More families will be driven into fuel poverty as a push to generate more electricity from “green” sources like wind, wave and solar power sharply increases household fuel bills, the Government has said.
Electricity bills could rise by 13 per cent and gas prices could go up by as much as 37 per cent as consumers are made to pay more to subsidise green energy production, ministers said in a new Renewable Energy Strategy.
At current levels, green tariffs make up around 14 per cent of average domestic electricity bills and 3 per cent of average gas bills.
Those tariffs will have to increase as ministers bid to wean Britain off fossil fuels like oil, gas and coal.
“Our policies to encourage renewable energy deployment in line with our 2020 goals will add further to energy bills,” the strategy paper says. “Reflecting some of the costs of tackling climate change through energy prices means that prices more closely reflect the true social, economic and environmental costs of climate change.”
By 2020, the document estimates that the full raft of new green energy proposals could increase domestic electricity bills by between 10 per cent and 13 per cent.
Gas bills could rise by 18 per cent to 37 per cent. Petrol prices could go up by 4 per cent. Campaigners say that 4 million households are currently in fuel poverty, having to spend 10 per cent or more of their total income on electricity and gas.
The Renewable Energy Strategy says: “It is likely that the measures we need to use to increase renewable energy will add to the challenges we face in combating fuel poverty.”
Government officials said that the fuel bill increases were based on the assumption that world oil prices will average around $70, roughly half their current level.
Were oil prices to stay above that level, the added cost of green energy would be smaller, because of the savings involved in cutting oil use.
John Hutton, the Industry Secretary, said the fuel bill increases were “reasonable and modest” while the cost of doing nothing to cut greenhouse gas emissions would be high.
“Is the era of cheap energy over? We all know it is, and that presents us with some pretty stark choices we have to make,” he said. “This is the time to make a decisive shift to a low-carbon economy.”
Alan Duncan, the Conservative shadow business secretary, endorsed the Government’s plan, but said ministers should go further.
He said: “After a series of painful and reluctant U-turns, it seems like the Government is at last coming round to our vision of a greener Britain.”
The shift to green power will mean 7,000 more wind turbines being built -often in the face of local opposition – across the countryside and around the coastline.
The renewable energy strategy was presented by Gordon Brown, who pledged to break Britain’s dependence on oil and to convert the country to a greener way of life.
The Prime Minister said the government’s commitment to a target of producing 15 per cent of the country’s energy from renewable sources by 2020 amounted to a green revolution in the making.
“It will be the most dramatic change in our energy policy since the advent of nuclear power,” he told an energy conference in London.
Meeting the 15 per cent target will cost the UK economy between £5 billion and £6 billion a year, according to Mr Hutton’s department.
The Government published its energy strategy as Lord Stern, the former Treasury economist who called on the world to spend 1 per cent of its wealth fighting climate change said the price of averting environmental disaster had now doubled to 2 per cent.
By James Kirkup and Paul Ecclestone
26 June 2008
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