Green taxes raising fuel bills? Energy company subsidies more like

Friends of the Earth's Donna Hume argues it is fossil fuel imports, not green levies, that are driving increases in energy bills

06 Sep 2011, 15:40

On Monday this week the Daily Telegraph misrepresented the advice issued by a senior government adviser in its warning that green energy policies could add £300 to people's energy bills. The idea that energy bill rises are entirely driven by DECC Ministers' attempts to meet impossibly challenging climate targets is increasingly dominating energy reporting in the media. But the reality is a little different.

Firstly, the 30 per cent by 2020 price rise Ben Moxham refers to was for electricity alone, not gas. The actual impact on energy bills for consumers will be a lot less at around £135 a year.

Secondly, while energy market reforms scheduled for next year do seek to take the carbon out of our electricity - though nowhere near as much as the Committee on Climate Change says is needed - it's our reliance on expensive imported fossil fuels, not green taxes, that is driving our fuel bills skyward. Around three quarters of the electricity supplied to us by the ‘Big Six' energy companies comes from coal and gas. Between 2010 and 2011 the price of coal for power stations increased by 32 per cent, whilst the price of gas rose 28 per cent.

Thirdly, even if we didn't have climate change to deal with, bills would be rocketing anyway. With many of our existing power plants coming to the end of their life over the next ten years, we have no choice but to replace them. What's up for grabs is what gets built. Will we continue to import polluting and increasingly expensive fossil fuels as our own supplies run out, risking the natural world we depend on? Or will we invest now in a new generation of clean power from UK green energy sources like the wind and waves, coupled with energy-saving initiatives to create hundreds of thousands of green business opportunities and jobs?

Oil companies might like to portray renewables and energy efficiency measures as an expensive investment. But Friends of the Earth's research has shown they offer the best hope we have of stabilising fuel bills long term. The truth is, failing to wean ourselves off fossil fuels will cost us far more in the long run than the Government's green energy plans - which are not currently up to the job they're setting out to do.

And if questions are being asked, perhaps it should be up to the 'Big Six' energy companies to explain why we suddenly need £200bn for new power stations and infrastructure. In the fast-fading era of cheap oil and gas, the 'Big Six' netted huge profits for their shareholders. With peak oil fast approaching they are turning to the taxpayer to pay for the clean energy solutions that they should have been developing over the last 20 years. Big Six profits went up by almost a third since just 2008, and payout to shareholders increased across the board - up an incredible six-fold since 1999 in the case of British Gas owners' Centrica. The one question being neatly avoided is why should it be assumed that the consumer picks up the whole bill.

Future rises in consumer bills will depend on where we go from here. How we source our energy and how much of it we waste. Ben Moxham is spot on that subsidies are needed to encourage the uptake of energy efficiency measures - but some things can be done that won't cost the Government a penny. People in rented homes are particularly vulnerable so the Government must bring forward rules to ensure landlords insulate the very coldest of their properties.

The future also depends on whether the Government pays just six big companies to clean up the mess from their two decade long party, or whether it distances itself from oil companies and reforms the electricity market to let in new players. A good start would be to reverse spending cuts to the solar feed-in tariff, helping deliver Cameron's promise of Big Society by enabling communities to generate their own clean energy through local schemes.

Donna Hume is an energy campaigner at Friends of the Earth

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