Select Committee on Environment, Transport and Regional Affairs Fifth Report


UK CLIMATE CHANGE PROGRAMME

Renewables

39.Renewable energy was the other main topic in this sector. There was concern about whether the target of achieving 10% of electricity supply from renewable sources by 2010 would be met[83] given that, at present, around 2% of electricity is produced from renewable sources. Many witnesses noted the potential of renewable sources to reduce emissions and also suggested that large employment benefits would accrue from an ambitious policy :

    "It would be realistic to set a target of ten per cent of our electricity supply from offshore wind alone in the next ten years from that renewable source. That would create 30,000 jobs..."[84]

It was generally accepted that the delays which characterised the review of renewable energy sources had caused problems and deterred some potential investors from committing themselves.[85] The review was intended to be a rapid appraisal but took more than 20 months to be completed and published.

40.Some witnesses noted that renewables policy will determine whether or not we gain 'first mover' advantage in renewables technologies:

    "I think the question which should concern the British Government is whether we are going to be a part of that [growth in renewables] or whether, as has happened so often in our history, we are going to be left behind economically while having got the science right."[86]

Witnesses also called for a more ambitious renewables target to be set[87] and we were told that the Renewables Division of the Department of Trade and Industry had identified a renewables potential of 20% in the next ten years and 50% by 2025.[88] Although these would be demanding targets, it is worth noting that Denmark has a target of 50% renewable generation by 2030. Greenpeace noted the importance of setting a challenging target:

    "you say 'This is the target, this is the framework, this is the economic support we are going to give' and let the market work out and technology deliver what is going to be most effective and most efficient."[89]

We note that the Government is suggesting a renewables percentage obligation on all electricity suppliers in its draft Utilities Bill. We welcome this, but suggest the Government takes into account the call for clear market signals for the industry and makes this proposal clear and enforceable.

41.There was general consensus that existing measures to encourage renewables (such as the Non-Fossil Fuel Obligation (NFFO)) were useful mechanisms but would not be able to deliver a more ambitious, long-term target, not least because they operate on a tranche-by-tranche basis.[90] There is a need for a range of other measures to ensure that there are guaranteed markets for renewable energy and, perhaps, a requirement that energy suppliers take a minimum quantity of renewable energy.[91] We also heard calls for greater public funding of research into long-term renewable options.[92]

42.Much greater use of renewable sources of energy will be necessary to achieve long-term emissions reductions. The Department of Trade and Industry found that 10% of electricity could be supplied from renewables at a cost of around 3.5 pence per kilowatt-hour[93] and it seems likely that more than 50% could be supplied at a cost of around 4 pence per kilowatt-hour. We urge the Government to commit itself to achieving a 20% renewables target by 2010 and to set out a clear strategy as soon as is practicable as to how the target will be achieved. Further, to give a clear signal to industry, a target of 50% for the proportion of electricity supplied by renewables by 2030 should be established. This target will require more support for long-term renewable options along with greater funding to bring viable options to the market.

The Domestic Sector

THE ENERGY-EFFICIENCY OF HOMES

43.The domestic sector was widely pinpointed as one in which the Government appeared to lack ambition.[94] This was particularly true for energy-efficiency savings which, of course, offer one

of the main 'win-win' options in any climate change strategy since energy-efficiency measures bring benefits other than just reduced emissions.[95] The Energy Saving Trust noted that:

    "we believe that, by reducing emissions via energy-efficiency measures, the UK can only benefit. Energy-efficiency in the domestic sector not only reduces environmentally harmful emissions; it also allows the fuel poor to heat their homes properly; it increases the disposable income of households; and it leads to job creation in the energy-efficiency industries."[96]

The Electricity Association presented the results of a study which showed that it would be cost-effective to save 6.1 MtC (at a cost of £11.2 billion) from a range of energy-efficiency initiatives in the domestic sector.[97] Similarly, the 1999 report on the Home Energy Conservation Act confirms that there exists the potential to achieve a 30% improvement in energy-efficiency over a 10-15 year timescale.[98] There is truly a consensus both that there is a huge potential for improved energy-efficiency in the domestic sector and that this risks being under-exploited. This is particularly the case since new regulatory arrangements are likely to yield falling gas and electricity prices. We believe that energy-efficiency in the domestic sector should be made more of a focus in the climate change strategy. Domestic energy-efficiency measures bring secondary benefits of warmer homes and improved living conditions for some of the poorest in society. New regulatory arrangements are predicted to lead to lower fuel prices for domestic users and consumers should be encouraged to use the money saved to improve the energy-efficiency of their homes.

