Letter to PM argues accelerating shift away from fossil fuels can help curb surging bills and cut fuel poverty
An alliance of 25 charities has called for increased funding for energy efficiency upgrades and clean energy technologies to help “wean the UK off expensive gas” as part of measures to combat rising energy costs.
Alongside emergency funding to support the most vulnerable and greater investment in home insulation, charities including Save the Children, Age-UK, End Fuel Poverty Coalition, WWF, Green Alliance, Faith for the Climate, Tearfund, and Greenpeace, say the measures could help combat steep price rises caused by soaring costs of fossil gas.
The charities estimate that fuel poverty could increase by 50 per cent in the months ahead from four to six million households across the UK, as households brace for an anticipated 50 per cent increase in energy bills from April.
The sharp increases in global gas wholesale prices has prompted a chorus of calls for the government to take action to curb bills, with the Treasury currently considering a range of options, including axing VAT on energy bills, shifting green levies on to general taxation, increasing grant support for fuel poor households, providing loans to energy suppliers to help them spread the impact of proice rises over several years, and a windfall tax on oil and gas firms to help pay for any new measures.
However, critics have warned such measures are unlikely to fully offset the upcoming increase in bills and that if the government wants to better insulate the UK from future price spikes then it needs to curb its reliance on gas.
In a joint letter to the Prime Minister, the charities state that a cut in support for making homes energy efficient after the last surge in energy bills a decade ago has left households more vulnerable to surging gas prices.
“When energy bills surged in 2013, the Warm Front programme to insulate low-income homes was abolished and the Energy Company Obligation (ECO) was cut in half,” it states. “This was damaging and counterproductive, leading to a 90 per cent cut in loft and cavity wall insulation measures, and loss of over half of insulation industry jobs.”
The charities warn against a similar rolling back of investment in clean energy now, following reports the Treasury was considering cutting the ECO further in a move that critics say would undermine energy efficieny programmes and only fractionally reduce bills.
“Today, it would be equally damaging to reduce or suspend climate investment. Improving the efficiency of the worst performing homes, including off-gas grid and older rural properties, could provide bill savings of over £500 every year per household, an aggregate saving of around £8bn,” the letter states. “Investing in UK green energy and technologies like heat pumps will help end our reliance on fossil gas. Indeed, renewables have helped to keep electricity prices from soaring as much as gas prices, as cheaper wind and solar cushion the increased expense of using gas to generate electricity.”
Dr Doug Parr, policy director at Greenpeace UK, said it was important for government support to solve both the immediate and longer term challenges posed by rising energy prices.
“The twin imperatives of a gas price crisis and the climate crisis mean we need to get off fossil fuels as fast as we can while protecting people on low incomes,” he said. “That means we need to see short-term support for fuel poor families and long-term support for energy efficiency and cheap renewables.”
A windfall tax on oil and gas companies would be a fair way to help finance the transition from fossil fuel production in line with advice from leading experts at the International Energy Agency, Parr added.
Chris Venables, head of politics at Green Alliance, said Ministers must act urgently to support households struggling to cope amid soaring gas prices without being distracted from the UK’s long-term commitment to net zero carbon emissions by 2050. “The UK’s future prosperity is dependent on investing in the green industries that will drive the transition to net zero,” he said. “Any short-term fixes that undermine plans to green the economy will come back to bite the government. North Sea oil and gas companies have enjoyed huge profits on the back of gas price rises over the past few months. The government needs to seriously look at introducing a windfall tax on these firms to help fund support for the thousands of households struggling to make ends meet this winter.”
Labour has also called for a windfall tax, but Ministers are known to be concerned that such a move could dent investor confidence at a time then they want to see oil and gas majors stepping up investment in a new wave of carbon capture and other low carbon projects.
Meanwhile, a small but influential group of Tory backbenchers is calling on the government to respond to the energy price crisis by scaling back green programmes and ramping up domestic gas production.