APPENDIX 7
Memorandum from Energy Saving Trust
1. ENERGY POLICY
The response implies (paragraph 2) that the
White Paper "Conclusions of the Review of Energy Sources
for Power Generation" is a comprehensive statement of Government
energy policy. As the title of the White Paper implies, it does
not include any detailed assessment of energy efficiency options,
and therefore is restricted in its coverage.
The cautious response to the Committee's request
for a sustainable energy hierarchy (paragraph 3) is justified
in so far as Government clearly needs to take into account economic
and social factors as well as environmental ones. However, energy
efficiency is generally the most economic and socially beneficial
option as well as the most environmentally desirable. The Committee's
view that energy efficiency should be the top priority therefore
remains correct, in our view.
2. ENERGY SOURCES
Paragraph 7 states that Government will ensure
NETA provides fair market prices for CHP and renewables. However,
most independent commentators believe that the proposed arrangements
are unhelpful both to small generators and those with unpredictable
output. CHP and renewables are therefore both likely to be disadvantaged.
Paragraph 8 states that NETA will take into
account embedded generation benefits. NETA itself refers the issues
of embedded benefits back to DTI review. This seems to be a contradiction.
3. FUEL POVERTY
AND VAT
The statement that "VAT on energy saving
materials has been reduced to 5 per cent" (paragraph 11)
is misleading. In practice the effect of the reduction only benefits
measures installed under the Home Energy Efficiency Scheme. The
statement that "we are also exploring with the European Commission
the possibility of a further reduction" could usefully be
further probed. Our discussions with officials in Customs and
Excise indicate that the Government has yet to respond to the
Commission invitation to list labour intensive measures which
might benefit from a lower rate of VAT (paragraph 36). France
has already taken advantage of the proposal to reduce VAT on energy
efficiency investments.
The Committee may also wish to explore the statement
that one third of Capital Receipts Initiative expenditure will
improve energy efficiency. We suspect that the definition is very
broad and includes measures with only marginal benefits for energy
efficiency. It would be more helpful to know what measures are
included and what the projected energy efficiency benefits will
be.
4. OBLIGATIONS
TO ACHIEVE
ENERGY EFFICIENCY
IMPROVEMENTS
The Government has now indicated that it will
take the powers to set Energy Efficiency Standards of Performance
in new legislation (Paragraphs 20, 21). This is welcome, but the
level at which new EESoP will be set is not clear. The level will
be critical for carbon dioxide emissions reduction from the domestic
sector. The Committee may wish to probe Government intentions
in this area.
5. THE CLIMATE
CHANGE LEVY
Paragraph 34 states that "an additional
£50 million in the first year" from the Levy will be
used to support renewables and energy efficiency. This leaves
open the possibility that the amount will be raised in future
years, which would be very helpful in responding to the Committee's
request for additional energy efficiency funding.
Paragraph 34 also notes that Treasury is considering
"additional incentives for energy efficiency investment".
It is likely that these are fiscal measures, either as Levy reductions
or accelerated depreciation. Either would be helpful, but the
Committee may wish to press the Government to consult with business
and energy efficiency interests on what would be most effective.
6. REGULATION
Paragraph 41 alludes to the "sellers pack"
initiative which has subsequently been announced. However, the
extent to which energy efficiency opportunities will be identified
in the proposed mandatory survey has not been announced. It would
be most helpful if the survey could provide both an overall rating
(SAP or similar) and a list of cost effective opportunities. The
Committee may wish to consider this.
November 1999
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