Ministers will outline plans to change green supplements from household electricity bills and try to gas bills in an effort to push consumers to lower carbon alternatives.
The plans – to be announced next month – are a sign of the government’s desire not to abandon the current crisis rising gas prices derails its long-term goal of eliminating all net carbon emissions by 2050.
Citizens who heat their homes with electricity or drive electric cars will pay less, while those who still use gas boilers will pay more under proposals that will be considered in the upcoming review.
Nearly a fifth of the UK’s carbon footprint comes from heating homes and workplaces, which are heavily dependent on gas use. Gas, a pollutant, is currently taxed at a lower rate than electricity, which can be generated by renewable clean energy. Households currently pay an average green surcharge of £ 159 on their electricity bill.
Hannah Dillon, of the Zero Carbon campaign, said the imbalance is important. “We are calling for an end to the perversity of overloading electricity and underloading gas,” she said.
Ministers will insist that the policy will be phased in over a long period – up to a decade – and that the combined costs of gas and electricity bills will remain the same.
The Department of Business, Energy and Industrial Strategy said: ‘We want to encourage people to use technologies such as heat pumps and electric vehicles. Affordability for consumers and taxpayers is at the heart of our approach. ”
But the announcement is likely to be controversial for domestic and industrial gas bills at some point – which rose 10 percent in April – will rise by 12 percent in October. They are expected to climb even further in April next year due to the “price range” set every six months by Ofgem, the energy regulator. The cap varies greatly, depending on the wholesale prices of energy, which have risen sharply this year.
Ministers hope that reducing the cost balance of electricity to gas will help consumers install electric heat pumps and buy electric cars, both of which are essential components of the government’s plan to achieve ‘net zero’ carbon emissions by 2050. The government has banned the sale of new gas boilers by 2035.
Josh Buckland, at Flint Global, the consulting firm, and a former energy adviser at the business division, said the government should set up the switch fast enough to reach its plan to mass heat uptake by the end of the decade. , to begin.
He added that a decision to start shifting levies from electricity to gas would send a big price signal to the market.
“If the government does not reach the switch over the next five years, consumers will not achieve large enough savings by switching from a gas boiler to an electric heat pump to convince them to invest in advance.”
The plan, called the ‘energy affordability and equity inquiry’, will examine how to allocate energy costs to encourage ‘cost-effective decarbonisation’. It will be published within a few weeks as part of the government’s much-delayed strategy for decolonizing buildings, called the Heat and Buildings Strategy.
The plan introduces new levies on gas bills designed to support net zero, such as a levy on gas bills to finance the young hydrogen industry.
It could also lead to the transition from existing levies to electricity bills to gas bills, such as those used to subsidize carbon-free electricity.
These may include: subsidies for renewable energy, including “contracts for difference”, which guarantee the price of energy; the protection of energy producers against volatile wholesale prices; and “import tariffs”, payments to households producing their own renewable electricity, which are paid through a levy on energy bills.
Ministers will also argue that Britain will benefit from a more secure energy system as the country relies less on imported gas and more on domestic generated nuclear, solar and wind power.
Separately, the business department is expected to draw up plans for the proceeds of the UK emissions trading system, a cap-and-trade scheme that requires polluters to buy allowances to cover their emissions. The government said last year that ” a long-term funding stream for decarbonisation ” would come from ” part of the UK ETS ‘.
It is expected that a treasury overview of where the cost of net zero will decrease, also long delayed, will also be published the November COP26 climate conference the UK plays host to in Glasgow.
Dillon said the government should ensure that there are ‘financial cushions’ available to support those who can pay the least, as the changes designed to reach a net zero take effect. ‘There is a very big task to sell to the public the benefits that will come from the transition.
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