The Resilience Of Smart Clean Energy Policies
By Michael Brower, President and CEO of the American Council On Renewable Energy (ACORE)
Welcome to 2014 – the year when partisan battles over renewable energy can finally be laid to rest. Bold prediction? Not really. Thanks to a plethora of recent market successes in the clean energy industry, fiscal conservatives are more readily accepting renewable energy as both economically viable and advantageous for local communities.
There remain some entrenched recalcitrants of course, focused more on outdated ideology rather than basic, market-driven economics. But as last year proved, these contrarians are being quickly relegated to the backbench, as state Renewable Portfolio Standards improve economies and ratepayers are seeing the benefits of low-cost renewable energy.
Despite a number of unsuccessful attacks on the smart clean energy policies that created a fair market for renewable energy over the last year, it seems like obstinate attacks from renewable energy contrarians will continue in 2014. According to recently leaked documents, the American Legislative Exchange Council’s (ALEC) 2014 agenda will target those who have invested in renewable projects, ranging from homeowners with solar panels to the USEPA. However, if red states like Ohio, Arizona and Michigan offer an example of what clean energy opponents can expect, it’s that repealing or weakening fair market policies for renewables is easier said than done.
One very recent example is from Ohio, where a Senate committee postponed in December, 2013, discussion of a bill designed to weaken the state’s renewable portfolio standard (RPS). The bill, which would have changed what utilities are allowed to purchase or count toward the state’s RPS requirements, faced a wide spectrum of opponents including the Ohio Manufacturers Association and the Ohio Office of Consumers’ Counsel.
Lawmakers hesitated on pushing this bill through because of the compelling evidence that renewable energy is saving Ohioans money. The Ohio Office of Consumers’ Counsel found that if the RPS-weakening bill passed, every Ohio household would pay as much as $528 more for electricity over the next three years. The Consumer’s Counsel also estimated that businesses would pay an average of $3,231 more on electric bills. And a report from Ohio Advanced Energy Economy and Ohio State University’s Resilience Center looked even further down the road and estimated Ohioans would pay nearly $4 billion extra over the next 12 years if the bill passed.
Last year’s net-metering debate between the solar industry and Arizona’s utility is another demonstration that ALEC’s latest plan to penalize solar homeowners has a rocky road ahead. In November, the state’s Corporation Commission protected the rights of solar homeowners by rejecting Arizona Public Service’s request to level extraordinary fees for home power generation. APS had waged a multimillion-dollar campaign to charge Arizona homeowners with solar an extra $50-100 per month in their utility bills. Instead, APS had to settle for a fraction of the monthly charge it wanted when the Commission settled on a $5 monthly fee for solar homeowners, following a compromise reached by the solar industry and the Residential Utility Consumers’ Office.
These skirmishes should not suggest, however, that utilities and renewables are always on opposite sides of the clean energy debate. In Michigan, for example, the market for renewable energy has been so robust that utilities are actually rolling back renewable surcharges. As Michigan discovered, the real cost of renewable energy came in lower than the utilities expected, leading to the Michigan Public Services Commission to conclude in a November report that Michigan’s renewable portfolio could be expanded to 30%.
Given such clear, clean successes, it is easy to understand why some fossil fuel companies might be worried about the growth of renewable energy. Policymakers across the country are seeing how renewable energy presents a better, cheaper and cleaner power source that is also growing local economies. Yes, in 2014 there are sure to be new challenges to state clean energy policies by incumbent industry special interest groups. But they will face mounting resistance as citizens and state legislatures alike increasingly recognize the economic and environmental benefits of clean, renewable energy.
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With the tremendous progress in improving the economics of LEDs, Solar generation and even Wind, it seems like the Clean Energy movement might do well to move the battlefield from mandates and subsidies to one that is based on competitive economics.
People generally embrace ideas that help them save money. Mandates, on the other hand, can turn off an audience just based on the fact that they are mandates.
It seems that we are at a tipping point where these technologies can win on their own economic merits; that is very encouraging.
We’re close.
But what you suggest is that we purposely cripple renewables by forcing them to compete against subsidized coal and nuclear without any field-leveling subsidizes.
I suggest flipping the subsidy argument around. Make the case that Renewables and LEDs are good investments without subsidies and, because this is aiding our energy independence drive, we can now eliminate ALL fossil fuels subsidies as well.
Make it an even playing field that way.
What Congressman could argue logically against clearing the field of all subsidies?
