MPs Demand Net-Zero Backing: Energy Debt Relief & Retrofit/EV/H2

Welcome to Net Zero News, where we bring you the latest developments driving the UK’s transition to a net-zero future. Today we report on a pivotal recommendation from Parliamentarians aimed at relieving UK households from crippling energy debt ahead of the winter months.

Net Zero News can reveal that in the first instalment of the House of Commons Energy Security and Net Zero select committee’s report, published on October 29, 2025, MPs have called on ministers to introduce an energy debt relief scheme to tackle the surge in unpaid energy bills among UK households. The proposed scheme forms part of a wider inquiry into the rising cost of energy.

In a significant step towards the UK’s net-zero goals, the committee’s report outlines a targeted mechanism designed to forgive existing energy debts and prevent new arrears accruing for vulnerable customers. The scheme would provide grants of up to £500 per household to clear historic debt, alongside ongoing support to help low-income families manage future energy costs.

The select committee highlights that energy debt among domestic consumers has exceeded £2.3 billion, with nearly one in ten households now in arrears. Net Zero News understands this forms part of broader concerns about fuel poverty rates doubling in the last two years and undermining public confidence in government support measures.

Detailed modelling in the report suggests a debt relief fund of £750 million over two years would stabilise household finances, reduce reliance on emergency support and create incentives for energy suppliers to offer flexible payment plans. The committee argues that coupling debt forgiveness with tailored advice on energy efficiency would amplify benefits for consumers and the environment.

This matters for the UK’s net-zero transition because households burdened by debt are less likely to invest in low-carbon measures such as heat pumps or home insulation. Clearing arrears would free up disposable income and encourage uptake of decarbonisation technologies, supporting the government’s target to retrofit 19 million homes by 2050.

Expected outcomes of the scheme include a projected reduction of 1.2 million tonnes of CO₂ equivalent over five years as more households make energy-efficiency upgrades. The committee also forecasts up to 3,000 new green jobs in local retrofit supply chains, bolstering economic recovery and social cohesion in disadvantaged communities.

Key stakeholders in the delivery of the debt relief scheme would include the Department for Energy Security and Net Zero, HM Treasury, Ofgem and local authorities. The report recommends close collaboration with energy suppliers, consumer advocacy groups and charities such as National Energy Action to ensure rapid rollout and prevent unintended consequences.

Initial funding of £750 million would be ringfenced within the Department for Energy Security and Net Zero’s budget, with additional contributions from a voluntary levy on large energy companies. The committee also proposes that Ofgem oversee the administration of grants, using existing consumer redress mechanisms to expedite payments directly to households.

This recommendation sits within a broader policy context that includes the government’s Energy Price Guarantee and the Net Zero Strategy: Build Back Greener. It aligns with the Fuel Poverty Strategy published earlier this year, reinforcing commitments to protect vulnerable consumers while advancing low-carbon energy deployment.

Net Zero News understands the debt relief call complements upcoming measures in the government’s Net Zero Delivery Plan, which is due for publication in early 2026. By embedding social support within climate action frameworks, Parliamentarians seek to ensure that the net-zero transition remains inclusive and socially equitable.

Communities and the wider energy industry stand to benefit from a more stable consumer base. Reducing household arrears will lower bad debt levels for suppliers, potentially easing upward pressure on tariffs. Community energy groups may also gain momentum as freed-up household budgets are channelled into local renewable projects.

What happens next is that the government must respond to the select committee’s recommendations within 60 days, setting out a plan for scheme design, funding approval and delivery timelines. Stakeholders expect draft regulations by spring 2026, with the first relief payments potentially reaching households before the next winter season.

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