Cutting green levies on energy bills is false economy, say analysts

theguardian.com:

Cutting green levies on energy bills, or watering down the UK’s commitment to net-zero carbon emissions, would fail to help households with high energy prices and store up problems for the near future, analysts have warned.

Ed Matthew, campaigns director at the E3G thinktank, said: “Cutting green levies to tackle the energy bills crisis would be utterly self-defeating. It would only keep the UK addicted to gas for longer. The only cure is to ramp up clean energy investment and eliminate energy waste. That is the permanent solution to bring down energy bills. Any politician working against that is directly undermining the interests of their constituents and likely to be in the pocket of the fossil fuel lobby.”

Green levies work to provide investment for insulation and other energy efficiency measures, and to support incentives for renewable energy. The energy company obligation, at about £1bn a year, provides insulation and other energy efficiency for poor households, and has saved about £11.7bn in total on fuel bills for lower-income households, but has been threatened by the Treasury in an effort to cut bills.

Levies on bills that support energy efficiency and renewables are falling, from £172 last year, or 15% of fuel bills, to about £153 on bills, according to recent figures from Ofgem.

Jan Rosenow, a director of the Regulatory Assistance Project, said: “Calls for cutting green levies are misplaced and a kneejerk reaction not supported by the evidence. Past levy-funded programmes have in fact reduced energy bills, as analysis has shown time and time again. Cutting levies now would leave customers paying more in the long term.”

Reducing green levies has been tried before – the then prime minister David Cameron famously