44.The poor quality of housing in this country is one of the main obstacles to improving energy-efficiency.[99] The 1996 English House Condition Survey showed that there are at least 4.3 million fuel poor households in England (a 'fuel poor household' is one 'which needs to spend in excess of 10% of income on fuel to maintain a satisfactory heating regime.')[100] Few other European countries have serious fuel poverty problems.[101] There exist a number of different initiatives aimed at increasing the energy-efficiency of UK housing: the New Home Energy Efficiency Scheme (HEES), the Home Energy Conservation Act 1995, the Energy Efficiency Standards of Performance scheme which funds initiatives from the Energy Saving Trust. The National Home Energy Efficiency Partnership is intended to provide a long-term framework and enable better co-ordination of these initiatives. We took limited evidence on the details of these schemes.

45.The main problem appears to be a mismatch of the funding for domestic energy-efficiency measures (about £200 million annually) with the required investment of around £800 million annually.[102] Although some of this investment may come from organisations and individuals, there will undoubtedly be a need for greater public investment if the full potential in this sector is to be achieved,[103] estimated by the Energy Saving Trust at an additional £200 million per annum. The 'Warm Homes Bill' is attempting to introduce legislation to start a 15-year programme to provide comprehensive insulation and energy-efficiency measures to 500,000 homes annually.[104] Against this, current efforts by the Government can be seen as doing little more than applying a sticking-plaster to the problem of fuel poverty. Given the size of the fuel poverty problem and the large potential for energy-efficiency in the domestic sector, we believe that the overall scale of measures to improve energy-efficiency should be expanded by a factor of at least two. Without a more ambitious programme, the Government risks merely tinkering with a serious social and environmental problem.

THE ENERGY EFFICIENCY STANDARDS OF PERFORMANCE SCHEME

46.Some of the more inspiring evidence we received on this sector concerned the Energy Efficiency Standards of Performance (EESoP) scheme. This scheme is an obligation on public electricity suppliers to make energy savings via domestic energy-efficiency measures. Research by the National Audit Office has shown that the scheme delivered net economic benefits to the country of £250 million and a benefit to householders of £4.70 for every £1 spent by the electricity companies.[105] A wide range of witnesses identified this scheme as a success to date[106] and the Energy Saving Trust told us that:

    "The EESoP mechanism is a proven means of delivering domestic energy-efficiency cost-effectively. Rolled out on a larger scale and extended to gas, it would be capable of achieving most of the domestic emissions reductions required to 2010."[107]

On the basis of the scheme's success, the Association for the Conservation of Energy made a persuasive case for a ten-fold expansion of EESoP and its extension to gas.[108] Other witnesses agreed that it should be broadened and deepened and Mr Meacher made a commitment to incorporate gas into the scheme.[109] Clearly, in considering a large expansion of the scheme, thought needs to be given as to how it should be funded. The existing EESoP scheme is funded by a flat rate £1 levy on each customer's electricity bill. The National Consumer Council expressed concern that an expanded scheme should not be funded in the same way as it would be socially inequitable.[110]

47. We are pleased that the Energy Efficiency Standards of Performance scheme is to be extended to include gas and look forward to further expansions of this scheme in future years.

BUILDING REGULATIONS

48.Building regulations are used to specify energy-efficiency standards for new buildings and these are currently being reviewed. In June 1998, the DETR published A review of the energy efficiency requirements in the building regulations. Interim paper., prepared by Oscar Faber which contained initial ideas for amending the regulations. A consultation paper on changes is due to be published later this year. Most witnesses who commented on this issue urged a strengthening of the building regulations and their extension to cover existing buildings whenever renovation or conversion takes place.[111] Given the relatively high standard of energy-efficiency in new houses and the slow turnover of housing stock, we believe that the extension of building regulations to existing buildings is critical. We look forward to the results of the review of Building Regulations but believe that the process is taking far too long. We recommend that the final stages of the review be accelerated, with changes made to the Regulations as soon as is practicable. We believe that the Regulations should be made more stringent in respect of energy-efficiency for new buildings. We further recommend that the Department should examine the possibility of introducing regulations which cover existing buildings whenever renovation or conversion takes place. There are, of course, other disincentives to carrying out energy-efficiency work including poor standards of work by contractors, access to funds and differentials in the VAT treatment of energy and energy-saving materials. We examine these below.

