Fuel for doubt

When secretary of state for energy Chris Huhne defended the earlier than expected cut to the feed-in tariff that came into effect on Monday, he did so on the basis that the FIT had become too expensive and was set to increase energy bills.

‘Each week’s delay leads to additional annual cost of £400 million,’ he claimed, addingthat if the government did not act now, the subsidy could add £80 to energy bills by 2020.

There has been a fair bit of back n’ forward over this figure. But regardless of whether it is correct, the point was clear: the government was taking a stand to protect consumers from rises in energy bills. For the government to shoot a fledgling, but rapidly growing industry in the face at a time when jobs and economic growth – not to mention investment in the green sector - is so badly needed, there must have been real and genuine fear that consumers will turn on the coalition’s green policies as their bills increase. To put it mildly, the government is bricking itself on the impact of rising energy prices. A perfect storm is gathering and right now the green deal is the only policy to hand that the government has to combat it. But there is an inherent mistrust about to what degree the government’s own green policies are contributing to the rising costs.

And to some extent it is easy to see why. Were I a journalist writing for a more climate sceptical publication than Inside Housing – naming no wind turbine hating papers in particular – the government’s green subsidies would seem like a gold mine of stories. Open goals everywhere. You say energy company obligation: I say outrageous green stealth tax. You say FIT: I say levy on the poor to pay for eco-bling for the rich (there is something to this line of interpretation as we will reveal here). And green deal? What’s that? Oh, it sounds like green regulation and red tape.

The fact is most consumers don’t have a clue that money from their energy bills are paying for anything other than their energy bills. And to be fair, it is far from transparent. There are legitimate questions to be asked about what kind of tabs are kept on the way energy companies spend these green levies. Can you imagine what will happen when the tabloids get their teeth into how CESP and CERT money is being spent – or not spent.

We have seen the mass give away of light bulbs by energy companies in the past, now as they all start to panic about the possibility of not being able to spend all of it in time we are seeing front page adverts in the Metro about insulation giveaways. Surely this is a ‘green scandal’ waiting to happen.

Interesting then, that yesterday the government’s green watchdog, the Committee on Climate Change, published a report showing that green policies are not responsible for energy bill hikes.

‘The committee’s findings disprove often repeated claims that recent bill increases are due to environmental policy costs, and that major investments in low-carbon power capacity will drive dramatic bill increases over the next decade,’ the press release claims, rather smugly. And why not? What a relief for the government. In short, gas prices rather than their policies are responsible for energy bill increases. End of. Ish.

The report also projects bills will increase by around £110 over the next decade to support investment in low-carbon power capacity and energy efficiency in homes. The all-important latter is worth £10.

To me, that seems like a price easily worth paying for what will effectively be a hedge on bills. But tell that to a wind turbine hating paper that shall not be named – and indeed the likes of the Telegraph which kicks off with ‘Green policies to add £110 to bills’, before then conceding that claims that investment in wind farms and other low carbon technologies will ‘dramatically’ hit household bills are untrue.

An interesting, and potentially important aside has been dug up by my colleague Jess McCabe who attended the launch of the report. It says that the FIT has had a ‘negligible’ impact on the typical household’s dual fuel bills. Subsidies for renewables added £16 to the average electricity bill in 2010 of £430, of which FITs account for less than £1. By 2020, the report predicts renewables support will make up £58 of the typical electricity bill, of which the FITs could account for about £7. This doesn’t quite chime with Mr Huhne’s claims regarding a feared £80 hit for consumers by 2020.

The government can’t have it both ways regarding the impact of green policies on energy bills. Its messages are mixed and confused, and there is a fundamental lack of transparency around the levies and how they are then spent – as demonstrated by the ongoing FITs saga. Until this changes, it is hard to criticise other publications scepticism around the government’s green policies.