High gas prices are responsible for two-thirds of the rise in household electricity bills since before the global energy crisis, says the UK Energy Research Centre (UKERC).
The new analysis, from one of the UK’s foremost research bodies on energy, flatly contradicts widespread media and political narratives that misleadingly seek to blame climate policies for high bills.
Kaylen Camacho McKluskey, research assistant at UKERC, tells Carbon Brief that despite “misleading claims” about policy costs, gas prices are the main driver of high bills. She says:
“While the story of what has driven up GB consumer electricity bills is often largely attributed to policy costs, our analysis shows that this is not the case. Volatile, gas-linked market prices – not green policies, as some misleading claims have suggested – dominate the real-terms increase in bills since 2021.”
In its 2025 review of UK energy policy, published today, UKERC says that annual electricity bills for typical households have risen by £166 since 2021.
It says that, after adjusting for inflation, some two-thirds of this increase (£112) is due to higher wholesale gas prices, as shown in the figure below.
(This analysis does not account for the recent surge in wholesale gas prices, which, in a matter of days, have jumped by around 40% in the UK and 140% in the US.)
UKERC estimates that, despite only supplying a third of the country’s electricity, gas-fired generators set the wholesale price of power around 90% of the time in 2025.
(This is slightly lower than widely cited earlier estimates, published in 2023 and covering 2021, which found gas was setting power prices 97% of the time.)
A surge of new clean power means that gas would only set wholesale power prices 60% of the time by 2029, UKERC says, adding that this would cut the nation’s exposure to “gas price shocks”.
It finds that new renewable projects set to come online over the next three years could cut wholesale power prices by 8% from current levels.
UKERC argues that the government could “strengthen…these downward trends” by shifting older renewable plants onto fixed-price “contracts for difference” (CfDs).
These older schemes, built under a policy known as the “renewables obligation”, are paid a top-up subsidy in addition to the wholesale power price, linking their receipts to high gas prices.
Newer renewable projects with CfDs get a fixed price, which is not linked to wholesale electricity prices or the price of gas power that drives it.
Prof Rob Gross, UKERC director says in a press release that “unpredictable global gas prices still dominate our power market”. He continues:
“The link between the wholesale price of gas and electricity prices continues to be the most significant factor in the price increases consumers have seen over the last few years. Government took action on some policy costs in [last year’s] budget and ongoing policies will weaken the link to gas prices. But more could be done to help ensure that the stable prices offered by renewables flow through to consumer bills.”
The UKERC analysis shows that rising network charges, linked to investments in expanding the electricity grid as well as balancing supply and demand in real time, were the second-largest contributor to the rise in bills since 2021.
Significant further grid investments are set to add further pressure on bills over the next few years. However, energy regulator Ofgem says these investments will cut bills relative to the alternative.
Policy costs are only the third-largest driver of current high bills, according to UKERC’s analysis. It says these were linked to just 12% of the rise for typical households, or £19 per year.
It is commonly argued that rising policy costs are certain to raise bills, but this tends to ignore the interplay between CfDs and wholesale power prices.
The record-breaking recent government auction for CfDs is expected to be roughly “cost neutral” for bills, potentially even generating consumer savings of £1bn a year by 2035.
As UKERC explains, this is because new renewable projects will receive CfD payments and may result in higher network costs, but they also cut wholesale power prices. A full analysis of the overall impact on bills must take all of these factors into account.
The UKERC report aligns with another recent analysis from thinktank Nesta, which said that, while there was a pressing need to look at future cost pressures from network and policy charges, “it is clear that gas is still the main source of our high energy bills to date”. It added:
“It is still true that higher gas prices are the main reason for higher energy bills for most British households when you look at the whole bill. Gas is not the only culprit, but it is still the biggest one.”
The post Expensive gas still biggest driver of high UK electricity bills, says UKERC appeared first on Carbon Brief.
Expensive gas still biggest driver of high UK electricity bills, says UKERC
One of the key expected outcomes from the upcoming COP31 climate summit in Antalya, Turkey, is the launch of a “just transition mechanism”.
This follows years of calls from civil society to support a “just transition” as countries shift towards low-emissions energy systems and away from fossil fuels.
At the COP30 UN climate talks last year in the Brazilian city of Belém parties agreed to establish a “mechanism” to support this goal, called the “Belém-Antalya mechanism” (BAM).
Groups that have championed the BAM want it to act as a central hub on just transitions, providing support for workers and communities around the world.
However, the details of exactly what the much-touted BAM will consist of remain vague, with developed and developing countries disagreeing about its functions and purpose.
Disagreements continued at the UN climate talks in Bonn in June 2026, including on the crucial question of how the BAM will be financed.
Here, Carbon Brief looks at where the idea for the BAM came from, how it could support just transitions and what to expect from COP31.
How has a ‘just transition’ featured in UN climate talks?
A “just transition” is the idea that workers and communities should be supported in the shift to a low-carbon economy. It is a central principle behind the idea of climate justice.
Often, the term refers to those linked to the fossil-fuel industry, but it can also refer to transitions taking place in agriculture, heavy industry and various other sectors.
