Despite green taxes, average UK consumer utility bills fall by £10 a month due to energy-efficiency improvements in household white goods

Climate policies will have added £200 to household bills by 2030 – but more energy efficient technology is cancelling out the rises, Government advisers have reported.

The costs to consumers of boosting renewables, reducing coal power and installing measures such as insulation in homes have added around £105 a year to annual bills since laws on tackling climate change were passed in 2008.

But big reductions in gas and electricity use have saved the average household £290 a year, largely due to new minimum efficiency standards for fridges, kettles, light bulbs and boilers, the Committee on Climate Change said.

While shifting to a low-carbon power system added £9 a month on dual fuel bills in 2016, the greater efficiency – which also reduces carbon emissions – has cut them by more than £20, the committee said.

Overall, household bills in 2016 were around £115 lower in real terms than in 2008, while carbon dioxide pollution has fallen by around a quarter.

Meeting legally-binding goals to cut emissions by the early 2030s, which will require sourcing 75% of electricity from low carbon technology such as offshore wind and nuclear, will add another £95 to consumer bills in 2030.

This could be more than offset by a £150 saving through energy efficiency improvements, mostly by replacing appliances, lights and boilers at the end of their lives with new models, a report by the committee said.

But the committee warned other factors, largely a rising price of wholesale gas, would push up average bills by £200 in 2030 to £1,350.

If measures needed to meet targets to cut emissions from homes such as more insulation and installing air source heat pumps are targeted at people struggling to pay their bills, three-quarters of them could be lifted out of fuel poverty by 2030.

However, meeting the Government’s goal of upgrading all fuel poor households to a decent standard of energy efficiency would require doubling the funding provided for energy efficiency measures, the committee warned.

It also looked at the impact of environmental policies on business energy costs, and found that if all costs were fed through to consumers, it would add threepence to the average £10 basket of goods and services in 2016 and sixpence in 2030.

Juliet Davenport
Juliet Davenport

Juliet Davenport, OBE, Chief Executive of renewable energy company Good Energy, said: “We welcome this report from the CCC.

“For far too long consumers have been under the impression that action to tackle climate change is costing them more money, so it is right to highlight low carbon developments and raising energy efficiency standards in households as actually helping to drive down electricity bills and reduce the cost of decarbonisation.

The committee also said it thought Government support for energy intensive industries such as steel, chemicals and paper was ‘at the right level’, but could be delivered more swiftly and transparently.

Committee chairman Lord Deben (aka former Tory Environment Minister John Gummer) said: “Action to deliver a cleaner, more efficient energy system is already delivering benefits for households and businesses.”

UK emissions were falling while the economy was rising, and household energy bills had fallen in real terms since 2012, he said.

He added: “It’s worth noting in these post-Brexit days, the energy efficiency, green part of the economy is now bigger than the coal, gas and oil industry, bigger than the heavy users of energy, and it’s growing and providing a lot of the new jobs.”

Green industries were the “businesses of the future, without which we can’t prosper,” he said.

A spokesman for the  Business and Energy Department commented: “Our top priority is making sure families and businesses have secure, affordable energy supplies, and we’re committed to reducing carbon emissions and delivering clean growth.

“This report confirms the benefits to households of improved energy efficiency and suggests recent price rises announced by energy suppliers cannot be explained by policy costs alone. 

Pixie Energy

Pixie logo Pixie Energy is an incubator and a facilitator of strategic research and project work, focusing on energy regulation, policy and markets at the local and national level. Find out more about Pixie Energy here.

Local Energy Matters: Scotland

Local Energy Matters: Scotland is a free-to-download brochure with a focus on energy tariffs in the two Scottish electricity distribution regions, as well news on local energy and low-carbon schemes.

Previous editions can be download here.

Scottish energy market overview

You can read an overview of the Scottish energy market here.

Scottish Government energy feed