AIBU?
To think a windfall tax would prevent investment in renewables at a time when we need them most
allatwonce · 08/09/2022 08:59
This may be an unpopular view, but people need to hear it. The vast profits being made by our energy companies look disgusting but are a once-in-a-generation opportunity for them to invest in alternatives to fossil fuels. They are building wind farms etc, and investing in future technologies such as modern nuclear power stations and fusion. This investment is the only way to wean us off fossil fuels such as gas. If Government takes the profits as a windfall tax, it would be a populist act that many would approve of, but they would then have to hand the money back to the same companies to subsidise their investment activities.
Disclaimer: I've never voted Conservative in my life, but I am objective and open to seeing the logic in some Conservative policies.
Am I being unreasonable?
AIBUYou have one vote. All votes are anonymous.
MarshaBradyo · 08/09/2022 10:06
MasterBeth · 08/09/2022 10:05
The planet cannot stand any additional fossil fuel extraction. Using the Russian war as an excuse to unlock even more carbon from where it's stored safely in the ground as gas and oil shows a total misunderstanding of the severity of the climate crisis.
MarshaBradyo · 08/09/2022 09:54
We need all of it.
including expanding nuclear and other
It takes about a decade to do that and we have an issue right now.
Huge cash amounts make change possible faster - as we saw with the vaccine. It takes a large amount of investment to be fast
MasterBeth · 08/09/2022 09:51
There will be no energy security if by pursuing new fossil fuel extraction we tip the climate into runaway irreversible system failure. If it's cold in your home, you don't make things better by setting your curtains on fire.
MarshaBradyo · 08/09/2022 09:44
What’s the comparative timescale? We need security quickly
Nuclear takes years, fracking not sure or wind
And they are investing in renewables - the sustainability lead OEUK made same point as op re windfall tax
At this point being fast is key
MasterBeth · 08/09/2022 09:40
No. We don't need new sources of fossil fuel extraction that will cause irreversible catastrophic climate change. We need to vastly accelerate the transition into renewables. Every pound we spend on fossil fuels and every ton of new carbon we release into the atmosphere is inching us closer to disaster.
All investement should be put into a massive programme of energy conservation and insulation, local sustainable production (solar, air source heat pumps etc), public transport, wind, tidal etc etc, not opening up more gas fields!
MarshaBradyo · 08/09/2022 09:37
We’ll need this and renewables though?
We need all types full speed
MasterBeth · 08/09/2022 09:36
We will switch but it takes time
How would you cope with the crisis we have in the interim?
While we wait for nuclear to be built
Choconut · 08/09/2022 10:24
allatwonce · 08/09/2022 09:30
Rubbish. They are investing in building infrastructure because they know the future is in alternative energy and they want to be the dominant suppliers of that when the oil/gas runs out. They are completely transforming their business models.
Flammkuchen · 08/09/2022 09:27
Investment is made based on the long-term future expected price, not what it is in the next 2 years.
If prices are expected to be temporarily high, and then reduce again, investment will only be made if it is economic at the expected future price, not the short-term high price.
That is why a one-off windfall tax does not deter investment if it is set at a sensible level and is not arbitrary.
If that's the case - that they know it's the future and they want to be the dominant suppler - then a windfall tax from their enormous profits is not going to change that.
Anyway Truss has ruled it out I believe so I look forward to seeing your prediction of a 'once-in-a-generation opportunity for them to invest in alternatives to fossil fuels' come to pass.
Windfarms aren't the perfect answer though anyway Sulphur hexafluoride is a horrendous greenhouse gas and levels are rising. Nuclear produces waste that has to be stored somewhere for a hundred thousand years or more - surface storage allows about 100 years and we've already got 500,000 cubic metres of high and intermediate level waste we need to bury deeply somewhere - but of course no one wants it near them. Of course there's always the chance of storage leaking, there's a couple in the US I think, not to mention the risk of the reactors themselves especially in a war situation - look at Ukraine. Also nuclear power plants only have a life span of 20 - 40 years and finding sites for them I'd imagine is extremely difficult.
Beside while the likes of China huge numbers of coal power stations - over 1000 on the mainland - and we have a grand total of three, who are we kidding that anything we do is going to have any perceivable impact on climate change.
allatwonce · 08/09/2022 10:35
If that's the case - that they know it's the future and they want to be the dominant suppler - then a windfall tax from their enormous profits is not going to change that.
Using the windfall to invest in the new technologies will speed up the transformation, and speed up the process of weaning us off gas.
LowDownn · 08/09/2022 11:16
Forgive me but wouldn’t the windfall tax be on profit. Hence, if the company invested the money into renewables then it’s not a profit. So, the more that they invest into renewables, the less they pay in tax. Wouldn’t that incentivise investing in renewables?
allatwonce · 08/09/2022 11:20
LowDownn · 08/09/2022 11:16
Forgive me but wouldn’t the windfall tax be on profit. Hence, if the company invested the money into renewables then it’s not a profit. So, the more that they invest into renewables, the less they pay in tax. Wouldn’t that incentivise investing in renewables?
No. Profit is re-invested into the company.
LowDownn · 08/09/2022 11:22
allatwonce · 08/09/2022 11:20
No. Profit is re-invested into the company.
LowDownn · 08/09/2022 11:16
Forgive me but wouldn’t the windfall tax be on profit. Hence, if the company invested the money into renewables then it’s not a profit. So, the more that they invest into renewables, the less they pay in tax. Wouldn’t that incentivise investing in renewables?
And then are no longer subject to tax…
allatwonce · 08/09/2022 11:24
Companies can obviously choose what to do with their profit - they can distribute it to shareholders (including the big pension funds, which are major shareholders in energy companies) and/or invest it in growing/tramsforming the company. Most YK companies prefer to pay their shareholders a steady dividend that doesn't swing up and down with profit and loss. So surplus profit is re-invested.
walkingonsunshinekat · 16/09/2022 19:51
@allatwonce Companies don't make significant investment decisions based on relatively short term profit, no matter how big, they make these decisions if they think they will make a good return.
This is why there should be a windfall tax, otherwise the money will go into shareholder buy backs and increased dividends.
allatwonce · 16/09/2022 20:03
walkingonsunshinekat the relevant companies are already investing in renewable energy infrastructure and research and have been shifting their business models towards them for some time. The extra cash will just speed up the process. As I said previously, British companies do not generally distribute profit spikes to their shareholders - they reinvest them back in the company, or else keep them in reserve for lean years, so that their dividends remain steady. Investors like steady, predictable dividends, and to see their companies making good investment decisions that will help them sustain future growth - like building wind farms and nuclear power stations.
allatwonce · 16/09/2022 22:06
Pedallleur · 16/09/2022 20:19
There is article in The Guardian today. Emails have surfaced in the US on how the oil companies are downplaying renewables. All you have to know is big profits = big dividends to shareholders and big bonuses for the execs
The big oil companies in this country are investing heavily in renewables. They are now describing themselves as energy companies, not oil companies.
To comment on this thread you need to create a Mumsnet account.