Gas levy ‘threatens to fuel soaring household energy bills’

Politics

Spiralling gas bills could soar further under government plans to impose new charges to pay for eco-friendly heating, it has been reported.

The move to introduce a levy on the fossil fuel is contained in a new strategy due to be published ahead of next month’s COP26 climate conference in Glasgow, according to The Times.

It commits the government to cutting the price of electricity by removing green levies and slapping additional costs on gas to fund the switch to low-carbon alternatives.

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Family struggles with cost of living

However, the step is likely to prove controversial, with households already struggling with soaring energy bills in the face of increased wholesale prices, triggered by global demand as economies recover from the coronavirus pandemic.

The energy watchdog Ofgem has already warned millions of households should expect to see a “significant rise” in their bills at the next price cap review.

One government insider told The Times that the plans were “madness”.

Earlier this week, Boris Johnson said Britain was aiming to produce “clean power” by 2035 as part of the nation’s goal of reaching net zero carbon emissions.

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Business Secretary Kwasi Kwarteng has also insisted that by decarbonising the UK’s power supply, the government would ensure households are less exposed to swings in fossil fuel markets.

The government will undertake a series of consultations on the carbon reduction plan, which is likely to start in 2023 and could add £170 a year to gas bills, The Times said.

The strategy will reportedly include measures to boost the sale of heat pumps, which currently cost about £10,000, compared with £2,000 for a gas boiler.

A spokesman for the Department for Business, Energy and Industrial Strategy told the Times: “We’ll set out our upcoming heat and buildings strategy shortly. No decisions have been made.”

It comes as soaring energy costs have prompted industry leaders to warn the government their factories could stop production or permanently close.

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Andrew Large, director-general at the Confederation of Paper Industries, and Gareth Stace from UK Steel, attended a meeting with the business secretary and other representatives of energy intensive industries to discuss the wholesale gas crisis on Friday.

Mr Large later told the BBC it was “very clear” across all of the sectors that there are “serious” risks that plants could halt work as a result of the gas prices being too high.

Speaking to Channel 4 News, Mr Stace insisted the worst-case scenario would see steel plants closing for good.

He said: “The nightmare scenario would be that we produce less steel in the UK, that we see all of that steel that we do consume in the UK, and that’s increasing, be met by imports and once you take away a steel plant, you don’t really bring them back.

“That’s it for good. Once it’s done, it’s done.”

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