There is a downside to carbon pricing. It temporarily exacerbates fuel poverty.
Many people in the UK struggle to pay their energy or transport bills and a carbon price will inevitably have the initial effect of increasing prices for these. Long term, prices will fall because renewable energy is, overall, much cheaper than non-renewable energy. But the impact of that is delayed by the initial cost of installation.
Avoiding the problem is not hard. Some of the revenue from carbon pricing should be returned to bill-payers so that ordinary households are not financially penalized overall. This is revenue recycling.
Revenue recycling is a central pillar of the Citizens’ Climate Lobby. We campaign for it because we believe there can be no transition to a low carbon economy without taking account of the real-world financial impacts of transition on ordinary citizens.
