The Mail and Telegraph picked up on a press statement from thinktank Civitas arguing that green energy subsidies will cost every household £600 per annum - or £16 billion in total - by 2020. The figure is based on calculation by the chief executive of the Renewable Energy Foundation (REF), Dr John Constable. 

How has the figure been created, and how does it compare to DECC's? 

REF has calculated the figure of £16 billion by adding up the following cost estimates for 2020:

• cost of subsidising renewables through the the government's main
• mechanism the Renewables Obligation (RO) - £8 billion or £307 per household;
• cost of upgrading and maintaining the power network, and managing the variable supply of power from wind - £5 billion, or £192 per household;
• cost of the Carbon Price Floor - £1 billion, or £38 per household. 

This makes £14 billion. REF adds VAT to get to just over £16 billion. 

The Department of Energy and Climate Change (DECC) has issued a statement saying it doesn't recognise REF's number. Altogether it suggests that the RO will add £63 to household energy bills by 2020. Add on the costs associated with developing green technologies - including a few with REF don't account for - and it suggests subsidies will add about £200 to consumer energy bills by 2020. 

The difference in the figures lies in the assumptions DECC and REF have made to calculate the cost of renewables.

Passing on costs from business and industry 

The government funds green energy subsidies by allowing energy companies to add them to consumer energy bills. But they're also added to the energy costs paid by businesses and industry.

Some commentators argue that businesses will then pass on those costs to consumers by charging more for their products and services - so the government should take that into account when calculating the costs households have to bear. In its calculation, REF assumes thatall of the costs borne by business and industry will be passed on to consumers. This accounts for two thirds of its projected cost, or £400 per household. 

But academics have challenged this view. Last year, Dr Rob Gross of Imperial College London labelled this approach "misleading in the extreme". He argued that the potential for competition between businesses, changes to other prices, and other changes to the economic cycle mean 

"it is by no means obvious that a tiny fractional overall cost increase will pass [from business to consumers] - 100 per cent, 80 per cent, or at all". 

Other thinktanks that have used the same approach have estimated lower pass through costs. In August 2011, the Taxpayers Alliance estimated that businesses will pass on 80 per cent of the costs to consumers. In June 2012, conservative thinktank Policy Exchange suggested that about 70 per cent of the costs will be passed on to consumers. 

The cost of upgrading the grid

REF's calculation also adds on £5 billion a year for the "additional system cost" of wind power - that is the cost of adding additional power lines to connect up wind farms, and managing the grid so that it can cope with the variable supply from wind. 

The prediction is based on work by Colin Gibson, who REF says used to be Power Network Director for National Grid. Gibson's work has been used before to make the case against wind power - for example in another report by Civitas, and also in anti-wind media coverage.

National Grid says it can't comment on Gibson's work directly. But it suggests that by 2020 it will cost somewhere between £851 million and £1.2 billion a year to manage the variability of wind - less than half of Gibson's estimate.

The Electricity Network Strategy Group, of which National Grid is a part, has also predicted that it will cost £8.8 billion to upgrade the grid over the next few years. But that's the total cost between now and 2020 - not the cost per year. 

So if we assume that upgrading the grid will cost the same every year (it won't), then that's an annual cost of around £2 billion by 2020. Still a pretty big figure, but not as big as REF suggests. 

Other commentators have been critical of Gibson's work. Energy blogger, Chris Goodall, took issue with his calculations in January 2012. He wrote:

"...many, many other analysts and engineers have also estimated the extra costs of adding large volumes of wind power to the electricity system. In this note I suggest that these alternative sources support a view that Mr Gibson's estimates are wrong by about a factor of four".

The initiative is coordinated by Carbon Connect which brings together MPs, peers and industry. The group's report will aim to outline "the role of renewables and how they tie into security of supply", according to former energy minister and Carbon Connect co-chair Charles Hendry. Here's a few key issues it will need to address.

