Tax Domicile and the citizen of nowhere

I don’t usually write about tax here, but the tax status of the UK Chancellor has changed that.

After the Brexit referendum, Teresa May in a speech said:

“Today, too many people in positions of power behave as though they have more in common with international elites than with the people down the road, the people they employ, the people they pass on the street … but if you believe you are a citizen of the world, you are a citizen of nowhere. You don’t understand what citizenship means.”

So how should we view the issues around the tax status of the Chancellor and his wife which have emerged. And yes, normally the tax affairs of a politicians spouse shouldn’t interest us, but the specifics of this situation are important.

If reports are correct the wife of the Chancellor, Akshata Murthy, has filed her tax returns as a non domicile for UK tax purposes as she is allowed to. As the government website makes clear “UK residents who have their permanent home (‘domicile’) outside the UK may not have to pay UK tax on foreign income.”

The point is “permanent home” with the implication that this is where you will return after your stay in the UK (questions of citizenship are irrelevant, it is where you regard your permanent home to be). So how can one spouse in a marriage have a permanent home outside the UK and the other not, unless of course they are going to either split up or both return to the permanent home outside the UK?

The problem here is that Mr Sunak is the Chancellor and was seen as potential Prime Minister. But can he hold these posts if his spouse doesn’t regard the UK as her permanent home and doesn’t pay tax on her considerable non UK income?

Then it is reported Mr Sunak still holds a US green card. To quote Homeland Security

“A Green Card holder is a permanent resident that has been granted authorization to live and work in the United States on a permanent basis. As proof of that status, U.S. Citizenship and Immigration Services (USCIS) grants a person a permanent resident card, commonly called a “Green Card.”

So, Mr Sunak can live and work in the US on a permanent basis (he is a permanent resident of the USA) and his spouse has her permanent home in India.

Lets go back to Teresa May,

“Today, too many people in positions of power behave as though they have more in common with international elites than with the people down the road, the people they employ, the people they pass on the street … but if you believe you are a citizen of the world, you are a citizen of nowhere. You don’t understand what citizenship means.”

Given their status for tax purposes are the Sunaks, in fact, “citizens of the world” or as May goes on to say, “citizens of nowhere”? And more importantly should the Chancellor of the Exchequer have this status given his role in tax policy and the economic future of the UK?

Again, to quote May, does he understand what citizenship means, or is he one of those people in power who “behave as though they have more in common with international elites than with the people down the road, the people they employ, the people they pass on the street”?

© Chris Lenon and http://www.zerocarbonourchoice.com  2020-2022. Unauthorized use and/or duplication of this material without express and written permission from this blog’s author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Chris Lenon and www.zerocarbonourchoice.com with appropriate and specific direction to the original content.

 

Gas : Have the EC lost their marbles?

The draft text by the European Commision on Taxonomy covering gas and nuclear activities (1 Jan 2022) baffled me when I saw it. I thought I would wait for other comments to check I hadn’t missed anything.

Well the other comments have generally been trenchant in their criticism. I hadn’t missed the point.

The paper recognises some parts of Europe are still heavily based on high carbon emitting coal. One might ask, in 2022, why the EC hasn’t done more to reduce coal in the power mix in the EU, when some countries have?

This then leads to the statement that there is a role for natural gas and nuclear in the path to net zero.

Well nuclear is zero carbon, but gas!!! Gas power plants have a life of 30 to 40 years so promoting gas investment until 2035, will mean that gas has a major role until 2065 to 2075 in the EU. How does this reconcile with net zero by 2050? The simple answer is it doesn’t.

I pondered how this decision came about, was it great lobbying by the gas industry? Was it the result of a very good lunch at Scheltema? But then the coincidence with the end of nuclear power in Germany this month made it clear.

Germany had lobbied to remove nuclear as a net zero fuel source, presumably based on national interest. Given the stranglehold which the greens have on power in Germany, there won’t be any nuclear there for the foreseeable future. (All this with France – down wind of Germany – dominated by nuclear power!)

Without nuclear in its power mix, Germany can only reduce emissions from coal by switching to gas and or renewables. Clearly it has decided to transition to net zero over a longer period than to 2050 (now 28 years away) through gas as well as renewables.

So next time you read the glossy aspirations of the EC about net zero,remember how little has been achieved in removing coal in many EU countries, how gas will continue to be a major source and benefit from NEW investment.

Will the EU reach its net zero targets by 2050 given this road map? Of course not.

So,the taxonomy on gas is a consultation. There is a chance to remove gas. If it isn’t removed, it will say a lot about the reality of the EU achieving net zero by 2050….or not.

