Energy Bill to create 'low carbon economy', says Davey


Energy Secretary Ed Davey says the Bill will transform the energy landscape

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Energy minister Ed Davey has unveiled the government's much-trailed Energy Bill, setting out the roadmap for the UK's switch to "a low-carbon economy".

Energy firms can increase the "green" levy from £3bn to £7.6bn a year by 2020, potentially increasing household bills by £100.

But big, energy-intensive companies could be exempt from the extra costs of the switch to renewable energy.

There are also proposals for financial incentives to reduce energy demand.

The "transformation" will cost the UK £110bn over ten years, Mr Davey said.

He told MPs: "Britain's energy sector is embarking on a period of exceptional renewal and expansion.

"The scale of the investment required is huge, representing close to half the UK's total infrastructure investment pipeline."

The government's plan formed the "biggest transformation of Britain's electricity market since privatisation," he said.

Measures proposed in the Bill and consultations include:

  • Household energy bills to rise £100 on average by 2020
  • "Green" levy charged by energy firms to rise from £3bn to £7.6bn
  • Switch to clean energy to cost £110bn over ten years
  • Bill aims to encourage investment in low-carbon power production
  • Energy-intensive companies may be exempt from additional charges
  • Possible financial incentives to reduce energy consumption

Mr Davey said government policy was "designed specifically to reduce consumer bills", arguing that without a move to renewable energy, bills would be higher because of a reliance on expensive and volatile gas prices.


The government has unveiled plans to exempt some of Britain's biggest industries from charges for clean electricity.

The Energy Bill confirms that households will be expected to pay about £100 a year on average to get more power from nuclear and renewables.

But it looks as though energy intensive firms won't have to pay the extra charges. It's feared that if their energy bills rise too high, they'll move manufacturing jobs abroad.

The move may prove controversial with consumer groups.

The Bill confirms that households would provide £7.6bn of subsidy to nuclear and renewables by 2020 to keep the lights on and to meet targets on reducing emissions of greenhouse gases.

The government says the investment will shield the UK from volatile gas prices and force down costs in the long run.

But ministers have also announced that some of biggest industrial polluters in the UK - like steel and cement - may not be asked to pay extra. These global firms threaten to take their jobs elsewhere if power bills rise.

The government has recognised that if you are trying to cut global emissions of carbon, it's futile driving away firms to pollute somewhere else. But many households may wonder why they're being forced to pay extra whilst big firms are not.

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The Energy Bill aims to move the UK's energy production from a dependence on fossil fuels to a more diverse mix of energy sources, such as wind, nuclear and biomass.

This is to fill the energy gap from closing a number of coal and nuclear power stations over the next two decades, and to meet the government's carbon dioxide emissions targets.

By allowing energy companies to charge more, the government hopes they will have the confidence to invest the huge sums of money that are needed to build renewable energy infrastructure such as windfarms.

But the opposition said that investment in renewable energy had fallen under the coalition.

"The reason that's happened is because of the uncertainty the government has created - that's why firms have put investment on hold, or scrapped it altogether," said shadow energy and climate change secretary Caroline Flint.

She added that the absence of a carbon cap for the energy sector for 2030 further undermined investment in renewables.


But in a consultation paper published alongside the Bill, Mr Davey said energy-intensive industries, such as steel and cement producers, would be exempt from additional costs arising from measures to encourage investment in new low-carbon production.

"Decarbonisation should not mean deindustrialisation", Mr Davey said.

"The transition to the low carbon economy will depend on products made by energy intensive industries - a wind turbine for example needing steel, cement and high-tech textiles.

"This exemption will ensure the UK retains the industrial capacity to support a low carbon economy."

Without the exemption, the government fears big companies would cut jobs and relocate abroad.

Reducing demand

The government proposals to reduce electricity demand include financial incentives for consumers and businesses alike.

Shadow energy secretary Caroline Flint says the bill will see consumers will facing higher prices

For example, firms could be paid for each kilowatt-hour they save as a result of taking energy-reduction measures, such as low-energy lighting.

Householders and businesses could be given discounts and incentives to replace old equipment with more energy-efficient versions.

The government believes a 10% reduction in electricity demand could save £4bn by 2030.

But research by management consultancy McKinsey suggests there is the potential to reduce demand by as much as 26%, equivalent to 92 terawatt-hours, or the electricity generated by nine power stations in one year.

Audrey Gallacher, director of energy at Consumer Focus, said: "The government's commitment to reduce energy demand through incentives for consumers and businesses is welcome.

"But it will come at a cost - which again will be passed onto customers."


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  • rate this

    Comment number 88.

    So the energy company's follow in the footsteps of the banks.
    Privatise profits whilst socialising the debts.
    The energy company's need to be renationalised. If the taxpayer is expected to pay for the infrastructure then the taxpayer owns the utility.
    No more exploitation of the public by greedy parasites who have been ripping off customers ever since privatisation paying themselves handsomely.

  • rate this

    Comment number 87.

    I enjoy the coded double speak.

    Low Carbon Economy means: We ran our manufacturing down and now rely on the banking sector to provide our money plus little ancillary industries like tourism.