Biomass emissions controversy

The government must reduce greenhouse gas emissions by 80 per cent by 2050  by law.  

It's hard to know whether biomass will help the UK cut carbon, however. Biomass generation can be carbon negative, in theory. But it depends on what kind of biomass is used and where it comes from. 

Biomass is at the core of the Department of Energy and Climate Change's strategy to deliver a "secure and cost-effective supply of low carbon energy". DECC proposes getting up to 11 per cent of the UK's total primary energy demand from biomass by 2020. 

DECC is developing a new calculator to work out what ramping up biomass burning could do to emissions. And it looks like it could push emissions up unless carefully judged. Early results showed biomass generation may produce more emissions than burning coal in five out of the calculator's twelve scenarios.

The new report will need to carefully assess what the government's plans mean for the UK's emissions goals. 

Whole trees or cuttings

A key issue is deciding precisely what gets burned. A lot of biomass is wood, but emissions vary depending on what type of wood gets burned.

Burning whole trees rather than cuttings - such as sawdust, bark and thinnings - emits more carbon dioxide and means less is absorbed by young trees which replace more mature wood stock. 

The UK could be burning somewhere between 15 million and 25 million tonnes of wood for energy in 2017. That means harvesting and burning somewhere between two and a half to five times the UK's 2011 wood harvest.

The bioenergy industry says it will be able to rely on waste products from the forestry industry. But green groups dispute this, saying there simply won't be enough wood from these sources, and biomass power stations will end up burning whole trees instead. 

A lot of the wood is expected to be imported. Industry group, Back Biomass, previously told us 120 million tonnes of wood could be "sustainably" harvested in parts of North America. That poses problems for emissions, too, however - as transporting the wood to the UK would mean more emissions.

A key task for the new report will be to clarify where the government expects to get the wood from, what type it will be, and how it might affect the UK's emissions.

Biomass in industry

Policymakers and industry are also debating whether biomass should be used to power homes or put to other uses.

The government's climate change advisors, the Committee on Climate Change (CCC), says the most desirable use for biomass is in construction and industrial heat production - not electricity generation, as the graphic below shows. It says wood could replace carbon intensive materials like coal and cement in construction. It could also be burned as a heat source in industrial processes.  

Source: Committee on Climate Change, Bioenergy Review

When it comes to power generation, the CCC says biomass should only play a role if carbon capture and storage (CCS) technology becomes viable on a large scale soon. Without CCS, more biomass will be needed to meet the government's emissions reduction targets than can sustainably sourced, according to the report. It says:

"without CCS, there does not appear to be a longer term role in large scale power generation [for biomass], given available alternative low-carbon technologies."

The CCC describes the UK's bioenergy stock as a "scarce resource", and the report will have to carefully consider how best to use it.

Next steps

The final report is due out in mid-July. We look forward to seeing if banging the heads of government and industry together produces workable solutions to these difficult issues. 

Broadly speaking, the programme did a good job of navigating what has become an entangled web of scientific issues, although it perhaps inevitably lacked clarity on a few points.

BBC environment correspondent Roger Harrabin posed the question "what kind of risk are we taking with the climate?" With greenhouse gases in the atmosphere rising, earth's surface temperature - that's the air over the land and ocean - has risen more slowly over the past decade and a half than in previous decades.

The Today programme report explored why this might be, while Dr Hansen was on hand to explain why despite the recent slow pace of surface warming, the science of climate change isn't really in doubt.

Warming still happening

Harrabin suggested that after being "largely ignored by mainstream science for a while" climate skeptic voices questioning the pace of global warming are now being heard. He suggested that "the scientific establishment agrees that global warming appears to have stalled", and that while "scientists thought temperatures would be driven steadily upward", surface temperature hasn't risen appreciably since 1998.

