The Institute of Economic Affairs (IEA) thinks the UK Government should simplify its energy policy as part of its plans to leave the European Union (EU).

The IEA blamed “inefficient and costly green policies” for pushing up electricity prices.

It said electricity costs for households in England and Wales have increased by 50% in real terms over the past 16 years, while industrial consumers face the third-highest prices in the EU-15, some 50% higher than prices paid in France.

Contradictory objectives – such as using energy policy to achieve poverty reduction and at the same time reduce emissions and pursue industrial policy goals – were also highlighted as a failing.

‘Pollution permits’

Diego Zuluaga, Financial Services Research Fellow at the IEA and the author of the report, said: “It doesn’t have to be this way: in the 1990s, electricity charges fell by over 25% even as Britain cut its carbon footprint.

“Leaving the EU will remove Britain from the European Emissions Trading System, as well as the 20-20-20 targets for renewable energy generation.

“The government can replace these policies with domestically generated and more economically efficient alternatives such as a system of pollution permits that cuts emissions in the most affordable way.”

> Download the report