Select Committee on Environmental Audit Seventh Report


The Environmental Audit Committee has agreed to the following Report:—


  1. The promotion of energy efficiency seems to be an unequivocal example of a win-win strategy for sustainable development. Investment in energy saving measures can reduce costs to business and the householder; alleviate pressure on finite natural resources; and reduce greenhouse gas emissions (and other energy-related environmental impacts) all at the same time. There is little doubt that there is substantial potential for cost-effective energy conservation measures across all sectors of the UK. Unfortunately there is equally no doubt that significant barriers exist to the realisation of this potential despite merit in the underlying economics as well as other benefits. The prospects for more difficult aspects of the sustainable development agenda are bleak indeed if an objective with such characteristics cannot be successfully integrated into the way we go about our lives.

2. In the UK consumption of primary energy has remained largely stable since the 1970s while the economy has grown by about 80 per cent. The UK's energy intensity therefore (the ratio of energy consumption to GDP) has improved markedly. However, the direction of current trends and the influence of reductions in energy prices are unclear and the latest forecasts are awaited. The Government attributes past improvements primarily to efficiency improvements in the industrial sector concentrated in the years after the two oil price crises. But since then the promotion of energy efficiency appears to have suffered from a lack of attention from Government matching, perhaps reflecting, a low priority afforded to the concept by the bulk of the population both at home and at work. Initiatives have developed piecemeal in response to a number of issues: economic savings ('monergy') in the 1980s; and climate change in the 1990s; and, throughout, the persisting national scandal of fuel poverty. The development of statutory provision has been largely left to the efforts of backbench Members and the vagaries of the lottery for Private Members' Bills.

3. Energy policy as a whole has been driven by supply-side considerations with the main thrust in recent years on the liberalisation of the energy market and the introduction of competition. While competition is likely to promote efficiency of production, improving the efficiency of energy use has not been integrated into the changes but has been a cinderella— recently setting off for the ball again courtesy of growing international consensus over the threat of climate change. There remain apparent tensions within the Government's energy policy— withdrawing from the generation and supply business while still needing to deal with their social and environmental implications; assumptions of a trade-off between diversity and sustainabililty in addressing the so-called 'dash for gas'; and realising lower energy prices through competition while wishing to promote substantial investments in energy efficiency measures.

4. The question that confronted the Committee was the extent to which the present Government has taken on board the implications of its own commitments and rhetoric in establishing the means to effect real change and a coherent framework in which energy efficiency can prosper. Political will, administrative coherence, adequate resources, and a plan, are all essential elements. In 1998 the International Energy Agency review of energy policy in the UK concluded that "the efficiency programmes in place are unconvincing".[1]

5. Our overall impression is that while the intention is there—demonstrated, and now driven, by challenging Kyoto and domestic targets on greenhouse gas reductions—the signals coming from government are mixed and progress has been slow. On the available evidence existing efforts seem likely to be overwhelmed by the effects of market liberalisation and perceptions of low and falling energy prices. On the plus side we note increased public expenditure on energy efficiency and fuel poverty programmes; the principle of an energy tax for business (although the details need careful consideration); and proposals for a substantial energy efficiency initiative arising from utilities reform. Against this we note some equivocation over sources for power generation (the relative merits of coal, gas and renewables); slow progress with the heralded new framework for reformed of energy regulation; and little evidence of the development of a comprehensive sustainable energy policy, integrating economic, social and environmental objectives across supply and demand.

6. We were told to 'watch this space' by the DETR.[2] A draft Climate Change Programme has yet to unfold and may pick up some of the loose threads that seem to festoon energy efficiency policy (for example, the perverse VAT differential between energy and energy saving measures, the apparent inability to introduce mandatory energy surveys for houses and a failure of domestic energy services to develop). Select committees, and others, have been 'watching this space' for a coherent approach to energy and the environment for some time and we echo the recent conclusion of the Trade and Industry Committee that "there is a crying need for the integration of environmental priorities with energy policy, rather than the one being a tardy intrusion into the latter."[3] We believe that it is high time that the 'space' for an effective energy efficiency strategy is filled with more than warm words. A new strategy needs to be an integral part of the existing energy policy mantra of "diversity, security and sustainability" which itself needs definition, each term and the balance to be struck between them. Energy efficiency also needs to be built into other Government policies, for example on urban regeneration. And the Government needs to establish the means to ensure that opportunities for this integration are identified and acted upon.

1  Energy Policies of IEA Countries, The UK 1998 Review, International Energy Agency/OECD, 1998, p8 Back

2  Q268 Back

3  Fifth Report from the Trade and Industry Committee, Energy Policy, HC471, 1997-98, paragraph 21(a) Back

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