Energy rethink could save bill payers over £7bn

Those with the lowest income are spending six times as much of their disposable income on green energy policies compared to those with the highest income, according to a report published by think tank IPPR today.

The report shows that lower-income groups are paying a far larger proportion of their disposable household income than more affluent households because of a number of factors including the prevalence of pre-pay meters and reduced internet access leading to exclusion from the cheapest tariffs.

The report recommends offering a ‘green levy allowance’, which would help to protect low-income households. The green levy allowance could be funded by new energy policy ideas, which could save over £7bn from the cost of low-carbon policies including:

• publicly-owned, privately-run nuclear plants to reduce the cost of building new nuclear capacity; and

• Danish-style offshore wind farm development.

The report shows that if the British government, which wants to build 12 new nuclear power stations, owned the new reactors while outsourcing their construction and operation to private sector firms, the costs could be significantly reduced by up to £5.5bn. The report highlights other significant infrastructure projects that the government already has a stake in such as Crossrail and the London Underground, and has previously invested in like the facilities for the London 2012 Olympic and Paralympic Games.

The report argues that if the government were to adopt the Danish model of procuring new offshore windfarms it could lower the development costs and bring better value for money for the public. At present hundreds of millions of pounds are being spent developing offshore wind farms, which may never be built. These costs are finding their way through to higher consumer bills.

Joss Garman, IPPR Associate Director, said: “The government’s plan to hike up green levies on energy bills risks causing a public backlash against action to address climate change, especially because they hit the poorest households hardest. Continued growth in clean energy is imperative to cut carbon pollution, support our low-carbon industries, and maintain our energy security. Ministers could shave billions of pounds off energy bills, and offer every family a green tax holiday whilst maintaining the same level of ambition on climate change.”