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Claire Coutinho, the Energy Secretary, is exploring the possibility of removing £4 billion of green levies from household electricity bills, considering options such as transferring some or all of these charges to gas bills or funding them through general taxation.
The move comes amid concerns that these levies are hindering the adoption of technologies like heat pumps and electric cars, crucial for achieving net-zero emissions by 2050.
Currently, green levies contribute around £142 to the average electricity bill, compared to just £46 for gas bills, primarily due to charges associated with renewable energy schemes and bill support for low-income households. While shifting these charges away from electricity bills could incentivize the uptake of eco-friendly technologies, it may pose challenges such as increased energy costs for gas-connected households and potential exacerbation of fuel poverty.
Energy industry stakeholders, including major companies like Centrica, E.On, and EDF, support the move, arguing that the current setup creates disincentives for customers to embrace green alternatives. However, the proposal may face opposition, given concerns about the impact on gas consumers and the broader tax burden.
Although no official decisions have been made yet, Coutinho has received a report on the matter and is considering the options. Any proposals will need to strike a balance between affordability and fairness for consumers. With local elections approaching and a general election on the horizon, the government faces a tight timeline for implementing any changes to the current system.
