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Green policies made up 9% of typical household energy bill in 2016, CCC analysis shows

Policies to tackle climate change – including measures to shift towards a low-carbon electricity system and improve the energy efficiency of UK homes – account for just 9% of the typical ‘dual fuel’ household energy bill, independent analysis by the Committee on Climate Change shows.

The Committee’s assessment, published in March this year, found that low-carbon policies added just over £100 to the typical 2016 bill of around £1,160.

The majority of the typical bill resulted from wholesale energy, transmission and distribution costs which are unrelated to the Government’s low-carbon policies.

The findings are in contrast to recent reports that green policies are primarily to blame for rising household energy bills. In the past year, all six of the UK’s largest energy companies have increased their prices by considerably more than the costs of low-carbon policies have increased.

  • Price increases have been announced of 6.9-12.5% for electricity and up to 9.6% for gas.
  • From 2016 to 2017, increased costs of low-carbon policies have added around 4% to electricity costs and nothing to gas.

The Committee’s ‘Energy Prices and Bills – Impacts of meeting carbon budgets’ report also found that:

  • Typical ‘dual fuel’ households, which use gas for heating and hot water and electricity for lights and appliances, paid (in real terms) £115 less per year for their energy in 2016 than in 2008 when the Climate Change Act was passed.
  • Improvements in energy efficiency have saved the typical household around £290 per year since 2008 as demand for electricity and gas has reduced. This saving has come largely through the replacement of older products such as fridges, freezers and boilers with new, higher-standard energy efficient alternatives.
  • The gradual shift towards low-carbon electricity could add a further £85-120 per year to a typical bill by 2030 if further policies to meet UK climate objectives are put in place. Further improvements in energy efficiency have the potential to deliver significant savings for households in future (around £150 on average, or more if wholesale costs continue to rise), which would more than offset the cost of shifting towards low-carbon sources of energy.

Acting Chief Executive of the Committee on Climate Change, Adrian Gault, said:

“Most of the typical household energy bill results from costs which are unrelated to the Government’s low-carbon policies. All of the ‘big six’ energy companies have announced price increases in the last year that go well beyond the increase that can be attributed to low-carbon measures, suggesting that other factors are having a larger effect.

“Policies to develop a cleaner, low-carbon electricity system are – overall – delivering savings for average UK households. Although green measures contributed around £9 a month to the typical ‘dual fuel’ energy bill in 2016, energy efficiency improvements to lights, boilers and appliances saved around £20 a month as result of reduced energy demand. The net impact is a saving of around £11 per month for the typical dual fuel household.”