Heating bills must be allowed to rise to encourage energy conservation and accelerate the move towards zero carbon emissions, the International Monetary Fund (IMF) has said.

The IMF has urged governments not to subsidize household electricity costs as it insisted that consumption should fall amid fears that Russia will cut off gas supplies this winter, The Telegraph reported.

The IMF believes that artificially cutting electricity bills will only exacerbate the looming crisis by increasing the risk of shortages while also encouraging dependence on fossil fuels.

European countries rushed to support households facing a huge blow to income due to a sharp increase in electricity bills.

However, softening the blow to household budgets means that many are less likely to cut back on their energy use. This will prevent demand from falling in line with supply, keeping prices high for longer.

The IMF called for support to be directed to those most in need after finding that the cost of living for the poorest fifth of households in the UK is expected to rise twice as much as for the richest, one of the biggest gaps in Europe.

Oil and gas prices have risen sharply this year since the outbreak of the war in Ukraine, with the bulk of the increase coming from households. The UK, US and EU have imposed an embargo on Russian oil, while Russia has begun to cut gas supplies.

Analysts have warned that the ceiling on energy prices will rise to £3,616 in January and remain above £3,000 a year until at least 2024, up from £1,300 before the war.