Select Committee on Trade and Industry Appendices to the Minutes of Evidence


Memorandum by the Association for the Conservation of Energy


  1.1  The Association for the Conservation of Energy thanks the Committee for this opportunity to submit evidence to the Inquiry. We are a lobbying, campaigning and policy research organisation, and have worked in the field of energy efficiency since 1981. Our lobbying and campaigning work represents the interests of our membership: major manufacturers and distributors of energy saving equipment in the United Kingdom. Our policy research is funded independently, and is focused on four key themes: policies and programmes to encourage increased energy efficiency; the environmental benefits of increased energy efficiency; the social impacts of energy use and of investment in energy efficiency measures; and organisational roles in the process of implementing energy efficiency policy.

  1.2  Thus, as our expertise lies in the field of energy efficiency in buildings, our evidence will be restricted largely to this area. This is not intended to suggest that energy supply issues or energy efficiency in the industrial and transport sectors are not important.


  2.1  Security of energy supply needs to be seen as the secure delivery of energy services. We do not require energy, we require the services it provides, such as heat and light. To ensure security of supply of these services, a strong domestic industry providing the equipment to ensure efficient use of energy is as important as diversity on the supply side.

  2.2  The contribution which demand side technologies make is summarised neatly in recent International Energy Agency figures (IEA, 1998). The graph below (figure 1) compares the contribution to meeting increased demand for energy services made by each of the major fuels and by energy efficiency. Additional demand for energy services is represented by additional Mtoe energy either supplied or avoided and, as the graph shows, energy efficiency contributed 80 per cent as much to meeting the increased demand between 1970 and 1995, and is projected to contribute 84 per cent as much between 1995 and 2020 as all sources of energy supply combined.


  3.1  Increasing energy efficiency as a way to increase security of supply is the best way to avoid any conflicts with environmental objectives, since increased efficiency generally leads to lower energy-related emissions: "the most environmentally benign form of energy production is that which does not need to be produced", as the former energy minister John Battle repeatedly used to say.


  4.1  There remains significant scope for further energy conservation in housing. The Home Energy Conservation Act guidance recommended that Local Authorities aim to improve energy efficiency in the domestic sector by 30 per cent between 1995 and 2010, using measures which were cost-effective to consumers. Most local authorities developed strategies to meet this target: very few could not identify sufficient cost-effective opportunities.

  4.2  To date, little progress has been made towards the target; to be on track to reach the 30 per cent target by 2010, authorities should have achieved an 8 per cent improvement by April 2000. However, the latest Government figures show just one in four local authorities achieving this level of improvement, suggesting a remaining untapped potential of significant size. The Energy Saving Trust estimates that potentially achievable energy efficiency improvements in households could, by the year 2010, result in energy savings of 111 TWh/year and CO2 savings of 7.8 MtC/year (EST, 2001).

  4.3  In the commercial sector also, energy efficiency can be increased greatly. Simple use of readily available and cost-effective energy efficiency technologies, such as compact fluorescent lamps and wall insulation, could reduce CO2 emissions from the sector by up to 16 per cent (Moss, 1996).

  4.4  More environmentally sensitive design of new buildings and refurbishment of the existing stock, together with energy-aware building use, has the potential to deliver far greater savings. For example, a "best practice" office can use almost 50 per cent less energy than an equivalent "typical" UK office of today, and typical prestige air-conditioned offices (excluding energy used in computer rooms) use over twice as much energy per unit of floor area as typical naturally ventilated cellular offices (DETR, 2000).


  5.1  To avoid unduly negative effects on industrial competitiveness and conflict with efforts to eradicate fuel poverty, increased security of service supply should be achieved using the lowest cost mix of acceptable options. For this to be possible, all alternatives from the supply and demand side must be compared in a consistent way.

  5.2  Even when least cost options are chosen, it is likely that the combination of supply security and environmental imperatives will lead to some increases in the cost of energy supplies in the longer term. Therefore it is important that today's fuel poverty strategy aims to increase the efficiency of homes sufficiently to ensure that warmth is affordable for all even at slightly higher energy prices. This may suggest the need for a focus on property rather than people, with a minimum efficiency standard defined for all housing, irrespective of whether the present occupants suffer from fuel poverty at current energy prices. Such a focus would also answer some of the weaknesses in the present Warm Front programme (see, for example, Smith 2001).

  5.3  A key element of industrial competitiveness is the level of employment in the economy. Work recently completed by the Association and a consortium of 11 other European institutes, for the European Commission, demonstrated that increased investment in energy efficiency increases employment in the vast majority of cases (ACE, 2000).