    Increased Green Levy means: Paying more for less.

    Britian biggest energy transformation means: We've run out of ideas since we cannot r*pe the World of it's resources anymore as the Empire is dead.

  • rate this

    Comment number 86.

    Stop banging on about carbon. Yes CO2 is a greenhouse gas, but it is minor in its effect compared to a similar quantity of Methane. In Britain, cows' posteriors cause more global warming than gas burning power stations. Put your "Green" levy therefore on burgers instead of householders.

  • rate this

    Comment number 85.

    This is all engineered by ministers to allow their mates at the energy companies to transform their businesses to low turnover - high profit, so charging more for less. Nothing to do with the environment whatsoever.

  • rate this

    Comment number 84.

    which is just brilliant until the cheap supplies run out, you have to think in the long run or inactivity on the issue will bite us in the backside 50 years from now

  • rate this

    Comment number 83.

    Another deluded government measure to impose stealth taxation by way of higher energy bills to fund the environment-destroying wind turbines.

  • rate this

    Comment number 82.

    So whats next? a 10p per litre levy on fuel for Honda to design a new car? £50 on gas so the Russians can build a new pipeline? how many times are they going to divert tax payers hard earned money (well those of us who actually pay tax) into privately owned foreign companies who refuse to invest in the UK, pay tax abroad, and quite happy to take our money? - NO INVESTMENT - revoke their contracts

  • rate this

    Comment number 81.

    Will these levies be itemised on our bills and will they be taxed and are they postcode dependent?

  • rate this

    Comment number 80.

    To be honest people need to stop complaining about wind turbines and hydro dams. People want cheap bills but then don't want an eyesore. Compromises have to be made and this is one of a few people are going to have to make

  • rate this

    Comment number 79.

    64.20 Cent
    Climate changes. Always has, always will.
    This is NOT the same situation though.

    We now have a significant man made process and a natural process which are interacting with one another. The data shows the consequences of this will be very severe.

    You can believe the oil execs and the dimwits with their brains in their wallets, or have some faith in independent science.

  • rate this

    Comment number 78.

    >That is to say, if our taxes are paying for it, it should be owned by us, >and any profits within the system should be reinvested directly back >into it for the benefit of us!

    Much of the large scale infrastructure is owned by National grid who are having to spend billions on connecting up large numbers of so called renewal sources which are spread (often remotely)throughout. the country.

  • rate this

    Comment number 77.

    There is only one source of pollution-free,never-ending power and that is simply solar energy.
    Just why cretinous politicians want to invest more of OUR money into such inefficient monstroities as wind turbines totally baffles me and no doubt,a lot of others also.
    Why force us to pay to energy firms that make money all the time even when their products produce nothing?
    Simply idiotic!

  • rate this

    Comment number 76.

    #68 The snag is that despite a lot of the propaganda Wind power is probably about the worst form of power generation you can get short of hamsters in wheels. There are ways to generate cleaner energy, but pretending that wind is an everlasting supply of all we need is a fantasy. Unfortunatly they are profitable and can be labeled "green" to justify any problems or abuses

  • rate this

    Comment number 75.

    With the dramatically inflated prices charged by the energy companies over the past decades, I feel it is about time the companies gave something back, not impose yet another hike to swell their already obscene profit margins. This seems to be a calculated strategy to appease a few loony Greens & others hell bent in blocking progress!

  • rate this

    Comment number 74.

    Lib Dem politics appealing to their imagined voting base at the next election.
    We should have been going the shale gas route ages ago just like the Americans.
    Wind turbines are non efficient (unfortunately) I waste of money and just a subsidy income for all the land owners.
    But thats what you get with committees for Govt.
    Climate Change Act against Nature... unbelievable stuff

  • rate this

    Comment number 73.

    31.The Teaparty is run by Mad Hatters
    Agreed: reduction by design is the sensible way forward.

    All new building should be required to be constructed of energy-efficient materials to minimise energy use. Why not also consider triple glazing & underfloor heating? Heat rises so must be more efficient than radiators etc.

    New commercial premises should also have to consider energy efficiency.

  • rate this

    Comment number 72.

    Not all scientists agree that carbon has a significant effect on climate change. The general public is even more sceptical. Politicians need to be careful before loading additional cost onto voters because of an unproven theory. Cheap, secure fuel supplies are more important than carbon emissions

  • rate this

    Comment number 71.

    The cause of climate change is not known. What is known (and ignored) is the fact that the biggest producers of carbon are Jet engines, Marine engines, Animal emissions etc. No, lets just ignore this and make the poor consumer of energy pay through the nose, instead of reducing our consumption of power by (for eg) having a insulation sceme for the millions of older houses with no cavity walls.

  • rate this

    Comment number 70.

    The only reliable renewable is tidal. For the remaining base load it has to be nuclear. Preferably 4th generation Thorium based breeder reactors that can render the waste from the previous generations of reactors.

  • rate this

    Comment number 69.

    The Government can increase the green levy on the profits of the energy companies, not penalise consumers who are already suffering under increased prices and a possible cartel. Disgusting !


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