Green energy subsidies – the cost to households

Civitas, 17 May 2013

Green energy subsidies will cost every British household £600 a year by 2020, a leading industry analyst warns in a Civitas paper published today.

The cost to consumers of pursuing EU renewables targets is set to rise above £16 billion per annum, when VAT is taken into account, Dr John Constable writes in Are Green Times Just Around the Corner?

Moreover, these huge costs are making it more, not less, likely that green energy production remains inefficient and a burden on the taxpayer in the years to come, he says.

Dr Constable, director of the Renewable Energy Foundation which publishes data on the energy sector, says subsidies are discouraging the innovation that will be necessary if green energy is ever to become a sustainable alternative to fossil fuels.

And he warns that the shift to renewables is likely to herald the first long-term decline in living standards since the start of the industrial revolution.

“The fact is that renewable energy is still far from competitive with fossil fuels, and nowhere near as economically productive,” he writes.

“Consequently, shifting to current renewables for the bulk of our energy would result in a reversal of the long-run economic trend since the industrial revolution.

“More people would be working for lower wages in the energy sector, energy costs would rise, the economy would stagnate, and there would be a significant decline in the standard of living.”

Dr Constable’s analysis is contained in the sixth of our Ideas for Economic Growth series, part of the Wealth of Nations project here at Civitas.

The purpose of Wealth of Nations is to explore how, amid the present economic difficulties, a free people can create prosperity that is widely shared and sustainable. This means exploring the optimum role for government and examining how public policy can best support the development of productive assets.

Today’s paper can be access here. Past publications in the Ideas for Economic Growth series can be accessed here. One of Dr Constable’s prior works for Civitas, The Green Mirage, can be purchased from Amazon here.