But this is a simplification, as Harrabin unpacked throughout his report. The word "stalled" suggests surface temperature rise has stopped - and might also imply it's expected to remain static. In the second segment, Dr James Hansen took this point head on, telling the programme that's not what scientists think at all. In response to Sarah Montague's opening statement that "global average will have been roughly the same for two decades", Hansen said:

"Well, I should correct what you just said. It's not true that temperature has not changed in the last two decades. In the last decade, it's warmed only by a tenth of a degree as opposed to two tenths of a degree in the preceding decade. But that's just natural variability - there's no reason to be surprised by that at all."

Scientists have told us they don't expect a steady year-on-year or decade-on-decade increase in warming. Natural climate cycles, like the El Nino that caused 1998 to be exceptionally warm, causes global temperatures to jump around from year to year. The long term trend is still one of warming.

Incidentally, Hansen's tenth of a degree figure refers to the five-year running average surface temperature over the decade 2000 to 2010. Some reaction to his interview online has suggested a different figure - of 0.01 degrees. That's the trend in monthly temperature between 2003 to 2013, and this really just illustrates the difficulties of measuring temperature over such short timescales. As scientists have repeatedly stressed, these are effectively temperature snapshots that need to be looked at in the context of previous decades.

On the Today programme Sir John Houghton, former chief scientist of the Intergovernmental Panel on Climate Change (IPCC), explained this point:

"If you look at the average, [the temperature] is still going up. You see a bump at 1998 and beyond, but the steady rise of about 0.1 degree per 10 years is still there."

Ocean warming

The Today report explained that rising greenhouse gas emissions must result in more warming - "That carbon dioxide warms the climate is not in doubt."

So if there's more carbon dioxide, and the warming isn't staying in the atmosphere, where is it going?

Surface temperature is only a small (but important) part of the climate system. In fact, most of the extra heat the planet absorbs goes into the oceans, climate scientist at the University of Reading Dr Richard Allan tells us:

"The vast ocean has a huge capacity to store heat … To balance the books you need to be measuring the energy coming in at the top of the atmosphere and all the places where it's going to really understand how the climate is heating."

Over the last decade or so when surface warming has slowed, there's some evidence that the amount of heat going into the deep ocean has increased. Sir Brian Hoskins, head of the Grantham Institute for Climate Change at Imperial College, explained to Roger Harrabin:

"You can have a decade or so where the ocean is storing up heat, but the atmosphere is not warming up much."

Scientists think the most likely reason for more heat entering the oceans rather than staying in the atmosphere is due to natural climate cycles that fluctuate slowly over timescales of a few decades.

Allan explains to us why this makes looking at temperature changes over short timescales a bad idea:

"[I]f you're measuring for a period of ten, 20 or even 30 years, you might just be measuring part of that natural cycle. You need to have a longer term perspective so you can put these bumps and troughs in context of longer timescale changes."

Importantly, the oceans absorbing more heat doesn't mean that the planet is "adapting" to extra warming, as Hansen's interviewer Sarah Montague seemed to imply at one point.

Decades in which atmospheric temperature rise slows down only to speed up again afterwards have occurred throughout the temperature record. With plenty of carbon dioxide in the atmosphere trapping heat, what we're seeing now is a temporary situation - atmospheric temperature will continue to rise when natural variability cycles turn in the other direction.

Climate sensitivity

The scientists in Harrabin's piece discuss natural variability as the most likely driver of the surface warming slowdown. Nevertheless, he examined an alternative idea - is the surface warming slowdown happening because the earth is less sensitive to greenhouse gases than previously thought?

The quick answer is no. We've written more about this - but here's a brief summary.

Scientists define climate sensitivity as how much the planet will warm with a doubling of carbon dioxide. The IPCC suggest that climate sensitivity is most likely between two and 4.5 degrees Celsius.

Harrabin referred to some recent research based on observational estimates of climate sensitivity that support of lower values. But as we've highlighted before, other estimates of climate sensitivity using climate models still support the higher end of the IPCC's likely range.

