Examination of Witnesses (Questions 300
- 319)
WEDNESDAY 23 FEBRUARY 2005
MR NICK
EYRE AND
MR BRIAN
SAMUEL
Q300 Mr Drew: There is some confusion
between the role you pursue and the Sustainable Energy Network.
Could you define for the benefit of those who are uninitiated
in these differential organisations what the differences between
yourselves are besides having different names?
Mr Eyre: The Sustainable Energy
Network is an idea that came out of the Energy White Paper, and
I have to say we were involved in getting it into the Energy White
Paper. The concept is, as Brian says, we would like to scale up
the activities of the energy advice centres to do more and to
contact more people because although we think it is good that
they contact three-quarters of a million people a year that is
still a small minority of the population. What we would see is
the centres distributed across the UK providing a local service
which would be managed by the Energy Saving Trust, by ourselves
centrally, and we would provide the corresponding services that
are naturally provided centrally such as web sites and some hotline
facilities and literature support because you need a national
back up to that sort of local service.
Q301 Mr Drew: Can I be absolutely
clear. Are we saying that the Sustainable Energy Network is looking
at macro issues? It is trying to persuade the general public that
they could do more and this would be having an impact on global
warming. The energy efficiency advice centres on the other hand
are dealing with the nitty-gritty of "if you wanted to make
your house more energy efficient these are the sorts of things
you should do, and there are some grants available to do this
work"?
Mr Eyre: We are talking about
scaling the advice centres up into a Sustainable Energy Network.
We are talking about something bigger and better.
Q302 Mr Drew: This is a directional
thing?
Mr Eyre: But you are right, that
part of the problem is that consumers in their homes and their
cars are responsible for about half the UK CO2 emissions
so what is often thought of as an industrial/business problem
is not entirely that and we do need to engage people, whether
it is as consumers or citizens, if we are going to make a real
dent in the problem.
Q303 Chairman: How do you measure
your success? If people come and ask advice in these energy efficiency
centres do you do any follow-up work to see if they have taken
up the advice and done anything about the information given?
Mr Samuel: Yes we do try and report
on the level of energy savings made based upon the advice. Obviously
it is difficult to get an accurate figure. Currently over the
life of the energy efficiency advice centres 1996-97 to 2003-04
we have saved some 62 terawatt hours approximately. Obviously
there is a band of sensitivities around that. This equates to
4.5 million tonnes of carbon on a lifetime savings basis. That
is the actual length of time the measure would last for. That
has been achieved at a cost of around £7.8 per tonne of carbon.
Q304 Chairman: Of the issues raised
by the public, what does it tell you about the policy initiatives
to deal with energy saving in the areas that people ask about?
Mr Eyre: It tells us that people
often know some of what they need to do. They have a sense that
insulation, heating systems, lights are important and are in some
way related to the problem and often that they know roughly what
to do, but they may not know where to go and they certainly do
not know who to trust. I think the issue of trust is quite a big
one. We know that the energy suppliers in their own energy efficiency
programmes often feel that consumers do not trust them. We know
that consumers in general do not trust builders and do not trust
many heating installers so there is a breakdown of trust between
the consumer and the people who are best-placed to deliver some
energy efficiency programmes and we have to work hard to overcome
that.
Q305 Mr Lazarowicz: On the question
of getting the message over to the public, we understand that
you have recently launched a new campaign to promote energy efficiency
in the home. Can you tell us a bit more about that campaign and
what form it will take?
Mr Samuel: Basically that campaign
is in support of the Energy Efficiency Commitment under which
the energy suppliers are obliged to deliver energy efficiency
savings. It is seeking to raise the level of awareness of the
activities of the energy suppliers.
Mr Eyre: I think it ties back
to the point I was just making that we have found and others have
found, including Government, that many consumers are not quite
sure why energy suppliers should be offering them deals to reduce
their energy because it is counter-intuitive. It needs to made
clear that in a sense Government has made this happen and Government
is expecting the energy suppliers to do that and it is not a con;
there are some very good deals out there. You can get efficient
light bulbs cheap, you can get your house insulated for far less
than the real cost of doing it, and people should do those things.
That is the simple message from the campaign.
Mr Samuel: The costs of providing
measures such as cavity wall insulation are a lot lower than the
general public perceive them to be. With the Energy Efficiency
Commitment they are even lower still.