Seems an easier argument to win than trying to fight for subsidies in a fiscally challenged environment.
Why don’t you start a campaign to eliminate fossil fuel subsidies?
Organize your conservative friends against this waste of taxpayers money.
I’m for elimination of virtually all subsidies, particularly those that are paid to Corporates. Unfortunately, the politicians on both sides of the aisle have been corrupted by these and it’s going to take something a lot larger than anything I can lead to change that.
That being your attitude, then why don’t you cease suggesting we cut the subsidies for renewables and make them unfairly compete against subsidized fossil fuels and nuclear?
I just made a suggestion above. Feel free to ignore it.
The problem is that in much of the country it is hard for unsubsidized wind and solar to compete with subsidized coal, oil and gas.
Let me be clear that I am opposed to all subsidies, including those for oil and gas. But the amount of the subsidies that oil and gas get are minuscule relative to the price of those products; makes virtually no difference to the price (another reason to get rid of them).
“The Center for American Progress has repeatedly in the last year scrutinized the hidden world of oil and gas tax subsidies, emphasizing that they represent wasteful government spending. Here’s a summary of the major oil and gas tax breaks and their cost to taxpayers:[1]Percentage depletion ($11.2 billion over 10 years)
Companies are generally allowed to deduct the costs of an investment over the term of that investment’s useful life. But oil companies get to use a special method for calculating their deductions called “percentage depletion.” Instead of deducting the costs of an oil or gas well as its value declines, oil companies are allowed to deduct a flat percentage of the income they derive from it. Because the deductions are based on revenues, not costs, the subsidy actually increases at times when prices are high, which of course is when oil companies enjoy their greatest profits.[2]
The oil and gas industry maintains that this is not a special tax break because other companies receive similar deductions. But the percentage depletion method permitted for oil and gas is fundamentally different and more favorable. In some cases, it can eliminate all federal taxes for these companies. Moreover, percentage depletion is a poorly designed subsidy because it “doesn’t specifically target hard-to-find or difficult-to-extract oil,” as CAP’s Richard Caperton and Sima Gandhi have written.
Domestic manufacturing deduction for oil production ($18.2 billion over 10 years)[3]
Oil producers successfully lobbied for inclusion in a 2004 bill that gave the beleaguered manufacturing sector a special tax break designed to discourage outsourcing of jobs. For a number of reasons—including the capital-intensive nature of oil production, the relative mobility of investments, and of course the level of profitability—there are vast differences between the oil industry and traditional U.S. manufacturing. As Sen. Bob Corker, a Tennessee Republican, has explained: “Congress was trying to solve a manufacturing issue in this country” by enacting the deduction and included oil producers “almost inadvertently.”[4]
Whatever rationale there was for allowing oil producers to claim the manufacturing deduction has evaporated in the intervening time, as oil prices have nearly tripled. Eliminating oil producers from a benefit never intended for them “will have no effect on consumer prices for gasoline and natural gas in the immediate future,” and is unlikely to have any effect over the long run, according to a recent report by Congress’s Joint Economic Committee.
Expensing of intangible drilling costs ($12.5 billion over 10 years)
Another special tax rule dating back to 1916 permits independent oil companies (and major integrated oil companies to a lesser but still significant extent) to “expense” certain costs associated with drilling oil wells. This means they can take immediate deductions for these costs rather than spreading the deductions out over the useful life of the wells, which is the normal tax code rule for other types of investments. Taking deductions immediately means the companies lower their tax bill in the first year, in effect getting an interest-free loan from the government.
“Dual capacity taxpayer” rules for claiming foreign tax credits ($10.8 billion over 10 years)
Our tax system allows companies that do business abroad to reduce from their tax bill any income taxes paid to other governments. The rules are supposed to prevent oil companies from claiming credit for royalty payments to foreign governments. Royalties are not taxes; they are fees for the privilege of extracting natural resources.
Notwithstanding these rules, so-called “dual capacity taxpayers,” which are overwhelmingly oil companies, have been permitted to claim credits for certain payments to foreign governments, even in countries that generally impose low or no business tax (suggesting that these payments, or levies, are in fact a form of royalty).[5] Dual capacity taxpayer rules, therefore, are a subsidy for foreign production by U.S. oil companies. President Obama and others have proposed limiting the tax credit for these companies to what it would be if they did not have the special “dual capacity taxpayer” status.
