PMQs: Cameron wrong to say green energy equals higher bills

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.”