Monday 22 February 2021 11:00 am

Forget grants, scrap VAT on green products for to supercharge the renewable revolution

Hayden is the co-founder and CEO of Bulb,

There’s a lot of talk about lowering carbon emissions and reaching ‘net zero’ ahead of the UK hosting COP26, the UN climate conference later this year. Businesses are committing to ambitious targets, renewables have overtaken coal, and there’s record investment in green technology. 

At the same time, the production of new jargon and acronyms in think-tanks is almost as impressive as the number of wind turbines we’re installing in the North Sea.

If you don’t know your ‘net zero’ from your ‘carbon neutral’ or your ‘offsets’ from your ‘footprints’ you’re not alone. I worry that all these new terms obscure some really simple, basic things that we need to get right.

For one: we need to design our taxation system so people are encouraged to do the right thing, not penalised for it. 

That’s why I’ve written to the Chancellor to urge him to scrap VAT on green products at the upcoming Budget. (I used renewable paper, obviously.) This will lower bills and lower carbon emissions for everyone in the UK and we can pay for it by scrapping the some £17 billion we spend as a country effectively propping up fossil fuels every year.

Usually the government taxes things that are bad for us – like cigarettes, alcohol, chocolate biscuits – in this case, the government is taxing things that are good for us, good for our planet and won’t give you a hangover.

Books, food and children’s clothes are quite rightly VAT exempt; products that help people lower their energy bills and carbon emissions should get the same treatment. So let’s scrap VAT on products like electric cars, chargers, heat pumps, solar panels and energy efficient fridge freezers to make green technology cheaper for millions of homes.

Scrap VAT on a mid-range electric car and it’ll be £4,500 cheaper. That makes choosing electric a no-brainer. A VAT-free energy efficient fridge freezer would save families over £70, as well as reducing their energy bills.

And more expensive technologies, like heat pumps, would suddenly be more affordable for millions of people. These are essential if we’re going to get to net zero. We have to find an alternative to gas, but right now, heat pumps are too expensive for most people.

We know there’s no magic money tree, but it’s OK, we don’t need one. Scrapping VAT on green products will boost consumer spending in green technologies, stimulate growth and create highly-skilled green jobs in all four corners of the UK. 

We’ll have new engineers building game-changing technologies; technicians installing them around the country; and builders putting up cleaner and more energy efficient buildings, homes and workplaces.

The tax we lose from VAT on 100,000 heat pump installations would be around £180 million. That would halve the emissions from heating in 100,000 homes. If we scrap VAT on green products for just two years, we’ll cut thousands of tonnes of carbon emissions and provide a welcome cash boost for hard-pressed families. 

At my company, Bulb, we want to make sure everyone is able to take part in the green revolution. We’re supplying renewable electricity to our members, and are building smart, low-carbon technology that will help them take control of their energy usage and transform the UK’s energy system.

I know all these new terms and new ideas are seductive and futuristic. Many of them are very valuable. But we have to get the basics right. If we want people to be green we have to make it affordable.

You don’t have to understand tons of climate jargon to get that.

City A.M.'s opinion pages are a place for thought-provoking views and debate. These views are not necessarily shared by City A.M.