How will the government’s new green funding help households?

Last month the government announced it was investing the rather specific amount of ‘over £116M’ to drive forward green innovation in the UK. It says the funds will ‘support British businesses developing new green technologies to reduce carbon emissions and utility bills and remove greenhouse gases from the atmosphere’. 

If you’ve been following this blog you’ll know we’re eagle-eyed about household utilities, so this caught my eye. On closer reading, the details of exactly how the government foresees utility bills being reduced are not yet clear and, giving the benefit of the doubt, the funding has only just been announced. But I thought this was still an opportune moment to consider the path towards more renewable and green household utilities in the UK, with the government, businesses and consumers all playing their part.

First, I’m assuming it’s agreed that reducing the carbon footprint of our energy (either from renewable sources or from carbon capture and storage – which is what a lot of the government’s green grants are targeted towards) is a good thing. I know that isn’t a universally held view, but let’s assume that reducing the carbon footprint of humanity – at reasonable cost (which is hard to define, I understand) – is the name of the game.

Second, I’m assuming that the trend of people taking individual or household responsibility for their carbon footprint will continue. I know that there are a million memes out there showing the carbon impact of Bezos or Musk’s space tourism flights, essentially making the point that when a billionaire spends some spare cash on ‘going to have a quick look at space’ it rather dwarfs the impact of me worrying about the energy source of my family home or whether I charged my electric car at home or commercially. But I’ve always thought that the point is that individuals should focus on doing the right thing themselves, rather than necessarily trying to force others to do the right thing. I am aware that one individual choosing to drive an electric car makes a small impact, but if everyone made their next car electric rather than diesel, that would soon add up.

One big question, then, is how do companies involved in directing consumer spend interact with this complex issue. And I think it needs to be much, much more obvious which activities are helping versus hindering. I’ve spent a lot of time trying to understand whether ‘green energy’ is ‘green’ or not and, frankly, it’s not obvious to me that some of the current systems are actually helping customers make good decisions about the ‘green-ness’ of their energy. For example, it seems to be far too easy for an energy supplier to claim ‘green’ when all they have done is bought an unused tradable permit. I don’t think customers are being done a great service there in the way in which advertising and regulation helps them understand the impact of purchasing decisions.

The next question is how can customers ‘show off’ their green choices (which is not only a crucial part of purchase psychology but also a vital force in effecting behavioural change at the sort of scale we are talking here). Buying an electric car is actually quite visible, which gives many people an added impetus to purchase. But there isn’t necessarily a visible manifestation of consumption choices for many of these household utility purchases. My household energy consumption is an almost invisible affair, and it’s hard for me to signal anything about it that’s different. I also have no idea how environmentally friendly my home or car insurance provider is, nor whether I should be concerned about whether there is a more eco-friendly option out there.

It’s really hard to work out if there’s any kind of carbon footprint difference between different providers of broadband or mobile, for instance. If I wanted to optimise my carbon footprint, should I buy 5G home broadband or rely on a fixed connection? Is there any difference between a broadband provider on OpenReach vs Virgin’s network? I’m not sure that’s clear enough, nor where the impetus should be for making that transparent. What environmental burden is introduced into these markets (which are mostly what my economics teacher at school used to call ‘natural monopolies’) by the competition driven by each regulatory regime? Should that be a concern? How different is the footprint of each company? How much should I have to worry about this as a consumer? It’s easy to end up in this wormhole of uncertainty.

One thing that does seem clear to me is that the government is currently taking a significant chunk of tax from energy bills to fund green initiatives. That feels like the wrong place to lay that burden - there is already plenty of other tax on consumer energy which should act, alongside the cost, as a spur for consumers to reduce their spend.  Surely that’s all regressive?

Anyway, at present it seems as if the recently announced raft of government incentives is a classic example of trying to move the market in the right direction in environmental terms by providing financial support. And that’s good. My question is whether there would be other ways in which the government or regulators could help nudge consumers – either by making it easier for households to assess the environmental impact of their decisions, or by helping to provide more visible signs of more eco-friendly choices. And then, to what extent could companies help provide either of these themselves. I’d love for there to be a far clearer picture of the environmental impact of my consumption decisions – surely that would enable me to make better decisions about what I spend money on.

I’m personally trying to balance so many things in terms of carbon footprint – how much I fly (not much the last couple of years!), how much I drive (I mainly drive an electric car, but I do have another diesel car mainly parked on the drive), what I eat (I’m a vegetarian, but I do eat dairy, but I feel like that gives me some positives), what I buy and invest in, etc. These choices get easier if I have the right information provided, without having to get overwhelmed, confused and sometimes tricked in the process of finding out for myself.

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