Q306 Mr Lazarowicz: I can certainly
see the merit of what you are doing. I think most of us probably
have the experience where every single jumble sale you go to there
is a large number of low energy light bulbs being sold by somebody
who does not know what to do with them. Can I just be clear is
the campaign directed very much at this energy commitment from
the suppliers or is it part of a wider campaign?
Mr Eyre: This specific campaign
over the next month or so is particularly geared towards the Energy
Efficiency Commitment. We were given an additional £3 million
this year by Defra specifically for this purpose. The reason for
the timing of course is that the scale of the Energy Efficiency
Commitment is going to be doubled from 1 April so there will be
more good offers and it is all the more important, given the centrality
of the Energy Efficiency Commitment to carbon saving targets in
the household sector, that people do understand what is going
on and why.
Q307 Mr Lazarowicz: Is it going to
be linked into any other informational activity by the energy
suppliers because £3 million is not a great deal of money
in contrast to the other advertising outlets provided by the energy
suppliers, surely?
Mr Samuel: We would certainly
like to see the energy suppliers develop innovative products to
reach the market through energy services, packages, et cetera.
Certainly there are opportunities to do that and we would like
to see them take advantage of that. The targets for the second
Energy Efficiency Commitment are higher and therefore more will
need to be done and energy suppliers will need to reach the market
in more efficient and more effective ways so we would like to
think that that would happen.
Mr Eyre: Just to put the scale
in context, we expect the suppliers between them will have to
spend £400 million a year to deliver the Energy Efficiency
Commitment at the scale that is expected from next April so I
would be surprised if they did not do quite a lot more marketing
than we are doing with £3 million but the point of our marketing
is that it is not from a commercial brand and therefore can be
seen to be unbiased information in a way that clearly information
from a commercial company cannot be.
Q308 Mr Lazarowicz: I know one of
my colleagues will be returning to the future of the commitment
later on, so if I could turn at this stage to another area of
concern and that is the encouragement of loft and cavity wall
insulation and general purchase of energy efficiency products.
One of the problems that seems to affect the take-up by the public
of these opportunities is the long pay-back period. People do
not see the benefit in financial terms up-front so they hesitate
sometimes to invest in the products. What are your plans to address
these concerns about the long pay-back periods for domestic consumers
of energy efficient products and devices?
Mr Eyre: I think it is the point
Brian made earlier which is there is a difference between the
perception (which you clearly have as well as other consumers)
that the pay-back for these is long. With an Energy Efficiency
Commitment deal on cavity wall insulation a customer can get it
for perhaps £100 or £150. That pays back in two years
so it is a lot more sensible than putting your money in a building
society. The difficulty is convincing people of that and getting
them to act. It is not the actual pay-back period that is the
problem. They give a pay-back that any business person would consider
an extremely attractive deal.
Q309 Mr Lazarowicz: Can the energy
suppliers not do more here? Maybe they should pay for the installation
and then recoup the savings in the bills that would otherwise
have been charged over that period?
Mr Eyre: That is essentially what
an energy services deal is and changes to the detailed regulation,
the so-called 28-day rule, last year will make it easier for them
to do that. So I think we do expect the big energy suppliers to
come forward with more offers of that type, and some of them are
beginning to do that.
Mr Lazarowicz: Thank you.
Q310 Joan Ruddock: I just wanted
to ask if I am correct in thinking there is probably no plan to
advertise any of this on television? Am I right?
Mr Eyre: No, you are wrong.
Q311 Joan Ruddock: Fantastic.
Mr Eyre: The campaign we have
got on the Energy Efficiency Commitment will have some television
advertising. It certainly will not be restricted to that. It will
have local radio and press as well.
Q312 Joan Ruddock: I would make the
point that your point about the lack of trust between consumers
and utility companies is just so true. When I get the big mailings
from them I say, "What are they up to now? Why are they trying
to take more money off me?" Getting the message over that
this is in the national interest, that the Government is requiring
the companies to do this and it is for your benefit would be a
really powerful and important thing to do, it seems to me, and
I hope you have had an input into this that that is the television
message that we need to get across if this campaign is going to
work.
Mr Eyre: I will just urge you
to watch more television then!
Joan Ruddock: I cannot; I just want to
ensure it is there.
Q313 Chairman: I am intrigued by
the fact that in the Energy White Paper it says insulating around
4.5 million cavity walls from this year to 2010 would save 1.2
million tonnes of carbon. How are we doing against that target
at this moment in time? How many cavity walls have been insulated?
