As an American President once said, “this was the moment when the rise of the oceans began to slow and our planet began to heal”:
“Home heating costs will rise as a carbon tax hike takes effect from today.
The move, which was announced in the budget last October, will see increased carbon tax on home-heating oil, gas, coal and briquettes.
Darragh Cassidy from Bonkers.ie says the cost of an average households annual gas bill will go up by around 14 euro a year.
He said: “What it means now is that the average household gas bill will be going up by €61 a year due to the carbon tax. That’s an extra €14 than what it was beforehand.
“If you like to use briquettes, then around 60c in carbon tax goes on briquettes and if you use home heating oil and have a 900 litres tank, €65 for every fill.”
The increase in the tax also adds around €2.73 to a 40kg bag of coal.”
Whatever about you suckers, we filled our tank on Tuesday, so there’ll be no carbon tax for me until at least next January or February. We’re going to burn cheap oil this winter, Greens or no Greens.
Of course, the whole point of the Carbon tax is to make us burn less oil. The idea, in theory at least, is that if you put the price up, we’ll use less of it, and in that way, our world will be healed. But the problem with that, as anybody who did leaving cert economics can tell you, is a little thing called “price elasticity”. For those of you who didn’t sit that particular paper, a primer:
If you are addicted to cigarettes, the chances are that you’ll keep buying a packet of 20 whether they cost €11, or €11.50. The extra 50c is less painful than the torture of gasping for a smoke and not having any cigarettes available. This is why cigarettes and alcohol are called “the old reliables” in the Budget – because by and large you can jack the price up 50cent a year and people will keep buying them anyway.
Of course, the theory with cigarettes – and there is some evidence it might, at long last, be working – is that eventually you reach a price point where people shift to cheaper alternatives, like vaping, or patches – at which point you start putting the taxes on those up, too.
But will it work like that with home heating, or Diesel?
The problem is that it’s a lot easier, addiction aside, to switch from cigarettes to vaping than it is from home heating oil to geothermal, or whatever, because the cost of switching is miniscule. It costs you nothing, in terms of capital expenditure, to move from one product to another. But that’s not the case with home heating systems.
If you want to switch from home heating oil to a more environmentally friendly system, you’re probably facing thousands – maybe tens of thousands – in costs, and the spectre of half your house being dug up so that your whole heating system can be replaced.
When it comes to retrofits, reputable suppliers will evaluate every house on a highly individual basis. The civil works of drilling a bore (often two) for a vertical collector or laying horizontal trenches for a shallow horizontal collector, will always make geothermal more expensive. For retrofits, air to water pumps are generally promoted by suppliers based on price, performance and ease of installation.
However, air to water pumps do not currently offer quite the same high efficiencies as geothermal systems recovering heat from the ground.
An air to water system installed will come in the area of €8 to €9k for the pump and tank fitted, commissioned and all ‘made-good’ (suppliers’ figures). Geothermal, including the sensible inclusion of 200m² of UFH will cost at least €14k-€18k for a 2,500 sq ft house (SEAI).
In those circumstances, are you really going to do that, just to save €100 or so annually, assuming most homes use maybe two tanks a year? Not on your life. In fact, even with today’s price rise, it would take you the guts of 80 years to save back the eight grand for an environmentally friendly system.
Which is why, of course, the Greens want to give you a grant to do it, ideally. But with 700,000 homes across Ireland using home heating oil, and even assuming a discounted cost of €5,000 per home to upgrade them all, the state would be facing a bill of €3.5billion for the upgrades. And that’s before you count all the homes that use natural gas, or coal, or other solid fuels. Is that money going to be spent in a recession? Not likely.
And of course, if you were going to do that, it would be pointless putting up the cost of heating oil at all, because you’d have no need to encourage people to switch if you were going to pay for them to make the switch anyway.
The end result of this is that the poorest people – who are also those who can least afford an eight grand upgrade to some approved, green form of heating, are the ones who suffer most. It’s pensioners and the old, and the poor, who most need to be warm in winter, who end up spending their days worrying about the costs of heating their homes.
The journalists and politicians who dream this stuff up? You won’t find them shivering in December. It’ll just be some Granny in Mullingar, who’s never done anything wrong in her life.
Shame on them.
Update: This post originally stated that home heating oil would increase by €65 on foot of the carbon tax increase. This figure was sourced from both the reporting of the Irish Examiner and RTE (indeed, it remains in the Examiner report excerpted above). However, reader Muireann Lynch correctly points out that the €65 per tank figure is the total cost of the carbon tax, and not the amount by which it increased yesterday:
Ok so for oil, 900l is approx 750kg, which has 2.3 tonnes of carbon, which at €6/tonne is an increase of €14
— Muireann Lynch (@mu_lynch) May 1, 2020
So, for clarity: The total additional cost of the carbon tax is about €65 a tank. And that has gone up by €14 overnight.
I apologise for the error. If, like Muireann, you ever spot errors in our reporting, please do let us know via [email protected], or by just reaching out to me on twitter, like Muireann did.