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Energy Bill – The government lays out its plan for energy in the UK

Details of the long-awaited Energy Bill have been released, offering a commitment to renewables but a delay to emmision reduction targets.

As details of the Energy Bill were released initial reactions were mixed, with the government coming under criticism from environmental groups about delaying the setting of carbon targets until 2016, but receiving praise from renewable energy groups and the CBI about its commitment to renewables.

The government will increase its commitment to renewables, to “…diversify our energy mix to avoid excessive gas import dependency by increasing the amount of electricity coming from renewables from 11% today to around 30% by 2020,” according to the Department of  Energy and Climate Change (DECC).

Ed Davey, the Energy and Climate Change Secretary said: “This is a durable agreement across the Coalition against which companies can invest and support jobs and our economic recovery.

“The decisions we’ve reached are true to the Coalition Agreement, they mean we can introduce the Energy Bill next week and have essential electricity market reforms up and running by 2014 as planned.”

The commitment will add about £110 to the average household energy bill by 2020 according to the advisory committee on climate change. DECC estimates it will be £95 – or 7%, but the moves will broadly triple what customers pay for renewable power.  However, speaking to the BBC, Mr Davey said the measures being introduced would save around the same amount on bills, and that the figures on the impact on bills were “rubbish”.

Carbon target delayed

The Energy Bill was also expected to set carbon emission targets for electricity until 2030, but the decision has been pushed back until 2016. The move means the UK may not be able to meet its emissions targets set out in the Climate Change Act, and has come under fire from environmental groups and Labour.

Caroline Flint, the shadow energy and climate change secretary said:”It is outrageous that on the day Ed Miliband committed to a tough cut in Britain’s carbon levels by 2030, George Osborne and Ed Davey abandoned their target.”

Environmental group Greenpeace were even more outspoken. Their executive director John Sauven said: “By failing to agree to any carbon target for the power sector until after the next election, David Cameron has allowed a militant tendency within his own ranks to derail the Energy Bill.”

The concession is being seen by many as defeat for the Lib Dems, who aimed to meet these targets and reduce emissions by removing gas from the electricity-generation system, a move opposed by the chancellor George Osbourne.

What we say

Ann Robinson, Director of Consumer Policy at uSwitch, says: “We welcome any clarity on the impact of future investment on household energy bills – it’s important that consumers are made aware so they can take action to prepare for higher bills in the future and find information and support on how to limit the impact on their household.

“However, the fact remains that any additional cost on top of the hikes already seen will be unaffordable for many consumers. The average household energy bill today is already £1,334 a year and this is hurting people.”

“We’re on the brink of an affordability crisis – research shows that when the average bill hits £1,500 a year a majority of households will be forced to take drastic action on their energy bills and this could lead to further compromises on health and wellbeing.

“Consumers must take steps to protect themselves by becoming energy efficient, to reduce the amount of energy they use, and by moving to the cheapest tariff for their needs, to reduce the amount they have to pay. There’s over £300 difference between the cheapest and most expensive tariffs on the market and thankfully there are still many free or low-cost home insulation offers that people can take up to reduce energy bills, but these won’t last forever.

“However, the Government also has to take action to protect those in fuel poverty and we would urge it to look at giving extra help to those on means-tested benefits, as these higher energy costs are likely to hit them hard.”