The UK government must urgently address high electricity prices to accelerate progress toward its net-zero carbon emissions targets, according to Piers Forster, interim chair of the Climate Change Committee (CCC).
Elevated electricity costs are undermining efforts to promote the use of heat pumps, electric vehicles (EVs), and the electrification of industries, all essential for achieving the country’s legally binding climate commitments.
While the UK has successfully expanded its renewable energy capacity, the energy transition is hindered by electricity prices significantly higher than those of gas.
Currently, under the energy price cap, electricity costs 24.50 pence per kilowatt-hour, compared to just 6.24 pence for gas, making green alternatives less financially attractive for households and businesses.
Forster stressed the importance of making electricity more affordable to encourage the adoption of clean energy technologies.
Lowering costs would boost demand for heat pumps and EVs, critical components of the UK’s strategy to decarbonize heating and transport sectors.
Recent policy changes, including reduced penalties for boilermakers failing to meet heat pump sales targets and potential adjustments to EV regulations, have raised concerns about the government’s commitment to climate goals.
Achieving net-zero by 2050 requires a large-scale shift from gas boilers, which still heat most British homes, to more sustainable solutions like heat pumps.
The CCC has long advocated for redistributing levies on energy bills to prevent electricity users from bearing disproportionate costs.
Between April and June 2024, levies to fund renewable energy subsidies and assistance for vulnerable households accounted for 16% of electricity bills but only 6% of gas bills, according to the Energy and Climate Intelligence Unit.
The UK’s reliance on a marginal pricing system, where the most expensive energy source—often gas—sets electricity prices, exacerbates the issue.
While previous Conservative governments explored market reforms to decouple electricity pricing from volatile gas costs, they ultimately retained the current system, citing its complexity and the protective effect of state subsidy contracts for new renewable projects.
Forster emphasized that alternatives, such as discounts for households using heat pumps or reforming the electricity market, could reduce costs and encourage greener energy use.
Think tank E3G has echoed this sentiment, highlighting the need for targeted support to accelerate the adoption of sustainable technologies.
The Department of Energy and Net Zero reiterated its commitment to making Britain a global leader in clean energy.
It is exploring strategies to lower electricity prices relative to gas, ensuring consumers benefit from the shift to renewable energy while maintaining progress toward climate targets.
Efforts to rebalance energy costs will play a pivotal role in determining the UK’s ability to achieve its environmental and economic ambitions, driving the adoption of sustainable technologies and reducing reliance on fossil fuels.