The Today programme actually did a pretty good job of unpacking this complicated area:

"[Mainstream scientists] have concluded that the top extreme [above 4.5 degrees Celsius] of the temperature range forecast for a doubling of carbon dioxide is less likely than ever. But the main projection remains about the same - something between two and 4.5 degrees Celsius."

Allan tells us the surface warming slowdown "doesn't add much physical insight" into scientists' estimates of climate sensitivity, adding that it tells us more about variability than long term warming. Hansen echoed this view extremely strongly on the Today programme, saying that a decade of surface warming slowdown provides "no change at all in our understanding of climate sensitivity and where the climate is headed."

Other scientists have told us basically the same thing. Professor Reto Knutti from the Institute for Atmospheric and Climate Science in Zurich told us recently:

"My personal view is that our overall assessment [of the value of climate sensitivity] hasn't changed much."

Key messages

While the recent surface warming slowdown doesn't challenge the fundamentals of climate science, there are some interesting questions about what's driving it. And the Today Programme gave a pretty good rundown of what is a complicated area.

It's also good that Hansen did a particularly good job of explaining why - although these are interesting questions - they are "details" that "shouldn't distract from the main message." Hansen ended his interview with a strongly worded statement on those who use this period of slower surface temperature rise to cast doubt on climate science:

"Deniers want the public to be confused, they raise these minor issues which are something between experts and then we forget about what is the main story: The main story is carbon dioxide is going up, it's going to produce a climate which is going to have dramatic changes if we don't begin to reduce our emissions."

Who's involved

The FT broke the story on Monday that the European Commission has raided the offices of oil companies BP, Shell and Statoil for misreporting petrol prices to Platts, an information provider which reports the 'benchmark price' for commodities like petrol - and whose offices were also raided.

Platts publishes information on commodity market such as food, energy and metals. It provides benchmark prices on these commodities, which underpin trading activity and can ultimately affect prices consumers pay on goods like petrol at the pump.

The investigation

The commission says it suspects oil companies had "colluded in reporting distorted prices" to agencies that publish data used to set oil and petrol prices, also reported in the Daily Mail.

According to the commission, the investigation stems from a tip-off from French oil major Total, which says it is not part of the investigation. According to the FT, Total told the commission in August that:

"several times a year, estimates of market prices on key [energy] indices ... are out of line with our experience of the day".

The companies tell the FT that they don't know exactly what conduct they're being investigated for, and it's not yet clear from the commission's statements, either.

The commission's directorate general for competition - or 'DG Comp' to the cool kids - says it's investigating price fixing and abuse of dominant position in the "crude oil, refined oil products and biofuels sectors".

That means it believes the companies might have agreed to fix prices and also restricted other companies from participating in the price reporting process so that they could carry on misreporting prices without being discovered - though how this may have happened is not yet clear.

The commission says it's taking the possible offence seriously:

"The prices assessed and published by price reporting agencies serve as benchmarks for trade in the physical and financial derivative markets for a number of commodity products in Europe and globally. Even small distortions of assessed prices may have a huge impact on the prices of crude oil, refined oil products and biofuels purchases and sales, potentially harming final consumers."

What's the link to other cases?

This isn't the first investigation into benchmark prices in the UK or EU. Last year in the UK, a whistleblower working at gas price reporting firm ICIS Heren drew attention to anomalies in gas prices.

Other price reporters then suggested that price fixing may also be happening in the electricity market. Both the FSA and Ofgem are investigating the case. The Guardian described the alleged scheme as a "Libor-like" scandal.  Libor, short for London interbank offered rate,  the benchmark interest rate large international banks use to borrow money from each other.

In June last year, Barclays bank agreed to pay £290 million to settle accusations by US and UK competition authorities that it had improperly manipulated Libor rates to boost profits. The manipulation affected the rates consumers pay on Libor-linked products like mortgages and student loans. The biggest losers appear to be large savers such as charities, who may have had their interest payments depressed. 10 other banks are under investigation and criminal cases in the US and UK may also follow.

