17-05-2025
How net zero made Ed Miliband the ‘dark lord of high-cost Britain'
Ed Miliband has a problem.
While his net zero crusade has long promised cheaper energy for households, a new report this week will point to a wildly different reality.
According to analysis by consultant Kathryn Porter, green levies on energy bills will hit £20bn by the end of the decade.
Staggeringly, this is up from £5bn in 2015, as the vast cost of Miliband's radical clean energy ambitions rapidly adds up.
As part of Porter's report into green levies, The True Affordability of Net Zero, she claims the renewables obligation scheme – which is responsible for supporting wind farm construction – is alone adding £7.8bn a year to power bills.
That is despite it being closed to new entrants seven years ago. Its successor, the Contracts for Difference scheme (CfD), is adding another £2.3bn, she says.
The scale of the increase in levies over the past decade has alarmed many in the industry who question whether Miliband has a democratic mandate to raise such huge sums via a levy system that few consumers understand.
'If this money was being raised through taxation, it would be scrutinised by the Treasury, the Office for Budget Responsibility, and by voters at general elections,' says Porter.
'But instead, Miliband is taking these subsidies from the pockets of consumers and giving them to renewable generators – without ever having had to win approval for the idea in an election.
'This mattered less in the past because the amounts were much smaller, but they have become far too large to stay in the shadows.'
As part of her analysis, Porter analysed 10 levies that are eventually added to the bills paid by households and businesses.
She argues that the imposition of such levies is what has led to the UK paying the highest industrial electricity prices in the world, as well as the fourth-highest domestic power prices.
'The costs are paid by consumers based on policy choices designed to support renewable generation and the drive to net zero,' says Porter.
The relative lack of scrutiny applied to such levies worries other energy experts too.
Tom Smout, a leading analyst at energy specialists LCP Delta, says: 'Energy levies are central to the economy but are mostly not counted as taxes so they are excluded from the Government's main balance sheets.
'Taxes are treated differently. They show up in all the government accounts and are scrutinised by the Treasury and the Office for Budget Responsibility. And both those organisations tend to favour progressive taxation because it frees up people's money and promotes growth.'
Renewables also have other hidden costs that appear on bills, such as connection and network fees.
A gas-fired power station, for example, needs far fewer cables and substations to connect to the grid than the multiple wind farms needed to generate the same output.
Consumers subsidise the cost of those cables and substations via the network charges added to bills.
Wind farms also generate curtailment costs if they have to be switched off, while there are balancing costs to compensate for the intermittency of wind. Those charges, estimated at over £1bn last year, are also added to bills.
All of which means that Miliband's argument that net zero will reduce bills by £300 by 2030 is looking increasingly shaky.
Chris O'Shea, chief executive of British Gas owner Centrica, reinforced that point this week when he warned politicians against claiming renewables would cut bills.
The shift to renewable power 'will not materially reduce UK electricity prices from current levels', he said. 'They may give price stability, and avoid future price spikes based on the international gas market, but they will definitely not reduce the price.'
O'Shea's analysis centred on the role of one particular levy, the CfD system, under which the Government guarantees developers an inflation-linked minimum price for each megawatt hour of electricity they produce.
That subsidy has added £7.8bn to bills since it was introduced in 2017, according to the Renewable Energy Foundation (REF).
In a separate report, it warned that as more wind, solar and other low-carbon energy is added to the system, those costs could hit £11bn a year.
John Constable, REF director, says Miliband's oversight of such huge levies had made him the 'dark lord of high-cost Britain'.
He compared his policymaking to that of Rachel Reeves, whose spending decisions are scrutinised within an inch of their life.
'The Department of Energy Security and Net Zero has less absolute power, but it operates in the shadows where few can see what it is doing, meaning it can transfer wealth with what amounts to impunity,' he says.
Such comments pose an awkward question for Labour.
Miliband has repeatedly promised that the shift to clean energy would save money, claiming that Britain will avoid another energy crisis by ending its reliance on fossil fuels.
