From the TUC

Facing a carbon cliff, Ministers target carbon savings?

15 Oct 2013, by in Environment

Carbon graph

The steep line on the right shows that cuts in world carbon emissions are vital if we are to avoid dangerous climate change. As the TUC will debate next Monday …

…the longer we leave it, the steeper the drop later. Oddly, Ministers appear to have the one energy policy in their sights that will cut energy bills and save carbon emissions: the Energy Company Obligation. Already, the OECD reckons the UK hands out $4bn a year in fossil fuel subsidies – the true figure could be much higher. Plus, the Chancellor is announcing new tax breaks for fracking and North Sea oil and gas exploration. 

ECO investments cuts fuel bills for 5.3 million households in fuel poverty through improved home insulation. In the absence of any state-funded heating and insulation scheme, it’s all the help our low income and vulnerable households in England have towards improving the energy efficiency of their homes. The main cause of fuel poverty in this country is not the price we pay per kilowatt hour but the fact that we have some of the most energy inefficient housing in Europe and no adequate (state) funding to address this.

And consumers cannot opt out of paying these subsidies via their energy bills. The cost of policies to promote low-carbon electricity should be subject to the same level of public scrutiny as all spending that comes from general taxation.   

SSE, for instance: energy bill payers were faced with the somewhat inscrutable announcement by energy giant SSE that they will be increasing their tariffs by an  over-inflation 8 per cent, or around £93 per year for the average bill payer.

Reg Platt at the ippr draws on SSE’s figures to show that average dual fuel (gas and electricity) tariff before the increase was £1,131 a year. Therefore, in absolute terms using SSE’s numbers:

  • wholesale energy costs are responsible for the tariff increasing by around £23
  • rises in network charges by around £28
  • increases in the cost of government schemes by around £15
  • VAT around £5.

Presented in this way it is clear that wholesale and network costs are mostly responsible for the tariff increase, not the cost of green policies, which account for only a sixth of the rise.

Time, then, to shift the burden of all energy policies – ECO, the incentives for renewables, the nuclear decommissioning costs, and the carbon taxes on carbon polluters – on to the taxpayer?

2 Responses to Facing a carbon cliff, Ministers target carbon savings?

  1. Time to look at all £9bn of energy policy support | ToUChstone blog: A public policy blog from the TUC
    Oct 25th 2013, 1:52 pm

    […] Might this be the moment to rebalance the national debate on energy subsidies by including fossil fuels and civil nuclear power in the mix, as well as renewables? Big jobs losses lie ahead if the […]