Government-funded researchers urge change in way clean energy is funded to reduce burden on poorest households
The richest households should pay £410 a year more towards supporting energy subsidies for wind farms, solar rooftops and home insulation schemes, government-funded researchers have urged.
The UK Energy Research Centre (Ukerc) said that shifting environmental and social levies off electricity bills and instead loading them on to general taxation would reduce the cost of energy for more than two thirds of households.
The researchers argued the current approach to funding low-carbon power and energy efficiency was regressive. The poorest households spend 10% of their income on heating and keeping the lights on, compared to 3% for the richest.
The report by Ukerc found that shifting the costs to taxation would save the poorest 10% of households £102 a year, “a significant difference for them”
Meanwhile the 10% of the country with the highest income would pay an extra £410 a year, “a relatively small difference” for such earners. The two high income brackets below the richest group would see rises of between £26 and £102 a year, while the remaining 70% would see no change or a decrease.
John Barrett, professor of energy and climate policy at the University of Leeds, who worked on the analysis, said the status quo was hurting the switch to greener energy.
“The key finding at the moment is we’ve created a system that pits social justice and equality against climate change. That creates opposition to some of the costs associated with climate change,” he said.
He said it was only fair that the richest should shoulder the burden of paying for clean energy, because they use more energy and they can afford it.
Subsidies for low-carbon power cost billpayers £5.2bn in 2016-17 but are projected by the Treasury to rise to £8.6bn in 2024-25 as new wind farms and other projects come online.
Campaigners have said for years that funding green energy subsidies through energy bills is regressive because the poor are disproportionately affected, but there has been little political appetite for a change.
Barrett admitted one potential weakness of shifting to general taxation is that clean energy budgets could be subject to political shifts on an annual basis by the Treasury, but said that was a price worth paying for a fairer system.