Monday, August 18, 2008

The Harrowell Plan (Or, No Christmas Card from Dsquared)

I'm about to propose something to make Daniel Davies cry. Specifically, it's a solution to a problem we currently deal with by a cash transfer through the tax and benefit system. But I think I've made a good case that trying to deal with high energy prices by paying the poor to burn more energy is not sensible, except perhaps as temporary relief of the symptoms. Instead, I suggested, why don't we pay them to insulate, or to install £1,895 air-source heat pumps, and get rid of the problem; after all, we subsidise the rich to do these things to their property. And I suggested that, if we're too stingy or the government is short of cash, we could use the money now paid out as winter fuel payments.

Terrifyingly, there's a chance someone might pick up on the idea - because it turns out they've got one like it in exciting America. Surely it's got to be good. The Californian municipality in question is offering loans to carry out energy-saving improvements, to be paid back through property tax. I'm not quite sure how it works, although here are more details; but it seems to be restricted to homeowners, and I'm far from sure if the repayments are additional to the property tax you'd already pay or not.

My brilliant scheme has the distinction that, rather than the user repaying it, it's repaid from the benefits they would otherwise claim. In a sense, it capitalises the stream of WFP cheques over ten years. Government gets to save on the benefit payments over and above the amortisation period of the heat pumps or insulation; the recipient gets to save hugely on heating; and society saves three to four units of energy from gas for every unit of electricity the heat pump uses. (The technology is wonderful.) And it hits the cheapest way of saving bulk CO2.

Here are some numbers. The two main groups of WFP recipients get £200 and £300 respectively; this is currently planned to go up quite sharply. (Another reason for my brilliant scheme is that tying bits of the government budget to prices that might rise without apparent bounds is stupid.) To be conservative, and also because I could have tried harder, here are some data from 2006. £1.98bn was spent. Elsewhere, it looks like 11,407,000 individuals received money, but the relevant number is a number of buildings not people. It seems 8 million households received WFP, which is a fair enough proxy. That gives us an annual payout per premises of £247.50; with a full-heating ASHP at £1,895, that's a bit over seven and a half years to pay it off.

We've already got a list of recipients, and we write to them every autumn. Obviously there are people who don't want to be bothered, and probably they are right, so we'll give them the choice of fuel payments or [whatever silly name our friendly local special advisor comes up with]. Given the usual take-up rate for optional benefits, I'd reckon the pressure every year should be manageable enough; but if we felt militant enough we could make it voluntary-but-automatic.

One question I'd raise against myself is why this pensioner obsession. Don't a lot of them own their homes? What about children? Well, for some reason they are the only group in our society we find it necessary to give special help with their energy requirements. Minister, I am a mere technocrat. I don't bother my head with these things...but you might want to look at the numbers for some of the in-work benefit schemes.


dd said...

oh go on then, as you surmise I am not wildly happy with this one on general public policy grounds, but since the obvious alternative use of the money is that it will be chucked at the low 90s of the periodic table, go ahead; I am also grudgingly in favour of handing out free smoke alarms too.

cian said...

Hmm. This guy argues that heatpumps are overhyped, and that if you have gas you'd be better off getting a condensing boiler:
He's not alone in making that argument, either.

What's wrong with solar heating? It works, and is pretty cheap now.

I think there's a good argument to be made for insulating all homes (rented, or not) and upgrading heating systems. In the case of rented accommodation you could either claw the money back as a tax, or claim it back on the house's sale. I've lived in rented accommodation where there was no thermostat, let alone insulation.

Alex said...

Ah. Note that he's arguing based on the cost of a groundsource heat pump, which is several times more due to all the civil works involved. They are considerably cooler (higher efficiencies, higher capacity, can do cool-and-heat better) but they involve digging a great big hole, which costs a fortune and is well out of the question for renters. The nice thing about ASHP is that it's a much easier retrofit.

Gridlock said...

I wonder what sort of discount you could get on an order for 8 million of these bad boys...

Actually, while you're at it, shouldn't we be converting Police stations, amry barracks, civic buildings, prisons etc? Surely this tech scales well?

"Securing our Gluttonous, Unsustainable Way Of Life" - now there's a platform we can all get behind.

PS - word verification - 'ucunt' - oh, won't someone think of the children?

silburnl said...

Cian, in addition to the point Alex made about GSHP vs ASHP, the conclusion of that blog post you linked to runs:

"GSHP is currently, at today’s fuel prices, a compelling option for home heating in a newly built house. But not nearly as compelling as Ice Energy would have us believe." (emphasis mine)

Mark Brinkley thought that natgas prices were likely to 'revert to the mean' in some fashion after recent (at the time of posting ie Jan 2006) price rises, but subsequent events rather shoot a hole in that assumption I think.

Indeed, given the way that North Sea Gas production has been falling off a cliff over the last few years and the fact that our natgas market has much less storage capacity and far fewer long-term contracts to buffer reductions in supply, the sort of eye-watering price hikes we've seen announced of late seem likely to be the first pebbles of the avalanche if you ask me.

As such locking in a dependence on natgas for space/water heating seems like a mug's move - certainly I will be taking a long hard look at alternatives when it's time to replace my natgas boiler (which will probably be in the next year or two as it happens).


cian said...

Well I think the main point is that the efficiency is not as high as the manufacturers like to claim on ground air pumps. Its closer to about 2.6 in practice (e.g. 2.6 units of heat for every unit of electricity). For air pumps the efficiency is apparently lower still. on whether they'd be sufficiently cheaper than condensing boilers depends upon the price of gas in relation to electricity to justify the expend (though the latter is of course partly dependant upon the former). The other problem is that air source pumps are a lot less efficient once you get below -3ish, so maybe not an option outside the south.

They're not a con like domestic wind turbines, but they're not a silver bullet either. You'd have to do the sums quite carefully, and I doubt you'd get the kind of return you'd get on basic improvements like making landlords get their houses insulated to a decent standard.

Incidentally Alex, you should check that blog out. He's a good guy. Passionate about sustainable design, but level headed enough to do the sums and cut through the hype.

Luke: Who knows what gas prices are doing. They're an even less transparent market than oil. There's no shortage of gas, the problem is Russia supplying most of our future gas and our wonderful government's belief in magic markets. I read somewhere that it is possible to ship it in tankers - though presumably there's a reason that we don't. But we're reliant on natural gas for electricity for the forseeable future.

ziz said...

" why this pensioner obsession"

Quite simple .. it is a way of buttering them up since they tied the pension to COI not RPI.

It has nothing to do with energy at all.

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