· 3 min read
illuminem summarises for you the essential news of the day. Read the full piece on The Telegraph or enjoy below:
🗞️ Driving the news: A decades-old UK green energy subsidy, the Renewables Obligation (RO), is now adding over £100 annually to household electricity bills and will cost consumers an estimated £38 billion more over the next five years — despite being closed to new entrants in 2017
• Criticised as a “zombie” levy, the scheme continues to inflate energy bills due to its design linking subsidies to the outdated Retail Price Index (RPI), significantly outpacing inflation measured by the Consumer Price Index (CPI)
🔭 The context: Introduced in 2002 under Tony Blair’s government, the RO aimed to accelerate renewable energy development by requiring electricity suppliers to buy green certificates (ROCs) from renewable generators
• Its generous terms — including RPI indexation and retroactive eligibility for older plants — have resulted in sustained, rising costs
• The scheme was replaced in 2017 by Contracts for Difference (CfD), but existing RO agreements remain active until 2037
• Drax alone has received £6.2 billion under the scheme
🌍 Why it matters for the planet: While the RO helped catalyse the UK’s early renewables boom — contributing to a record 46.4% share of renewables in electricity generation by 2023 — its outdated financial mechanism is now undermining affordability and public support for the energy transition
• High electricity costs can deter uptake of low-carbon technologies such as electric vehicles and heat pumps
• Calls are growing to replace regressive levies with more equitable funding via general taxation
⏭️ What's next: With energy bills under political scrutiny, reforming or phasing out legacy green levies like the RO is likely to feature in future UK energy policy debates
• Industry groups and consumer advocates are urging legislative action to limit the financial burden on households and improve industrial competitiveness
• Any overhaul would require primary legislation and coordination with broader net-zero objectives
💬 One quote: “It isn’t right that struggling households pay the cost of legacy subsidies like ROCs... They are, in essence, a regressive stealth tax on households,” – Sam Dumitriu, Head of Policy, Britain Remade.
📈 One stat: The Renewables Obligation added £6.7 billion to UK power bills in 2023–24, forecast to rise to £8.5 billion by 2026 — an increase of 25%.
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