Source: BBC Radio 4: Today Programme
URL: http://news.bbc.co.uk/today/hi/today/newsid_9662000/9662348.stm
Date: 15/12/2011
Event: David Kennedy of the CCC on green policies and fuel bills
Attribution: BBC Radio 4
People:
Justin Webb: It is wrong to suggest that government policies on climate change are going to lead to big rises in fuel bills. That's what the Committee on Climate Change is claiming. They advise the government on green policies. They accept that bills have gone up over the last six years but, they say, only 16% of the increase is due to policies aimed at reducing carbon emissions. David Kennedy is Chief Executive of the Committee, and he's here now. Good morning to you.
David Kennedy: Good morning.
Justin Webb: Let's talk about the figures, first of all, because, I mean, you've put actual figures, actual pound sums, haven't you, on the amount extra that people have paid over the last 6 years, and, crucially, the amount they are likely to pay over the coming years.
David Kennedy: Yes, we have, so if I take you through those figures, well, if you look at current bills, we've all felt very significant increases over the last few years. We estimate bills have gone up by about £450 for the typical household, and that most of that is due to gas. And people ask me how confident can we be about the various aspects of the analysis. Well, we can be very confident that's what happened, and that's a fact.
Justin Webb: Yeah, because that much is simply the price of gas has gone up.
David Kennedy: Of course.
Justin Webb: But within that, you've said something about the amount of that increase that is due to wholesale prices and the amount that's due to other factors, and the amount that's due to climate change policies. And why have you hit on the figure you have hit on, for climate change policies?
David Kennedy: Well, we're just able to estimate the cost of those policies. We know what the cost is, but if we -
Justin Webb: No, because what people say is that it's an estimation that is simply an estimation. It doesn't really have any basis in science. And those people who say "Actually, the costs are going to be much greater in the future" may still be right.
David Kennedy: Okay, so this is the crucial thing. Let's differentiate between bills now - and we can be confident about what's happened, including the cost of low-carbon policies to date - if we look forward, then there are some uncertainties. And so what we've said there is: if there are low-carbon policies will pull bills in two directions. On the one hand, there's a set of things, a set of low-carbon power-generation technologies which we need to support over the next decade. We need those for our longer-term challenges, to build a low-carbon power system, but to reduce reliance on imported fossil fuels. And we estimate that supporting those will cost a typical household £100 in 2020, so bills will increase from now by £100 because we are supporting these technologies -
Justin Webb: Which is, for a poorer household, a lot of money.
David Kennedy: We're not making the judgement there's £100 a lot, or is it not a lot. We're saying it is £100, and that can be the basis for public debate and discussion, but I have to contrast that with some of the claims that are made in this debate. You hear numbers that are hundreds of pounds and even thousands of pounds. So we are pretty confident that the hundred pounds we have got that right, could be slightly higher, it could be slightly lower, but it's not orders of magnitude different. But the other thing - so policies do pull in the other direction. We identify, in the analysis, a good opportunity for energy efficiency improvement - that's people insulating lofts and cavity walls. It's also people shopping around when they buy new appliances and making sure they buy the most efficient on the market. If they do that - there's a big challenge there, but it's in our hands - if we do that, we can keep bills at current levels.
Justin Webb: The Chancellor said recently a decade of environmental laws and regulations are piling costs on the energy bills of households and companies, is he right?
David Kennedy: Well, again, we've said what the costs we project to be over the next decade. It is £100 per household in a worst-case scenario -
Justin Webb: But what the Chancellor is saying is that costs are being piled onto energy bills by environmental laws and regulations.
David Kennedy: Well, £100 is £100. And that is a worst-case scenario. I've said that we can bring that back down through energy efficiency and improvement. But we've got to set against that the benefit of investing in low-carbon technologies and in supporting energy efficiency and improvement and fuel -
Justin Webb: And just on that point, finally, 2% - less than 2%, actually - of world carbon emissions come from this country. I mean, what particularly those people who are struggling to pay those bills will be thinking: is this - is this worth it? And even with an acceptance that there is a world problem to face, that actually our contribution to it is small, and this pressure - particularly on poorer households - is big.
David Kennedy: I think we're moving into a carbon-constrained world, globally. Now, if that is the case, we can either be on the front foot - we can anticipate that, we can develop technologies and make investments. If we do that, we can keep the costs down - that is the economically sensible way. Or we can ignore the future. We can invest in high-carbon assets, lock into those and scrap them later on. That is a very expensive way. So it's economically sensible to do what we are doing, to start on the low-carbon path now.