When Chris Huhne announced the carbon budget for the period 2023-27 recently, as required by law under the terms of the Climate Change Act, the Department of Energy and Climate Change had this to say in a press release:

The carbon budget will place the British economy at the leading edge of a new global industrial transformation, and ensure low carbon energy security and decarbonisation is achieved at least cost to the consumer.

Well, I suppose he would say that, wouldn’t he. But what will the cost actually be?

According to a BBC report published the same day, which predictably makes an enthusiastic attempt to sell this absurd piece of economic self-destruction to the public, this is what is in store for us:

The Committee on Climate Change has forecast that to meet emissions targets the average household fuel bill will go up by £1 a week until 2020 when it will plateau out with no major rises after that.

… and just what is that supposed to mean?

Taken literally, are we supposed to prepare ourselves for an eye watering £1 hike in our fuel bills for each and every week from now until 2020, in which case the increase in cost will be over £600 per week by then. Or is it supposed to mean that by 2020 the cost of domestic fuel will be only just £1 per week more than it is now, which seems equally improbable.

In any case, what has the cost of fuel in 2020 got to do with an announcement about a carbon reduction target seven years later? I suppose that whoever fed this titbit of spin to the churnalists in the BBC newsroom thought that muttering something incomprehensible about £1 per week would be enough to lull most readers into a complacent acceptance of grandiose plans to single-handedly save the planet while miraculously resuscitating the moribund British economy.

A quick check revealed that the press release on the DECC website makes no mention of a £1 per week increase in fuel bills, which is not particularly surprising. The briefings that friendly organisations like the BBC receive from government departments go well beyond the published press releases that people like bloggers, who may ask awkward questions, are allowed to get their hands on. However I did find this in the Notes for Editors section of the press release:

The Committee on Climate Change provided their advice in December 2010.

So presumably that is where the BBC’s notion that completely restructuring the UK energy industry will only cost consumers £1 per week originated – or something.

Now that link leads to a report from the Committee on Climate Change which runs to nearly 400 pages, and I’m not going to pretend that I’ve read it all. On the other hand, I have spent a good deal of time searching it to try and track down the claim that “… the average household fuel bill will go up by £1 a week until 2020 when it will plateau out …”, and discover how this estimate has been arrived at.

No luck! Zilch! Nothing!

The DECC press release also provides a link to the full text to Chris Huhne’s ministerial statement to the House of Commons so casting the net a little wider, I tried that. These are some of the fragments that I found:

Signing up to an ambitious Fourth Carbon Budget will result in no additional costs to consumers during this parliament.


Rising electricity costs pose a key risk to these sectors [energy intensive industries] which are critical to our growth agenda. We will, therefore, take steps to reduce the impact …


Mr Speaker, it is important to stress that the UK’s existing policies already put us on track to meet the first three carbon budgets. They also provide a strong foundation for the fourth carbon budget, implying no additional near-term costs. [my emphasis]

It is hardly surprising that targets for cutting carbon emissions during the period 2023-27 will have no immediate impact on house hold fuel bills, and this tells us nothing about what the actual impact will be. There can be no doubt that the minister recognises that there will be additional costs associated with his plans, because he mentions this problem in connection with energy intensive industries. He finally claims that his plans will incur no ‘near term-costs’, whatever that may mean, but he skilfully avoids any reference to what the cost of the plans he has just presented to Parliament will be. And there can be no doubt that there will be considerable costs, can there?.

If anyone out there can point me to the source of the claim in the BBC reports that “… household fuel bill will go up by £1 a week until 2020 when it will plateau out with no major rises after that” I would be very grateful, because I find all this pretty confusing. Perhaps we are supposed to believe that the massive extra cost of carbon reduction will just vanish into thin air if it is not added directly to domestic fuel bills, and that the electorate will not notice at all. It would be interesting to know whether the Committee on Climate Change really did make this claim, and if so how they did their sums.

29 Responses to “HELP! Huhne and £1 per week cost of decarbonisation”

  1. I don’t think this country has ever has more useless government. Its going to take a day or two for me to think of a response, that is if fatigue doesn’t set in.

