwise, the majority who won’t get that support will suffer an average increase of £47 in 2020. This means that the richest ten per cent of households in England in 2020 will save, on average, over two-and-a-half times as much on their annual energy bill as the poorest ten per cent. Richer people do better because they’re more likely to be able to install renewables, which require capital and home ownership. They’re also less likely to heat their homes using electricity (which carries a higher proportion of future policy costs) than poorer people.

Feed-in tariffs

Feed-in tariffs (paying people who install home renewables such as solar panels for the energy they produce) are particularly regressive. The report predicts that in 2020 households taking advantage of feed-in tariffs will save around £360 on their annual energy bill. However, the remaining eighty-eight per cent of the population will pay for the policy at an average cost of £10 extra on their energy bill.

If government assumptions about energy efficiency improvements in appliances are not fulfilled, the situation gets worse. In that case, the richest ten per cent of households will still pay less for their annual energy bills (about £30 less on average in 2020) but the poorest ten per cent will be paying £86 more than if there were no climate change policies in place.

This is not fair – it means that people at the bottom of the heap are subsidising well-off professionals who are ‘doing their bit’ – and saving money – by installing renewables. It’s increasing economic inequalities and may place further burdens on poor people who already have to choose between eating well and staying warm. The changes announced in December do not affect feed-in tariffs.

Better alternatives

The JRF report points the way forward to better policies. They are not only fairer, but more effective too. The researchers modelled an alternative policy scenario that involved the installation of home energy performance improvements (for example, insulation) in every home in England. These were provided free to low-income households. The researchers modelled the funding as coming from a combination of taxation, carbon pricing mechanisms, savings made from means-testing Winter Fuel payments and a Green Deal charge on the energy bills of wealthier households. This model results in cuts in household carbon emissions of six per cent more by 2020 than current policies are likely to deliver. It also avoids regressive impacts. The poorest forty per cent of households would benefit from average annual energy bills being £220 to £237 lower in 2020. Everyone else would see their energy bills increase, from £17 extra for those in the fifth income decile, to £70 more for the top income decile over the year.

An earlier report found that it’s fairer to recover the costs of climate change policies through taxation than energy bills. Recognising, however, that governments are currently unwilling to do that, it argued that if costs are levied through energy bills, the system could be made more just by using ‘rising block tariffs’. These allow energy suppliers to recoup the costs of climate change policies only on gas and electricity consumption over a certain level, so poorer households with below-average use would be protected. Richer people using much more energy, and therefore creating more pollution, would bear the brunt of costs of measures to reduce emissions. Of course, they could still benefit by taking advantage of such measures.

These kinds of policies are unlikely to be popular with better-off people who are not concerned about economic justice. Although some policies are more progressive than others, all policies will have negative impacts for poor people who live in hard-to-heat homes and have higher-than-average energy use. So, more needs to be done to reduce the problem of fuel poverty.

Being proactive

This is all the more reason for Friends to be proactive in commissioning and funding this kind of research, making it widely known and discerning, individually and corporately, which policies or types of policies we should be actively championing. We should also be seeking partners in other churches/faith groups and nongovernmental organisations with whom to advocate for more just responses to the threat of climate change.

It’s not enough simply to seek a sort of ‘low-carbon purity’ in our own lifestyles and Meeting houses, especially if taking advantage of some of the current opportunities on offer increases inequalities. We do need to take action ourselves, because that gives our voice moral legitimacy. But we urgently need to use our considerable experience in advocacy to campaign for a society in which it is easier for others to change their lifestyles, and for the costs to be distributed fairly.

Rachel works at Aberystwyth University researching how to promote lower-carbon lifestyles.

A summary of the JRF report, Distribution of carbon emissions in the UK: implications for domestic energy policy, can be found here:

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