Regulating oil pricing

Just like the Libor exchange and the gas and electricity markets, the market that decides the price of oil isn't regulated, relying on companies to submit accurate data. A report from the G20, published last July, warned that banks, oil companies and hedge funds have an "incentive" to distort the market by reporting false oil prices, in order to boost profits.

But pressure is growing to include them in a regulatory regime. Energy secretary, Ed Davey, told MPs yesterday:

"There is an issue - we've seen it with Libor, with the gas market manipulation allegations and now today - about how price reporting agencies operate. These are unregulated bodies."

Energy companies have resisted attempts to gain more oversight of benchmark prices, however. The Telegraph reports that BP, Platts, national oil company Saudi Aramco and Shell lobbied the International Organisation of Securities Commissions (Iosco), which was tasked by the G20 finance ministers look at the sector, not to intervene.

BP told Iosco it was "unconvinced" of the need for regulation. In contrast, Total told Iosco there should be public oversight of pricing agencies because it had seen "inconsistencies" in price reporting.

The FT writes today that it is "troubling" that it has taken so long for an investigation to open, given that Total reported concerns two years ago. It says Iosco lost an opportunity to push for reform, instead proposing only minor adjustments in the face of industry pressure.

What's next

While DG Comp presided over the raid, it says it was accompanied by officials from  member states' competition authorities, meaning that they may take up the case in their own jurisdictions and according to their own laws.

UK politicians have promised a muscular response to any price fixing on the oil market, with prime minister, David Cameron, highlighting that the government plans to make it a criminal offence. The case could prompt attention from further afield, too, if other countries believe that the case has affected their economies.

In the UK, for example, price fixing carries a fine of 10 per cent of companies' turnover. This may not apply to all companies involved, however. For example, the first company in the door with information for DG Comp will get immunity from a fine.

Price fixing is also a criminal offence in several jurisdictions - and UK nationals can be extradited to other countries to serve prison terms. Just ask the former British Airways executive who went to prison in the US for price fixing.

But whether the investigation will eventually lead to wider market regulation isn't clear.

The Department of Energy and Climate Change (DECC) releases annual figures on fuel poverty. A household is considered in fuel poverty if it spends more than 10 per cent of its income on fuel costs. But this measure has been criticised for failing to recognise households' different energy needs so the government now also measures fuel poverty on the basis of how much they have to spend for an 'adequate' standard of living. 

Energy prices affect fuel poverty

Fuel prices have been steadily increasing over the last ten years and are "typically been the most influential factor in movements in fuel poverty", according to the report.

Energy prices have rocketed compared to other goods. The chart below shows how energy prices have spiked in the last decade, while the cost of goods such as stir fry packets, t-shirts, and ebooks has increased more slowly. 

Over the last decade, the number of households in fuel poverty has always increased when fuel prices rose. The new figures show that in 2011 this wasn't the case, however - energy prices increased, but fuel poverty levels decreased. 

DECC says this is partly because fuel poverty figures are actually a combination of two years worth of data - so the 2011 price rise may hit figures in the next report. It's also partly down to energy efficiency home improvements which meant energy consumption in some of the most impoverished households was reduced, DECC claims.

Household income affects fuel poverty

Fuel costs hit poorest households hardest. 

The chart below shows the lowest income households are much more likely to be in fuel poverty than richer households. Over 70 per cent of the UK's poorest households are in fuel poverty under the old 10 per cent measure. 

This figure drops dramatically under the new measure to 44 per cent. Why is this? The new figures don't include households with low energy needs. The justification is that although they may spend more than 10 per cent of their income on fuel costs, this isn't considered necessary to adequately heat their homes. 

The lowest income group are still the largest group in fuel poverty under the new measure, however.

House location affects fuel poverty

Where people live also affects how likely they are to be in fuel poverty. The map below shows many more households are in fuel poverty in the North and South West of England than in the South East. 

This is because houses in those areas are likely to be older and less energy efficient, and average household incomes are lower - making those households more vulnerable to high energy costs.