Humpty Dumpty, Zero Carbon Homes and public confusion

The National House-Building Council Foundation, which is an independent research institution, connected to the NHBC, but operating separately and works closely with the Building Research Establishment, to look at the Government’s target of all new homes being “zero carbon” by 2016. 

The definition of a Zero Carbon Home is a bit of a Humpty Dumpty definition. In Lewis Carroll’s “Through the Looking Glass” Alice meets Humpty Dumpty who says to her:- 

When I use a word,” Humpty Dumpty said, in a rather scornful tone, “it means just what I choose it to mean – neither more nor less.”  Continue reading

Zero carbon homes – what a gas!

Natural gas is used to heat around 80% of the United Kingdom’s homes. Most of the homes that are use gas to provide heat also use it to provide hot water, although I would guess (I have not be able to find any statistics) that a small proportion of gas users switch off their boilers in summer and get their hot water from an immersion heater in a cylinder. That means that 20% of the homes are off the natural gas network.

These homes  – around four and a half million of them -have to use electricity, heating oil or liquid petroleum gas, all of which produce around three times the amount of carbon dioxide and many more times the amount of particulate emissions than natural gas. If you have a top of the range gas condensing the boiler the quantity of emissions produced for heat per kilowatt hour is even lower. 

According to the latest energy statistics, the average home paid in the 12 months ended September 2007 £552 for gas and £383 for electricity. I think that these figures include value added tax. recent price increase will add around 16% to thie bill.

Clearly the four and a half million homes not connected to the gas network are the biggest polluters, as far as dwellings are concerned. They will also pay the biggest fuel bills, because electricity and oil and LPG is, per kWh, much more expensive than natural gas. In addition oil and coal and LPG have had larger price increases than gas and electricity.

What is the Government’s reaction to this? You would expect that it would develop a program to provide incentives to people off the natural gas network to use renewables, like solar panels and PV and turbines for heat and electricity, and possible also to extend the natural gas network. 

Well unfortunately we cannot expect things to be logical, can we? Mr Alistair Darling, (I expect he finds some time to look at these things when he is not being distracted by the Northern Rock crisis) has set out criteria to provide an incentive in the form of Stamp Duty relief for zero carbon homes. I have written about this before and make no apology for doing so again. 

The terms of getting the relief recognise that a “zero carbon home” cannot be zero carbon all the time so it must be zero carbon over a period of time, taking account of the export of locally generated electricity back to the grid.

Measuring electricity going in and out of a home is very different from the home being zero carbon; you have to take account of the overall position including transmission losses and the fact that sometimes the renewable electricity generated will be generated at times when it cannot be usefully used because the grid’s base load is adequate. 

Of course all these measurements and statistics and details are set theoretically at the start, when the home is built. Once you have got your stamp duty relief what is prevent the home occupier using more electricity than he or she generates? Er…nothing. They can have dozens of powerful appliances, leaving them on all day. There will be no device to limt the electricity that they can consume. 

If you have a zero carbon home it must not be connected to the gas grid. Under the rules a “zero carbon home” qualifying for stamp duty relief cannot be connected to the gas grid. This will make some interesting scenarios if anyone does actually try to build these in numbers because we all know that there are times when renewables cannot generate energy (including heat energy) and you have to have a back up. What will be the back up heat for a zero carbon home? Why – electricity and biomass, both of which produce much more carbon than …natural gas.

 It makes you question why people like Gordon Brown in his 2007 budget and Alistair Darling muddle incompetently in things that they do not understand and waste their time and our money devising nonsensical schemes. It would have produced much greater carbon savings to devise a special renewables scheme of those of the gas grid network, but the spinning opportunities would be much fewer than those under a grandiosely misnamed scheme called “zero carbon homes”. 

I can think of no more powerful demonstration of why we need an Energy Minister of Cabinet rank, advised by civil servants with the knowledge and intellectual capacity to get these things right.

Stamp Duty, zero carbon homes and other gimmicks

Stamp Duty Transfer Tax is a jolly way for the Government to raise money. Traditionally, Governments have used Stamp Duty as a means of raising tax for hundreds of years; it was one of those taxes to which the American colonists objected. If you wanted to become a solicitor eighty or so years ago you had to pay stamp duty on your deed of articles of clerkship – then £80, which was more than the average annual wage. Up until about 1965 every cheque you issued attracted a two pence stamp. 

The present Government has raised stamp duty on the purchase of property. Homes under £125,000 are exempt, homes up to £250,000 attract a 1% stamp and homes up to £500,000 attract a 3% stamp; more expensive properties are taxed at 4%. These are historically high levels of stamp duty for homes. There were a plethora of schemes to avoid stamp duty on property but the loopholes have been closed and if you want to move house, or if you need to move house, you will have to pay what amounts to a large tax on your change of one capital asset for another. 

In 2001 only 6% of house buyers paid the 3% paid of stamp duty but now around 20% of them pay 3%, so taxing homes as they rise in price is, as I said, a jolly way to raise money. 

The Government have been looking for ways to reward home buyers that use microgeneration because these people have invested in personal infrastructure which lowers their own carbon footprint for the common good. I have always thought that the best way to do this is to provide a council tax discount, and if that is not possible to provide income tax relief.

When I discussed these possibilities with treasury officials last year they pointed out that historically reliefs for income tax were very limited. Yes they were, but historically income tax was imposed in a time of crisis to raise money to fight Napoleon, who threatened us with invasion. The threat from the crisis of global climate change is greater than Napoleon’s threat. 

Anyway back to stamp duty. Some bright spark at the government thought up a concept of providing a stamp duty exemption to encourage microgeneration. This was announced in Gordon Brown’s last budget. As stamp duty is only charged when people buy property, the microgeneration exemption could only apply easily apply to new homes, otherwise you might create a huge rush for people to avoid stamp duty on expensive homes by installing solar panels, heat pumps, under floor heating and the odd wind turbine.  

Personally I think that such an encouragement to avoid stamp duty by laying out on microgeneration before you sell would be a very good thing for the environment. It would reduce the money that the government raises from stamp duty, which would have to be made up elsewhere – possibly by increasing stamp duty on homes that do not install microgeneration. 

Obviously I think very differently from the government on this, because the government came up with an exemption (up to £15,000) for stamp duty on what they called “zero carbon homes”. Now I have described “zero carbon homes” as a holy grail, which is genuinely impossible to achieve; the phrase is a gimmick, a marketing device. The definition of a zero carbon home showed this. 

Last month the government published a law to provide stamp duty exemption on zero carbon homes. They have apparently taken my views into account, but the wrong bit of them. They have in the new law created a definition of a zero carbon home that will be virtually impossible to meet, because it would be virtually zero carbon.

Is this incompetence or is there some sinister force at the Treasury that thinks climate change is nonsense and it is not worth changing tax rules to alleviate it? It is sad for the world that the government have let us down on this point.

It is right to be ambitious and aim for “zero carbon homes” and “carbon sequestration” and “carbon offsetting” and all sorts of other things that cannot be achieved from our present knowledge.  Ambition to alleviate climate change by radical means is entirely laudable but those who frame laws and tax reliefs seem to have no understanding on the laws of physics and technology.

In particular they do not understand that every present technology must be used now, rather than wasting time chasing a pot of gold at the end of a rainbow.  Something positive has to be done now. Introducing a stamp duty relief that no one can claim is not being positive, but simply spinning a good yarn, but a yarn nevertheless.  

You can find the regulations at