CLEAN or cheap? That, increasingly, is the choice that energy consumers are confronting. And the decision often looks simple. As bills rise remorselessly, tackling carbon pollution gets cast as an unaffordable luxury.

It is not: energy can be both clean and cheap.

The main battleground of the supposed conflict between cheap and clean energy is in Europe. In September 2013, nine of Europe’s biggest utility companies warned that the expansion of renewable energy – supported by “overgenerous subsidies” – was putting the continent’s energy security at risk. In Germany, some of the subsidies that underpin the country’s ambitious renewables programme are due to be cut because of concerns about costs.

In the UK, the issue was catapulted to the top of the political agenda last year when opposition leader Ed Miliband promised to freeze energy bills for 15 months if elected in 2015. Politicians from all parties are now focused on the issue as next year’s general election approaches.

Their focus on energy costs is not surprising because, as surveys show, the electorate has noticed that bills keep rising. In the UK in 2003, the average household spent 1.8 per cent of its income on gas and electricity. Last year that rose to 3.1 per cent. Between 2004 and 2011, the UK’s average annual household energy bill went up by £360 to £970.

The main reason for these soaring prices is higher wholesale gas costs; they were responsible for 62 per cent of the rise from 2004. Clean energy policies were responsible for just 10 per cent of the rise. But that hasn’t stopped green policies taking the blame. For instance, the prime minister David Cameron was recently reported as saying he wanted to “get rid of the green crap” on energy bills in order to bring them down. Following this his government scaled back a policy that helps people improve the energy efficiency of their houses.

The problem is only going to get worse. Eradicating carbon pollution by replacing coal and gas with low-carbon energy sources, such as wind farms and nuclear power stations, is expensive. By 2020, UK bill payers are set to fork out £7.6 billion a year in “green levies”, which will be added to their gas and electricity bills to subsidise low-carbon power generation.

“By 2020, UK bill payers are set to fork out £7.6 billion a year in green levies added to their energy bills”

That figure will increase substantially into the 2020s as more low-carbon generators come online. It is by no means clear that bill payers will accept paying these escalating costs.

We clearly need a new, lower-cost route to clean energy if consumers are to stay the course. The answer is to invest more money and effort in reducing and managing consumers’ energy demand. To understand why this is the case, Europe can look to approaches being pioneered in the US.

An overriding reason to reduce demand is that if less energy is used, less carbon is released into the atmosphere. After all, the cleanest energy is energy that isn’t used. But it is the “double dividend” that consumers gain from using less energy that makes it such an attractive approach.

First, if consumers use less energy, not only do they pollute less, they also pay lower bills. Second, if consumers en masse use less energy, fewer low-carbon power stations need building, which means fewer subsidy costs must be passed on to bills.

California has shown the way by taking account of these twin benefits in the design of its energy policies. The benefits can be substantial.

Research by my organisation, the Institute for Public Policy Research, shows that if UK consumers were to buy high-efficiency electrical appliances, by 2030, low-carbon subsidy costs would drop by £1.8 billion a year in today’s prices. At the same time, lower energy use would cause their bills to fall by £2 billion a year in total.

Another way to get clean energy while keeping bills down is to better manage electricity demand.

At certain times of day there are peaks in electricity use, for example during the evening when people return home from work and watch television. During these times, the most costly sources of generation come into use, which increases the amount paid for all of the other electricity being generated at the time. This means that peaks in demand add large costs on to bills.

One estimate is that, in the US, as much as 20 per cent of the total cost of providing electricity in a year comes from just 4 days’ worth of peak demand.

To limit the cost of peaks in demand, some US utility companies now pay their customers not to use energy at the same time as everybody else. In a similar way to reducing demand, this approach produces a double dividend: the cost of the energy that consumers buy is reduced, and they also benefit from the incentives on offer.

This novel approach is made possible because of new technologies. For example, one company, Nest in Palo Alto, California, offers a service in which air conditioning is turned down automatically so that its owner can benefit from incentives when they are available. Google acquired Nest for $3.2 billion in January. We can expect to see more technological innovation in this space.

It is clear, then, that clean energy policies do not need to be sacrificed on the altar of affordability. Reducing and better managing demand can bring down bills and make the transition to clean energy far more affordable. European policy-makers should get behind this approach.

