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23 November 2012

Energy Bill: Households to fund £7.6bn green investment

The Energy Bill will allow energy firms to charge households an extra £7.6 bn until 2020 which will go towards the development of low-carbon electricity generation.

A decision about setting carbon emission targets for 2030 has been delayed until 2016, after the election.

Fears have been expressed about the impact on bills and whether this delay will put off investors in new plants.

Announcing the Bill, the government said: "With a fifth of the UK's electricity generating capacity due to close this decade, reforms are needed to provide certainty to investors to bring forward £110 billion investment in new infrastructure to keep the lights on and continue the shift to a diverse, low carbon economy as cheaply as possible".

The independent advisory committee on climate change estimates the £7.6bn the plan allows for will add about £110 to the average household energy bill in 2020.

The Department for Energy and Climate Change (DECC) has a lower estimate of £95 - or a rise of 7% - although some analysts think it would be more.

DECC believes the clean energy and efficiency measures will save on bills in the long run. The Energy and Climate Change Secretary, Ed Davey, said that the measures would eventually save about the same amount.

Environmentalists condemned the bill, saying the lack of a 2030 emissions target would make it very hard to meet the UK's law on climate change but business groups said more needed to be done to mitigate the impact on firms of these extra costs.

The Energy Intensive Users Group said it supported the government's efforts to shift to cleaner energy generation "but we need to ensure that in doing so we don't undermine competitiveness of UK manufacturing internationally".