Watch this space.

Climate denial and personal choice denial – barriers to net zero

I’ve given 10 talks over 2021 on the issues which reaching net zero will provide. The range of responses has been fascinating as has the level of understanding ranging from excellent to a real ignorance. After one of the meetings there was an exchange led by some who were in complete denial about man made climate change, here is a quote:

“It is clear that Mr B is convinced that human beings have the power to have a significant effect on the immense forces of nature which cause, and have always caused, climate change.   He will not be convinced otherwise and I do not intend to try.

I am however concerned that “climate-change” has become highly politicised.  It has become a multi-billion dollar industry which channels vast amounts of public money into universities and other research institutions and media outlets and commercial enterprises which support and promulgate and benefit from its views. By contrast there is little or no funding for those who do not agree with them. In particular, for many years the BBC has failed in its duty to examine both sides of this very important case. We have now reached the point that the climate change industry worldwide has become a quasi religion which will not tolerate dissent and which demands obedience from governments and people alike.”

These views still exist although they are often under the surface.

What is equally interesting is that people who recognise climate change and the need to do something about it, but are not prepared to change their lifestyle. After a lengthy discussion about fossil fuel heating (gas central heating) someone said “but Chris you’re not going to take my gas central heating away from it, I love it”.

Many of us are aware of climate change denial, but probably the more significant issue is personal change denial, a refusal to see the change in lifestyle which net zero inevitably involves. Unless individuals are prepared to change, net zero will not be achieved.

Please get in touch if you would like me to give a talk or host a discussion of issues either in person or using zoom, etc. I have spoken to amenity groups, universities and church groups so far. Happy to talk to commercial organisations.

SONY DSC

Managing in a Changing Environment

Cotswold International Airport

I took this photo this afternoon at Cotswold International Airport which is near Cirencester. Yes it does exist and as you will see 747s can land there. The reason for the photo today, is that it is roughly 12 months since Covid 19 started to take hold of our attention. Would any of us have thought it would have led to the grounding and taking out of service of 747s? I doubt it.

What Covid has shown us, is that coping with change, let alone planning for it, is difficult. That our politicians are not very good with change. That lots of people are not very good at change because its not business as usual.

The journey to a net zero carbon global economy involves a vast amount of change for all of us, individuals, businesses and political systems from the local council to national governments and beyond. What coping with Covid should teach us, is that lots of people are not skilled in dealing with change. That some deny what is going on. It is highly probable that changing to net zero will produce many of the same issues as covid. If anyone tells you this will be easy, they haven’t thought about it or they have a vested interest they are protecting or they are dissembling.

Don’t underestimate the change that a net zero carbon economy requires.

© Chris Lenon and http://www.zerocarbonourchoice.com  2020-2021. Unauthorized use and/or duplication of this material without express and written permission from this blog’s author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Chris Lenon and www.zerocarbonourchoice.com with appropriate and specific direction to the original content.

“Put a big fat price on carbon”: OECD chief bows out with climate rally cry.

Angel Gurria

This is the headline from a Guardian article. The article is an interesting spin on Gurria’s 15 years at the head of the OECD. I worked with him in BIAC from 2006 to 2012, he’s a nice person in my experience. But OECD hasn’t really taken the lead in pushing this agenda forward, perhaps constrained by the attitude of its biggest member, the US under both Obama and Trump.

I wrote a blog questioning why the OECD wasn’t working on the taxation of aviation and the tax subsidies which it enjoys.  “Why is the OECD not reviewing the taxation of aviation?” I’d asked insiders why the work wasn’t being done and they pointed to a lack of funding and “more important” projects.

The OECD is perfectly positioned to work on this subject. The zero rating of airline tickets and the exemption from fuel duty for airline fuel clearly sit within the OECD expertise. The issue of passenger duty also would fit. It is an obviously international issue in both tax and carbon.

So, if the OECD wants to “Put a big fat price on carbon”, why doesn’t it do this work on the taxing of a form of emissions which is often discretionary? On removing this carbon subsidy?

Instead that quote looks like a piece of greenwash. Do we want to put a big, fat price on all carbon? On domestic heating for instance? Or does the OECD lean towards taxation because it is part of their mandate, whereas regulation, which may be more suitable for some emissions, is more of a national competence.

© Chris Lenon and http://www.zerocarbonourchoice.com  2020-2021. Unauthorized use and/or duplication of this material without express and written permission from this blog’s author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Chris Lenon and www.zerocarbonourchoice.com with appropriate and specific direction to the original content.

