The rising cost of gas, rather than policies and investment into renewable energy sector, are primarily responsible for the rising household energy prices, a new report suggests.
The government’s Committee on Climate Change (CCC) has published its first comprehensive analysis of the impact of meeting carbon budgets on household energy bills, concluding that recent bill increases are primarily due to increased wholesale gas costs.
By 2020, policies to achieve a low-carbon economy are expected to add around £110 to bills – with scope to offset this if energy efficiency can be improved. This has lead to criticism from opponents of renewable energy sources such as wind farms, that policies to support such energy sources will make life harder for those already struggling with fuel poverty.
The Committee’s analysis focuses on the 84 per cent of UK households (21 million) that have dual-fuel energy bills (i.e.gas and electric). For these households, energy bills increased from around £605 per household in 2004 to £1,060 in 2010-an increase of £455. Of this increase, around £380 (84 per cent) was unrelated to low-carbon measures, with £290 due to increases in the wholesale costs reflecting increases in the price of gas and supplier costs, £70 due to increasing transmission and distribution costs, and £20 due to VAT.
Around £75-just 16 per cent- was due to policies that reduce carbon emissions, including £30 to support investment in low-carbon power generation, and £45 for funding energy efficiency improvements in homes.
The drive for greener electricity is an important part of our policies to green up transport too-with support for electric cars given greater weight by clean recharging sources.
