Energy costs to remain high even after petrol crisis ends due to Net Zero

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Experts have warned that energy is likely to be a major drag on household finances for years to come even after the current petrol and heating crunch eases.

Transitioning the UK to ‘Net Zero’ - where the economy emits net zero carbon dioxide - will cost British households on average £1,500 over the next decade, the Resolution Foundation and the London School of Economics have said.

Britain has set ambitious targets to reduce emissions in the coming years but experts say the next phase of going green will require households to reduce their emissions by improving the energy efficiency of their homes and upgrading their cars from gas guzzlers to electric.

The cost of upgrading homes is estimated to be £42.5 billion over the next decade. That equates to around £1,500 per household, or around £150 a year. Costs are likely to be even higher when upgrading to electric cars is factored in.

“No-one should kid themselves that this next phase won’t be challenging,” said Jonny Marshall, senior economist at the Resolution Foundation. “We cannot afford to ignore the significant upfront costs that will be required to decarbonise our homes and our cars.”

The figures mean energy costs are likely to be a significant drag on household finances for years to come. Britain is already grappling with a cost-of-living crisis with petrol at an eight-year high and running short, while energy bills are set to soar. Experts think changes in wholesale prices mean bills will rise by at least £250 from next April.

The cost of transitioning to net zero is likely to fall hardest on low and middle income households who are more likely to live in low energy efficiency homes. Marshall said the government needs to come up with policies to help these people upgrade their homes without paying more than their fair share.

“We also need to pay particular attention to how low-and-middle income households are bearing those costs, and benefitting from future savings too,” he said. “The government must move from legislating targets to the far harder task of setting out policies to deliver this goal.”

The importance of household emissions in the next phase of climate plans has recently been highlighted by activists from the group Insulate Britain who have blocked motorways in protests calling for the government to do more to insulate houses. Household emissions in the UK need to fall by almost 80% over the next 15 years to meet the UK’s climate goals.

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