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Free Insulation
February 3, 2009 | 14 Comments | Mark Crosby
The government is going to release details of a major new stimulus package this afternoon. Included in the package is supposed to be funding for free insulation for home owners and also for rental properties. While I’m not wholely against this, it is part of a very piecemeal approach to climate change from the government. Since they were elected the government has signed the Kyoto protocol, then means tested subsidies for solar panels and so decimated the solar industry, and against the advice of the Garnaut report supported only a modest cut in emissions and compensation for polluters in the carbon reduction scheme. The inconsistencies with policy seem in part to be driven by misunderstanding about the role that relative prices can play in driving behavioural changes. We need to face much higher energy prices in this country – this would encourage more people to install insulation without needing heavy subsidies. Higher energy prices, reflecting the externalities associated with producing electricity, would also level the competitive landscape for renewable producers. Unfortunately the government seems to want the behavioural changes without being willing to let price signals do their job.
Comments
14 Responses to “Free Insulation”
…then means tested subsidies for solar panels and so decimated the solar industry…
Really? Can you substantiate that? My understanding was that demand rose in the period after, possibly incidentally due to the publicity. And that BP closed up (the small) shop so they could move to china and import.
And what about those households who cannot afford, or are adverse to, the upfront cost of insulation. You don’t think these measures are responsible to address this? When the details come out, expect the eligibility to be directed to low-income households.
[...] economics.com.au [...]
A number of articles in the Age this week (unfortunately citing confidential cabinet papers) point to solar industry cash drying up – see http://www.theage.com.au/national/solar-industry-cash-dries-up-20090126-7q08.html?skin=text-only It is impossible to believe that a reduction in incentives would in the long run increase renewable (or solar) take up.
On your second point you are right. Even when payback periods are very short, low income households may not make “green” investments like insulation due to the upfront costs. This is why I stated that I was not wholely against this. But my point is that the renewables and climate change strategy is very piecemeal and inconsistent.
Mark, the renewables industry already has a massive kick-along – the mandatory renewable energy target. But solar PV is wholly uncompetitive with wind and other types of renewables, both current ones and ones that should be deployed in the very near term, without lots of <EM>extra</EM> subsidies.
What’s the case for supporting small-scale solar PV over other types of renewables, other than the Toyota Prius “look-at-me-I’m-helping-the-environment” factor?
That said, you’re spot on that the government’s response to climate change has been:
a0 piecemeal
b0 inadequate
c) a disappointment to those who elected them, from some anecdotal evidence I’ve collected.
Subsidizing awnings, not just ceiling insulation, could have a bigger effect and more efficient… more small-medium manufacturers, more available workers, and stops heat getting into houses/offices in the first place.
I agree that the insulation is a terrific spend for long term emission reductions (and household comfort!).
On the issue of residential solar program, from an economic perspective, the new program distorts the price of the renewable energy certificates (RECs). While 1 REC has always represents 1 MWh production from a renewable source, the new incentive program will issue 5 RECs for each MWh production from residential solar.
http://www.treasurer.gov.au/DisplayDocs.aspx?doc=pressreleases/2008/143.htm&pageID=003&min=wms&Year=&DocType=0
But you have to realise that pollies will always prefer the piecemeal and symbolic to the systemic and substantive. Its just the incentives they face in a democracy.
Any ideas on the criteria for free insulation? I presume if Rudd keeps form it will be means tested and exclude ‘Middle Australia’. We’ll be gutted if we miss out as this subsidy can only force the price up for insulation materials and labour for installation.
@3
Thanks for the article. Though the arguement about a lack of policies dries up in the face of 20% RET and the states introducing feed-in tariff schemes. It seems this might be more of a reason:
Oystein Oyehaug, said: “In the 10 to 15 countries we visited we got substantially better packages than from Australia, whether it was tax or investment incentives or bank underwriting.”
Hand-outs, not renewable policies.
And they talk about Australia’s solar industry dropping since the 90′s, not since Garret means tested the rebate mid-08.
Robert,
There is a good argument for distributed generation to defer (very expensive) network augmentation, and in that case you have solar PV neck to neck with small-scale wind depending on the geography.
In this case, solar PV could be considered as demand management (esp. in summer peaks), rather than as renewable generation.
[...] Free Insulation [...]
[...] Free Insulation [...]
Free Insulation – Most details of the Free Insulation Program are due for release this Thursday 26 Feb 2009. My fathers business is Balmoral Heating & Cooling and if anyone is looking to have Insulation Installed for we can help you!
Keep an eye on this website below if you are Household or Installer and want to find out more information on free insulation http://www.environment.gov.au/energyefficiency/insulation.html
or keep an eye on my Business website http://www.freeinsulation.org.au/
Matt Gaylard
Balmoral Heating & Cooling
Ph – 0421 441 481