No one ever said that tackling climate change would be a free ride. But reducing demand and managing it better is the cleanest and cheapest energy approach there is, and we should make the most of it.

This article appeared in print under the headline “The real cost of ‘green crap'”

THE location of the British Isles at Europe’s wild and windy western fringe does not always seem like a blessing. But in one important respect it is: the UK has the greatest potential for wind power, both onshore and offshore, of any European country.

Onshore wind power has expanded steadily across the UK in recent years and is a key plank of the country’s commitment to greening its electricity supply. But as the turbines have gone up across the countryside, so has the level of opposition. Wind power has become a deeply divisive issue in British politics.

The issue exploded last year when 106 members of parliament, mostly Conservatives representing rural constituencies, signed a . They urged him to cut subsidies for the onshore wind industry, describing wind technology as “inefficient and intermittent”.

Things escalated in the autumn when the recently appointed Conservative energy minister, John Hayes, that and that no new onshore wind farms would be built. He was , the secretary of state for energy and climate change and a member of the Liberal Democrat party. But simmering tensions remain at the top level of the coalition government. Another Conservative, finance minister George Osborne, is known to be sympathetic to the anti-wind cause. Wind turbines also became an important point of contention between the parties in a recent by-election.

Two of the anti-wind campaigners’ main concerns are the impact of turbines on the beauty of the countryside and the opposition of local people. It is absolutely right that these be taken into account. But they need to be balanced against the bulk of public opinion, which strongly supports the increased use of wind turbines.

Any misgivings must also be balanced against the important role that this technology can play for the UK, both in fulfilling its climate-change commitments and for future economic success.

Anti-wind campaigners frequently make claims about the shortcomings of wind power. Their main complaints are that the turbines are so inefficient that they actually increase carbon dioxide emissions, and so unreliable that they require constant backup from conventional coal and gas-fired stations.

If correct, these claims would be devastating to wind power. But they are not.

My organisation, the Institute for Public Policy Research, recently published a tackling these questions. Our conclusions are unambiguous. Onshore wind power reduces carbon emissions and is a reliable source of electricity, at least up to the capacity of wind power that is forecast to be installed in the UK by 2020.

To answer the carbon question, we used a simple model of the UK electricity market. As demand increases, say on a weekday morning when people are waking up and getting ready to go to work, power plants increase output to meet it. Plants with the lowest marginal cost – that is, those that can produce additional electricity most cheaply – are selected first by the market. Here wind beats gas and coal, as no fuel is needed to generate electricity.

The upshot is that, in theory, adding wind power to the energy mix should displace coal and gas, and hence cut carbon. This is backed up by empirical data on emissions reductions from wind power in the US.

There is another way of looking at it. In 2011, wind energy contributed approximately 15.5 terawatt-hours of electricity to the UK. If this had been supplied by fossil fuels instead, CO₂ emissions would have been at least 5.5 million tonnes higher, and as much as 12 million tonnes higher.

As for the important matter of reliability, the obvious worry is that because the wind does not always blow, the system will sometimes not be able to supply electricity when needed.

This seems like common sense. However, the reliability of wind power does not depend on the variability of wind. Instead, it depends on how well changes in wind power output can be anticipated.

Forecasts of wind farm output are increasingly accurate, and drops in output can be predicted and compensated for using conventional power stations. In any case, output is surprisingly stable across the country’s entire network of wind farms: when the wind isn’t blowing in one area, it usually is somewhere else. The relatively small changes that do occur are well within the capabilities of existing systems for balancing supply and demand on the grid.

Even when winter delivers a “long, cold, calm spell” with low temperatures and little wind, the system can cope. This was demonstrated by a two-week period in February 2010 in Ireland, a country that is much more reliant on wind than the UK. It coped perfectly well.

If the UK government caves into pressure and lowers its ambitions for onshore wind, it will make more expensive forms of low-carbon generation a necessity to hit the UK’s by 2020. The result will be even higher electricity bills.

Scaling back on wind would also be a lost opportunity. The natural resource at our disposal, combined with the UK’s engineering heritage, could create significant economic growth and jobs.

The concerns of people who do not want wind power on their doorsteps need to be taken into account. We must also be sensitive to the need to preserve areas of natural beauty. But we should not sacrifice important opportunities because of the views of vocal minority groups and their unsubstantiated claims.

“We should not sacrifice opportunities because of the unsubstantiated claims of vocal minority groups”