The concept originated in the 1980s, when US labour unions forged alliances with environmental justice groups. It has since become a key part of international climate discussions.
The preamble to the 2015 Paris Agreement includes a commitment to “tak[e] into account the imperatives of a just transition of the workforce and the creation of decent work and quality jobs in accordance with nationally defined development priorities”.
Bert De Wel, policy officer at the International Trade Union Confederation (ITUC), tells Carbon Brief:
“The labour movement is very happy with the wide audience and broad political support that the concept has received since its inception in the 1980s. The inclusion in the Paris Agreement, with the reference to the creation of decent work and quality jobs was a milestone for the movement. While other demands have been added…we continue to stress the labour dimension as being central to the concept.”
Three years after the creation of the Paris Agreement, at COP24 in the former coal-mining city of Katowice, the Polish presidency highlighted the issue of just transitions.
The need for carbon-cutting policies to ensure “a just transition of the workforce” that creates “decent work and quality jobs” was included in the “Silesia declaration”, issued by the presidency during the first week of COP24.
While the declaration was only signed by 50 countries – roughly a quarter of the parties at the summit – it was still “noted” in the final COP text.
This helped to drive momentum behind the idea, culminating in formal agreement at COP27 in Egypt to launch a “work programme on just transition” (JTWP).
De Wel says the establishment of the JTWP was a “major step forward” that allowed parties to “speak about just transition in more concrete terms”.
In the years since, negotiators have worked to flesh out the JTWP, with disagreements between parties about what its purpose should be.
Broadly, developed countries would like it to focus on domestic workforces, while some nations want a more global outlook, including support for transitions in developing countries.
The JTWP has proved a challenging negotiating space, with talks at the COP29 summit in 2024 closing without an agreement, in what one observer dubbed a “betrayal”.
However, despite these frustrations, parties at COP30 in Brazil agreed to establish a new institutional mechanism on just transitions, which has become widely known as the BAM. The move was hailed as a “victory” by civil society.
Where did the ‘just transition mechanism’ come from?
In the run-up to COP30, civil society began to push for the establishment of an “institutional arrangement” that would move work under the JTWP from talk into action.
(This was originally called the “Belém action mechanism” by civil society groups, who subsequently updated this to the “Belém-Antalya mechanism” following the outcome at COP30. However, in the JTWP text agreed at COP30 it is only described as a “mechanism”, sometimes also referred to as the “just transition mechanism”.)
Anabella Rosemberg, senior advisor on just transition at NGO umbrella group Climate Action Network (CAN) International, tells Carbon Brief:
“The idea of the mechanism emerged from the collaboration of civil society, trade unions, feminist groups, youth and Indigenous peoples in the UNFCCC.
“It was clear that the kind of activities being run under the JTWP – two dialogues a year and one ministerial – would not support the delivery of just-transition strategies on the ground, so a new approach was developed to get words into action.”
Following the inception of the idea, civil society did “tonnes of stuff to boost it up the agenda”, Dr Leon Sealey-Huggins, a senior campaigner at the charity War on Want, tells Carbon Brief.
This ranged from presenting demands and proposals to different constituents, organising joint letters and writing policy papers, all the way through to designing logos, creating memes and even a song.
These efforts ultimately paid off: during the Bonn climate negotiations in June 2025, one draft text included the idea for a new institutional arrangement. One of the options in the draft text was for a “toolbox, guidance framework, global platform, technical assistance network [or] mechanism”.
![Paragraph 28 of the JTWP text published 25 June 2025. The text reads "28. Options for further implementation of the United Arab Emirates just transition work programme Option 1: Improving existing modalities Option 2: New institutional arrangements [toolbox, guidance framework, global platform, technical assistance network, mechanism] Option 3: Defer decision to 2026"](https://www.carbonbrief.org/wp-content/uploads/2026/11/para28-1024x334.png)
This inclusion was broadly welcomed as a “big win” for civil society groups, although parties acknowledged that more needed to be done to flesh out the idea.
Going into COP30, civil society groups continued to push the idea of creating a BAM, with protests, banners and badges visible around the venue.
Early in negotiations, the G77 and China – a large coalition of developing countries at UN climate talks – put forward their own proposal for a just transition “mechanism”. This, they suggested, could provide technical assistance, support international cooperation and help to foster partnerships in an effort to address implementation gaps.
Their proposal faced initial pushback from developed-country parties including Norway, the UK and others, who opposed it due to concerns that it would duplicate existing systems and require additional funding.
Developed countries also opposed the use of the term “mechanism”, with the EU suggesting an “action plan” as a potential alternative. Nevertheless, the creation of a “mechanism” was included in the final draft text on the JTWP.
This text was formally approved during the COP30 closing plenary to extended applause from many in the hall.
In a statement at the time, Chiara Martinelli, director at CAN Europe, welcomed the decision:
“Delivering BAM was a major civil society win. It creates a coordinated institutional home to drive forward progress on the just transition.”
The decision to develop the mechanism included a request for parties to work over the subsequent year – through to COP31 – on a plan to get things started.
What role could the mechanism play in facilitating ‘just transitions’?
