Committee on Climate Change shows that energy bill increases are not caused by low carbon technologies

Posted on 15 December 2011

This is the CCC’s first comprehensive analysis of the impact of meeting carbon budgets on household energy bills. The Committee concludes that recent bill increases are primarily due to increased wholesale gas costs.

The Committee’s findings therefore disprove often repeated claims that recent bill increases are due to environmental policy costs, and that major investments in low-carbon power capacity will drive dramatic bill increases over the next decade (e.g. as high as £3,000).

Looking forward, bills are projected to increase by around £110 over the next decade to support investment in low-carbon power capacity (£100) and energy efficiency in homes (£10). Further increases will be required to support grid investment (£15), and may be required depending on gas price movements.

The Committee also highlights opportunities for further energy efficiency improvement:

  • Insulation and more efficient use of heating controls could reduce gas consumption by around 8%.
  • Replacement of lights and appliances with the most efficient models as the stock turns over could reduce electricity consumption by 19%.

If these improvements can be achieved, then energy bills in 2020 are projected to be broadly at 2010 levels. However, the Committee stresses the need for new policies with strengthened incentives in order to encourage energy efficiency improvement.

Lord Adair Turner, Chair of the Committee on Climate Change said:
“We were keen to provide a dispassionate analysis of household bill impacts in what has become a politically controversial area. 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. And if we introduce new polices to stimulate energy efficiency improvement then bills in 2020 could broadly be contained at current levels.”