STANDARD OF WORK BY CONTRACTORS

49.One barrier to improving domestic energy-efficiency is that there is no guarantee of the level of knowledge or competence of those installing or maintaining energy-efficient equipment.[112] This is particularly the case for plumbers and heating engineers dealing with boilers. The Energy Saving Trust commented that:

    "There are over 50,000 Corgi registered firms and about 2,000 of these have put in more than two energy-efficient boilers. That is the scale of the problem."[113]

Gas condensing boilers can significantly reduce emissions but many firms are still failing to recommend them, despite their clear-cut energy benefits to the householder. More generally, a lack of public confidence in builders and other contractors is proving to be a barrier to improving the energy-efficiency of the housing stock. We recommend that the Government explore the need for minimum standards of competency for those contractors involved in improving the energy-efficiency of houses. The Government should also consider carefully the need for better dissemination of information and training to ensure that there is a growing force of well-trained people capable of undertaking energy-efficiency work.

LOANS FOR ENERGY-EFFICIENCY WORK

50.Other mechanisms can help improve the poor energy-efficiency of many existing houses. Perhaps the most convincing one presented to us was offering low-cost loans for funding energy-efficiency measures when a property changes hands. The point of purchase is a major opportunity to improve the energy-efficiency of a property, given that more than one million are traded each year.[114] Roger Humber of the House Builders Federation noted the potential:

    "If at the point of sale the vendor was required to obtain some kind of energy rating, and then required to improve the energy-efficiency of that house by a specified percentage ... a very considerable amount of work could be done in a relatively short period of time - I am talking about ten years - on the existing stock."[115]

Pilkington told us of a scheme in which they were involved in Australia where banks offer a self-financing loan for energy-efficiency measures[116] but also commented that they had been unable to persuade any financial institutions in the UK to offer similar loans.[117] There are some isolated examples of 'green' mortgages but these make up a very small proportion of the products available in the UK.

51.When discussing this matter, the importance of energy information on properties was often emphasised. For example, the National Consumer Council told us that:

    "We would like to see all houses energy labelled and we want to see the information on the energy rating of houses coming out in the public domain when houses change ownership, either at the point of rental or point of sale"[118]

The Government has already introduced the Standard Assessment Procedure (SAP) for home energy rating which all new houses must be assessed against and given an energy-efficiency score on a scale of 1 to 100. Clive Efford, MP was unsuccessful with his Private Member's Bill which would have required all mortgage surveys to include an energy rating and a list of the three most cost-effective energy-efficiency improvements that could be made to the property.

This would have been a useful first step and we note the Government's stated support for these aims.[119] We are disappointed that the financial institutions have so far failed to offer 'green' mortgages which would enable energy-efficiency improvements to be made to a property when it is sold. We urge the Government to work with the Council of Mortgage Lenders to develop suitable loan schemes.

ENERGY PRICES AND TAXATION

52.Beyond specific measures to improve the energy-efficiency of housing, there is the issue of energy prices and taxation for domestic users. Government policy on this is plain:

However, many witnesses noted that falling fuel prices in recent years were set to continue as the market liberalisation is completed and that this is giving the wrong signal to consumers about their energy use.[120] We have already acknowledged that fuel poverty is a critical social problem and support expanded efforts to tackle it. We also recognise the need to protect poorer consumers from increased energy costs and further consideration needs to be given as to how incentives could be given to domestic consumers to limit their energy use.

53.A final point on taxation for domestic users is the continuing discrepancy in the rates on fuel and power (5%) and energy-saving equipment (17.5%). As it stands, this is a clear disincentive to those wishing to invest in energy-efficiency. The Government argues that it has gone as far as it can in addressing this anomaly by reducing VAT on the installation of energy saving materials within certain Government­funded schemes (principally the Home Energy Efficiency Scheme) and that any wider application would run foul of EC law in the form of Annex H of the 6th VAT Directive.[121] Although we have been told at various points that the Government is pressing for resolution of this matter within the European Commission, no progress appears to have been made. We regret that the Government has not given more consideration to the opportunities offered within EC legislation to secure a reduced rate of VAT for the installation of energy saving materials amongst other services. We urge the Government to make a genuine effort both to ensure the start of the promised review of reduced rates in the 6th VAT Directive and to achieve real progress with respect to energy saving materials.

EFFICIENCY OF APPLIANCES

54.Aside from improving the energy-efficiency of housing, one of the main methods of reducing emissions is by improving the efficiency of appliances.[122] We considered this matter in detail in our recent Report on "Reducing the Environmental Impact of Consumer Products". We noted in that report the Government's reliance on the 'Market Transformation' approach [123] and whilst supporting the approach in principle, we expressed some reservations about its use. Here, our only comment is that the pace and extent of 'market transformation' must be accelerated if it is to contribute to meeting emissions targets in 2010. We also note that the Government could play a direct and leading role by adopting green procurement practices. We encourage the Government to explore further options to increase the share of emissions reductions in the public sector.

