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TEQs & Renewable Energy Levy

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Joined: 20 Oct 2007
Posts: 184
Location: London

PostPosted: Fri Aug 22, 2008 8:16 am    Post subject: TEQs & Renewable Energy Levy Reply with quote

Here's a nice policy thought experiment from one of those smart Claverton Energy people : articulating nicely the same kind of thinking that explains why TEQs are ENERGY-based rather than CARBON-based.


Date: Wed Aug 20, 2008 5:48 pm

I attended a workshop in Newcastle a while ago, where one of the main items on the agenda was for one of the architects of this carbon credit scheme to explain it and for us all then to divide into teams and work through the mechanics of it.

We were all activists (or wouldn't have been there) and eager to "believe". The feed back was devastating, and probably had a lot to do with Miliband's later decision to "bin" it. People found it difficult to understand, and felt it was a complex, unwieldy and arbitrary mechanism.

No-one - and I mean no-one - thought it would work in the real world.

The point about carbon credits and emissions trading is that they aim to monetise something inherently worthless. No surprises then to find that the current markets in "Carbon" are brought to us by the same people who brought us the "Credit Crunch".

So what's the alternative? Well, as the guy said: "If you want to keep a Donkey healthy, you don't regulate what comes out of it; you regulate what goes in" IMHO the answer lies in monetising the energy value of carbon.

This can be achieved by applying a levy on carbon energy use - collected via the payment system on /energy transactions - and using this levy as a compulsory investment in an "Energy Pool" fund.

This fund, while containing , is not denominated in but in "Energy Units" of (say) 10 Kilo Watt Hours each. So an Initial levy of 100m may create a "Pool" of 200m Energy Units at an initial price of 50p per Unit.

The fund is then used to invest in Renewable Energy projects by simply purchasing at an agreed value enough of the project's future production (leaving a provision for operating costs) to fund the project.

So a 1 Mw turbine costing 1m could be funded by an interest-free loan of 1 million creating a liability to the Pool of 2 million Units @ 50p each; 2.5m Units at 40p each, and so on. Similarly, the fund may invest in "NegaWatts" by investing in energy efficiency eg retrofitting CHP.

Here, the user of the finance simply repays the "Energy Investment" at the prevailing market price for energy.

The Alchemy comes from the fact that if the Redeemable Units created in the Pool are distributed equally to consumers as an "Energy Dividend" they may then either be used against purchases of renewable energy, or in repaying energy efficiency investments received from the Pool.

The outcome is that those with above average use of Carbon energy make a net transfer to those with below average use.

It also creates - in the Energy Units - an "Energy currency" or Carbon Dollar which will be universally acceptable because it is redeemable against something of value, rather than deriving its "value" from purely arbitrary political decisions and attributions.

Best Regards

Chris Cook

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