Green levies mean we are paying too much for energy
GREEN levies mean families and businesses are paying far too much for their energy, a report has found.
Falling energy costs are not being passed on to customers, while environmental taxes are much too high, it said.
The excessive costs are hampering industry and perpetuating fuel poverty, the study warned.
Oxford University professor Dieter Helm, an economist specialising in utilities and the environment, who was commissioned to investigate by the Government, said in his report that despite falling energy prices, ‘households and industry have seen limited benefits from these cost reductions’.
Green taxes, which make up 20 per cent of electricity bills, were also said to be much higher than needed to reduce greenhouse gases and should be lowered.
Professor Helm said by 2030 around £100billion will have been collected through green taxes, which are imposed to meet targets imposed by Britain’s Climate Change Act to reduce greenhouse gases.
He said: ‘Much more decarbonisation [using low-carbon energy sources] could have been achieved for less; costs should be lower, and they should be falling further.’ Many green taxes are ‘not fit for purpose’, and of ‘mind-numbing complexity’, he added.
The report said higher green taxes can partly be blamed on the EU, which has an energy directive calling for all EU countries to produce 20 per cent of their power from renewable sources by 2020.
The directive excludes nuclear power but includes burning wood pellets – which the report said was not that different from burning oil or coal in terms of creating greenhouse gases.
The report said: ‘The EU Renewables Directive and its particular definition of renewables has been a major contributor to raising the costs above those necessary to reduce carbon emissions.’
Electricity only produces 24 per cent of total carbon emissions – so other areas that produce greenhouse gases, such as farmWhite ing, which produces 10 per cent of greenhouse gases, need to be looked at, and farmers could be called on to produce less, the report suggested.
It also recommended showing the cost of green energy surcharges separately on customers’ bills. A default tariff on bills, instead of current standard variable tariff, was also recommended to keep prices down. The tariff would cap the profits made by energy companies.
Two weeks ago the Government published a draft bill to cap charges for 12million customers on standard variable tariffs. Professor Helm said: ‘Not to implement these recommendations is likely to perpetuate the crisis mentality of the industry, and these crises are likely to get worse. We can, and should, do much better, and open up a period of falling prices as households and industry benefit from the great technological opportunities over the coming decades.’
Responding to the report, Business and Energy Secretary Greg Clark said: ‘Homes and business depend upon reliable, affordable power and the Government is ambitious in its plans to keep costs as low as possible for them over the coming decades.’
‘We can and should do much better’