UK govt should decarbonise more affordably, think-thank says

Ill-considered energy and climate policies have pushed up UK energy bills by GBP 120 (USD 188/EUR 172) between 2009 and 2014, according to a think-thank report which criticised policymakers for failing to find the right balance between affordability and decarbonisation.

Policy Exchange said on Thursday the average dual fuel energy bill has increased by GBP 240 to GBP 1,340 a year over the past five years, and blamed half of the rise on factors controlled by government.

"Government should take its decarbonisation commitments extremely seriously but must also recognise that what consumers really want is affordable energy," said Richard Howard, author of the report.Policy Exchange made a number of recommendations, including a focus on mature, low cost technologies, in contrast to the government's move to withdraw subsidies for onshore wind.

The think-thank estimates that carbon taxes, renewables subsidies and energy efficiency grants account for 7% of the average bill, while network costs are responsible for 22%. Increases in green policy costs have added GBP 60 to bills and rises in network costs another GBP 60. According to the research, domestic electricity prices could rise by another 18% by 2020 in real terms due to further policy cost increases.

The report said that the UK department for energy and climate change (DECC) had breached the Levy Control Framework, a cap on levy-funded clean energy spending, in each of the past three years and would also breach the cap to 2020 without policy changes. The report recommended keeping the system of carbon budgets but without setting technology- or sector-specific targets, as well as curtailing the most expensive subsidies. It further said that the government should scrap the 2020 renewable energy target.

(GBP 1.0 = USD 1.563/EUR 1.435)

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