Select Committee on Environmental Audit Seventh Report


  SEVENTH REPORT

SUMMARY OF CONCLUSIONS AND RECOMMENDATIONS

  7. The Committee's key conclusions and recommendations are summarised below:

    Energy policy

          (i)  The Government should adopt a sustainable hierarchy in establishing a framework for UK energy policy (as exists in the waste strategy). This hierarchy should start with the promotion of end-use energy efficiency; energy supply from renewable resources followed by combined heat and power; fossil fuels, in order of efficiency and carbon intensity, and nuclear power. (Paragraph 24)

    Energy sources

      Renewables

          (ii)  The Government target is for 10 per cent. of UK electricity to come from renewable sources of energy "as soon as possible". We are concerned about the Government's approach. Policy commitments must have both a target-level and a defined time- period to be meaningful. Without these elements progress may prove difficult to inspire and certainly impossible to audit. We look for the draft Climate Change Programme to propose either a date for the 10 per cent goal or an interim target for 2010. In the light of the grave reservations over the likelihood of the target being met, expressed recently by the Lords Select Committee on the European Communities, we also look to the Government to produce a clear strategy demonstrating how its goals are to be achieved. (Paragraph 26)

      Combined heat and power

          (iii)  If the mooted target of 10,000WMe of CHP by 2010 is to be achieved it seems likely that larger installations will be needed with the potential for more substantial sales of electricity to the national grid. In these circumstances any new framework for electricity distribution should incorporate incentives encouraging demand-side solutions such as CHP and other embedded generation with environmental benefits. The Government should also consider what could be done to secure long-term access to fair market prices for CHP using the NFFO as an example. (Paragraph 30)

      The stricter consents policy

          (iv)  We regard the stricter consents policy to be serving no particular purpose and as running counter to the spirit of the Government's commitments on climate change. The Government should conclude the reform of the wholesale electricity market as soon as possible so that it may bring the stricter consents policy to an end. However, we believe that tinkering with power station consents is peripheral to the vital work needed to establish a sound footing for the development of sustainable energy sources for the UK over the longer term. (Paragraph 35)

    Fuel poverty

          (v)  The persistent problem of fuel poverty in the UK is a continuing national scandal. Its contribution to 30,000 extra winter deaths (including some caused by cold within the home), and the fact that up to four and a half million people are significantly affected, should be addressed with the sort of urgency and determination usually reserved for more sudden crises here and abroad.

        - In terms of public expenditure alone we believe it would be most prudent and effective to address the underlying causes of fuel poverty with a substantial and specific programme of capital investment to raise energy efficiency standards.

        - We are concerned at the way the target for HEES is expressed in the Sustainable Development Strategy in terms of the installation of "energy efficiency measures" in a headline number of buildings - one million - by 2002. We would prefer a more meaningful measure of the outcomes achieved in terms of a reduction in the incidence of fuel poverty and some assessment of associated emissions reductions.

        - Until fuel poverty is addressed, taxes on domestic fuel and power are difficult to countenance. However, if the UK is to deliver the necessary reductions in greenhouse gas emissions (by 2010 and beyond) we do not believe that the domestic sector can be permanently exempt from the environmental consequences of its energy consumption. Therefore addressing fuel poverty is both a social and environmental imperative. (Paragraph 46)

    Barriers to implementation of energy efficiency

          (vi)  Falling energy prices appear to send stronger signals than awareness campaigns and seem likely to overwhelm current efforts to promote energy efficiency. The actual economics of energy efficiency investments will become less attractive but, more importantly, the already low priority afforded to the concept overall will be further weakened. (Paragraph 55)

          (vii)  We regard incentives to consume higher levels of energy as flying in the face of current Government objectives - and the provision of Air Miles in this context as rubbing salt in the wound. We recommend that Ministers, the Director-General of Electricity and Gas Supply and the energy companies together consider what measures are currently feasible and/or desirable to address this issue. An assessment should be made of the balance between the benefits of cost-reflective pricing compared to the poor environmental signals being given. (Paragraph 56)

