Ed Davey, the Environment Secretary, says there will be no cap on wind farms, as he insists that Green levies must stay and might have to be paid through taxes
New taxes to pay for environmental schemes are being considered as part of a deal to cut household energy bills, it can be disclosed.
The taxpayer would foot the bill for two of the “green” schemes, all of which are currently paid for through a levy on gas and electricity bills.
The major energy suppliers have repeatedly told ministers the levies are pushing up household bills — for which they and the Government have been severely criticised.
Senior Tories have held talks with the companies and believe they have secured agreement that if the largest levy, the Energy Companies Obligation (ECO), is removed, immediate cuts in prices of up to seven per cent would be announced.
A deal could be struck in time to be announced as early as next month, allowing an average saving of as much as £75 a household.
But Ed Davey, the Liberal Democrat Energy Secretary, said the green schemes had to stay — and signalled that they could be paid for through tax.
He told The Telegraph that he was happy to have a “debate” about how green energy policies were funded. He said: “We can maybe find there are other ways of paying for them. There may be ways and means.”
The move by the Lib Dems means that George Osborne will either have to raise taxes or find money to pay for the scheme, expected to cost £1.3 billion next year, from already under-pressure public funds through more cuts or borrowing.
In a significant intervention in the heated debate, Mr Davey also:
• Vetoed the Prime Minister’s own intention to review every green subsidy, saying that support for wind farms and other “renewable” energy systems would not be reconsidered;
• Refused to back down on support for wind farms, insisting that more onshore turbines would be “critical” for energy supplies;
• Said the wind farms, which have attracted huge opposition where they have been built or proposed, did not affect house prices;
• Attacked Right-wing Tories for “undermining consensus” on the environment;
• Said there has been “massive interest” in new licences for fracking and a review to be published on Monday will outline a revival in the North Sea oil industry.
The prospect of a tax to pay for green schemes emerged after the last Labour government introduced the current system of extra charges, which energy firms add to customers’ bills, known collectively as “green levies”.