PM’s net zero changes could cost households up to £8bn

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By George Smeeton

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Policy changes announced today by the Prime Minister could cost British households almost £8bn in higher bills over the next decade, and more if gas prices spike again, due to cancelling new energy efficiency regulations for the private rental sector, [1] according to analysis by the Energy and Climate Intelligence Unit (ECIU).

There could be further impacts for household bills due to changes to the phase-out of oil boilers for off-gas grid homes.

Costs to the NHS due to poor housing could reach £1.2bn a year, or £12bn over the next decade. [2]

More generally, if gas demand remains high across the economy, the UK could pay an extra £150bn over 10 years to overseas gas producers, compared to if the Government introduced policies to ambitiously cut gas demand. [3]

Commenting on the results, Jess Ralston, Energy Analyst at ECIU, said: “This looks chaotic and not the way long-term policy should be made around important issues, with emergency cabinet meetings and investors spooked.

“Quite the opposite of an honest debate, the implication that any of these policies were going to affect the cost of living here and now is untrue. In fact, the PM has sided with landlords over renters, putting their energy bills and cost of living up by ducking the improvement of rules on energy efficiency. That doesn't make any sense when excess cold in homes costs the NHS £1.2bn per year and renters are amongst those with the lowest incomes. As the North Sea declines, if the UK fails to shift to heat pumps, we'll end up reliant on importing ever larger quantities of foreign gas.

“The last thing that the car industry wants to see is uncertainty and a lack of long term policy stability – but that’s what they've got with the pushing back of the phase out that they've been preparing for.”

The announcement about weakening the ZEV mandate in relation to hybrids will likely have a small impact on drivers’ costs, whereas if the targets for EV sales were to be removed then drivers could face £6bn in extra costs to 2035. [4]. And the UK car manufacturing sector faces the loss of £13bn of exports if targets fall below those set by other major economies. [5]

Policy changes in the 2010s cost households £28bn in 2022 alone during the worst of the gas crisis, [6] and the UK’s high gas demand was a key factor in the Government’s energy bill support reaching £40bn. [7]

Policy changes and failures recently in 2023 will cost at least £13bn in the decade to 2035, and more if gas prices were to spike again – £1bn for each year’s delay in offshore windfarms due to the Government’s failure in the recent auction, [8] and £12bn out to 2030 due to low ambition in the Energy Company Obligation (ECO) and the Great British Insulation Scheme (GBIS). [9]

Notes to editors

1. Analysis updated based upon Government delay to insulation, ECIU, 2023

2. Data from Buildings Research Establishment and Department of Health: Annual Report of the Chief Medical Officer

3. Analysis based on scenarios underlying report Rising Gas Imports and the UK’s Balance of Trade, ECIU, 2023

4. Analysis based on report The UK’s second-hand car market, ECIU, 2023

5. UK car exports on a cliff edge ECIU, Jun 2023

6. Cost of Not Zero, ECIU, 2023

7. £40 billion spent protecting families and businesses from energy costs (HM Gov, 2023)

8. Billpayers could miss out on £1bn a year in savings due to wind auction error, ECIU, Sep 2023

9. Analysis based on scenarios underlying report Rising Gas Imports and the UK’s Balance of Trade, ECIU, 2023

For more information or for interview requests:

George Smeeton, Head of Communications, ECIU, Tel: 07894 571 153, email: