A report published by the Committee on Climate Change (CCC) has refuted claims that green-technology support will lead to huge rises in energy bills over the coming decade. The Government advisors also indicate that recent energy bill hikes are primarily due to the increased wholesale cost of gas.
The report states that household energy bills will rise by just £190 over the next decade. By 2020 support for renewables and energy efficiency measures will cost household bill-payers £110.
The committee’s findings go someway to disprove often repeated claims that major investment in low-carbon power capacity will drive dramatic bill increases over the next decade, some reports have been as wild as claiming £3,000 will be added because of such measures.
Lord Adair Turner, Chair of the Committee on Climate Change explained the purpose of the report, saying: “We were keen to provide a dispassionate analysis of household bill impacts in what has become a politically controversial area.
“We found that bills have increased primarily in response to increased wholesale gas costs and not due to environmental policies.”
The comprehensive analysis focused on the 84 percent of UK households that have dual-fuel energy bills. These 21 million homes saw energy bills increase from around £605 per household in 2004 to £1,600 in 2010. Of the £455 price rise, 84 percent (£380) was unrelated to low-carbon measures.
£290 of the price rise is attributed to increases in the wholesale costs of gas, £70 to increased transmission and distribution cost, and £20 due to VAT.
Only 16 percent of the price rise consumers experienced can be attributed to policies that support green measures. The cost to the consumer of funding energy efficiency improvements since 2004 was £45. The cost for supporting low-carbon power generation was just £30.
Contrary to many reports the cost of subsidising renewable energy technology accounted for a lowly 6 percent of the price-hike consumers have experienced since 2004.
The committee predicts that over the next decade bills will increase by approximately £110 to support investment in green technologies. 91 percent of the rise will be spent on supporting investment in low-carbon power capacity, with the remaining allocated to improve energy efficiency in homes.
However, the committee also stress that if further energy efficiency measures are implemented, energy bills in 2020 could remain at 2010 levels. The committee recommend implementing new policies with strengthened incentives, in order to encourage the uptake of energy efficiency improvements, such as loft and wall cavity insulation.
Lord Turner concluded: “Over the next decade, we anticipate a rise of around £100 in the average bill as a result of investment in low-carbon power capacity, which will benefit the UK in the long run. And if we introduce new polices to stimulate energy efficiency improvement then bills in 2020 could broadly be contained at current levels.”