          (viii)  We regard the development of energy services provision as fundamentally important to the achievement of the UK's environmental objectives and their promotion should be integral to the Government's stewardship of the completion of market liberal isation and not left for bolting on afterwards. (Paragraph 57)

    Institutions and programmes

          (ix)  We recommend that the Government review its arrangements for developing and implementing sustainable energy policy and the potential for synergy between efforts to promote energy efficiency and efforts to promote the development of renewables. In particular it shoul1d consider carefully the concerns that have led to calls for innovation, for example, the establishment of an independent sustainable energy agency. It seems clear that while Government believes its arrangements can be made to work, this view is not shared by significant partners outside Whitehall. (Paragraph 64)

          (x)  We recommend that a new unit with a dedicated staff be given specific responsibility for driving and coordinating policy on energy efficiency; its integration into other policy areas; and for identifying barriers to effective action. The unit should report to the relevant Ministers in both the DETR and DTI and have a remit to advise Ministers on: particular barriers and opportunities in the promotion of energy efficiency throughout all Government policies and programmes; and on what actions are needed when logjams have been identified. (Paragraph 65)

          (xi)  We conclude that the Government needs to reassess its many different programmes for promoting energy efficiency to achieve a simpler, more stream-lined and efficient approach. (Paragraph 72)

    The Climate Change Levy

          (xii)  With regard to the Climate Change Levy, we recommend tha1t:

        - the Levy be identified clearly on consumers' bills;

        - the Government should address the impact that the Levy will have on the competitiveness of heavy users of energy in a proportionate way;

        - electricity bought under verified green tariffs be exempted from the Levy;

        - the amount of direct funding for energy efficiency under the Climate Change Levy be doubled and reviewed over time as to cost-effectiveness in securing emissions reductions; and

        - the Government should assess the effects of using a proportion of Levy revenue to provide continuing incentives and assistance for investments in energy efficiency in the form of tax breaks or rebates.

        In addition we conclude that for the Government and interested parties not to consider options for emissions trading schemes alongside the development of the details of the Levy may prove a lost opportunity. (Paragraph 74)

    Value added tax

          (xiii)  We recommend that the UK supports the European Commission proposal for a Directive allowing temporary VAT reductions to be applied to local labour- intensive services and that the Government applies the reduction, once available, to all installations of energy saving materials as a priority. (Paragraph 76)

    Obligations to achieve efficiency improvements

          (xiv)  We recommend that all necessary steps be taken to extend the existing Standards of Performance scheme for electricity supply until the advent of the new utilities legislation including, if necessary, securing the voluntary participation of suppliers outside the ambit of the existing legislation. We urge the Director-General of Electricity and Gas Supply to establish a Standards of Performance scheme for gas suppliers as soon as possible using the successful electricity scheme as a model (and we recommend that his statutory powers to do so are not allowed to lapse by the Secretary of State for Trade and Industry). (Paragraph 82)

          (xv)  We support the establishment of an enhanced Standards of Performance scheme for energy efficiency and we strongly recommend that obligations, for both electricity and gas, be imposed on the supply function rather than the distribution function in order to encourage the development of energy services provision. (Paragraph 84)

    Regulation

          (xvi)  We believe that the Government should adopt the proposal for there to be mandatory energy surveys of houses at the point of sale or introduce a requirement for energy suppliers to offer one to new customers (in which case the utilities reform bill offers a timely opportunity to secure introduction.) (Paragraph 92)

    Local authorities

          (xvii)  We welcome the Government's plans to assess formally the lessons to be learned from the experience of the Nottinghamshire and Derbyshire Local Authorities' Energy Partnership in order to disseminate best practice...We recommend that as well as extracting lessons for best practice, the Government's review process also focuses upon the barriers encountered by the Partnership and that Ministers take steps to address these. (Paragraph 98)


 
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