The UK government is considering a shift in how green infrastructure costs are funded, potentially moving from levies on energy bills to general taxation, Energy Secretary Miatta Fahnbulleh has indicated. This approach could reduce household energy bills by an average of £120 annually, but would require an estimated £3 billion increase in taxes.

Fahnbulleh outlined the proposal amid rising electricity prices expected next year, with projections indicating that bills could increase by more than £400 due in part to the ongoing conflict in Iran. The government is seeking ways to ease the financial burden on consumers while continuing to support investment in renewable energy and infrastructure.

Speaking on a political podcast, Fahnbulleh emphasized the need to find a "fairest way" to recover the fixed costs associated with a resilient and diverse energy system. She noted that other countries are grappling with similar questions about balancing the costs between taxpayers and bill payers.

Campaigners have criticized the current UK model, which collects funding for the green transition primarily through energy bills, as inequitable compared with other nations that distribute costs across taxpayers in proportion to income. The analysis by the MCF Foundation supports this view, suggesting a tax-funded model would lower individual bills but increase expenditures on the public purse by billions annually.

While Fahnbulleh refrained from committing to a specific bill reduction target, she acknowledged the importance of lowering costs for consumers. She declined to endorse her predecessor Ed Miliband’s goal of a £300 reduction but stressed that her performance would be measured by whether bills come down over time.

Despite political opposition from the Conservative Party and the Reform UK group, Fahnbulleh pledged to maintain momentum on climate initiatives. She challenged critics by highlighting job creation and industrial growth linked to green policies, suggesting that attempts to reverse progress would face resistance from affected communities.

“Ultimately, the only way to bring down bills for good for homes and businesses is through clean power we can control,” Fahnbulleh said, underscoring the government’s commitment to sustainable energy development as a long-term solution for affordability and security.