According to civil society, the BAM could help tackle the fractured just-transition landscape by centralising resources and helping to overcome a number of barriers.
Speaking to Carbon Brief, Rosemberg says the just-transition space “lacks coordination and the right kind of support and is quite disconnected from climate action imperatives”. She adds:
“The BAM can play a role in bringing those [people] trying to make just transition happen together, identify gaps and barriers, foster cooperation and accelerate support.”
Civil society has put forward a number of proposals likely to inform the structure of the BAM. Most consist of a mechanism with three parts, which would encompass and expand upon the work that is currently being carried out under the JTWP.
One proposal by a coalition of five NGOs suggests the mechanism is formed of a steering body, a “knowledge arm” and an “implementation arm”.
The steering body would coordinate the work of the two arms of the BAM, including deciding the topics that should be discussed under the ongoing JTWP, which will continue to feature in climate negotiations. They suggest the body would recommend topics that require negotiation when “gaps that require political guidance are identified”.
Their proposal is illustrated in the infographic below, showing the steering body acting as a central hub for work within the BAM.
The final part of the BAM, the “implementation arm”, would act as a hub to enable and coordinate technical, financial and knowledge-based assistance for those pursuing a just transition.
Rosemberg says the vision of civil society is for work to go “beyond negotiators’ dialogues”. She says the BAM could enable the organisation of a “matchmaking platform” to provide support faster, as well as dedicated groups to identify and mobilise financial resources. She adds:
“Finally, through bottom-up identification of barriers, the BAM can also allow a discussion on enabling just transition that is informed by practitioners. The BAM can show that implementation does not necessarily mean taking issues outside of the UNFCCC.”
A separate proposal for the structure of the BAM from the Global Campaign to Demand Climate Justice (DCJ) – a separate coalition of NGOs – similarly proposes three elements. These would be: coordination and coherence; knowledge generation; and international cooperation and support.
Sealey-Huggins, who is affiliated with DCJ, notes:
“If it works in practice, what we’ll see is a cascade of just-transition policies implemented across countries, across sectors in a unifying, transformational moment for justice-centered climate action, and that will be the key to unlocking the transition that’s been missing so far.”
Another proposal for the BAM comes from the Grantham Institute at the London School of Economics. It suggests the three functions of the mechanism should be capacity-building, technical assistance and knowledge-sharing, but it recommends a dual-arm structure comprising a policy arm and an operational arm.
De Wel tells Carbon Brief that while there is “rather broad consensus on the functions”, parties are pushing in “very different directions” on how the BAM will be set up.
What are the financial implications of the mechanism?
Within UN climate negotiations, some parties have raised concerns about the potential cost of the mechanism.
The push to launch the BAM comes at a time when the UNFCCC itself is facing a funding gap, following the US withdrawal. Several other parties have also delayed or reduced their contributions, in response to changes in domestic priorities.
This has led to the UNFCCC cancelling events and not filling vacated positions, as the organisation struggles to carry out its existing functions.
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As such, some parties have expressed hesitancy about creating another mechanism under the remit of the UNFCCC, which also requires funding. However, proponents of the BAM argue that the costs of running it would be minimal.
Rosemberg tells Carbon Brief that the BAM represents “an opportunity to streamline and make efficient use of public resources”. She adds:
“The mechanism does not necessarily require the creation of a costly new institution. Instead, it can leverage existing climate-finance channels and philanthropy.”
She adds that a “similar body” to the potential mechanism, the Climate Technology Centre and Network, costs less than $10m a year. Rosemberg notes that this is “not an impossible amount to be found if there is political will to make just transition happen”.
De Wel notes that the mechanism will build on existing work inside the UNFCCC and out, including the International Labour Organization’s “just transition policy gateway”. He further emphasises that “we’re clearly not asking for a new [just-transition] fund, we want all climate finance to be just-transition proof”.
Alongside highlighting the potential efficiencies of the BAM design, many have argued that the potential benefits are well worth the cost of the new mechanism, with Sealey-Huggins telling Carbon Brief:
“The cost to the [BAM] secretariat pales in comparison to the potential benefit of the action.”
What is likely to happen in Antalya?
Despite the “victory” in Belém of agreeing to set up the new just-transition mechanism, climate negotiations in Bonn in June 2026 quickly hit sticking points.
While Bonn did ultimately agree on a “skeleton” draft text to send forward for further negotiations at COP31, many details still need to be agreed in Antalya for the BAM to start functioning.
De Wel cautions that a “swift approval of the agenda of COP31 allowing parties to start the negotiations” is “crucial”. He adds:
“We can’t lose any time, there is so much work that needs to be done on [just transition]. Then we need a constructive approach by the major country blocs. If one of them starts playing tactical games, then it will be lost.”
In a submission to the UNFCCC earlier this year, CAN called for a series of measures to get the BAM up and running. This includes calling for a decision to be made on a first face-to-face meeting of a “just-transition committee” – a core part of the mechanism in the group’s proposal – to be held in April 2027.
Ahead of COP31, negotiating groups such as the Alliance of Small Island States (AOSIS), the least deve