PERSUADING THE PUBLIC

55.If long-term emissions reductions are to be secured, the public must understand the importance of climate change and the part that their own actions can play in exacerbating or diminishing the problem. Many witnesses told us that this was not the case at present[124] and the need for behavioural change was widely acknowledged.[125] We heard from the Worldwide Fund for Nature that although 86% of people were concerned about climate change, only 22% recognised that domestic energy consumption was a major contributor to the problem.[126] We were told of various efforts to communicate these messages to the public but found little evidence that they were having a significant impact. For example, the 'Are You Doing Your Bit?' campaign was presented by the Government as a major effort[127] but the National Consumer Council told us that few people had heard of it.[128] We also heard from the Global Environmental Change Research Programme that "Information, however well targeted, is not sufficient by itself to change consumption patterns. Before they act on information, people need to feel that they are making a difference."[129] This point was also noted by Mr Meacher.[130] To aid with this, we have produced in Box 1 a number of ways in which an individual can make a real difference to their contribution to global climate change. If people started to act upon these recommendations, emissions of carbon dioxide could be reduced by between 10 and 15 MtC, around half of the 'gap' between current emissions projections and the target of reducing emissions by 20% below 1990 levels by 2010.

Text Box 1[131]

ActionPersonal Impact
Impact on National Annual Carbon Emissions
Turn down the heating thermostat by 1°C Reduce heating bill by 10%, saving £15 to £30 annually
0.25 MtC[132]
Set hot water cylinder thermostat at 60°C Reduce heating bill by 10%, saving £15 to £30 annually
0.15 MtC[133]
Install cavity-wall insulationReduces space heating costs by around 30%, saving £50 to £100 annually.
3.4 MtC[134]
Install condensing boilerReduces space heating costs by around 20%, saving £35 to £70 annually
3.0 MtC[135]
Install loft insulationReduces space heating costs by around 30%, saving £50-£100 annually
1.3 MtC[136]
Install hot water tank insulationInsulation will reduce water heating costs by around 30%, saving £20 to £40 annually.
0.35 MtC[137]
Turn out lights on leaving a roomOne quarter of all the electricity used is for lighting. Annual savings of around £5 possible.
0.25 MtC[138]
Switch off TV instead of leaving it on standby About 10% of the energy use of a TV is during standby. Saves around £2 annually
0.1 MtC[139]
Fit draught excluders to doors and windows Reduce space heating costs by around 5%, saving £5 to £15 annually
0.5 MtC[140]
Change to energy-saving light-bulbsEnergy-saving light bulbs use 25% of the amount of energy that conventional bulbs use. Saves around £20 annually.
1.6 MtC[141]
Take showers instead of baths whenever possible A conventional shower uses 60% less hot water than a bath. Can save £5 to £10 annually
0.5 MtC[142]
Get your car serviced regularlyA serviced car may use up to 5% less fuel
0.4 MtC[143]
Drive at 50mph instead of 70 mphA car uses 25% less fuel at the lower speed
0.6-5.1 MtC[144]

56.Some witnesses noted that for people to be motivated to change their behaviour, they needed to feel that those persuading them to do so were acting upon their own advice. The Global Environmental Research Programme explained:

"People are sceptical if they are being subject to rhetoric which says you must take responsibility and you must do things but the people who are actually delivering the rhetoric are not being seen to be doing those things themselves"[145]

Press stories which reveal the environmentally damaging behaviour of Government Departments and Ministers are a frequent occurrence. We believe that such stories inevitably undermine the effectiveness of Government messages to the public to change their own behaviour. To ensure that the public can be persuaded of the need to take action to reduce their own emissions, we believe that the Government must make greater efforts to reduce emissions from the public sector. Green procurement practices and transport plans should be established as quickly as possible and widely publicised. Ministers must also try and demonstrate environmentally-responsible behaviour whenever possible.