Welsh Ministers have laid regulations in the Senedd that formally commit Wales to legally binding targets designed to deliver net-zero carbon emissions within 30 years.

“The Welsh Government has also accepted the revised advice of the independent Climate Change Committee (CCC) that this goal is credible, feasible and – crucially – affordable.

Environment and energy minister Lesley Griffiths made it clear the administration would push to achieve zero-carbon sooner than 2050.

Latest analysis from the committee reveals that the most significant potential to accelerate emissions reductions in Wales is based on evidence suggesting greater abatement is possible in the industry and power sectors. This reflects the presence of a small number of high-emitting point sources in Wales, such as the Port Talbot steelworks.

However, the committee has also highlighted that the path to net-zero will be partly or fully driven by societal or behavioural changes.

“This means government, communities and businesses working together to change how we travel, shop, heat our homes, and switching to lower-carbon diets. In all cases, large reductions in the amount of energy and natural resources we use is necessary to achieve the targets,” said the government.

The committee assessment highlighted an accelerated shift in diets away from meat and dairy products, reductions in waste, slower growth in flights and reductions in demand for travel.

Improved energy and resource efficiency would be critical, stressed the committee. “By the early 2030s, all new cars and vans and all boiler replacements in homes and other buildings must be low-carbon – we expect largely electric.

“By 2040, all new heavy goods vehicles should be low-carbon. The South Wales industrial cluster (as well as other industrial sites in Wales) must either switch away from fossil fuels to low-carbon alternatives and/or install carbon capture and storage (CCS) at scale from the mid-2030s.”

Significant land use change will be involved, argued the committee. “A transformation is needed in Wales’s land while supporting Welsh farmers.”

By 2030, this should involve planting a cumulative 43,000 hectares of mixed woodland to remove CO2 from the atmosphere as they grow, increasing to a total of 180,000 hectares by 2050.

Another 56,000 hectares of agricultural land should shift to bioenergy production (including short rotation forestry) by 2050.

The committee’s report stressed that peatlands must be restored widely and managed sustainably. Low-carbon farming practices must be adopted widely while raising farm productivity.

Ministers have promised to set out how the government intends to deliver the country’s new net-zero ambition in its next All Wales Plan. This will be published in advance of the United Nations climate summit, COP26, which is being held in Glasgow later this year.

The Path to Net Zero and Progress on Reducing Emissions in Wales can be read on the Committee on Climate Change website. 

The themes in this analysis, echo those in “Zero Carbon Our Choice”, particularly “The committee assessment highlighted an accelerated shift in diets away from meat and dairy products, reductions in waste, slower growth in flights and reductions in demand for travel.

Improved energy and resource efficiency would be critical, stressed the committee. “By the early 2030s, all new cars and vans and all boiler replacements in homes and other buildings must be low-carbon – we expect largely electric.”

I hope that we can now begin an informed debate about how to achieve these goals which are demanding.

© Chris Lenon and http://www.zerocarbonourchoice.com  2020-2021. Unauthorized use and/or duplication of this material without express and written permission from this blog’s author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Chris Lenon and www.zerocarbonourchoice.com with appropriate and specific direction to the original content.

Planning for net zero carbon

https://consult.rbkc.gov.uk/housing/draft-greening-supplementary-planning-document-spd/

RBKC in London is consulting on revising their planning guidelines to reach net zero carbon targets.

It is a fascinating, well written document and can be viewed through the link above. Here are some quotes from the document:

“We will aim to reduce the energy demand of new buildings. This will be done by optimising the design of buildings to take full benefit of sun orientation or natural ventilation for example. We are also setting high energy standards and will require ‘Net Zero carbon’ from all our major developments both residential and non-residential.”

“The Government’s recent Planning for net zero carbon Ten Point Plan for a Green Industrial Revolution declares the phasing out of gas boilers. This section of the SPD provides guidance on using alternative means such as heat pumps and other forms 4 of renewable energy which are suitable in the Borough such as photo voltaic solar panels.”

“There is a clear recognition that development proposals need to consider the air quality given that the whole Borough is in an air quality management area. We will require Air Quality Assessments as part of major developments. Amongst other measures to improve air quality we support the provision of electric vehicle charging points. For all new developments where parking is proposed, applicants should seek to provide on-site charging points to accommodate the current and future requirements of the occupants. We also recognise the benefits of retrofitting charging points to existing parking spaces and support this.”

