UK Politics

Further cuts coming to green energy subsidies

Boy cycling against a backdrop of a wind farm Image copyright PA

Green taxes are set to be cut further, the BBC has learnt.

A cabinet source has said that a "big reset" on subsidies paid by consumers, which push up household energy bills, is coming in the autumn.

"There is a hardening view in the cabinet that we've got to deal with green subsidies," the source added.

Last month, the government announced that new onshore wind farms would be excluded from a subsidy scheme from April next year.

Within a few weeks, the solar power industry is expecting its subsidies will be cut.

The issue of renewable energy subsidies was discussed at the weekly meeting of the government's most senior ministers on Tuesday.

Subsidies to the renewable energy industry, paid for by consumers, are expected to add up to £4.3bn this year.

'Best deal'

This week, the think tank Policy Exchange said the average household energy bill has risen by £120 over the last five years due to what they called "ill-thought through energy and climate policies".

A spokeswoman for the Department for Energy and Climate Change said:

"Reducing energy bills for hard-working British families and businesses is this government's priority. We've already announced reforms to remove subsidies for onshore wind, and that work to make sure bill payers are getting the best possible deal is going to continue."

But the renewable energy industry fears a cut now could seriously damage an industry at a crucial point in its development.

"We are getting very anxious about what might be coming," Leonie Greene, from the Solar Trade Association, told the BBC.

"The British industry is already very significant today. It employs over 30,000 people and turns over billions of pounds. It is quite clear that globally this industry is going to be worth trillions. So it is incredibly important that in terms of the global race that the prime minister talks about, that we make sure we have a strong solar industry in the UK."

In a speech last month, the Energy Secretary Amber Rudd warned the renewables industry and campaigners that support for the environment has to be weighed against the impact on energy bills.

"All that support costs money," she said. "We cannot ignore the fact that, obviously, people want subsidies if they are on the receiving end of subsidies, but we have to ensure that we get the good measure of it."

And there lies the conundrum for the government: attempting to keep bills low, supporting emerging industries and keeping to climate change targets - with the United Nations Climate Change Conference in Paris just a few months away now in December.

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