Carbon taxes should boost Green Deal

by Jessica Shankleman

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09 Nov 2012

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A LARGE-SCALE ROLLOUT of energy-saving measures paid for by carbon taxes could boost the UK's gross domestic product by 0.2% and create 71,000 jobs by 2015, according to a report which warns the government's current energy efficiency policies will fail to tackle fuel poverty.

Research commissioned by Consumer Focus and backed by a coalition of organisations dubbed the Energy Bill Revolution will today argue that using revenues from carbon trading could cut fuel poverty by up to 87%, Accountancy Age's sister publication reports.

The study warns that government policies, including the Green Deal and Energy Company Obligation (ECO) will fail to sufficiently tackle the problem of fuel poverty, which affects six million households – a number that is forecast to reach nine million by 2016.

The report shows the UK could copy an approach that is being launched in France, where the proceeds of auctioning allowances in the EU Emissions Trading Scheme (ETS) will help to pay for one million homes per year to be insulated.

The government has predicted ECO has the potential to help up to 5% of those currently in fuel poverty.

But the Consumer Focus report argues the government could also invest a portion of the £63bn raised from the carbon floor price and EU ETS between 2012 and 2027 in targeted energy-saving measures, significantly reducing levels of fuel poverty.

It shows that investing between 35% and 95% of carbon tax revenue could cut fuel poverty by 75% to 87%, depending on the level of investment.

The report also claims investing carbon tax revenues in energy efficiency measures would reduce energy bills in treated homes by more than £200 per year.

Research published ahead of the release of the government's imminent Energy Bill shows that if nine out of 10 fuel-poor households were removed from fuel poverty, it would quadruple the impact of the Green Deal and ECO on carbon emissions.

"This report challenges the assumption that we cannot afford to tackle fuel poverty," said Mike O'Connor, chief executive of Consumer Focus.

"It argues that there is a triple-win available of warmer homes, greater energy efficiency and economic growth if we can use carbon taxes revenue to benefit consumers, and fuel poor households in particular."

Climate change minister Greg Barker, however, argued that the government was already taking significant steps to help households struggling with rising energy bills.

"Two million households will get help under the Warm Home Discount Scheme this year, including more than one million low-income pensioners who will get £130 off their bill," he said.

"There is also help available with heating and insulation under the Warm Front scheme. And from next year the Green Deal will help millions improve their homes so they are better insulated, with extra help for those who need it most."

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