October 19, 2021

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Gas bills set to rise further under green energy surcharge plan

A green energy surcharge which is applied to household electricity bills will instead be slapped on gas bills as part of the government’s net zero drive, according to reports.

Ministers will insist that the policy will be phased in over a period of up to 10 years and maintain that combined energy bills will not increase in price.

The proposals, which will be considered at an upcoming review, are likely to be controversial at a time when household energy bills are increasing sharply as a global gas shortage raises prices for energy providers.

Ministers are set to announce the proposals, which would see customers with gas boilers pay more than those who use electricity to heat their homes or drive electric cars, according to the Financial Times.

The heating of homes and workplaces, for which gas is heavily relied upon, accounts for almost one-fifth of the UK’s carbon emissions. 

Gas is currently taxed at a lower rate than electricity despite being a pollutant, while electricity can be generated through renewable sources.

The Government has set itself the long-term goal of eliminating all net carbon emissions by 2050 and green surcharges are set to play a crucial role in this. The surcharges currently add £159 to each household’s electricity bill on average.

The Department of Business, Energy and Industrial Strategy said they wanted to encourage people to take up technologies such as heat pumps and electric vehicles, while insisting that “affordability” for consumers and taxpayers would be at the heart of their approach.

The sale of new gas boilers is set to be banned by 2035. Heat pumps, an eco-friendly electric alternative to gas boilers which work like a refrigerator in reverse, currently have much higher upfront installation costs than gas boilers.

Air-source heat pumps currently cost around £10,000, though suppliers are expected to cut these costs over the coming years.

A survey by RSK Group found that almost 80 per cent of homeowners would only install a heat pump system if they received adequate financial support from the Government to meet the costs of putting in the technology.

Earlier this month, a report from the Institute for Public Policy Research warned that only six per cent of the heat pumps needed to reach the UK’s net zero target of 2050 are currently being installed.

A spokesman for the Department for Business, Energy and Industrial Strategy said: “Over the next 15 years, we will help households to gradually transition away from fossil fuel boilers as people replace their appliances with lower carbon, more efficient alternatives like heat pumps, with £1.3bn already committed to support upgrades to home energy efficiency.

“Alongside leading manufacturers and suppliers of heating systems, we are confident that the upfront costs of low-carbon heating systems, such as heat pumps, will fall in the upcoming years, and we will look to help the market drive down these costs.”

A mass switch to electric cars is also seen as essential if the UK is to meet its net zero target to reduce greenhouse gas emissions.

New diesel trucks will be banned in the UK from 2035 and 2040 – with smaller ones being prohibited from the road first, followed by those weighing more than 26 tonnes.

Heavy goods vehicles account for about 17 per cent of emissions from transport according to government figures, compared with more than 55 per cent from cars.

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