Amortization of geological and geophysical expenditures ($1.4 billion over 10 years)
Another way many oil producers get to postpone their tax liability is by writing off the costs of searching for oil over an accelerated time period of two years. The president has proposed that all oil companies write off these costs over seven years, a relatively minor tax change that would have a negligible impact on investment decisions. According to the Congressional Research Service: “If the industry were experiencing a time of stagnant oil prices that were near the cost of production, relatively small changes in tax expenses might affect investment and production activities. However, in a time of high and volatile oil prices, small changes in tax expense are overshadowed by price variations.”[6]
“Last-in, first-out” accounting for oil companies (as much as $22.5 billion over 10 years)[7]
A tax accounting method known as “last in, first out,” or LIFO, provides a significant tax benefit for oil companies, especially when prices are rising. LIFO allows oil companies to calculate profits based on the cost of the oil they most recently added to their inventory. Since the most recently acquired inventory costs the most when prices are rising, this method can minimize a company’s taxable income. LIFO is available to businesses in other industries but large oil companies are perhaps the biggest beneficiaries.[8]
Taken together, these oil and gas tax subsidies represent a colossal waste of taxpayer resources since they pay companies, in the form of tax breaks, to do what they do anyway—especially at a time of price-fueled record profits.
American consumers have for years been waiting for the benefits of these tax subsidies to trickle down to them in the form of lower gas prices. It hasn’t happened. In fact, these subsidies existed during the 2008 oil shock when prices hit a record $147 per barrel, yet did nothing to lower oil prices or increase production. And repealing them won’t increase prices at the pump. “Gasoline prices are a function of world oil prices and refining margins,” explains Severin Borenstein, co-director of UC-Berkeley’s Center for the Study of Energy Markets. Any incremental impact on production “will have no impact on world oil prices, and therefore no impact on gasoline prices.”
Oil tax subsidies are simply a waste of taxpayer dollars. Oil and gas companies, like all companies, make investment decisions based on the profit potential. Those decisions are driven primarily by market conditions, including the price of oil on world markets, not marginal tax incentives.
“With $55 oil we don’t need incentives to the oil and gas companies to explore,” said President George W. Bush in 2005. “There are plenty of incentives.”
Oil prices today are double what they were then. It’s time to stop giving away tax dollars to some of the world’s most profitable companies.
Seth Hanlon is Director of Fiscal Reform for CAP’s Doing What Works project.
Endnotes
[1]. There are also several other special tax provisions with a smaller cost to taxpayers (or no estimated cost due to current circumstances). These include the enhanced oil recovery credit, the credit for oil and gas produced from marginal wells, the deduction for tertiary injectants, and the exception from the passive loss rules for working interests in oil and natural gas properties.
[2]. Alan B. Krueger, Testimony before the Senate Committee on Finance Subcommittee on Energy, Natural Resources, and Infrastructure, September 10, 2009.
[3]. All revenue estimates are, unless otherwise noted, from: General Explanations of the Administration’s Fiscal Year 2012 Revenue Proposals(Department of the Treasury, 2011).
[4]. Chuck O’Toole, “‘Gang of 10’ Energy Compromise Would Strip Oil and Gas Deduction,” Tax Notes, August 4, 2008).
[5]. Joint Committee on Taxation, Description of Revenue Provisions Contained in the President’s Fiscal Year 2011 Budget Proposal (Government Printing Office, 2010), p. 318.
[6]. Robert Pirog, “Oil and Natural Gas Industry Tax Issues in the FY2012 Budget Proposal” (Washington: Congressional Research Service, 2011).
[7]. This is the industry estimate of the effect on oil companies of President Obama’s proposal to eliminate LIFO as a whole. See: American Petroleum Institute, “Significant Industry Tax Issues Contained in President Obama’s FY 2012 Budget” (2011), available athttp://www.api.org/policy/tax/upload/FY2012_Budget-Short_Tax_Issues_Paper.pdf.
