Chancellor’s ‘low-carbon energy’ plan could add over 15% to energy bill … and cause great problems to domestic and business users
Plans outlined by Chancellor George Osborne to force energy suppliers to use low-carbon sources are likely to increase energy bills by over 15%.
In his budget, Mr Osborne said that, following a consultation period, the “carbon floor price” will start at £16 a tonne of carbon dioxide in 2013 and move to a target price of £30 a tonne by 2020.
Andrew Padmore, Managing Director of UES, said: “This plan is likely to have a positive impact on carbon reduction but it will also create challenges for businesses. Most importantly, they will need to manage their energy procurement and usage much more closely.
“The carbon floor price is a levy on the amount of carbon dioxide gas produced in energy production, and is designed to steer energy supplies away from fossil fuels and into more sustainable sources which have less impact on climate change.
Inevitably, it’s going to be seen as another tax, just like CRC (carbon reduction commitment). And in effect, it will significantly increase our energy bills, initially by between 5% and 10% when it’s introduced in 2013. But this is likely to rise to over15% by 2020 according to a number of industry experts.
“In that respect it’s more bad news on energy costs for the immediate future. But the gradual, phased introduction is intended to allow time for people to factor the additional cost of energy into their budgets and adapt their consumption patterns as necessary.
“And by focusing attention on the dramatic increases in energy costs more businesses and consumers are likely to consider generating their own renewable energy to take advantage of the developing market mechanisms and subsidies available to them right now.”
