DECC’s day to day resource budget has been cut by 22%, it has been announced.
Chancellor George Osborne launched the Spending Review this afternoon announcing he was “building Britain to become prosperous” by taking the “difficult decisions” to bring debt down.
Energy plans include “reforming” the Renewable Heat Incentive to save £700m as well as doubling the budget for renewables and low carbon technologies; “double spending” for energy research including £250m for small modular nuclear reactors; and supporting investment in shale gas.
The government will increase funding for the Renewable Heat Incentive to £1.15 billion in 2021 while reforming the scheme.
The Treasury expects managed expenditure on environmental levies, which include the Renewables Obligation, CfDs and feed-in tariffs as well as the carbon reduction commitment, capacity markets and the Warm Homes Discount, to rise from £6.2 billion in 2015-16 to £13.8 billion in 2020-21.
This figure, which does not include other DECC schemes that affect energy bills such as the Energy Company Obligation, is a reduction of £1.1 billion in 2020/21 on earlier forecasts.
Receipts from environmental levies are forecast to rise from £6.2 billion in 2015/16 to £13.1 billion in 2020/21.
Osborne said a new energy efficiency scheme will replace ECO to save consumers £30 a year on household bills, though no plans have been put forward on how that will work.
The Treasury said ECO will be replaced from April 2017 with a “new cheaper energy supplier obligation to reduce carbon emissions which will run for five years.”
The changes will mean that on average 24 million households will save £30 a year on their energy bills from 2017.
The Warm Home Discount scheme will also be extended to 2020-2021. This currently gives certain low-income households a one-off reduction of £140 on their electricity bill.
Osborne told the House of Commons: “We are committed to the low carbon sector and we show our commitment to the Paris talks next week.
“But we believe going green should not cost the earth.”
Image: DECC