“Urban Greening: Urban greening describes the act of adding green infrastructure elements. Due to our dense built environment, green roofs, street trees, and additional vegetation are the most appropriate elements of green infrastructure. Urban Greening Factor: This is a land-use planning tool to help determine the amount of greening required in new developments.”

“Where an energy assessment demonstrates that the carbon savings required cannot be delivered on-site, the remaining regulated emissions will incur a charge in the form of a cash in lieu payment to the council’s carbon offset fund which will be secured through a legal agreement. The council has adopted the Mayor’s current carbon offset price. For all major developments the payment required is based on the nationally recognised ‘Zero Carbon Hub’ price per tonne of carbon dioxide of £60, offset over 30 years. At present, this gives an overall price of £1,800 (£60 x 30 years) per tonne of carbon to be offset. The tonnes of carbon that will need to be offset should be clearly set out in the applicant’s energy strategy.”

I think these quotes demonstrate how far we have come in a few years. The concepts and the type of framework described in the document needs to be adopted by all councils in the UK, and elsewhere. The consultation is about the built environment and infrastructure, but it demonstrates the changes needed in domestic heating and motor transport within this. Heat pumps and electric charging points will be key to this strategy.

I think these quotes demonstrate how far we have come in a few years. The concepts and the type of framework described in the document needs to be adopted by all councils in the UK, and elsewhere. The consultation is about the built environment and infrastructure, but it demonstrates the changes needed in domestic heating and motor transport within this. Heat pumps and electric charging points will be key to this strategy.

Business is responsible for less than 50% of UK emissions

Source : The Guardian

In “Zero Carbon Our Choice”, I argued that while many people think that achieving zero carbon is the responsibility of government and business, in fact it is impossible without a change to the choices which we as consumers make.

Using the 2018 final statistics as summarised in “2018 UK Greenhouse Gas Emissions, Final figures 4 February 2020 National Statistics” as the basis for this. “In 2018, 28% of net greenhouse gas emissions in the UK were estimated to be from the transport sector, 23% from energy supply, 18% from business, 15% from the residential sector and 10% from agriculture. The rest was attributable to the remaining sectors: waste management, industrial processes, and the public sector. The land use, land use change and forestry (LULUCF) sector acted as a net sink in 2018 so emissions were effectively negative.”

My argument is that we need to analyse these figures to look at who is responsible for the emissions by the choices they make?

On this basis, the emissions of energy supply (23%)  – mainly electricity generation – are decided by government decisions and regulations. It was government dictat which stopped coal use in power generation by imposing a cost penalty on coal burnt in power stations. These emissions are not business emissions as although business is an end user, like we the consumer, they do not determine the power mix of power generation, it is government regulation and pricing mechanisms which do.

18% from business is business’s responsibility.

28 % from transport. “Road transport is the most significant source of emissions in this sector, in particular passenger cars; and the changes which have been seen over the period were heavily influenced by this category. Figure 5 shows how the volume of traffic on the roads has changed over time in Great Britain, which reflects the trend seen for the UK. Motor vehicle traffic volumes have generally increased throughout this period, other than a fall seen between 2007 and 2012 following the recession.”

56% of transport emissions relate to passenger cars, so even if one assumes that all the other transport emissions are business then 12% of total UK emissions are business transport emissions but 16% are public emissions, from our choice to drive ICE vehicles.

15% from the residential sector “The residential sector consists of emissions from fuel combustion for heating and cooking, garden machinery, and fluorinated gases released from aerosols and metered dose inhalers. It is estimated to have been responsible for around 15% of UK greenhouse gas emissions in 2018, with carbon dioxide being the most prominent gas for this sector (96%). The main source of emissions from this sector is the use of natural gas for heating and cooking.”

These are not business emissions. Again, these are emissions from our choice to use carbon fuels in our homes. There are roughly 27 million homes in the UK, the government has a target to install 600,000 heat pump systems per annum. At this rate, we will still have carbon heating in 2066 and nearly 10 million UK homes will still have carbon heating by 2050. To put this in perspective in 2017, 20,000 heat pump systems were installed.

10% Agriculture. If one considers agriculture to be a business, then these emissions are business emissions. But half these emissions arise from the production of meat products. One can argue that again these emissions arise as a result of the choice which we the consumer makes to eat meat and therefore that “business emissions” in agriculture are 5% of the total.

2% from industrial processes is a business responsibility.

2% Public sector is not a business responsibility.

5% Waste management (mainly landfill). At least half of this is from food waste in landfill. So, I would suggest business is responsible for 2% of these emissions at most.

