Green levy costs do not make up 25% of energy bills

17 May 2022
What was claimed

Green levies make up 25% of our energy costs.

Our verdict

This figure is inaccurate. Green levies represent a proportion of environmental and social obligation costs, which account for less than 8% of an average energy bill’s costs under the current price cap. They did make up 25% of the 2021 average electricity bill.

"We need to get rid of the green levies, that are 25% of our energy bills."

During an appearance on Radio 4’s Today programme on 12 May, Conservative MP Robert Halfon wrongly claimed that green levies account for 25% of energy bills while arguing that they should be scrapped to help mitigate the impact of changes to the cost of living.

Mr Halfon repeated this claim in a since corrected op-ed for The Sun, and it has also been made by others, including UKIP.

The figure only refers to electricity bills, not energy bills in general, and includes some money spent on social schemes, not just environmental schemes. 

What are green levies?

The term “green levies” is often used to refer to “environmental and social obligation costs”, which are contributions paid by consumers via larger energy suppliers towards various energy policies. UKIP’s post claims that these costs are used to “subsidise wealthy companies to build wind and solar farms.”

While it is true that some of the money from these costs goes towards large-scale renewable energy projects, they are also used to fund a range of other environmental policies, including improvements to the energy efficiency of homes and business and Feed in Tariffs paid to households for surplus energy generated from renewable sources (like solar panels). 

So the money isn’t just spent on building wind and solar farms as UKIP claimed.

The costs also pay for the Warm Home Discount, a social policy which offers rebates on energy bills to low-income households. So while green levies fall under the environmental and social obligation costs banner, they don’t make up the entirety of the costs as Mr Halfon suggested.

Green levies do not account for a quarter of the cost of energy bills

According to the regulator Ofgem, an average direct debit energy customer under the default price cap announced on 1 April would pay £1,971 per year, of which £153 would be environmental and social obligation costs. 

Based on these figures, the costs account for around 7.8% of the bill—far less than the 25% figure claimed by UKIP and by Mr Halfon on the Today programme. This percentage is slightly lower for those who pay for their energy using standard credit or prepayment meters, as these bills are subject to a higher price cap.

The percentage of energy costs accounted for by environmental and social obligation costs has actually decreased over the past year, from 12% in winter 2021/22 and 15% in summer 2021. This is because while the total price cap has increased, environmental and obligation costs have actually fallen slightly from £172 in summer 2021.

Mr Halfon was likely referencing figures related to electricity bills

After facing criticism on social media for his claim, Mr Halfon clarified that green levies comprised 25% of electricity bills. This is correct according to a 2021 Ofgem breakdown of electricity bill costs which showed that environmental and social obligation costs accounted for 25% of an average electricity bill. 

However, as we’ve shown, claiming that this 25% was solely for green levies on energy bills, as he said on the radio, is still inaccurate. 

Mr Halfon repeated the inaccurate claim in his column published in The Sun, which has since been corrected to remove the figure.

Full Fact has asked Ofgem if it has any more up-to-date information available on environmental and social obligation costs as a percentage of electricity bills to reflect the two energy price cap increases since that data was released.

Official portrait of Robert Halfon MP, Attribution 3.0 Unported (CC BY 3.0) 

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After we published this fact check, we contacted Robert Halfon to request a correction regarding this claim.

He is did not respond.

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