[8]. In 2005 the use of LIFO inflated the cost of goods for the five biggest oil companies by a combined $12 billion, thereby reducing their taxable income. See: David Reilly, “Big Oil’s Accounting Methods Fuel Criticism,” The Wall Street Journal, August 8, 2006.
http://www.americanprogress.org/issues/tax-reform/news/2011/05/05/9663/big-oils-misbegotten-tax-gusher/The Center for American Progress has repeatedly in the last year scrutinized the hidden world of oil and gas tax subsidies, emphasizing that they represent wasteful government spending. Here’s a summary of the major oil and gas tax breaks and their cost to taxpayers:[1]
Percentage depletion ($11.2 billion over 10 years)
Companies are generally allowed to deduct the costs of an investment over the term of that investment’s useful life. But oil companies get to use a special method for calculating their deductions called “percentage depletion.” Instead of deducting the costs of an oil or gas well as its value declines, oil companies are allowed to deduct a flat percentage of the income they derive from it. Because the deductions are based on revenues, not costs, the subsidy actually increases at times when prices are high, which of course is when oil companies enjoy their greatest profits.[2]
The oil and gas industry maintains that this is not a special tax break because other companies receive similar deductions. But the percentage depletion method permitted for oil and gas is fundamentally different and more favorable. In some cases, it can eliminate all federal taxes for these companies. Moreover, percentage depletion is a poorly designed subsidy because it “doesn’t specifically target hard-to-find or difficult-to-extract oil,” as CAP’s Richard Caperton and Sima Gandhi have written.
Domestic manufacturing deduction for oil production ($18.2 billion over 10 years)[3]
Oil producers successfully lobbied for inclusion in a 2004 bill that gave the beleaguered manufacturing sector a special tax break designed to discourage outsourcing of jobs. For a number of reasons—including the capital-intensive nature of oil production, the relative mobility of investments, and of course the level of profitability—there are vast differences between the oil industry and traditional U.S. manufacturing. As Sen. Bob Corker, a Tennessee Republican, has explained: “Congress was trying to solve a manufacturing issue in this country” by enacting the deduction and included oil producers “almost inadvertently.”[4]
Whatever rationale there was for allowing oil producers to claim the manufacturing deduction has evaporated in the intervening time, as oil prices have nearly tripled. Eliminating oil producers from a benefit never intended for them “will have no effect on consumer prices for gasoline and natural gas in the immediate future,” and is unlikely to have any effect over the long run, according to a recent report by Congress’s Joint Economic Committee.
Expensing of intangible drilling costs ($12.5 billion over 10 years)
Another special tax rule dating back to 1916 permits independent oil companies (and major integrated oil companies to a lesser but still significant extent) to “expense” certain costs associated with drilling oil wells. This means they can take immediate deductions for these costs rather than spreading the deductions out over the useful life of the wells, which is the normal tax code rule for other types of investments. Taking deductions immediately means the companies lower their tax bill in the first year, in effect getting an interest-free loan from the government.
“Dual capacity taxpayer” rules for claiming foreign tax credits ($10.8 billion over 10 years)
Our tax system allows companies that do business abroad to reduce from their tax bill any income taxes paid to other governments. The rules are supposed to prevent oil companies from claiming credit for royalty payments to foreign governments. Royalties are not taxes; they are fees for the privilege of extracting natural resources.
Notwithstanding these rules, so-called “dual capacity taxpayers,” which are overwhelmingly oil companies, have been permitted to claim credits for certain payments to foreign governments, even in countries that generally impose low or no business tax (suggesting that these payments, or levies, are in fact a form of royalty).[5] Dual capacity taxpayer rules, therefore, are a subsidy for foreign production by U.S. oil companies. President Obama and others have proposed limiting the tax credit for these companies to what it would be if they did not have the special “dual capacity taxpayer” status.
Amortization of geological and geophysical expenditures ($1.4 billion over 10 years)
Another way many oil producers get to postpone their tax liability is by writing off the costs of searching for oil over an accelerated time period of two years. The president has proposed that all oil companies write off these costs over seven years, a relatively minor tax change that would have a negligible impact on investment decisions. According to the Congressional Research Service: “If the industry were experiencing a time of stagnant oil prices that were near the cost of production, relatively small changes in tax expenses might affect investment and production activities. However, in a time of high and volatile oil prices, small changes in tax expense are overshadowed by price variations.”[6]
“Last-in, first-out” accounting for oil companies (as much as $22.5 billion over 10 years)[7]
A tax accounting method known as “last in, first out,” or LIFO, provides a significant tax benefit for oil companies, especially when prices are rising. LIFO allows oil companies to calculate profits based on the cost of the oil they most recently added to their inventory. Since the most recently acquired inventory costs the most when prices are rising, this method can minimize a company’s taxable income. LIFO is available to businesses in other industries but large oil companies are perhaps the biggest beneficiaries.[8]
Taken together, these oil and gas tax subsidies represent a colossal waste of taxpayer resources since they pay companies, in the form of tax breaks, to do what they do anyway—especially at a time of price-fueled record profits.
