Firm action on Green Levies and funds could win back support for government

By Paul Homewood

 

 

London, 12 January – Net Zero Watch has called on the government to take firm action and turn the energy crisis into an opportunity for the finances of households, businesses and the economy.

The campaign group is today publishing a simple guide on the options available to the government to effectively solve the energy bills crisis in the short and medium term.

At a time when millions of households are facing the prospects of sky-rocketing energy bills ministers should consider offsetting any costs arising from the measures taken by delaying international green funds – some £12 billion in total – which the government has pledged to hand out over the next five years.

The British people cannot afford handing out billions of pounds every year to green investors abroad while millions of families face unaffordable energy bills at home. Charity starts at home,” Dr Benny Peiser, Net Zero Watch director said.

The energy crisis is the result of failed policy decisions stretching back decades, and presents short-term hardship problems that are extremely difficult to address, as well fundamental problems that require long-term reform of energy policy.

However, we show that with firm action on green levies the government can redeem its reputation and emerge as a consumer champion.

In the short-term government could consider:

• Transfer of the costs of Contracts for Difference renewables subsidies to general taxation (a saving of £2.1 billion a year on the national electricity bill)

• Radical readjustment of the Renewables Obligation subsidy (a saving of up to £6.6 billion a year on the national electricity bill).

• A VAT holiday on gas and electricity, and also, for consistency, on heating oil. This would give a modest but worthwhile saving of 5% on the bill.

• Special grants to pensioners, adding to the Winter Fuel Payment, and increasing its catchment to include all pensioners.

These measures could provide direct relief to bills of households and also to industrial and commercial consumers, containing the knock-on effect on goods and services, and therefore limiting any increase in inflation.

In the medium and longer term the UK could resume fracking, could remove obstacles to the replacement of older CCGTs, could accelerate the introduction of small modular nuclear reactors for both electricity and industrial heat, could wind down and phase out all renewables subsidies, and should ensure that the renewables fleet is compelled to pay for its own system management costs and grid expansion.

These measures would provide direct and immediate relief to households – a saving equivalent to about £500 each – and also to industrial and commercial consumers.

These short-term solutions would also stimulate economic growth and reduce inflationary pressure.
Dr Benny Peiser, Net Zero Watch director, said:

By taking radical action Boris Johnson has a chance to turn the deepening energy crisis into an opportunity to reform Britain’s failing energy policies and emerge as a consumer champion. Unless he grabs this chance now he is unlikely to save consumers, businesses and himself from economic devastation and political oblivion.”

Dr John Constable, Net Zero Watch energy editor, said:

The current energy cost crisis is the result of two decades of mistaken environmental policies. Cutting the £10 billion a year burden of the green levies is the single largest and most effective measure, and will have to be done in any case at some point, so Mr Johnson could regard this as a golden opportunity to improve British competitiveness post-Brexit.”