By Daniel Martin
Household energy bills are set to fall after ministers unveiled plans to
slash green subsidies, it emerged yesterday.
Billions of pounds are handed out by the Government to wind farm and solar
energy firms every year, with families and manufacturers picking up the cost.
These climate change subsidies add around £110 a year to a household’s
average bill.
Theresa May’s industrial strategy, published yesterday, suggested that
these levies should be dramatically reduced to help steel plants, which pay
for emissions, compete overseas.
This help for industry would have the knock-on effect of bringing down
household bills, Government sources said.
The move will be seen as another example of the Prime Minister rowing back
on David Cameron’s green legacy. Even he got tired of the environmental
agenda after a while, telling his ministers in private to ‘get rid of the
green crap’.
The document detailing the new industrial strategy said that while
subsidies had originally been needed to ensure green energy firms could
make a profit, that is now no longer the case.
‘The transition to low-carbon and the securing of our energy supplies
must be done in a way which minimises the cost to business and domestic
consumers,’ it said.
‘Subsidies and other forms of state support have played an important role
in creating markets for new technologies and driving down their costs.
‘But it is important that we move steadily to an operating model in which
competitive markets deliver the energy on which our country depends.’
At present, energy-intensive industries pay around £20 for every ton of
carbon dioxide they emit. This money goes towards subsidies to green energy
firms.
But steel firms are among manufacturers saying the huge costs make them
uncompetitive on world markets.
The new strategy would cut these firms’ energy costs by cutting Government
subsidies for offshore wind farms. This would also bring down household
costs as families also contribute towards the subsidies on their bills.
An official review will be held later this year, after which the subsidies
could be slashed.
The green paper on the new industrial strategy, published yesterday, said
the Government was seeking to ‘reduce the cost of achieving our
decarbonisation goals in the power and industrial sectors’.
It added: ‘The review will cover how best to support greater energy
efficiency, the scope to use existing instruments to support further
reductions in the cost of offshore wind once current commitments have been
delivered, and how Government can best work with the regulator Ofgem to
ensure markets and networks operate as efficiently as possible in a
low-carbon system.’
The new deal could see the prices the Government pays for electricity
generation from offshore windfarms slashed once contracts come to an end.
For example the world’s biggest offshore wind farm, off the coast of
Yorkshire, secured a contract three years ago under which it is paid four
times the market price for every unit of electricity it generates.
This costs an estimated £280million per year in subsidies. The Government
could decide to cut this subsidy after the contract ends in 2029. The steel
industry, in particular, has blamed green levies for making it harder to
compete with foreign firms, especially Chinese ones.
A spokesman for UK Steel said: ‘The steel industry welcomes the
Government’s commitment to minimise business energy costs, cut back on
renewable subsidies, and help industry become even more energy efficient
and we look forward to helping Government turn this commitment into action
to allow us to compete on a level playing field.’
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