American consumers have for years been waiting for the benefits of these tax subsidies to trickle down to them in the form of lower gas prices. It hasn’t happened. In fact, these subsidies existed during the 2008 oil shock when prices hit a record $147 per barrel, yet did nothing to lower oil prices or increase production. And repealing them won’t increase prices at the pump. “Gasoline prices are a function of world oil prices and refining margins,” explains Severin Borenstein, co-director of UC-Berkeley’s Center for the Study of Energy Markets. Any incremental impact on production “will have no impact on world oil prices, and therefore no impact on gasoline prices.”
Oil tax subsidies are simply a waste of taxpayer dollars. Oil and gas companies, like all companies, make investment decisions based on the profit potential. Those decisions are driven primarily by market conditions, including the price of oil on world markets, not marginal tax incentives.
“With $55 oil we don’t need incentives to the oil and gas companies to explore,” said President George W. Bush in 2005. “There are plenty of incentives.”
Oil prices today are double what they were then. It’s time to stop giving away tax dollars to some of the world’s most profitable companies.
Seth Hanlon is Director of Fiscal Reform for CAP’s Doing What Works project.
Endnotes
[1]. There are also several other special tax provisions with a smaller cost to taxpayers (or no estimated cost due to current circumstances). These include the enhanced oil recovery credit, the credit for oil and gas produced from marginal wells, the deduction for tertiary injectants, and the exception from the passive loss rules for working interests in oil and natural gas properties.
[2]. Alan B. Krueger, Testimony before the Senate Committee on Finance Subcommittee on Energy, Natural Resources, and Infrastructure, September 10, 2009.
[3]. All revenue estimates are, unless otherwise noted, from: General Explanations of the Administration’s Fiscal Year 2012 Revenue Proposals(Department of the Treasury, 2011).
[4]. Chuck O’Toole, “‘Gang of 10’ Energy Compromise Would Strip Oil and Gas Deduction,” Tax Notes, August 4, 2008).
[5]. Joint Committee on Taxation, Description of Revenue Provisions Contained in the President’s Fiscal Year 2011 Budget Proposal (Government Printing Office, 2010), p. 318.
[6]. Robert Pirog, “Oil and Natural Gas Industry Tax Issues in the FY2012 Budget Proposal” (Washington: Congressional Research Service, 2011).
[7]. This is the industry estimate of the effect on oil companies of President Obama’s proposal to eliminate LIFO as a whole. See: American Petroleum Institute, “Significant Industry Tax Issues Contained in President Obama’s FY 2012 Budget” (2011), available athttp://www.api.org/policy/tax/upload/FY2012_Budget-Short_Tax_Issues_Paper.pdf.
[8]. In 2005 the use of LIFO inflated the cost of goods for the five biggest oil companies by a combined $12 billion, thereby reducing their taxable income. See: David Reilly, “Big Oil’s Accounting Methods Fuel Criticism,” The Wall Street Journal, August 8, 2006.
http://www.americanprogress.org/issues/tax-reform/news/2011/05/05/9663/big-oils-misbegotten-tax-gusher/
So let’s start with the presumption that these figures are correct; don’t have any reason to believe they are not.
These total to approx. $77B over 10 years. $7.7B/ year.
Conservatively, the US produces 8MM bbls/day of oil and 50BCF/day of Nat Gas. Let’s use $90/bbl and $4/MCF to estimate value.
8MM x 365 x $90 = $263B/yr of oil revenue
50BCF x 365 x $4 = $73B/yr of gas revenue
Total = $336B/yr
7.7/336 = 2.2%
So subsidies have next to nothing to do with the price of oil or gas. Also makes the case that we should get rid of them as they are unneeded.
Now calculate in the $9 trillion to cover the oil wars….
Don’t have to convince me of that.
Pair fracking with renewables to make us energy independent, and then it’s adios to the Middle East. Let’s see how those guys enjoy Chinese and Russian hegemony. Another headwind for Europe’s economy to fight.
Environmentalists and public health advocates often talk about the harmful “external” costs of coal that are not accounted for in its price.
Those externalities include damage to the local environment, threats to public health, and, of course, climate change.
In a study last year, Dr. Paul Epstein of the Center for Health and the Global Environment at Harvard Medical School attempted toquantify how harmful coal is:
Our comprehensive review finds that the best estimate for the total economically quantifiable costs, based on a conservative weighting of many of the study findings, amount to some $345.3 billion, adding close to 17.8¢/kWh of electricity generated from coal…. These and the more difficult to quantify externalities are borne by the general public.
