Contrary to what David Cameron said during today's PMQs, decarbonising the power sector would actually lead to bills coming down.
David Cameron said during PMQs today that a decarbonisation target would cost every household in Britain at least £120.
Fortunately – or unfortunately for Cam – associate director of IPPR and Left Foot Forward founder Will Straw has looked into this already, and has found Cameron’s claim to be without foundation.
As Straw points out:
“if Britain invests in high levels of gas, as the Treasury seems to prefer, it will inevitably expose consumers to rising and volatile gas prices. Indeed, in a scenario where emissions intensity is only reduced to 200g CO2/kWh as set out in the government’s recent gas generation plan, energy costs could vary by as much as £229 per household by 2030.”
Meanwhile the cost of onshore and offshore wind is actually coming down comparative to gas, as the graph below demonstrates.
In other words, relying on gas and building more gas power stations will actually cost the economy a further £312 million – and up to £478 million if gas prices are higher than expected. This, the IPPR calculates, is the equivalent of £10 to £15 per household.
By contrast, decarbonising the power sector and eliminating polluting gas would mean that energy costs were only likely to vary by around £51 per household.
This would not mean an increase in energy bills, however. On the contrary, it would result in small cost savings – across the economy of at least £163m if gas prices rise in line with expectations.
As Straw adds: “If gas prices are at the upper bound of expectations, the saving from going green could be £249m.”
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10 Responses to “PMQs: Cameron wrong to say green energy equals higher bills”
Jen
I read somewhere once that for the price of building and running a nuclear power station (and the massive costs of disposing of nuclear waste) instead we could provide all residential houses with free solar panels and mini roof wind turbines, boosting the industry, creating loads of jobs and making everybody more self sufficient, thus not having to rely on totally the national grid and outside gas resources. The government buying in bulk would make it more cost efficient. This would massively bring down bills for the households and less need to build more power stations. Couple this with giving tax breaks to companies who manufacture the most energy efficient electrical goods. Insisting all new builds are as energy efficient as possible, or at least all social housing. We all become more self sufficient and energy providers ourselves if we are low usage. I would be interested if someone could so costings and compare, especially as I read this several years ago and the price in solar has come down since then. If so it could be extended to small businesses and large business/corporates could buy their own as it makes good financial sense in the current global gas market. The average investment is about 11% over 7 years I was told recently with solar, so that’s better than a savings account investment.
Innovation is the only way to solve the energy crisis. Using outdated technology and energy sources are not only bad for the environment, it makes no financial sense – except to the giant energy companies who like holding the world to ransom for massive profits.
Andy Mayer
Were energy and raw material prices so predictable this would be broadly correct. The issue with Will’s argument, and the very certain way it is presented here, is that is not the case.
We do not know what gas prices will be next year, let alone in 2035, and the sort of innovation that drives down renewable costs also drives down costs in gas – shale exploitation being the most topical exampke
Further if we’re sure offshore wind in 2035 is going to cost 40% less than today, that’s a good argument for waiting on deployment – not bumping up taxes to buy expensive kit. All that does is undermine UK competitiveness, paradoxically making it less not more likely that green manufacturing will come to the UK. Wind turbines require energy-intensive inputs, for concrete, steel, plastics and electronics – they are not woven from hemp by volunteers.
In short a sustainable low carbon transition requires affordable energy. Today that means more gas and a cautious stimulus programme for alternatives for tomorrow. It means international collaboration and partnerships for innovation not unilateral green chest beating or offering false certainty that these choices are easy or obvious.
Selohesra
Perhaps Cameron was referring to todays prices rather than some hypothetical scenario still some 17 years away?
uglyfatbloke
Jen… if we enable people to produce efficient an affordable renewable energy precisely where it is used it would reduce the profits of energy companies and therefore the number of directorships that can be handed out to failed politicians and the size of donations that energy corporations give to political parties. Next thing you know people will be demanding free speech and civil liberties!
uglyfatbloke
Jen… if we enable people to produce efficient an affordable renewable energy precisely where it is used it would reduce the profits of energy companies and therefore the number of directorships that can be handed out to failed politicians and the size of donations that energy corporations give to political parties. Next thing you know people will be demanding free speech and civil liberties!