The policy framework

  6.1  A major challenge for Government is to establish a policy framework which will allow supply and demand side options to contribute optimally. The present energy system is inadequate to meet the policy challenges ahead as it is based on the separate supply of energy and energy-using equipment. A framework is needed which allows the clear identification of required energy services together with the most economic and socially acceptable means to deliver them. This means that energy users have to become the focus of energy policy, not energy producers and suppliers or narrowly defined "market mechanisms".

  6.2  Energy policy making is at present fragmented, and its various components based on very differing sets of policy drivers. The development of a sustainable energy system is in essence about meeting the energy service needs of consumers in the most economically, environmentally and socially sustainable way. At present it seems that policy making is based in a government department whose duties appear biased towards sponsoring the interests of producers.

  6.3  The importance of the local planning process in determining possible options for a future energy system is becoming increasingly obvious. Updated Planning Policy Guidance to ensure that construction best practice and the use of domestic scale renewable energy options are promoted is the very minimum that is needed.

  6.4  More radically, it may be time to begin a process whereby local communities take responsibility for the generation of the energy their service demands require. Local / regional targets could be set, requiring a proportion of energy demand in a given area to be met from local energy sources / generation, and the planning process guided such that all potential demand and supply side options are considered. This would not only avoid the frequent tendency to refuse any energy supply development but would also offer local communities an incentive to invest in the demand side (less total energy demand would mean the need for fewer power generation installations in the local area).

Domestic sector energy efficiency

  6.5  The Home Energy Conservation Act (HECA) placed a duty on local authorities to report on progress towards reducing energy consumption in their areas, but there is at present no duty to achieve the 30 per cent reduction target. The assumption in the Climate Programme that HECA will deliver must seriously be questioned unless steps are taken to provide local authorities with the duties, powers and resources they need to implement their HECA strategies. The Home Energy Conservation Bill 2001, being put forward by Desmond Turner MP, is a step on this path.

Commercial sector energy efficiency

  6.6  The rate of growth of energy consumption in the UK commercial sector in the last 25 years has been three times greater than in the domestic sector, and is projected to exceed growth in all other areas except transport. The rate of increase equals or exceeds the growth in the contribution the sector makes to the UK economy (ACE, 2000a). Most commercial buildings suffer from the classic "landlord-tenant" problem in that work done to the fabric of the building by the landlord gives rise to energy savings which accrue to the tenant. Although some work has been done to improve the energy efficiency of new built commercial buildings, through the Building Regulations and through voluntary adoption of the BREEAM standard, no significant incentives are in place for existing properties. Whilst government policy has addressed a wide range of corporate issues including corporate social responsibility, pension reform and ethical and environmental reporting, there has been no encouragement to a major investment sector, property freehold, (including insurance companies, pension funds and others) to take action to reduce the energy use of their investments.

  6.7  The swift UK implementation of the EU Buildings Directive—should it be approved—would improve the situation, but there would remain a need for co-ordinated additional action. The Climate Change Levy is likely to have little effect in this sector, where energy costs are a smaller proportion of turnover than for large industrial consumers and are often hidden in service charges. It therefore seems appropriate for the Carbon Trust to focus considerable resources on improving the response to the levy in this sector. A number of potential options exist, including those listed below (see ACE, 1998 for further details), and these should be given serious consideration at the earliest opportunity:

    —  Place a duty on freeholders of all properties to undertake energy surveys and provide details of the results to all new tenants or existing ones at the time of rent review;

    —  Extend the Home Energy Conservation Act to cover commercial sector buildings;

    —  Require fuel consumption per m2 to be included in company annual reports, together with targets for improvement;

    —  Extend the Environment Agency's powers under IPPC to cover offices over a certain size; and

    —  Implement an extensive publicity campaign to influence tenants and landlords to take action, targeting selected large companies with significant property freehold portfolios either on a "flagship" or "name and shame" basis.


  ACE, 1998, A Strategy for Making Offices More Energy Efficient in the UK, briefing note 98/4.

  ACE, 2000, National and Local Employment Impacts of Energy Efficiency Investment Programmes. Summary report, final report to the European Commission for SAVE contract XVII/4.1031/D/97-032.

  ACE, 2000a, White Collar CO2; Energy Consumption in the Service Sector.

  DETR, 2000, Energy Use in Offices. Energy Efficiency Best Practice Programme Energy Consumption Guide 19.

  EST, 2001, Submission to the Cabinet Office PIU Review of Energy Policy, IEA, 1998, World Energy Outlook 1998, International Energy Agency, Paris.

  Moss SA, 1996, Potential Carbon Emissions Savings from Energy Efficiency in Commercial Buildings, IP3/96, Building Research Establishment.

  Smith PF, 2001, "Existing Housing: the scope for a remedy", presented at the Royal Institute of Public Health seminar: Healthy Houses and Cold Winters, 25 October 2001.

previous page contents next page

House of Commons home page Parliament home page House of Lords home page search page enquiries index

© Parliamentary copyright 2002
Prepared 27 August 2002