APPENDIX 2
Memorandum from the Association for the
Conservation of Energy
1. INTRODUCTION
1.1 The Association for the Conservation
of Energy is a lobbying, campaigning and policy research organisation,
and has 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 We welcome this opportunity to engage
in a vital debate on the framework and effectiveness of the Government's
Sustainable Development Strategy, which we believe must include
a headline indicator for energy use—including energy conservation,
production and consumption. We hope that full use is made of the
chance to amend the Strategy in order to set the UK on a course
towards a sustainable system for the delivery of energy services
and resource use.
2. GENERAL COMMENTS
2.1 We suggest that the overriding objective
of a Sustainable Development Strategy should be the reduction
of national carbon emissions and the delivery of an inclusive
society that facilitates sustainable patterns of investment, design,
production and consumption and assists in elimination of all forms
of poverty. The delivery of energy services in an economically,
environmentally and socially sustainable way should be a vital
part of this more overriding Strategy. We expect that environmental
objectives and security of supply will be central to energy policy
for the foreseeable future. However, this does not need to be
at the expense of economic and social objectives, since the wide
range of options available to us should allow all to be taken
into consideration.
2.2 Energy use is linked to all four key
objectives and to several other headline indicators in the Strategy,
such as poverty, health, housing, climate change, transport. Given
the significant contribution that energy efficiency can make to
the reduction of fuel poverty and carbon dioxide emissions,
it should play a key part in the delivery of sustainable development.
Thus, an energy headline indicator within an overall Strategy
should aim to guarantee a secure supply of energy to households
and businesses at the lowest economic cost consistent with high
environmental objectives, to meet international targets for greenhouse
gas emissions reductions, and the social objectives of community
health/wellbeing and the reduction of fuel poverty. We believe
that there is no inevitable growth in the amount of energy we
use. It is possible to enjoy substantial growth in prosperity,
which is sufficiently resource-efficient to ensure decreasing
fuel usage. Energy efficiency can significantly reduce the environmental
impact of energy production and use, while enhancing energy security
by reducing the need for energy imports and allowing businesses
and households to meet energy service needs with a lower basic
energy input.
2.3 The Government has declared that it
wishes to double the average rate of improvement over the past
30 years in energy intensity of 1.8% pa. Most of these gains occurred
during the 1970s and early 1980s; during the 1990s progress slowed,
and in some years completely reversed. We endorse the Government's
targets. But we are convinced that these can never be achieved
without radical improvements to existing policies. All forms of
energy generation have both ecological impacts and significant
capital costs—it is therefore in the UK's overall economic
interest to minimise energy wastage.
2.4 As the present Government Departmental
division of responsibilities is based on the separate supply of
energy and energy-using equipment, we believe that the present
system is inadequate to meet the policy challenges ahead. 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". Consumers (domestic,
commercial and industrial) are not interested in buying units
of power, but in light, heat and motive power that enables them
to achieve their objectives.
2.5 Within an energy use headline indicator,
we would support strongly the development of energy efficiency
targets for each sector of the economy. Not only do these provide
clarity in the evaluation of policy effectiveness, they also give
a degree of certainty for the energy efficiency supply industries:
if a step change in energy efficiency is to be achieved, the industries
involved will have to invest to expand, and to do this they need
to be sure that increases in policy-led activity in the market
will be sustained.
2.6 The cost-effective potential for additional
energy efficiency improvements remains large, which is in itself
evidence that additional policy activity is required to achieve
the required step change in the energy efficiency of all sectors
of the economy. At present both gas and electricity companies
deliver mandated energy efficiency measures to domestic customers
at an average cost of 1-1.5 pence per kWh saved; these schemes
do not even incorporate all the potential savings at this average
cost because they are limited in size or use artificial pay-back
periods. But the cost to the customer of purchasing fuel is at
present nearer 7 pence per kWh. For the customer it remains more
cost-effective for every energy efficiency measure that costs
up to 7 pence per kWh to be installed. This emphasises the need
to take account of investment now on long term cost savings, just
as the lifetime costs of energy generation need to be taken into
account in scenarios involving additional generation capacity.
2.7 We would also recommend that an energy
indicator be included within the Strategy in order to require
a step change in the use of energy within the Government estate.
To date, no legislation (whether the Sustainable Energy Act or
Energy Bill) has included targets for energy efficiency within
the Government estate, which would constitute a significant example
of encouragement to the energy efficiency industries, to householders
and businesses.
2.8 In terms of energy efficiency, the Strategy
has delivered very little in terms of progress and it has taken
the Energy White Paper and continuous pressure to firm up its
aspirations to real Government commitments or targets, and legislative
instruments (Sustainable Energy Act) to achieve some progress
towards the step change required to deliver the carbon savings
from energy efficiency anticipated by the Energy White Paper.
The industry has received a significant blow in the scaling down
of that commitment from 5 million tonnes of carbon to 4.2 MtC
in the recent Energy Efficiency Implementation Plan. A stronger
Strategy with an energy headline indicator might have been helpful
at this time. A truly sustainable policy must have at its heart
a target for the achievement of 5 megatonnes of annual carbon
savings from household energy efficiency per annum by 2010, and
a further 4-6 MtC p.a. by 2020 (as originally envisaged by the
Energy White Paper).
2.9 The prioritisation of energy use and
consumption is of particular significance in achieving the behavioural
change required in order to reach more sustainable patterns of
consumption. It is the individual householder, landlord or business
that needs the fiscal incentives and public awareness campaign
in order to make sustainable energy purchasing choices, whether
in the insulating materials they buy, supplier they use, and micro-generated
energy that they may be able to produce independently. Sustainable
consumption relates as much to the energy service offered by the
supplier, as to the nature of the demands of the energy user.
May 2004
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