Wind power

Green policy cost claims untrue - climate advisers

Climate advisers have refuted claims that investment in low-carbon energy will increase household energy bills dramatically.

Policies to achieve a low-carbon economy will add a further £110 to dual fuel bills in 2020 with scope to offset this rise if energy efficiency can be further improved through measures such as more efficient lighting and appliances, the Committee on Climate Change (CCC) said.

David Kennedy, CCC chief executive, said the committee had analysed the impact of investment in low-carbon power technologies including offshore and onshore wind, nuclear and carbon capture and storage.

The cost of investing in low-carbon power technologies was "significantly" outweighed by the benefits, including a reduced reliance by the UK on imported fossil fuels, he said.

"If you put our analysis next to some of the claims that have been made - I think the first claim is 'well energy bills are through the roof at the moment and it is because of low carbon'," he said.

"Clearly that is not the case. Energy bills are high but the reason is not low carbon, it is because of changes in the gas price which have fed through to energy bills in our homes."

The independent body, which advises the government on preparing for the impact of climate change, said that wholesale gas prices were "by far" the largest contributor to rises in average household dual fuel bills between 2004 and 2010.

An analysis of households by the committee predicted that the combined gas and electricity bill for the typical household could increase from £1,060 in 2010 to £1,250 in 2020 if there is "limited" success in implementing energy efficiency measures.

The committee said its "best estimate" was that green policies would add a further £110 to bills in 2020 - made up of £100 to support investments in low-carbon power generation, with £10 needed to support energy efficiency measures such as smart meters.

"The second claim goes something like 'well there is huge investment needed over the next decade in low carbon and that will drive bills to astronomical levels', possibly as high as £3,000, I think, is the highest estimate we have seen," said Kennedy.

"Our analysis says there are some investments needed over the next decade but the bill impacts will be limited. 

"I have said this is £100, not hundreds of pounds, and not thousands and if we can address the energy efficiency opportunities, you can get bills back to current levels."

The committee said there was still scope for further energy efficiency improvement through projects such as loft and wall cavity insulation and more efficient energy use of lighting and household appliances.

The projected 2020 bill could be reduced to £1,085 per household - roughly at 2010 levels - if these were successfully implemented, it said.

An analysis of the average dual fuel energy bills for a typical household showed an increase of £455 from around £605 in 2004 to £1,060 in 2010 but more than 80 per cent of this rise was unrelated to low-carbon measures, the CCC said.

The biggest contributor to the rise was wholesale gas prices, which added around £290 to bills, with around £75 due to policies that reduce carbon emissions.

"We were keen to provide a dispassionate analysis of household bill impacts in what has become a politically controversial area," said Lord Adair Turner, CCC chairman.

"We found that bills have increased primarily in response to increased wholesale gas costs and not due to environmental policies.

"Over the next decade, we anticipate a rise of around £100 in the average bill as a result of investment in low-carbon power capacity, which will benefit the UK in the long run.

"If we introduce new policies to stimulate energy efficiency improvement then bills in 2020 could broadly be contained at current levels."

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