GWPF Urges UK Govt to Halt Green Levies

The privately-funded Global Warming Policy Foundation urged the UK government January 28 to suspend the green levies on energy bills, owing to the "sharp rise in fuel poverty among millions of households." These are now costing over £10bn/year, mostly in subsidies to renewable electricity investors, it said.

!This suspension should remain in place for as long as public health measures are needed to tackle the coronavirus, and pending further reforms," it said.

About one third of the government's climate policy impact hits households directly through their electricity bills, and since it is low-income households that use electric heating they are being disproportionately affected. The other two thirds of this climate policy cost hits all households indirectly, through general cost of living, as industrial and commercial businesses pass on their additional energy cost to consumers.

"This indirect impact is too little appreciated, even by charities concerned with fuel poverty, who are already beginning to express their concerns that the public health measures intended to address coronavirus are deepening problems for low-income households," it said. 

A charity End Fuel Poverty has observed that “Fuel bills set to soar under latest work from home rules”, and noted that "working from home could cost some households an extra £45/month more this winter in increased heating and electricity bills.”

And another organisation, Citizens Advice, has calculated that 600,000 households have fallen into fuel poverty owing to previous lockdowns, and a similar or still more serious effect is feared due to the current lockdowns.

GWPF notes that because of the indirect impact on general cost of living the problem is actually much worse than it appears to be, hitting low-income households harder and affecting even middle-income households.

Electricity grid management costs were running at £1.5bn/yr before the lockdown but have rocketed since, as the Electricity System Operator has had to resort to extreme measures to balance the fluctuating wind and solar output during periods of both low and higher demand, and are now expected to be around £2bn/yr, GWPF said. But this additional cost has yet to hit consumers, since suppliers have been permitted to defer payment to National Grid. "If, as we fear, millions of households are simply unable to pay their bills when these charges are fed through, suppliers large and small may be tipped into financial difficulties, further deepening the crisis," it said.

GWPF energy editor John Constable said: "The new team at the Department for Business, Energy and Industrial Strategy, Kwasi Kwarteng and Anne-Marie Trevelyan, face an unenviable choice. If they do nothing, consumer hardship will only get worse. But taking the necessary emergency action in the short run, and adopting a longer-term cost-minimisation strategy will mean admitting that the green policies are failing.”

Achieving the UK goal of net-zero carbon by 2050 has been estimated to cost about £30bn/yr on average over the 30 years remaining.