Mr Samuel: About six million have
been insulated.
Q314 Chairman: Out of how many?
Mr Samuel: Out of a potential
of 17.5 million. There are just about two million where it is
unknown if they have got cavity wall insulation or not and there
are some nine million potentially in there to insulate. The problem
is getting customers to take those steps. Obviously campaigns
such as the Energy Efficiency Commitment should help tackle that
market. There is certainly far greater potential than that outlined
in the White Paper.
Mr Eyre: Can I just add I think
the easy answer to your question, Chairman, is that we are not
doing very well on cavity wall insulation. The current market
size is about 300,000 a year and if you do a quick bit of arithmetic
that is not going to give you anything like 4.5 million additional
by 2010 so whereas in some other areas of energy efficiency, particularly
white goods, there are some very good stories to tell about changes
in the market, this is a tough one because it is invisible and
it is difficult to get people excited about.
Q315 Chairman: In the White Paper
it says "illustrate where savings might be achieved".
Is that language right? Should it not be savings that "must"
be achieved?
Mr Samuel: We would like to think
that that language will be used in future.
Q316 Alan Simpson: Nick, I am not
at all unhappy with what you are doing but I was troubled by some
of your comments when you said you were confident that EEC2 will
prove to be as successful in transforming markets for energy efficient
products as EEC1. My experience of this is that people say to
me, "There are only so many low energy light bulbs you can
eat." The industry has gone for the cheapest, least demanding
areas to be seen to be active. The ODPM says that only 16% of
our existing housing stock in Britain meets SAT rating 65. We
are not going to meet our 2010 commitments to reduce domestic
carbon emissions by 20%. How do we count that as a success?
Mr Eyre: As I said, we can count
as a success markets like washing machines where we have gone
from 5% of A-rated product to 80% in just a few years and a similar
story in fridges and freezers.
Q317 Chairman: Can I interrupt you
just a moment? Is that models on offer as opposed to models in
use?
Mr Eyre: That is new sales figures
that I am quoting here. Clearly that takes time to work through
the stock. I am not sure I agree with you on light bulbs. There
are something like 500 million lights in use in homes in the UK
and from memory only about 30 million of those are low energy
light bulbs so there are quite a lot more light bulbs that people
can use saving money and saving carbon at the same time. I take
your point that on the fabric of buildings that is where the progress
has been slowest and most difficult because those are markets
where a lot of the investments are discretionary. People have
to buy a fridge, they then have a choice whether they buy a good
fridge or a bad fridge and we have now on the whole got them to
buy good fridges. For cavity wall insulation people just do not
have to do it so most of them do not do it.
Q318 Alan Simpson: How far, when
you peel the surface away on this, do the figures that you quote
reflect a purchasing pattern that rewards those with purchasing
power and in which the poor are still purchasing, fuel efficiently,
poor products? We have been having this from the energy industry.
They say, "It is not us; it is the consumers; they do not
buy the products." You ask them why they do not buy them
and in a short space of time they will admit it is because people
who are fuel poor are also poor, so they are in trap that no amount
of advertising is going to get them out of. How can we say that
is a success?
Mr Eyre: I think that is why market
transformation is important because when virtually every product
in the shops is A-rated and then in a few years' time virtually
every product on the second-hand market will be A-rated then people
on low incomes are going to have high-quality appliances as well
as people on high incomes. I think in general the initial niche
markets for the most efficient equipment will be taken up by people
on high incomes, but those products are working through to people
on low incomes. Again for building fabric you are in a different
position and that is where the Government and devolved administrations'
fuel poverty programmes are absolutely crucial in getting good
heating systems and getting insulation into the homes of people
on low incomes.
Q319 Alan Simpson: All I am trying
to say to you is if we are to look for success criteria for EEC2,
surely we have to go beyond an assumption that the poor have to
wait until energy-efficient products turn up in second-hand markets,
and the only way we are going to do that is to build both targets
and obligations into the delivery part of EEC2 rather than waiting
for consumer power to reach the poor?
Mr Eyre: 50% of EEC2 activity
will by law have to be for people on benefits and those people
in general are getting free offers from the energy suppliers,
so whilst it is primarily a carbon saving programme and it is
in general more expensive for suppliers to save carbon for people
on low incomes because they cannot make a contribution, I think
the Government has taken note of that and ensured that a fair
share of EEC activity will go to people on low incomes.
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