The economic case for recycling carbon tax into energy efficiency

The economic case for recycling carbon tax into energy efficiency

Over the next 15 years the UK Treasury will collect from consumers £60 billion in carbon taxes on electricity. These come from the auctioning of EU-ETS allowances and the Carbon Support Price.

At the moment the Government does not recycle these carbon taxes to help people bring down their energy bills, despite the fact there are compelling reasons for them to do so. In particular there are significant social, environmental and economic benefits from recycling the proceeds from these taxes into domestic energy efficiency.

The cost of domestic energy has turned into a major political issue because energy bills continue to rise and several million households are now in fuel poverty in the UK. If the proceeds from the carbon taxes were spent on energy efficiency 90 per cent of these households could be lifted out of fuel poverty.

Though it is rarely acknowledged the UK government has introduced a range of taxes where revenues are recycled for spending on particular pre-announced programmes. This report shows that recycling revenue from a tax for a specific programme is quite common. Most of the UK’s renewable energy programmes are funded through recycled tax revenue systems.

It is notable that the Treasury supports the case for recycling tax to subsidise renewables but has so far opposed recycling of carbon tax to subsidise energy efficiency. This is despite the fact energy efficiency is the best long-term solution to bring down energy bills and end fuel poverty.

The full report is attached. To find out more about the campaign head to Energy Bill Revolution.


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