Green Energy Tax Will ‘Hit Poor the Hardest’

Published: 28 June 2011 By Julian Stone Leave a Comment

Climate policies could get a ‘bad name’ if a new green ‘stealth’ tax pushes thousands of households into fuel poverty, according the the centre-left think tank, the Institute of Public Policy Research (IPPR).

Energy pricesWorse, the Government’s carbon floor price policy announced in this year’s budget could not only add £1 billion to energy bills, but may also have no effect on reducing carbon emissions.

The IPPR’s new report, Hot Air, concludes that the policy – due to come into force in 2013 – may not encourage the investment in low-carbon energy the Government hopes for.

That’s because energy companies are required to generate a fixed level of green energy annually, or buy permits to emit additional carbon.

The new policy will prevent the cost of these permits from falling, and from 2013 the ‘floor price’ to emit a tonne of carbon will be £16. That figure will almost double to £30 by 2020.

The IPPR believes that expensive carbon prices in the UK will lead to lower prices elsewhere – and won’t reduce the amount of carbon emitted.

Worse, the think tank believes that energy companies will pass on the cost of these rises to business and household consumers. With 5.5 million households already in fuel poverty – compared to only 1.4 million in 2004 – the prediction is for a bleak future, especially given recent rises in energy costs.

Energy Price Rises

IPPR associate director Andrew Pendleton said: “The carbon price support scheme risks giving energy and climate change policy a bad name because it will do nothing to reduce carbon emissions while piling more cost on to the shoulders of already hard-pressed consumers in the UK.”

IPPR’s solution includes setting a lower carbon tax and for Government to encourage other European countries to introduce comparable schemes.

Moneyhighstreet comments: “The conclusions of the IPPR’s report are bad news for consumers, who have already been hard hit by rises in energy prices. If energy companies are hit by expensive carbon permits, there needs to be a system in place that prevents businesses and householders picking up the tab.

“In the meantime, it’s more important than ever to shop around for the best energy deals. Reviewing gas and electric suppliers on comparison websites can sometimes lead to savings of hundreds of pounds.”

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