Land use is negative 2-3% mainly from forestry.

Using this basis, business is responsible for the emissions from total UK emissions of business 18%, business transport 12%, Industrial processes 2%, waste management 2% , a total of 34%. If agriculture is included this increase to either 39% or 44% (depending on how meat production emissions are treated).

Consumers are responsible for emissions from private transport 16%, residential 15%, waste 3%, a total of 34%.

Government is responsible for Energy supply 23% and public sector 2%, a total of 25%

This doesn’t allocate the negative land use of 2-3%.

Using these UK numbers, business is responsible for (and can control and reduce) under half of the UK emissions. It does not control the emissions of Energy Supply, (even if it is a part end user like consumers) nor of the public sector nor of consumers themselves.

A recent poll showed that 67% of UK respondents thought the government should do more about zero carbon. What these figures show is that those respondents need to do more about their own emissions if net zero carbon, is to be achieved. Buying electric cars, using non carbon heating for their homes, minimising food waste in land fill and probably eating a lot less meat are all decisions we need to make. And I haven’t included emissions from flying.

Net zero carbon is about our choices as well as government action.

© Chris Lenon and http://www.zerocarbonourchoice.com  2020-2021. Unauthorized use and/or duplication of this material without express and written permission from this blog’s author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Chris Lenon and www.zerocarbonourchoice.com with appropriate and specific direction to the original content.

London Electric cabs – Investment Cost

London Electric cab charging – Source The Guardian

I talked to a London cab driver about his electric cab recently. It costs £60,000 compared to £40,000 for a diesel cab. He gets 70 mile range between charges and charges the cab at home and then in London as he drives around, but hopes the range will extend. He was very happy with it, and saw the environmental benefits of electric. He was considering solar panels to help the charging with green electricity.

The driver told me he was from Somalia originally. I thought that he could see issues that many of us do, but we don’t spend their own money on. I’ve recently written about air source heat pumps and receive a plethora of comments about the capital cost compared to a gas boiler. About how difficult it is to do this, to invest in an air source heat pump, from a forum which promotes Zero Carbon Britain. There is something wrong here, people advocate the change to zero carbon but they don’t think about how it is to be paid for, or they think that someone else will pay. Someone else won’t pay, there isn’t a money tree for these investments, we will pay even if the government provides financial support. Instead of assuming magic economics, we need a serious debate about how the investments to achieve zero carbon will be paid for and we all need to be transparent about the scale of the total investment.

How many of us will personally invest £60,000 in green infrastructure or have done? And yet a London cab driver, originally from Somalia, is prepared to – actions speak louder than words and the choices we make are key to a transition to zero carbon.

© Chris Lenon and http://www.zerocarbonourchoice.com  2020. Unauthorized use and/or duplication of this material without express and written permission from this blog’s author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Chris Lenon and www.zerocarbonourchoice.com with appropriate and specific direction to the original content.

The limitations on Solar electricity generation in the UK

Enso Solar Energy panels

I have followed Enso Energy Solar whose business model is to construct solar farms around grid substations in the UK. Unlike other connections to the grid this allows them to agree a contract with the grid and then assemble the land package for the solar farm around the substation. It is an astute business model.

In looking at their project pipeline two things struck me, first and no surprise is the length of the time for the planning process to gain permission for the solar farm.

The second issue was the power output per acre of the farms. These are state of the art solar farms with panels which move with the sun during the day to maximise solar collection. They also incorporate battery storage at the substations to maximise the usable electricity from solar generation to store electricity and match with demand.

As an example of the capacity, a 300 acre solar farm in South Oxfordshire is rated at 50 MW and 72000 MWH, powering 19,000 homes.  It is interesting from this to extrapolate the acreage required for solar farms to make a significant contribution to UK power generation. On a per acre basis this means 240 MWh and 63 homes. So, if we just consider homes, with 25 million homes in the UK Solar would need nearly 400,000 acres which is roughly the area of Surrey.

What I think this shows (and what I described in my book Zero Carbon Our Choice) is that the competition for land to meet zero carbon targets will pose some real challenges. Renewables, by definition, need an interest in land, a site. The land required for tree planting, solar, onshore wind, hydro and biomass is significant. The UK, like other countries, needs a policy framework to decide on these changes in land use if these technologies are to make a significant contribution to emission reduction.

© Chris Lenon and http://www.zerocarbonourchoice.com  2020. Unauthorized use and/or duplication of this material without express and written permission from this blog’s author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Chris Lenon and www.zerocarbonourchoice.com with appropriate and specific direction to the original content.