While these costs are very real, the economic argument can still be abstract to people. So it’s helpful to look at more tangible ways the coal industry is being subsidized by the American taxpayer. Indeed, coal companies benefit from tax breaks, public land loopholes, and subsidized railroads that help them continue being “cheap.”
Below are a few examples of the kind of government support we give the coal industry.
1. Tax breaks
Just as the oil and gas industry receives tens of billions of dollars in taxpayer subsidies, coal companies also receive preferential treatment from the Internal Revenue Service. The Treasury Department estimates that eliminating just three tax preferences for coal would save $2.6 billion between 2013-2022:
– Expensing of exploration and development costs: Under current law, coal companies can expense costs incurred by locating coal ore deposits.
– Percentage Depletion for Hard Mineral Fossil Fuels: As the tax code currently stands, coal companies can claim a tax deduction to cover the costs of investments in mines.
– Capital Gains Treatment for Royalties: Some coal royalties for private owners are treated as long-term capital gains, so they are taxed at a lower rate.
2. Public land loopholes
According the Energy Information Administration, 43.2 percent of U.S. coal comes from public lands. However, the coal industry benefits from a number of loopholes that make obtaining leases on public lands easier and cheaper.
For example, the nation’s largest coal producing region, the Powder River Basin in Wyoming, is not legally classified as a “coal-producing region.” This means that coal tracts within it are rarely competitively leased, which shortchanges taxpayers for the value of the land and the coal underneath it.
Additionally, some have alleged that the non-public process by which the Bureau of Land Management determines fair market value for coal on public lands is flawed. In a lengthy legal brief, Tom Sanzillo of the Institute for Energy Economics and Financial Analysis outlines how the value established by the government is much lower than would the market would command: “In the broader economic arena where coal is bought and sold, the FMV lease process does not capture the full value of the coal.”
3. Subsidized railroads
Coal is the most important commodity transported on railroads in America. As the Association of American Railroads describes, “In 2009, coal accounted for 47 percent of tonnage and 25 percent of revenue for U.S. railroads.” U.S. railroads get loans and loan guarantees from government agencies like the Department of Transportation/Federal Railroad Administration and have received numerous tax incentives for investments in new infrastructure.
The relationship between coal and railroads becomes more important when considering coal exports. On Tuesday, the Associated Press reported that American coal exports have “surged” to the highest levels since 1991. A large portion of these exports are going to Asian countries, where coal use has exploded. This begs the question: are American taxpayers subsidizing the coal boom in countries like China, thus helping accelerate global warming at an even faster rate?
In the end, the taxpayer is paying more for coal than the industry would like you to believe.
http://thinkprogress.org/climate/2012/04/13/463874/top-three-ways-that-american-taxpayers-subsidize-dirty-coal-development/#
Here’s the kicker –
Based on a conservative weighting subsidies add close to 17.8¢/kWh of electricity generated from coal. 17.8 cents for coal and 2.3 cents for wind and solar?
I live in the Netherlands. last year I have installed Solar and an air to water heat pump.and a 300 liter water storage tank. all electric house.
it works.
I had the natural gas disconnected. gas heating out.
triple plus washing cooling induction cooking.
my energy bill went down from 250 euros to 5 euros a month.
co2 free and saves me about 3000 euros a year.
next year an EV and solar on the garage.
no more gas bills, savings again about 3000 euros a year.
and no more pollution, what is this discussion about????
problem is
even people nearby, that see it, do not believe it.
they rather pay fossil than change to all electric.
and moan about crisis.
How much did the conversion from gas to a heat pump cost?
I was wondering about this the other day. I recently went to Ikea here in the UK and saw that they’re selling a 3.3kW solar system for GBP5700 which is pretty good value (and not even the cheapest) and payback is only 6-8 years. But take-up is still quite slow.
I think the biggest challenge is human nature. In our busy lives we tend to think only in the short term (1-2 years max) and we consider it onerous to even change electricity suppliers to save money, let alone install panels on the roof of a house where we might not be living in 2 years time. Perhaps it’s the case that your neighbours are simply indifferent towards your house rather than disbelieving of it?
As long as fossil fuels remain relatively cheap (say under 10% of income annually), it will always be cheaper to use them in the next immediate year (or at least more convenient). I think we need a combination of rising fossil fuel prices and lowering solar costs to force the change. A carbon tax would achieve this.
Congratulations on your house though, it sounds fantastic!