What this levy will do, is it will balance up the relative cost of gas or electricity for heating our homes. Right now, the green levies fall on electricity, which puts its price up. They don’t fall on gas, which means you’re not getting a clear signal on which way to go. So, this is the right thing to do, but The Times has only really got half the story. The rest of the story is that to make this work, you’ve really got to improve energy efficiency. You’ve got to invest the money in improving the energy efficiency of our homes.
We’ve just done a piece to work in E3G which looked at particularly for low and middle-class households, that if we invested the money we need to invest in energy efficiency to meet our climate targets, that actually we would more or less offset all the current and forecast price rises in gas. About £500 a year off people’s bills. By improving energy efficiency I mean insulating people homes. If the government doesn’t do what it said it will do, which is spend over the life of this Parliament about 9 billion pounds in stimulating the improvement of energy efficiency in our homes, then yes it will sting people. If the government does what it has said it will do, then it will really ameliorate that cost, and what’s more, it will stop homeowners and businesses being exposed to the kind of price volatility that we are seeing right now, which I think is going to remain a sort of constant feature as we go through the transition to a low-carbon economy.
There’s a whole range of options for heating houses with electricity, whether they are air source heat pumps or whether they are storage heaters. EDF will give you a long list on their website of all the different ways in which you can use electricity for heat, including by the way, electric boilers heating water, so there’s a very wide range of technical options. The question is how to make sure that it is beneficial to people’s bills to do that, and the way you really make that work, is to make the concurrent investment in improving the efficiency of our homes. We have the least efficient homes in the whole of Europe. We are far worse than most of the other countries in Europe, and that bill falls on our householders already.
In the short term, the government absolutely needs to step in and help those businesses that are struggling with the massively rising cost of gas at the moment. There’s a difference between the bills falling on householders, and what you do with them, and the bills falling on businesses, and what you do for them. Quite a lot of the price rise that businesses are facing is not for using gas directly, it’s for using gas driven electricity, that means their electricity bills are going up because we shifted to gas for electricity, we had shifted to gas for a bit and there are real problems, more global problems, with the availability of gas. Not the least because we have about 8 days storage of gas in this country compared to say 70 to 80 days the most European countries. So, we’ve not invested in the ability to buffer these kind of short term price spikes. That is that is something the government should intervene and do something about. It is not permanent thing. It’s something for right now.
These are excepts from and interview for Times Radio. The full discussion can be listened to here: