The poor will pay most for climate change policies

CSE report points to ’triple injustice’

11 March 2013

Low-income households are facing a ‘triple injustice’ in wake of policies to cut carbon emissions and reduce fuel poverty. This is the conclusion of a report written by CSE for the independent Joseph Rowntree Foundation (JRF). See the project page here.

The Government has legally binding targets to ensure no households are in fuel poverty by 2016 and to reduce carbon emissions by 80% by 2050. The report identifies who benefits and who pays for Government energy policies based on analysis of their own figures.

The report, Distribution of carbon emissions in the UK: implications for domestic energy policy, stresses the need to meet climate change targets, but calls for a fair approach in how policies impact on poorer households.

A 4-page 'findings' document can be downloaded here.

Using the Government’s own assessments of policy costs and impacts, CSE’s analysis found that low-income households:

  1. Benefit least from energy policies. While bills are predicted to fall for all households if government policies are successful, the wealthiest 10% will see their bills reduced by 12% by 2020, a cut of £182 – compared to just £69 (7%) for the 10% of lowest income households.
  2. Pay a higher share of the cost for policies. More of the costs of policy come from lower income households than from higher income households. And the lowest income are expected to spend 10.5% of household income on energy bills; the richest spend 1.3%. There will still be nearly 3 million fuel poor households in 2020 even if policies are successful.
  3. Emit the least: on average the richest 10% of households are responsible for three times more than the poorest 10% (16% of all emissions). The least well-off 10% contribute only 5%.

Infographics from the report. Click on the thumbnails to expland.

Katharine Knox, Programme Manager for Place at JRF, said: “Climate change is one of the biggest risks facing society and needs dealing with, but we must take care to ensure a fair approach. It’s important to meet our targets but currently there appears to be a triple injustice for low-income households: they are least responsible for carbon emissions, but pay more and benefit less from existing policies. We must take a more equitable approach and tackle climate change and fuel poverty together.”

The report analyses Government data to reveal the winners and losers from the policies designed to cut domestic carbon emissions.  It highlights policy options to ensure progress is made towards our climate change targets in a fair way.

To achieve this requires incentives in the short term. This could include council tax breaks for those that improve the thermal efficiency of their home; subsidised interest rates for Green Deal loans; cutting stamp duty based on pre house sale improvements to energy efficiency; and bringing forward mandatory efficiency targets for private rented homes.

But the study stresses long-term solutions are needed to achieve sufficient cuts in carbon emissions while protecting low-income households from negative impacts. A better optimised programme of retrofit for the housing stock would cut emissions further, lead to lower bills and reduce fuel poverty compared with existing plans.

Simon Roberts OBE, Chief Executive of CSE, said: “Lower income households already tend to have much lower emissions. So they shouldn’t be carrying the burden of paying for better off households to cut their emissions.

"Moreover, our analysis shows that there is very little leeway for the policies to underperform if we are to hit these vital targets. So we need policies which stimulate emission reductions but also take the burden off low income households. That means targeting government support at those most in need and shifting away from using fuel bills as the means to raise money to fund policies.”

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