Select Committee on Environmental Audit Appendices to the Minutes of Evidence


Memorandum from The Environmental Industries Commission

  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.


  EIC was launched in 1995 to give the environmental technology and services industry a strong and effective voice with Government.

  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.


  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 techniques—be 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 up—directing 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.


  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 life—political, 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 of society.

  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 companies—this 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 environmental reporting.

    —  Government should support any review of NETA that supports smaller generators—as 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 UK—as recommended at 7.35 in the PIU report.

March 2002

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