Source · Select Committees · Business and Trade Committee
Recommendation 29
29
Paragraph: 123
The current apportioning of environmental levies disincentivises the switch to electrified low carbon heating solutions,...
Conclusion
The current apportioning of environmental levies disincentivises the switch to electrified low carbon heating solutions, such as heat pumps, because the running costs are greater than a gas boiler. As we have seen with the ongoing gas market crisis, increases in gas prices have increased energy bills, which has, in turn, disproportionately affected the fuel poor. The reapportioning of environmental levies should not further burden the fuel poor with an even greater increase in energy bills. We welcome the Government’s commitment in the Net Zero Strategy to shift or rebalance energy levies.
Paragraph Reference:
123
Government Response
Not Addressed
HM Government
Not Addressed
Government recognises that current pricing of electricity and gas does not incentivise consumers to make green choices, such as switching from gas boilers to electric heat pumps. We are committed to keeping costs fair and affordable for industry and consumers, and working to identify how costs can be allocated in a way which incentivises consumers to make green choices. As set out in the Heat and Buildings Strategy, we want to reduce electricity costs and are looking at options to shift or rebalance energy levies and obligations (such as the Renewables Obligation, Feed-in-Tariffs and Energy Company Obligation) away from electricity over this decade. This will include looking at options to expand carbon pricing and remove costs from electricity bills. As set out in the Energy Security Strategy we will publish our proposals on how to do so in 2022, considering overall system impacts and limiting the impact on bills, particularly for low-income consumers. Financial support is currently available to low income and vulnerable households through the Warm Home Discount, Winter Fuel Payment and Cold Weather Payment. We continue to review additional costs and how best to support fuel poor households during the transition to Net Zero. In addition to these targeted