How much have renewable energy subsidies cost households?
13th Dec 2011
"A report today claims renewable technologies cannot meet the UK's energy needs and will only lead to higher bills due to their dependence on subsidies — it has already cost every household about £320." Daily Express, 12 December, 2011
With today's announcement that Canada intends to withdraw from the Kyoto agreement on emissions reductions coming hot on the heels of this week's UN conference on climate change in Durban, environmental issues have found themselves bumped up the news agenda.
A report by the Adam Smith Institute released yesterday on the UK's efforts to meet renewable energy targets received a lot of attention in the media.
It suggested that wind power is unable to provide the energy we need, and is less cost-effective than nuclear power. To illustrate the point, the Express claimed that renewable energy had already cost each UK household some £320 in government subsidies.
Is this correct? Full Fact took a look.
Yesterday's Adam Smith Institute (ASI) report did estimate the cost of the government's Renewable Obligations Certificates (ROCs), a government initiative to encourage renewable energy generation.
The ASI report noted: "At the end of 2010, the cumulative cost of the ROCs programme has been over £5 billion." If this cost was divided equally between the UK's 26 million households the figure should be closer to £192.
We got in touch with the Department for Energy and Climate Change for more details and they pointed us towards figures from a Parliamentary Question on Tuesday 25 October 2011, about the cost per household of levy-funded policies.
|Policy||Time period considered||Estimated cost to date (£bn, Real 2010-11 Prices)||Estimated average cost to date to household (£, Real 2010-11 Prices)|
|Energy Efficiency Commitment (EEC) I||April 2002-March 2005||0.5i||21|
|Energy Efficiency Commitment (EEC) II||April 2005-March 2008||1.0||41|
|Carbon Emissions Reduction Target (CERT)||April 2008-March 2011||3.3ii||127|
|Carbon Emissions Reduction Target (CERT) Extension*||April2011-October 2011||0.6||22|
|Community Energy Saving Programme*(CESP)||September 2009-October 2011||0.2||7.9|
|Feed in Tariffs Tar(FiTs)*||April 2010-July 2011||0.02iii||0.3|
|Renewables Obligation* (RO)||April 2002-March 2011||7.31 iv||103|
The £320 figure the Express quoted is the total of the estimated average cost to households of each levy, shown on the right, dating from between 2002 and 2011.
However as a spokesperson for DECC told us, this doesn't accurately represent the cost to households of "renewable technologies", as the Express claimed.
The Department of Energy and Climate Change stated that only the last two levies in the table, Feed in Tariffs and the Renewables Obligation, relate to renewable or green energy.
Other schemes listed in the table, such as the Energy Efficiency Commitment and the Carbon Emissions Reduction Target, cover a much broader remit, incorporating things such as building insulation and efficiency measures.
Given this information, the total cost per household of renewable technologies since 2002 is actually only £103.3, not the £320 the Daily Express claimed.
Ofgem has also pointed out that environmental and social levies currently account for around 7 to 8 per cent of bills.
While the Express's £320 figure isn't unfounded, coming as it does from government information on the sums spent on energy and environmental policies as a whole, the paper has taken it out of context by describing it as the total cost of "renewable technologies".