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Distributional Impacts Model for Policy Scenario Analysis – DIMPSA

Photograph of a smiling woman's head and shoulders. Behind her is a house with solar panels on the roof.

Who will pay for the home energy-efficiency improvements and low carbon technologies necessary for meeting UK climate change policies?

In 2010, the Centre for Sustainable Energy (CSE) developed a model known as DIMPSA – Distributional Impacts Model for Policy Scenario Analysis. CSE created DIMPSA as part of research conducted with the Association for the Conservation of Energy to explore the distributional impacts of UK climate change mitigation policies.

The model has since been used to conduct distributional impact analysis across a variety of projects. The Department of Energy and Climate Change (now the Department for Energy Security and Net Zero) used DIMPSA under license for the Government’s assessments of the distributional impacts of policies.


Underlying DIMPSA is a comprehensive dataset of UK household energy consumption. CSE derived this dataset from the socio-demographically representative sample of UK households surveyed in the Office of National Statistics Living Costs and Food Survey. We combined data from six of these surveys (2004/5 to 2009), generating a sample size of over 36,000 cases.

Open data 

As part of our Open Data project (funded by the Esmée Fairbairn Foundation), we made key statistics from DIMPSA on average household energy consumption openly available.

This information included estimates of average annual household electricity and gas consumption for all households in Great Britain. It was broken down by income bands and consumption bands (representing ‘quintiles’ and ‘deciles’ of the dataset). The number of households in each consumption and income quintile and decile was also provided. This information is fundamental to understanding the distribution of energy consumption patterns across households in Great Britain.

The data from DIMPSA has now been archived as it is no longer being updated.

Distributional impacts of UK climate change policies

The transition to a low carbon energy system requires significant improvements to the UK housing stock. Such as the installation of insulation and renewable energy measures. The study we originally created DIMPSA for investigated who might pay for these improvements. It explored:

In addition, the report’s authors explored the wider implications for social justice in the context of climate change mitigation policies.

The impact of different means of recovering the cost of housing stock improvements

The study used DIMPSA to model different scenarios where the cost of climate change policies was recovered via different means.

Recovering costs through consumer bills

If the costs of climate change policies were recovered through consumer energy bills, the average annual household energy bill (assumed to be £1,154) would increase by £103 (8.5%).

This ‘spread-even’ scenario takes more from higher-income households in absolute terms. But it hits the poor, who spend a higher proportion of household income on energy, significantly harder. This inequity could be addressed through a ‘protected-block tariff’. This is where energy suppliers are only allowed to recover the costs of climate change policies after a household consumes a certain amount of energy. Consumers would pay the additional costs if their energy consumption exceeded this amount. For example, for the heating and lighting of large homes, swimming pools etc.

This scenario would protect the poor but require regulatory backing.

Recovering costs through taxation

Alternatively, if the costs were covered by income tax, consumer energy bills would decrease by £193 (16%). This is because consumers would benefit from the higher energy efficiency associated with insulation and renewable energy, but not pay for this through their bills.

However, as the costs are paid for through income tax, annual household income falls by an average of £309. Under this scenario, the average household is £116 ‘net’ worse off, compared to £103. The lowest-income households who pay the least income tax will actually see a net surplus of £96 (i.e. what they save in energy costs more than compensates for the slight decrease in household income). By contrast, the richest households paying the most tax would be £1,378 worse off. Although this is probably affordable at around 0.7% of their income.

Overall, the analysis showed that recovery of costs through energy bills would be more regressive – hit the poor harder than the rich – than the taxation route. The government is unlikely to support this kind of taxation route as it could run to billions of pounds. However, the results of this study highlight the importance of recovering costs in a way that is as fair as possible – where vulnerable consumers are protected, expenditure on measures is linked to the householder, not the house, and high energy consumers are penalised.

Download the full report

“The distributional impacts of UK climate change policies”

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