Household energy bills will rise by more than £200 a year under the Government’s low-carbon strategy being announced next week.

Meeting Britain’s targets for cutting emissions could push another 1.7 million households into fuel poverty, meaning that seven million homes would be spending more than 10 per cent of their income on fuel.

The Renewable Energy Strategy, to be published on Wednesday, will state that more than £100 billion will have to be invested in renewable energy infrastructure, including 7,000 wind turbines, by 2020.

The Government has bound itself legally to cutting CO2 emissions by 34 per cent by 2020 and 80 per cent by 2050. To achieve this, it must increase the amount of energy generated from renewable sources from 2 per cent at present to 15 per cent by 2020.

The strategy estimates that energy bills will have to rise by about 20 per cent to pay for the investment. The average household currently pays about £1,150 a year for electricity and gas, a small decline on last year but still double the amount paid in 2003.

The cost of converting to renewable energy and modernising Britain’s power supply would add about £230 to annual bills. Costs are likely to ratchet up quickly as the investment is made, with the increase reaching 20 per cent within three years.

Industry estimates due to be published next week will take an even gloomier view and claim that bills could rise by 30 per cent.

Ed Miliband, the Energy and Climate Change Secretary, admitted to The Times that energy bills would rise, but said that the carbon-reduction targets were not the only factor. “There is upward pressure on energy prices whether you go for a high-carbon or a low-carbon alternative,” he said. “The costs of not acting on climate change far outweigh than the costs of acting.”

Derek Lickorish, chairman of the government-appointed Fuel Poverty Advisory Group, urged ministers to introduce measures to protect poorer families from rising energy prices.“We need decisive action on energy efficiency and social tariffs or many hundreds of thousands more pensioners, families and disabled people will struggle to afford their energy bills,” he said.

Ministers are expected to announce a “pay-while-you-save” scheme under which families can spread the cost of home insulation, paying by instalments based on the amounts they save by consuming less energy.

John Sauven, director of Greenpeace, said that higher energy bills would be accompanied by massive investment in renewable energy, with 250,000 new jobs and the opportunity to turn Britain into a world leader in low-carbon technology.

A White Paper detailing how Britain will make the transition to being a low-carbon economy will also be published on Wednesday. It will contain measures designed to accelerate plans to slash Britain’s dependency on fossil fuels such as coal, gas and oil for electricity generation from the current level of 78 per cent.

The White Paper will include predictions that Britain will have to cut its gas consumption by nearly 30 per cent by 2025 and coal by 34 per cent. Consumption of petrol and diesel will also have to fall by 10 per cent by 2020.

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