Media Brief: What does net zero mean for household energy prices?
Source: · CLEAN ENERGY CANADA · | January 14, 2022
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Source: Clean Energy Canada
Europe’s skyrocketing natural gas prices have brought energy costs to the forefront of public debate. As we move toward net zero, our energy systems are shifting away from fossil fuels and toward clean energy sources such as wind, solar, hydrogen, and geothermal. Proponents of fossil fuel use have implied that climate policies, like carbon pricing or other regulations, will have a negative impact on household spending, including home heating and gas for vehicles. But while fossil fuels may get more expensive in a net-zero world, a number of studies suggest that Canadians will be spending less on energy over time.
This media brief dives into the readily available information on the potential impacts of the energy transition on household energy spending in Canada.
The International Energy Agency’s World Energy Outlook 2021 found that, under current global policies, average household energy bills in advanced economies would decline between 2020 and 2050. Under a scenario where governments introduce policies to reach net zero by 2050, bills would decline even further.
While electricity bills are set to be higher in a net-zero world due to increased use of electricity, cost savings from energy efficiency and the lack of fossil-fuel-related expenditure (like gasoline for cars and natural gas for heating) mean that overall household energy bills are lower.
More ambitious climate policies would reduce the financial impact of fossil fuel price shocks on households, such as the recent one in Europe.