Carbon pricing change could cut bills

Changing how carbon pricing feeds through Britain’s electricity market could have cut household and business energy bills by almost £2.3bn in 2025, according to a report.

The Energy Competitiveness Unit is proposing a “decarbonisation rebate” that would recover the extra money paid to some older low-carbon generators when carbon costs push up electricity prices and return it to households and businesses.

It said this would cut bills without scrapping carbon pricing or reducing treasury revenue. It estimates that between 2023 and 2025 every £1 raised by carbon taxes on the power sector cost consumers around £2 on domestically generated electricity

The Energy Competitiveness Unit is hosted by Project Tempo, a European research organisation headquartered in London which aims to develop policies to reduce the costs of the UK energy system.