57.Although we recognise that efforts to change people's behaviour are still developing, the current efforts appear to be patchy and low-profile. As we noted in our report on Reducing the Environmental Impact of Consumer Products, "the 'Are You Doing Your Bit? campaign is inadequate in scale, coverage and public profile."[146] The National Consumer Council noted the contrast in funding for different information campaigns:

"We looked at all the Government's information campaigns and commented in particular on how Going for Green received less public funding than the anti-litter campaign, and contrasted that effort with things such as the road safety campaign. The road safety campaign has been very consistent, very heavily funded, still with £8 million a year, very targeted, very focussed, very sustained over a very long period, and has delivered ... So we feel it can be done..."[147]

The Institution of Highways and Transportation echoed this point, noting that even within the transport sector, there is a great disparity in the resources put to the campaigns to reduce journeys and emissions as against those put towards tackling speeding and drink-driving.[148] The UK Government relaunched the Are You Doing Your Bit campaign in May 1999 with a £7 million annual budget and with climate change/energy efficiency amongst its priorities. We recognise this as an improvement on the 1998 campaign but our reservations about the Government's information strategy remain. The consultation document fails to recognise that the public remains uninformed and unconvinced of the need for personal action on climate change. We do not believe that the existing publicity campaigns will be effective in changing people's behaviour. In many cases, their profiles are low and their messages ineffective, largely as a result of inadequate funding. A sophisticated and targeted approach is required to change people's behaviour along with a much greater commitment from Government to 'doing its bit'.


83   Ev p33 Back

84   Q93 Back

85   Ev p69; Q112 Back

86   Q106 Back

87   Ev p69 Back

88   Q119 Back

89   Q120 Back

90   Ev p5, p33 Back

91   Ev p70 Back

92   Q81, Q88 Back

93   Annex 3 of 'New and Renewable Energy: Prospects for the 21st Century', published by the Department of Trade and Industry, 1999 Back

94   Ev p46, p97, p98; Q537 Back

95   Ev p16, p78; Q523 Back

96   Ev p98 Back

97   Ev p37 Back

98   Home Energy Conservation Act 1995, Report to Parliament by the Secretary of State for the Environment, Transport and the Regions, April 1999 Back

99   Q291 Back

100   Fuel Poverty: The New HEES - a programme for warmer, healthier homes, May 1999 Back

101   Q252 Back

102   Ev p100 Back

103   Q646 Back

104   Q292 and Friends of the Earth website Back

105   Ev p97; Q294 Back

106   Q429 Back

107   Ev p97 Back

108   Ev p85 Back

109   Q877 Back

110   Q650 Back

111   Ev p47, Ev p220; Q259 Back

112   Ev p232; Q495, Q646 Back

113   Q283 Back

114   Ev p128 Back

115   Q585 Back

116   Q503 Back

117   Q513 Back

118   Q642 Back

119   Q881 Back

120   Ev p63, p91; Q69, Q445 Back

121   However, the Government's concession in a Parliamentary answer that the VAT rate levied on the installation of energy efficiency materials or measures using a contractor in France was cut from 22.5% to 5.5% appears to show the UK has not gone as far as some of its European partners (Hansard, 17.1.2000, col 352 written) Back

122   Ev p129 Back

123   'Market transformation' is the term used to describe the use of a combination of product-related measures to bring about a steady rise in the overall environmental performance of products in particular markets. Back

124   Q61, Q632 Back

125   Ev p22, p80 Back

126   Ev p91 Back

127   Q191-193, Q849 Back

128   Q635 Back

129   Ev p79 Back

130   Q852 Back

131   We are grateful to the Department of the Environment, Transport and the Regions, the Parliamentary Office of Science and Technology from a range of sources. Back

132   Assumes that about 10% of households could sensibly do this. Back

133   Assumes that the water temperature might be set 10 oC too high in about 10% of households. Back

134   Based on the Building Research Establishment Report for the Department of the Environment, Transport and the Regions (CR350/98 - unpublished), and assuming no comfort taking.. Back

135   Based on CR350/98, but calculated as the marginal savings over a standard new boiler rather than the original (and assuming no comfort taking) for up to 18 million replacements. Back

136   Based on CR350/98. Back

137   Based on CR350/98 figures. Back

138   Based on the figure of 10% of lighting being unnecessary from the Oxford University Environmental Change Unit DECADE report "2 MtC". Back

139   Based on the Oxford University Environmental Change Unit DECADE report "2 MtC". Back

140   Based on CR350/98 figures. Back

141   Savings taken from CR350/98, which is based on DECADE 2 MtC figures. Back

142   Based on the cost savings quoted in the Energy Efficiency Office "Handy Hints" booklet, converted into 2 GigaJoules per household, then converted into carbon and applied to half the housing stock (to take account of the fact that not households have a shower). Back

143   Based on an emission saving of about 1.7 MtC for all cars and assuming that half of them could make the 5% saving. Back

144   This value is for speed limits of 60mph being enforced and is taken from the consultation paper on Climate Change Strategy. Back

145   Q62 Back

146   "Reducing the Environmental Impact of Consumer Products", HC149-I, paragraph 9 Back

147   Q637 Back

148   Q684 Back


 
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