There are as many as seven different social and environmental policies which are funded through household energy bills as green levies, rather than through general taxation and together they amount for 9% or around £110 of everyone’s electricity and gas bills. Whilst less than 25% of the green levy subsidises renewable energy sources such as wind farms, more than half goes to support low income households in their fight against fuel poverty. These measures include a ‘warm home discount’ of £135 deducted from energy bills for those eligible and help for pensioners and those on State Benefits to improve the energy efficiency of their homes.
The Government is restricted by legislation which commits it to reduce fuel poverty by 2016 whilst at the same time improving the energy efficiency of the UK’s housing stock in order to reduce emissions responsible for climate change. In this age of austerity there is a debate about the need to keep energy bills under control whilst meeting the cost of tackling climate change through green policies. As the UK fights to come out of the recession, George Osborne, the Chancellor, and Ed Davey, the Energy Secretary, disagree over the conflicting needs to keep costs down whilst still creating programmes to improve energy efficiency and reduce carbon emissions. This has resulted in the Treasury announcing that “saving the planet shouldn’t cost the earth”.
The Energy Company Obligation (ECO) which includes the Affordable Warmth Obligation is funded by energy companies and pays for energy efficiency measures in qualifying households fighting fuel poverty. This includes the installation of replacement gas central heating boilers to replace old inefficient boilers, cavity wall insulation, loft insulation and solid wall insulation and those receiving certain State Benefits may apply. It is claimed that ECO is responsible for about 4% of every domestic electricity and gas bill in the UK.