In its third assessment of the impact of carbon budgets on energy bills, the Committee on Climate Change finds that policies to support cleaner low-carbon electricity made up £45 of energy bills in 2013. As a result, emission reductions have been achieved equivalent to the annual emissions of 10 million cars.
The report, Energy prices and bills – impacts of meeting carbon budgets, finds that out of a typical energy bill costing £1140 in 2013, householders paid around £55 per year to support energy efficiency schemes and £45 per year to support low-carbon electricity.
The £55 contributed towards energy efficiency schemes in 2013 and helped to pay for 200,000 new boilers and heating controls to be installed in low-income homes and /or fuel poor families. The money also supported the insulation of almost 200,000 homes (cavity walls, solid walls and lofts). These actions have reduced energy costs and saved carbon. A high proportion (40%) of these insulation measures benefitted low-income and/or fuel poor families.
Lord Deben, Chairman of the Committee on Climate Change said:
“Last year, as energy consumers we all helped hundreds of thousands of poorer people to have warmer homes and contributed to real reductions in our emissions in the fight against climate change – all for around £100 a year on the average bill. Many people saved more than that by taking simple energy saving measures that didn’t interfere with their life-style.”
The report finds that the primary causes of energy bill increases since 2004 have been an increase in the international price of gas and investment in electricity/gas networks. Whilst low-carbon policies and support for energy efficiency improvement have had an impact, this remains small by comparison (e.g. each accounting for around £1 in every £10 increase in household bills from 2004-13).
Our best estimates of the projected impact of low-carbon policies on 2020 and 2030 energy bills are as follows:
- A further £55 would be added to average annual bills from 2013 to 2020, to support investment in low-carbon electricity
- A further £75 from 2020 to 2030 largely resulting from assumed increases in the carbon price
For commercial and industrial users:
- For commercial and industrial users: bills are likely to rise by around 9-17% from 2013 to 2020 and a further 12-25% to 2030 due to low-carbon policies. Energy costs currently represent a small share of total costs in these sectors (i.e. 0.5% of costs in the commercial sector and around 2% of costs in the industrial sector). The impact on consumers will be small: approximately one penny to every £10 spent in the commercial sector, and six pence to every £10 spent on manufactured goods.
- There are many different types of commercial and industrial enterprises and impacts can vary widely across them. The report reviews the specific measures that are in place for those most affected.
Opportunities to improve energy efficiency could offset all of the impact on household bills to 2030 and at least part of the impact on commercial and industrial firms. However, stronger policies will be required if this potential is to be realised.