  2. Tim Yeo, Chairman of the Energy and Climate Change Select Committee was on the radio a couple of days ago, talking about the price hikes (excerpt below, and more here):

    Justin Webb: What Scottish Power also said is that costly government programmes are partly to blame for the price increases. They say “meeting environmental and social targets” – on environmental targets, I mean, you do wonder whether the enormous amount that we’re having to pay to subsidise wind farms to get them off the ground is actually behind a lot of this. A lot of consumers will wonder whether that is, perhaps, money that – you know, slightly better, if people are – this is a serious issue for people, if people are potentially dying of hypothermia as a result of not being able to pay bills, maybe we should think a bit more about protecting people who are currently alive rather than future targets for carbon reductions.

    Tim Yeo: Well, at the moment, such a tiny proportion of electricity in this country is generated by renewable sources, such as wind, that –

    Justin Webb: You know, a lot of money going towards it –

    Tim Yeo: Well, in the future, there may be more money going towards it, certainly, but Scottish Power, I think, are being a bit disingenuous here. The truth is that, at the moment, the amount of money going to renewables is very, very small. It will become greater, it is perfectly true –

    Justin Webb: And that will force up prices.

    Tim Yeo: Well, it is perfectly true that greener energy, and more secure energy that is sourced within the UK, rather than imported from Russia, is likely to cost more, so the issue about consumer prices is going to get more intense. And one of the factors undoubtedly is the drive, which I fully support, the drive towards more low-carbon electricity.

    It’s interesting that when the emphasis is on performance, the stress is also on how much electricity is generated by renewables (as in this article) but when the emphasis is on costs, the stress is still on how little it is. And note the way Tim Yeo straightaway mentions the proportion of electricity that renewables generate, rather than about the cost to set them up, which was what Justin Webb was actually talking about, in this interview.

    Also, note his comment: “The truth is that, at the moment, the amount of money going to renewables is very, very small.”

    But as he points out, this is going to rise. And I don’t find it inconceivable that Scottish Power are raising electricity prices this year, in part to fund future costs under the government’s Carbon Reduction Commitment. This is from the summary of a report from Verdantix in October last year entitled “UK Government Hits Businesses With Carbon Tax” (emphasis mine):

    The UK government announced that HM Treasury will retain 100% of funds from sales of carbon emissions allowances sold by the government to between 3,000 and 5,000 private sector and public sector organizations covered by the Carbon Reduction Commitment (CRC). Participants in the CRC must pay for their allowances in April 2012 to cover the compliance year that begins April 2011. This radical policy change imposes a carbon tax equivalent to a 9% to 11% increase in electricity prices.

  3. Having said all that, I just remembered that energy companies are not included in the CRC but are covered by the EU ETS instead. The CRC applies to large companies not in the EU ETS, and thus the carbon tax mentioned by Verdantix will go straight to HM Govt without involving the energy companies.

    More about these schemes here. Good quote from Ben Wielgus of KPMG:

    Ben Wielgus, of KPMG’s climate change and sustainability practice, said “We find CRC participants in the difficult situation of paying for carbon emissions three times – once through the CRC, once through the climate change levy (CCL) and once through the cost of carbon charged by their electricity companies through energy bills.”

  4. Chris Huhne is now blaming the public for being apathetic and lazy, when it comes to saving money on fuel bills, according to the Times (paywalled, so here’s the story as reported in the Guardian.) I find it reminiscent, in its way, of David Miliband accusing the public of being apathetic and lazy about climate change, about this time two years ago.

    In an interview with the Times, the Liberal Democrat said: “They frankly spend less time shopping around for a bill that’s on average more than £1,000 a year than they would shop around for a £25 toaster. If they got that in perspective and said, ‘OK, we are going to spend a little bit of time shopping around’ (they) could save very substantial amounts of money.”

    He said 85% of households do not shop around, and challenged customers not to “just sit back and take it and succumb to the myth that all energy tariffs are the same”.

    However, further down:

    Mr Huhne has reportedly asked regulator Ofgem to pursue a complaint that the large energy companies are squeezing out smaller suppliers with impossibly cheap deals.

    So on the one hand, it’s our fault that we’re not shopping around for the cheapest deals, but on the other hand, the big energy companies shouldn’t be offering these very cheap deals in the first place.

    Mad Hatter logic at its finest.

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