But gas prices have fallen in recent months and, with the world facing a glut of gas in the next few years, will probably fall further.
That means it is the levies attached to renewables that will be to blame for keeping Britain's electricity prices among the world's highest.
Dieter Helm, professor of energy policy at Oxford University, warned about the growing impact of energy levies in a recent speech
'Levies, what I would call subsidies in our energy bills, are already about 25pc of the total for consumers,' he says. 'This isn't just analytics or neat little intellectual points. This is really serious.
'Because not only does it undermine the growth mission but driving up energy prices does not seem to me to be a good way of maximising competitiveness, particularly against the United States and China. It's true for much of Europe too, but it's worse here.'
But if accelerating the drive to net zero meant more levies and higher bills, why did Labour and Ed Miliband target 2030 for decarbonising the grid?
Prof Helm believes it was a deliberate political ploy.
'What the Government has done, and it seems to me, to be a deliberate policy, is to try to use net zero as a wedge between Labour and the Conservatives and everybody else, apart from perhaps the Liberal Democrats,' he said.
'It's been deliberately designed to be divisive, to divide lines. That's what the spin is all about. Well, that's really bad news for investors and for the continuity of climate change policy in the UK.
'Energy and climate policy is long-term. If you decide to set a new deadline of 2030 for net zero electricity because the Conservatives had 2035 as their target, then you have to pay whatever it costs to achieve that target.'
If he is right, then the levies already buried in our bills are partly the product of short-term politicking rather than long-sighted investment policies.
And it's Britain's consumers and businesses that will pay the price.
The politicking has, however, worked up to a point. The Conservatives, only just out of a government that was firmly committed to net zero, have done a complete about-turn.
Kemi Badenoch, the leader of the Opposition, has pronounced that net zero is now unachievable by 2050 and insists that cheap energy must come first.
Claire Coutinho, the former energy secretary, said: 'We committed to no new green levies in the Conservative manifesto. The temptation for a Labour Government trying to hide the costs of net zero is to pile all the hidden costs on to people's energy bills.
'This is completely self-defeating, as it will just cripple British industry and slash household incomes. It's the exact opposite of the £300 off bills that Ed Miliband promised voters at the general election. That's why we've said that cheap energy must come first. And lots of it.'
But what Miliband may not have expected when announcing his net zero plan less than a year ago was the rise of Reform.
Nigel Farage and his deputy, Richard Tice, see energy prices and the rollout of pylons, cables, turbines and giant solar farms on England's green shires as a key campaigning issue.
Tice, energy spokesman for Reform, said its success in the recent county council elections stemmed from opposition to net zero, suggesting that Miliband may have badly miscalculated.
'Green levies hit the lowest paid the most, as this group has the least margin for change,' he says. 'New levies are set to be added to those we already have, suggesting that bills will go up, not down.
'They are all a hidden tax which voters increasingly see as lacking scrutiny and accountability. And they are voting accordingly.'
Even so, Miliband has so far indicated he will stick with his green levies.
An Energy Department spokesman said criticism of the levy system was 'categorically false, ignores the benefits of clean power and significantly overestimates the costs of renewables'.
'Levies drive investment in renewables and other generation technologies, which will secure Britain's energy independence and protect bill-payers from future energy shocks,' they added.
However, the Energy Secretary can't escape the growing criticism.
Matthew Chadwick, at Cornwall Insight, says: 'The current structure is now increasingly out of step with our net zero ambitions.
'As we move to decarbonise the energy system, we're asking people to switch to electricity, yet the current system means those who do so often face higher bills because they're paying policy costs on both their heating and everyday electricity use.
'This penalises those who don't have access to the gas grid and discourages the uptake of low-carbon technologies like heat pumps and electric vehicles.'
Constable, of REF, is more blunt: 'The net zero undertaking is without doubt the single largest intervention in the British economy since the Second World War, and yet no one has even a glimmering of its total costs and opportunity costs.
'We are flying blind.'
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