We subsidise wind and peat power, which reduce and increase carbon emissions – the situation is complicated, writes SARAH CAREY
HERE’S THE problem with Brian Lenihan: he’s too damn good at softening us up. The moral authority of the Government resides entirely in him, and so his huge personal popularity stands in the way of a general election. Now and then I realise we desperately need a general election, because it’s the only way to reverse some of the truly mad and blatantly contradictory policies this Government is pursuing.
The public service obligation fee on our electricity bills is a classic example.
Just see how it operates in the context of other policy objectives of the Government: manual devaluation, increased competitiveness, reduction of carbon dioxide emissions and dependency on fossil fuels, protection of unique landscapes and, as Lenihan himself stated at Béal na mBláth, the effort to spread fairly the financial burdens of the current crisis.
Manual devaluation is the project to reduce the cost of everything because we can’t devalue our currency. This will increase competitiveness by making our stuff cheaper for foreigners to buy, thus driving the elusive export-led recovery.
Fairness is about making sure that where taxes and payments have to increase, it’s done progressively – that is, those who are better-off pay more. Then there’s the personal project of every householder – tightly managing their cash flow, to reduce costs. All of these combine neatly in the cost of electricity. It’s supposed to come down.
Domestically, I’ve switched to Airtricity. I’ve sent for the electrician to swap out fashionable but expensive spotlight fittings, and I’ve been bugging the family with petty energy-saving projects, such as plugging out mobile phone chargers. That’s me doing my bit. The Government does its bit by adding €33 a year to my bill with this increase. That’s considerably more than I’ve saved by not filling the kettle when I only want enough for a cuppa. Every household pays the same, rich or poor. Big business is exempt from the fee, so residents and small businesses are subsidising the big boys.
It’s not that the €33 or the €99 small businesses must pay will break anyone, but it’s hardly motivating, is it? It’s also in the opposite direction of what the competitiveness hawks demand. But let’s make a big effort and dismiss piffling little €33s and €99s. What’s the money for?
The go-to guy on environmental economics is the ESRI’s Richard Tol, who explained in the Sunday Business Post recently how the fund of €157 million raised with this fee will be spent. Just 9 per cent of the money will actually go towards the “public service” part of providing electricity. Most – €78 million – will subsidise peat-powered electricity, and €43 million will go to wind power.
People think wind is wonderful because it’s free. In actual fact, wind-created energy is horrendously expensive, which is why it needs guaranteed pricing and subsidies to be viable. Oil and gas are still cheap in comparison.
You can argue that since wind is environmentally virtuous, it’s worth paying for. But paying that price is a separate policy, in direct contradiction with the earlier policy to reduce costs, because power costs affect the price of everything. So all I’m sayin’ is: which policy is it? Cheap and nasty, or dear and virtuous? We can go with either, but both seems pointless.
But that €78 million for peat is a whole other kettle of metaphorical fish, unnecessarily filled to the top. Remember, we’re subsidising wind power because it’s not a fossil fuel and that’s good. And we’re subsidising peat because it is a fossil fuel and . . . yes, it gets complicated. Wind power reduces carbon emissions. Peat-power increases carbon emissions. Both are more expensive than oil and gas, and need to be subsidised. As Tol observes, one cancels the other out, so why are we paying for two opposing policies?
There are two possible reasons. Reason one: burning expensive carbon-producing peat reduces our dependency on imported gas. We have to reduce our dependency on imported gas because obviously the crazy unstable government in the UK might cut off our supply unexpectedly, in case we beat them in rugby perhaps. In which case, we’ll have enough peat to last us a few days. Hopefully the UK Gas War won’t last too long.
Reason two: our peat-powered stations are in Co Offaly. Policy consistency would require shutting them down to reduce carbon emissions and generate cheaper electricity. That would create a firestorm in the Taoiseach’s constituency.
As the voiceover on TV's Big Brothersays: you decide. My vote is that it's a €78 million decision that has more to do with politics than energy policy. The €78 million would buy a lot of respite care, but I guess respite for Fianna Fáil in the midlands is more important.
There is one final and farcical element to this shambolic energy policy. Last week I ventured west for a good blast of Atlantic air before the winter sets in and observed little heaps of turf by roadsides, waiting to be brought home by small farmers. This year, a ban in 32 bogs prevented thousands of farmers from cutting their bit of turf for winter fuel. I suppose they’ll have to buy briquettes instead, which come from – bogs.
We have one policy to subsidise burning the produce of the bog and another to preserve the bogs. Two mutually opposing policies, both of them stupid. I wonder what Michael Collins would make of it.