David Cameron threatens to scrap key UK climate legislation

Prime Minister says green levies need to be cut, despite evidence indicating wholesale market responsible for price rises

By Ed King

David Cameron has told Parliament he wants to cut a series of ‘green levies’ imposed on energy companies aimed at encouraging low carbon growth.

“We need to roll back some of the green regulations and charges that are putting up bills, yes, yes, we all know who put them in place,” he said.

Cameron added the government aimed to set up a commission to establish why the energy market is not working effectively, but repeated his belief that “green regulations” are a problem.

The Prime Minister made the comments during a feisty session at the House of Commons, where he was challenged by opposition leader Ed Miliband to explain how he would cut energy bills.

Millions of UK consumers have been hit over the past fortnight after three of the country’s ‘Big Six’ energy companies announced they planned to raise their prices above inflation.

Labour leader Miliband says he would impose a “price freeze” if elected.

Yesterday former British PM John Major called on the government to get a grip and impose a windfall tax on energy companies profits.

Green levies account for around 9% of UK energy bills, of which carbon taxes make up 2%. The cost of buying fuel from the wholesale energy market accounts for 47% of prices.

The aim of the levies is to encourage energy efficiency and investment in renewable technologies like wind, solar and marine power.

According to the Carbon Brief website, the UK Government believes green policies will initially drive bills up by £286 per household, but subsequently bring them down by £452 as efficiency measures kick in.

The independent advisory Committee on Climate Change says low carbon policies could add as little as £10 per house up to 2020, a figure which could rise to £30 between 2020-2030. After 2030 it says bills are expected to fall.

Meanwhile the FT points out Cameron may be tilting at the wrong windmill: “these are not the primary cause of the recent price rises – infrastructure costs and wholesale price rises are more important, according to energy companies,” it says.

With under a month before the next round of UN climate change talks, Cameron’s announcement will be seen as another blow to the UK’s international reputation as a low carbon leader.

Before his election in 2010 Cameron called on voters to “vote blue and go green”, adding once Prime Minister that he would lead the “Greenest Government Ever”.

UK green groups reacted with disappointment to today’s news. David Nussbaum, Chief Executive of WWF-UK said cutting efficiency measures would be a “false economy.”

“Measures to tackle climate change are in place for a reason – to decarbonise our economy, increase our energy security, create jobs and encourage investment,” he said.

“The Government’s own Committee on Climate Change has said clearly that the measures we have in place to decarbonise our economy represent the minimum action we can take to hit emissions reductions targets.”

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