Treasury Prejudice Against Energy Efficiency Exposed

February 7th, 2014

A report released today by the Energy Bill Revolution has revealed Treasury hypocrisy over financial support for the energy sector.

It reveals that although the Treasury has so far refused to recycle carbon tax to help households reduce their energy bills by making them more energy efficient, it allows other taxes to be recycled to support renewable energy and fracking for gas.

Using carbon tax to make homes highly energy efficient is a demand of the Energy Bill Revolution, an alliance of almost 200 major UK charities, businesses, unions, consumer and health groups.  It is the biggest fuel poverty coalition in the world.


They are calling for carbon revenue from the Emission Trading Scheme and Carbon Support Price to be used to finance a major infrastructure programme to make homes highly energy efficient. This is seen as the only long term solution to high energy bills and fuel poverty.  The Energy Bill Revolution revealed last year that the UK has the oldest and worst insulated housing stock of any country in western Europe.

The report, ‘The economic case for recycling carbon tax into energy efficiency’ reveals 7 taxes that the UK recycles or hypothecates, worth £4 billion, every year to support green and social policies and community development. These include the Renewables Obligation, Feed in Tariffs, the Climate Change Levy, Landfill Tax, London Congestion Charge and Community Infrastructure Levy. Most recently Government has announced that councils can keep 100% of business rates from fracking, estimated by Government to be worth £1.7m per year for each fracking site.

The report also reveals that 13 countries in the EU are using proceeds from the EU-ETS auctions to finance climate and energy efficiency programmes[1]. It includes 7 of the 10 countries expecting the largest ETS revenues. France and Germany, Italy, Czech Republic, Hungary, Estonia and Lithuania have all made energy efficiency of the building stock a priority for the use of their ETS revenues.

Germany has committed €1.5bn of investment in 2013 in making homes more energy efficient with carbon revenues contributing to this figure.France has announced an ambitious national refurbishment programme which is expected to benefit from €1bn of carbon revenues in 2016.

The Treasury announced last year that both carbon taxes from the ETS and Carbon Support Price were classified as ‘green taxes’ which means that their principal objective is officially to help protect the environment.  Despite this they still refuse to recycle them to reduce carbon emissions. Research shows that the money raised from carbon taxes when spent on energy efficiency can result in eight times more energy savings than caused by the price rise alone[2].

Ed Matthew, Director of the Energy Bill Revolution said “The real reason the Treasury has opposed carbon tax recycling into energy efficiency is because they don’t want to reduce their control over public spending and other departments. When will they understand that this is not their tax revenue. It belongs to the people and we want it back to warm up our homes. Using carbon tax to make households more energy efficient is by far the best long term solution to both bring down energy bills and end fuel poverty


Does your MP support the Energy Bill Revolution?

See the original report here



Notes to Editors:

1.   The Energy Bill Revolution is the biggest fuel poverty alliance in the world. It is a coalition of almost 200 leading UK charities, businesses, unions, consumer and health groups. It is calling on the Government to use carbon tax revenue to support a major infrastructure programme to make UK homes super energy efficient. See:

2. Cold Homes Week is from 3rd to 7th February 2014: It is a week of action by the Energy Bill Revolution alliance to draw attention to the plight of those in fuel poverty.

3. Carbon Tax: 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. If the proceeds from the carbon taxes were spent on energy e.fficiency 90 per cent of these households could be lifted out of fuel poverty.

4. UK Tax Recycling: The table below lists seven other tax-and-spend programmes that together already collect £5.2 billion and resulted in recycled spending of £4.0 billion in 2012/13:


Year introduced

Levied on Subsidy paid to Revenue in 2012-13 (£m)
Landfill tax


Tonnage waste landfilled Businesses (NIC reduction) and Environmental Bodies


of which 88.8m or 6.8% of total recycled

Londoncongestion charge


Vehicles driven into London Transport forLondon


Community infrastructure levy


Developers Local community infrastructure


Renewable obligation


Electricity consumers Renewable electricity generators


Feed-in tariff


Electricity consumers Small scale renewable electricity generators


Warm home discount


General taxation* Vulnerable households


Climate Change Levy


Commercial energy users Business (NIC  & Climate Change Agreement holders)


* In the 2013 Autumn Statement the chancellor announced energy companies would be provided funding for Warm Home Discount from 2014

** £800m was raised from the Climate Change Levy in 2012-13 net of the reduced rate paid by firms that are in climate change agreements.

5. European carbon tax recycling:  The following countries inEurope are recycling carbon tax to support climate and energy efficiency programmes:



ETS Revenue 2013-2020 (Bn€)[3] % to be recycled EE a priority Description
Germany 17.8 Almost 100% Y ETS revenues go to the Special Energy and Climate Fund. €1.4bn budget in 2013.
Italy 8.6 50% Y 50% of ETS revenues allocated to the “Kyotofund”. €200m annual revolving fund offers loans for EE (incl. buildings), distributed generation and small scale RE.
France 5.1 Up to 100% Y Up to 100% ETS revenues can be used by the National Agency for Housing. A major priority is energy efficiency refurbishment of buildings, esp. for low-income families.
Romania 3.7 More than 70%   71% of revenues (plus 100% from aviation) will go to projects for climate purposes.
CzechRepublic 3.1 50% Y 50% of ETS revenues are legally recycled for energy efficiency. Of this, 2/3 is to fund the Green Savings Programme for EE and RE in homes.
TheNetherlands 3.1 unknown   Industry compensation scheme to be funded by ETS revenues. Compensation is conditional on firms making energy efficiency improvements.
Greece 3.1 unknown   An undefined amount of ETS revenue reported to be directed into a special fund for renewable energy.
Belgium(Flanders) 2.3 unknown   Proposed industry compensation scheme, conditional on an energy audit and economically feasible energy savings.
Bulgaria 1.9 50%   Law allocates some revenues to projects that contribute to low-carbon development. Unofficial report 50%.
Finland 1.5 unknown   Revenues will be directed in part to climate action within development cooperation as part of the aim to reach the 0.7% of GNP devoted to international development.
Hungary 1.0 50%


Y Requirement for 50% of revenues to be spent on climate action. Housing refurbishment reported to be 2013 priority.
Estonia 0.6 50% Y 50% of the revenues will be recycled for environmental purposes. Energy saving measures in apartment buildings is the funding priority for 2013.
Lithuania 0.4 100% Y Requirement that all ETS revenues are directed into a revolving fund. In 2013 the largest investments have been in energy efficiency in buildings.


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The only permanent solution to drive down energy bills and end fuel poverty.