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Tax the energy giants and cut fuel bills

Saturday, August 2nd, 2008

Millions of people across Britain are struggling with soaring household energy bills. The government could act to ease the pain by taxing oil and gas firms, or imposing a limit on price rises. Instead it refuses to do anything that would harm profits.

EDF Energy raised its prices again last week – by 22 percent for gas and 17 percent for electricity. On average EDF customers have seen their bills rise by over 33 percent since the start of the year. British Gas customers have seen their gas bills rise by 77 percent and electricity bills by 74 percent since 2003.

These energy companies claim that rising costs are forcing them to raise prices. But in fact they are using rising commodity prices as an excuse to rake in the profits.

This week oil giant BP reported that its profits for the first six months of the year had increased by 23 percent to £6.7 billion.

British Gas, due to announce its profits on Thursday, expects profits of between £100 and £200 million. In 2007 it raised prices to boost its profits by an obscene 500 percent.

Centrica, the parent company of British Gas, expects to announce pre-tax profits of £880 million for the first half of this year.

In sharp contrast to these riches, over 4.5 million people in Britain are already living in “fuel poverty” – spending more than 10 percent of their income on energy. This figure is set to rise by a staggering 50 percent as energy companies keep raising prices.

Ordinary people also face rising debt just to stay on top of the price rises. Around 6.8 million households in Britain are in debt to their energy supplier. Total personal debt is now rising by an average of £1 million every five minutes.

It may be the height of summer, but already people are worrying about how they will survive the coming winter.

Fuel poverty leads to the deaths of between 20,000 and 50,000 people in Britain each winter. Over one in three pensioner households are expected to be in fuel poverty by the end of the year.

Centrica’s managing director Jake Ulrich – who receives a salary of £1,033,000 a year – admits that fuel price rises are “going to hit people hard”. Fortunately he has advice for how people can soften the blow – they should wear “two jumpers instead of one”.

The bosses and the government are completely removed from the reality of life for ordinary people.

The government votes to keep lavish expenses for MPs – but it refuses to implement even the most minor measures that could limit the hardship faced by ordinary people.

The parliamentary business and enterprise committee has investigated the energy market in light of the current crisis.

But its conclusion is that the market is not functioning efficiently enough and that we need more “liberalisation”.

In the face of the massive political crisis that Gordon Brown now faces, some argue that he is simply a victim of a global economic recession that is pushing up the cost of living.

The massive unpopularity of New Labour following the wars in Iraq and Afghanistan and its constant neoliberal attacks on working people is conveniently forgotten. Brown is portrayed as powerless in the face of the global economy.

Response

It is true that energy and food price rises are fuelling anger with the government. But what people are really angry about is the government’s response.

Brown is not powerless. There are many things he could do to ease the burden on working class people. He could implement a windfall tax on the energy companies. He could increase corporation tax. He could impose a limit on the amount that firms can raise energy prices.

But instead of this New Labour has repeatedly cut corporation tax, which currently stands at just 28 percent.

The People Before Profit Charter puts forward demands that would stop ordinary people sinking deeper into poverty.

As well as the demands to tax corporate profits, the charter calls for an end to Brown’s 2 percent pay limit on public sector workers, the abolition of tax on fuel and energy for old people and the poor, and the restoration of the link between state pensions and average earnings.

New Labour is doing none of these things because it defends the interests of the rich and business.

Making sure that workers don’t pay for the crisis means building resistance on the ground. The People Before Profit Charter can help mobilise that resistance.

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CU professor uses grass pellets as an alternative energy

Thursday, March 29th, 2007

Jennie Daley

Grass pellets sound more like rabbit food than a local, sustainable energy source, but a Cornell University professor hopes to change that perception.Jerry Cherney, the E.V. Baker professor of agriculture in the department of crop and soil sciences, has been working for about five years to pull together the pieces needed to create an industry around grass pellets and the stoves that burn them. The latest step toward that was the installation of a grass pellet stove in Cornell’s Big Red Barn, which serves as the graduate and professional student center.

“This technology holds so much promise and we wanted to draw some attention to it,” said Ethan Rainwater, Cornell’s sustainability intern who helped facilitate the on-campus installation. On the mantel above the stove in the Big Red Barn is a large, informational poster that reads, “It takes 70 days to grow a crop for grass pellets. It takes 70 million years to make the fossilized grass in fossil fuels.”

Grass pellet proponents appreciate this quality of the fuel as well as the fact that it’s a product that can be grown locally, dramatically reducing transportation costs and potentially providing local jobs.

Mike Rutzke, a senior research associate in Cornell’s food science department, considered these advantages two years ago when he decided to buy a pellet stove that burns corn. Since his Danby home has acreage on which his neighbor grows corn, it was an easy decision for him and his wife to invest in a slightly more expensive stove that would burn what they grow. They quickly found that adding about a 20 percent ratio of grass pellets to their corn made for a cleaner burn, so they now also use some of the grass pellets Cherney provides.

While Rutzke is thrilled with the performance and cost of his new heating system, he’s seeing clear signs that more needs to happen to improve the industry. He said there is a long wait for new stoves, suggesting anyone who wants one for next winter should order now. He has also found that securing grass pellets is tough if you don’t know someone like Cherney.

Yet even for Cherney it’s tough. He had to send grasses to Canada for his latest batch of pellets. Infrastructure issues such as these are ones he feels could be overcome with some government support of the industry such as what he has seen in Pennsylvania and Vermont.

Middlebury College in Vermont recently decided to invest $11 million in a biomass plant that is fueled by wood chips, grass pellets and willows. They hope state grants will offset some costs. The plant will provide heat for the college and is part of its initiative to be carbon neutral by 2012, meaning it will produce all of its own clean energy locally.

“Trying to start a whole new energy system is tough,” Cherney said, especially when New York state recently dedicated significant resources to ethanol production. “I’m trying to get everything together to get an industry going where there’s supply and demand but you can’t do that on your own. Most things start up with some sort of government support.”

The New York State Energy Research and Development Authority, NYSERDA, said that they have no programs supporting the development of grass pellets in part because it’s not a new technology.

While not novel, there are still barriers that Cherney thinks government funds could help overcome, for instance subsidizing the purchase of pellet machines in areas where they could be shared by several farmers.

Once a farm had a way of creating pellets, there would be little required for it to produce a heating source, according to Cherney. Most farms already grow and harvest grasses and it’s a plant that can grow on marginal soils that aren’t well suited for other crops.

Cherney noted that interest in grass pellets seems to be driven by two things, the price of fuel oil and the weather. He said he gets fewer inquiries in the warmer months and when fuel costs are low. Also, the availability of wood pellets affects interest. While wood pellet stoves aren’t equipped to burn grass pellets, many people wonder about that possibility when wood pellet supplies become limited.

The relatively higher ash content of grass pellets makes them incompatible with wood stoves. When the ash gets heated it can melt and form a mass that blocks air flow and ash removal. Many corn-burning stoves have some type of rotating device to prevent this.

While incompatible in stoves, Cherney said the existing research demonstrates that the amount of heat from grass pellets is comparable to that of wood and the two should be comparable in cost, too.

Rutzke has found his stove to be efficient and cost-effective.

“We think it’s a much better alternative to fossil fuels than converting biomass to ethanol because there are fewer steps, it’s more direct and it’s a technology that already exists,” Rutzke said.

Details on Cherney’s research and information about grass pellet stoves is available at www.grassbioenergy.org.

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