Consumer groups are warning that the chancellor’s climate change targets announced in the 2009 budget, could knock nearly two million households into fuel poverty.

They reckon that Alistair Darling’s commitment to introduce carbon capture plants and build offshore wind parks will have to be partly paid for with a levy on the average households’ energy bill of some £30. The effect of this could see 100,000 more households thrust into fuel poverty. Put this new group together with some 1.6 million people who will find the actual cost of increasing electricity prices hurting them, and that makes some 1.7 million who will experience fuel poverty in the future.

These estimates originate from independent advisor The Committee on Climate Change, who warned the government last year that if they increased the share of renewable sources when it comes to generating electricity, then the extra costs, as much as 25%, would be passed onto consumers.

Already there are some five million households in the U.K. who fall in the bracket of being in fuel poverty. The definition is those households with at least one tenth of their income going on fuel bills. And this bracket includes 2.5 million pensioners.

But the budget saw the government stand steadfast when it comes to cutting emissions. Its target for a cut of 22% by the end of 2012 and 34% by 2022 is seen as a minimum by many. The plans that were announced by Darling included four new carbon capture projects. These involve the capture of carbon at the source of generation, mostly the power stations, which is then stored underground. It has been calculated that this will cause a 2% increase in consumer bills by 2020, equating to about £25 extra a year. The offshore wind parks will eventually cost the consumer around £15 a year.

Consumer groups agree that protecting the environment is essential, but that the lowest income households will be a major casualty. And they claim that the government has got its sums wrong when it comes to allocating funds to help those in fuel poverty. For those new 1.7 million about to be hit by fuel poverty, it is reckoned that some £500 million will be needed to be spent on energy efficiency incentives to balance out the effect. Yet Darling only allocated some £200 million in the budget.

Guest Article by Neil Camp

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