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Green energy ‘folly will put £600 on bills’: Annual charges to hit living standards, says report

Britain’s green energy ‘folly’ will cost every family an extra £600 a year by 2020, a report warned last night.

The cost to consumers of green energy subsidies will exceed £16billion a year within seven years, according to a leading industry analyst.

Dr John Constable, director of the Renewable Energy Foundation, warned that the huge burden on taxpayers could lead to the first long-term decline in living standards since the Industrial Revolution.

He estimates that a third of the £600 annual cost will land on energy bills.

The rest will be borne by businesses who will pass on the costs to consumers by charging higher prices for their goods.

In a report titled Are Green Times Just Around The Corner?, he said: ‘Shifting to current renewables for the bulk of our energy would result in a reversal of the long-run economic trend since the Industrial Revolution.

‘More people would be working for lower wages in the energy sector, energy costs would rise, the economy would stagnate and there would also be a significant decline in people’s standard of living.’

He added: ‘The annual additional cost to consumers will be upwards of £16billion a year in 2020, which is over 1 per cent of current GDP.

‘One third of this cost would hit households directly through their electricity bills, regardless of income, making it an intensely regressive measure.

‘The remainder of the cost would be passed through from industrial and commercial customers and eventually be met by households from increases in the cost of living. The total impact would be in the order of £600 per household per year, assuming there are 26million households.’

Under EU laws, Britain’s energy consumption from renewables needs to reach 15 per cent by 2020 – one of the largest proportional increases in Europe. It is currently around 6 per cent.

Dr Constable said the Renewables Obligation – the amount customers pay on their fuel bills to fund green energy – currently costs consumers £2billion a year.

This will have to rise to almost £8billion to meet the targets, he said – costing an average family some £200 extra a year.

The Carbon Price Floor policy, which is a charge on businesses for every tonne of carbon dioxide they emit, will cost an additional £1billion.

Experts say this will make Britain’s firms uncompetitive and force them to pass on costs to consumers.

Additional charges to help fund wind farms are likely to add around £5billion a year, the report claims.

Matthew Sinclair, chief executive of the TaxPayers’ Alliance, said: ‘With many families struggling to make ends meet in these tough economic times, taxpayers will be disgusted at how much of their cash is subsidising green energy.

‘Millions of people are worried about the cost of living, yet the Government’s own policies are making bills even more expensive for households up and down the country.

‘Ministers should be looking to reduce the burdens they are placing on people by scrapping expensive green taxes and subsidies which are unnecessarily pushing up our energy bills.’

Last night a Department of Energy and Climate Change spokesman said: ‘We don’t recognise these numbers. The costs of renewables are coming down.

‘We’ve already cut the subsidies for onshore wind and solar and in future all green technologies will have to compete to deliver the best bang for the buck.

‘Renewable energy is helping support growth through jobs and investment.’