Memorandum from The Environmental Industries
We would like to take this opportunity to contribute
to this stage of your Inquiry, following the publication of the
PIU Energy Review. This evidence is in addition to our earlier
evidence, which was based on EIC's Climate Change Group report
"Creating the Climate for Change: a post-Bonn action plan
for transforming energy efficiency in UK business".
We welcome the report produced by the PIU and
agree with many of its conclusions and recommendations. Overall,
the Energy Review provides an excellent basis for further discussion.
1. THE ENVIRONMENTAL
EIC was launched in 1995 to give the environmental
technology and services industry a strong and effective voice
With over 200 Member companies EIC has grown
to be the largest trade association in Europe for the environmental
technology and services industry. It enjoys the support of leading
politicians from all three major parties, industrialists, trade
union leaders, environmentalists and academics.
The emphasis on market mechanisms to increase
energy efficiency in the most cost effective and creative manner
is welcomed; but we recognise the need for a range of other approaches,
in particular regulation, where market mechanisms are ineffective
or are not rapid enough to create the changes necessary.
The need to reduce CO2 emissions
by 60 per cent by the year 2050 will require tough action and
needs an appropriate legal, regulatory and market framework. As
ever, it is crucial that Government policy making is well connected
to the day-to-day reality of policy implementation. EIC Members
have expressed concern that a clear message is not emerging from
the various Governmental bodies charged with promoting energy
efficiency. Even in the sphere of Government procurement the benefits
of energy efficiency are often not recognised.
It is essential as the UK progresses with its
Energy Review and that any recommendations, if accepted, are properly
implemented and that the necessary legal and regulatory framework
exists. At present the legal and regulatory regime does not always
implement or enforce regulations fully or successfully.
This response is not intended to be a full analysis
of the multitude of policy recommendations proposed in the Energy
Review, but we have taken the opportunity to highlight some of
the key energy efficiency issues for the environmental technology
and services industry.
3. EIC ENERGY
As mentioned, EIC has published "Creating
the Climate for Change". The four key recommendations we
would like to re-stress highlight in the light of your Inquiry's
focus on the PIU report are:
The Enhanced Capital Allowance scheme
should be developed to take into account the whole use of energy
at a site. It should provide financial incentives to invest in
the most effective energy efficient techniquesbe they equipment
and/or system solutions.
The opportunity to participate in
the Climate Change Levy Agreements should be extended as widely
as possible to all energy intensive companies.
In support of a co-ordinated framework,
a "first stop" shop service should be set updirecting
inquiries to the Carbon Trust, Energy Savings Trust, Energy Efficiency
Best Practice Programme and regional initiatives.
The Government should provide clear
milestones and a robust policy framework to demonstrate its commitment
in the medium and long-term to climate change policies.
4. THE ENERGY
The call for a step change in action for the
UK to ensure a trajectory towards a low carbon economy brings
with it the need for radical changes in decision making processes
and behaviour in all spheres of UK lifepolitical, commercial
and domestic. Many of the barriers to change, including the uptake
of energy efficiency measures and the commercialisation of renewable
energy technologies require radical actions, the introduction
of which are difficult when set against the economic drivers for
the UK and UK businesses and frequently the inertia in many parts
EIC Members believe strongly, however, that
there are substantial benefits for businesses and individuals
in the short, medium and long term and therefore support any policies
that lead to innovation and uptake of low carbon choices. In particular
EIC recommends that:
Further policies to encourage energy
efficiency should be introduced to ensure the Government's long-term
targets are met. In particular, DEFRA should develop an energy
efficiency strategy for business (which would expand on 7.33 in
the PIU report) as well as for homes (already recommended at 7.15).
A resource productivity strategy
should be developed for SMEs. Furthermore, zero interest loans
for SMEs to overcome current barriers to adopting energy efficiency
measures and the feasibility of setting up an insurance scheme
for SMEs that invest in energy efficiency measures should be actively
considered. It is the view of EIC's Members that more focus should
have been given to the SME sector in the PIU report.
The opportunity to participate in
the Levy Agreements should be extended as widely as possible to
all energy intensive companiesthis would help bring more
companies into the Emissions Trading System as suggested at 3.79
in the PIU report.
Government should require an environmental
report from major companies as part of their annual reporting
processes to encourage internal measurement and monitoring. The
need for developing energy efficiency indicators, targets and
monitoring for each sector of the economy is recommended (7.9
in the PIU report), but stops short of recommending mandatory
Government should support any review
of NETA that supports smaller generatorsas covered at the
appendix to Chapter 7 in the PIU report.
The Government should tighten the
carbon emissions evaluations required by Climate Change Agreements,
when they are reviewed, to ensure a progressive improvement in
the level of carbon emissions in the UKas recommended at
7.35 in the PIU report.