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Energy-efficiency and Environmental Policies & Income Supplements in the UK: Evolution and Distributional Impacts on Domestic Energy Bills

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  • Mallika Chawla
  • Michael G. Pollitt

Abstract

The paper examines the financial costs of energy-efficiency and environmental policies that directly affect domestic electricity and gas bills in the UK over time. It also attempts to work out the current distributional impacts of these policies and others that act as income supplements thereby presenting a consistent picture across time and income deciles. Figures suggest that between 2000 and 2011, the percentage share of policy costs in typical domestic electricity and gas bills rose by 14% and 4% respectively. This reflects a growing share of policy costs in bills which is relatively small for gas customers but significant for electricity customers. Moreover, distributional impacts of the energy-policy mix highlight the issue of imperfect targeting of low-income households during 2009-10. The study also indicates that during 2010-11, 76% of the funds for energy-efficiency schemes were handled by the private sector. Given that a long-term solution to fuel poverty lies in improving thermal efficiency of houses, this research draws attention towards the need for definitive evidence on the ways in which energy suppliers charge policy costs from their domestic customers.

Suggested Citation

  • Mallika Chawla & Michael G. Pollitt, 2013. "Energy-efficiency and Environmental Policies & Income Supplements in the UK: Evolution and Distributional Impacts on Domestic Energy Bills," Economics of Energy & Environmental Policy, International Association for Energy Economics, vol. 0(Number 1).
    • Handle: RePEc:aen:eeepjl:2_1_a02
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Michael G. Pollitt, 2016. "Electricity Network Charging for Flexibility," Working Papers EPRG 1623, Energy Policy Research Group, Cambridge Judge Business School, University of Cambridge.
    2. Devine, Mel & Farrell, Niall & Lee, William, 2014. "Managing investor and consumer exposure to electricity market price risks through Feed-in Tariff design," MPRA Paper 59208, University Library of Munich, Germany.
    3. Niall Farrell & Mel T. Devine & William T. Lee & James P. Gleeson & Seán Lyons, 2017. "Specifying An Efficient Renewable Energy Feed-in Tariff," The Energy Journal, , vol. 38(2), pages 53-76, March.
    4. repec:zbw:rwirep:0542 is not listed on IDEAS
    5. Manuel Frondel & Stephan Sommer & Colin Vance, 2015. "The burden of Germanyùs energy transition: An empirical analysis of distributional effects," Economic Analysis and Policy, Elsevier, vol. 45(c), pages 89-99.
    6. Okushima, Shinichiro, 2016. "Measuring energy poverty in Japan, 2004–2013," Energy Policy, Elsevier, vol. 98(C), pages 557-564.
    7. Manuel Frondel & Stephan Sommer & Colin Vance, 2015. "The Burden of Germany’s Energy Transition – An Empirical Analysis of Distributional Effects," Ruhr Economic Papers 0542, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
    8. Niall Farrell & Seán Lyons, 2016. "Equity impacts of energy and climate policy: who is shouldering the burden?," Wiley Interdisciplinary Reviews: Energy and Environment, Wiley Blackwell, vol. 5(5), pages 492-509, September.
    9. Matthew Lockwood, 2022. "Policy feedback and institutional context in energy transitions," Policy Sciences, Springer;Society of Policy Sciences, vol. 55(3), pages 487-507, September.
    10. Okushima, Shinichiro, 2017. "Gauging energy poverty: A multidimensional approach," Energy, Elsevier, vol. 137(C), pages 1159-1166.
    11. David Newbery, 2015. "Reforming UK Energy Policy to Live Within Its Means," Working Papers EPRG 1516, Energy Policy Research Group, Cambridge Judge Business School, University of Cambridge.
    12. Farrell, Niall & Devine, Mel, 2015. "How do External Costs affect Pay-as-bid Renewable Energy Connection Auctions?," Papers WP517, Economic and Social Research Institute (ESRI).
    13. Michael G. Pollitt, 2015. "In Search of 'Good' Energy Policy: The Social Limits to Technological Solutions to Energy and Climate Problems," Working Papers EPRG 1520, Energy Policy Research Group, Cambridge Judge Business School, University of Cambridge.
    14. Curtis, John & Devitt, Niamh & di Cosmo, Valeria & Farrell, Niall & FitzGerald, John & Hyland, Marie & Lynch, Muireann & Lyons, Sean & McCoy, Daire & Malaguzzi Valeri, Laura & Walsh, Darragh, 2014. "Irish Energy Policy: An Analysis of Current Issues," Research Series, Economic and Social Research Institute (ESRI), number rs37 edited by FitzGerald, John & Malaguzzi Valeri, Laura.
    15. Oseni, Musiliu O. & Pollitt, Michael G., 2014. "Institutional arrangements for the promotion of regional integration of electricity markets : international experience," Policy Research Working Paper Series 6947, The World Bank.
    16. Farrell, Niall & Lyons, Seán, 2014. "The distributional impact of the Irish public service obligation levy on electricity consumption," MPRA Paper 53488, University Library of Munich, Germany.
    17. Lockwood, Matthew, 2016. "The UK's Levy Control Framework for renewable electricity support: Effects and significance," Energy Policy, Elsevier, vol. 97(C), pages 193-201.
    18. Farrell, Niall & Humes, Harry, 2022. "Diminishing deadweight loss through energy subsidy cost recovery," Papers WP727, Economic and Social Research Institute (ESRI).
    19. Verde, Stefano F. & Pazienza, Maria Grazia, 2016. "Energy and climate hand-in-hand: Financing RES-E support with carbon revenues," Energy Policy, Elsevier, vol. 88(C), pages 234-244.
    20. Haar, Lawrence, 2020. "An empirical analysis of the fiscal incidence of renewable energy support in the European Union," Energy Policy, Elsevier, vol. 143(C).
    21. Niall Farrell & Cathal O'Donoghue & Karyn Morrissey, 2020. "Regional income and wave energy deployment in Ireland," Papers in Regional Science, Wiley Blackwell, vol. 99(3), pages 509-531, June.
    22. Manuel Frondel & Stephan Sommer, 2014. "Diskussionspapier: Energiekostenbelastung privater Haushalte – Das EEG als sozialpolitische Zeitbombe?," RWI Materialien, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, pages 23, 06.
    23. repec:zbw:rwimat:081 is not listed on IDEAS

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