Finally a Telegraph front page story on climate finance…

…though not the one we would have dreamed of. You got the feeling a different, and dare I say better, report got hijacked and turned into a tirade against aid and wind farms.

So let’s focus on a few of the facts quoted in the story:

1.      Britain has pledged almost £2billion in taxpayers money to tackle climate change in developing countries – this means each household will pay the equivalent of £70

The £1.8 billion in climate finance pledged for 2013-2015 is not new money – the figures are complicated but it’s been announced before, just framed in a slightly different way. The reason why NGOs jumped up and down is that we are desperate to use the UK’s leadership on this issue to encourage other developed countries to come forward at the Doha climate talks and pledge their share of international climate finance. That’s another commitment we developed countries including the UK have already made – to mobilise $100billion a year for climate action in developing countries from 2020.

And this money comes directly from the overseas aid budget which is already committed – Conservative, Labour and Lib Dem policy is to increase ODA to 0.7% of GNI – this money is within that commitment – so we aren’t talking suddenly about new money to come out of household bills.

As such, it comes from tax, not some spurious household budget, and is the equivalent of 0.2 pence in the basic rate of income tax. For the average earner, this pledge amounts to about £3.60 a year – but remember, this is not new tax, it is tax already earmarked (calculations below).

Incidentally, we are calling on the Government to find new sources of money for climate finance so that they don’t have to keep raiding already stretched budgets. For example, unlike for domestic businesses, there is currently no emissions levy on international shipping. Bill Gates has suggested in a report to G20 ministers that this is a plausible source.

2.      Wind farms are all but useless and nobody wants them in England let alone in Africa.

For a start this is certainly not £1.8 billion for wind farms in Africa. Half is finance for various forms of clean energy and to address deforestation, and half to help people adapt to the effects of changing weather patterns which we’ve caused by our excessive carbon emissions.

A recent poll found that actually people ‘in England’ do want more wind farms. The Fabian Society and WWF commissioned poll found that 57% of the public and 53% of Tory voters said the UK should commit to generating most of its electricity from renewable sources by 2030 with just 10% opposing the idea. And a ComRes poll in June found overall 68% of people favoured more wind farms – with 58% of Conservatives in favour.

And wind farms are far from useless – a recent report by IPPR and renewable energy consultancy, GL Garrad Hassan (owned by GL Group which has interests in the oil and gas sectors) found that wind was a reliable source and power and that it reduced the UK’s CO2 emissions.

The report found that in 2011, wind turbines in the UK saved a minimum of 5.5 million tonnes of CO2 (if gas was displaced) and a maximum of over 12 million tonnes (if coal was displaced).Offshore wind is capable of providing  up to 45 per cent of the UK’s total electricity needs in 2030 (Climate Change Committee 2011)) – and the Carbon Trust estimates it could contribute £3–10 billion annually to the economy between 2010 and 2050 (Carbon Trust 2011).

And the Renewable Energy Association (REA) and RenewableUK believes wind power could create 76,000 jobs by 2021 and deliver nearly £700,000 value for each megawatt of onshore wind capacity installed.

Furthermore, the IPPR report concludes that while renewable energy subsidies do add to energy bills, from 2004 to 2010, government support for renewables added £30 to the average energy bill while rises in the wholesale cost of gas added £290.

Wind turbines may or may not be the best form of energy in all developing countries – say solar or geothermal might be more appropriate. But the developing world needs our climate finance – the poorest communities are being hit now by climate change. And we promised to provide it. Lets not break that promise.

 (1)  How we did our maths – thanks/blame for my colleague Sam!

–         The Telegraph call a 1.8 billion spend “£2 billion”  – good to know that £200 million of taxpayers money is just rounding for the Telegraph (as they criticise a £100million project).

–         Their claim is ‘it will cost every household in the UK £70’: calculated by dividing £1.8bn by 26.3million households in the UK (=£68.44)

  • ·BUT

–         This money comes out of general taxation (the DFID budget)

–         This money is amortised over at two years (2013-14, 2014-15– i.e. £900million a year.

–         (Back of an envelope calculation) As the Telegraph has pointed out, a penny on the basic rate of income tax is worth £4.4billion a year. Therefore this spend costs approximately 0.2p (4.4/.9= 4.8) in the penny of the basic rate of tax. In 2009, mean  gross incomes were around £26,000, median around £20,000 (BBC 2009 report). Total tax on a mean income at 20%, less a rough threshold of £8,000 is £1,800, so this makes up around £3.60 of the average taxpayer’s total tax contribution a year.

–         Someone else might want to explore the actual taxpayer cost (Income tax, Capital Gains Tax and National insurance only makes up 55% of treasury tax receipts (and treasury income is supplemented by loans, so this percentage falls in terms of contribution to public spending); and of course taxation is progressive, with higher earners paying proportionately more, so the burden is even more equitably distributed. 

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