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Energy: Electricity Prices

Volume 712: debated on Tuesday 7 July 2009

Question

Asked by

To ask Her Majesty's Government what are their projections of the proportion of the electricity bills of (a) domestic, and (b) business, customers attributable to climate change legislation (1) now, and (2) in 2020. [HL3406]

DECC's analysis estimates that the benefits to the UK as a whole of measures to help avert climate change could outweigh the costs by more than 10 times. Where these measures lead to an international climate agreement consistent with delivering a 450 ppm stabilisation of GHG atmospheric concentrations, we estimate the total benefits at £241.9 billion. This compares with total costs of £20.6 billion. The impact assessment can be found at www.decc.gov.uk/en/content/cms/what_we_do/lc_uk/carbon_budgets/carbon_budgets.aspx.

The Government are committed to ensuring that policies to avert climate change are cost-effective.

For household consumers, approximately 12 to 14 per cent of current average electricity bills for medium-sized consumers is attributable to climate change legislation (the renewables obligation, the EU Emissions Trading Scheme and the Carbon Emissions Reduction Target). However the Carbon Emissions Reduction Target supports energy efficiency measures for households and so will deliver over time an overall saving greater than its total cost to consumers.

For industrial consumers, approximately 15 per cent of current average electricity bills for a medium-sized industrial consumer is attributable to climate change legislation (the renewables obligation and EU ETS). Actual proportions for individual industrial consumers will vary from this average according to actual prices paid and consumption sizes.

With reference to estimates for 2020, a DECC assessment on the impact of the renewables obligation and the EU Emissions Trading Scheme on electricity prices in 2020 was published in April as part of the impact assessment on the EU Climate and Energy Package. This information is available at http://www.decc.gov.uk/en/content/cms/what_we_do/lc_uk/carbon_budgets/carbon_budgets.aspx.

An energy and climate change strategy setting out the proposals and policies for meeting carbon budgets will be laid before Parliament in the summer. This report will put the Government's carbon reduction strategy in the context of the overall programme for delivering secure and low-carbon energy, transport and housing, in a way which benefits the UK economy into the future. An estimate of the cost of the proposed financial mechanism for carbon capture and storage demonstration will also be published as part of the impact assessment alongside the consultation in the summer.