| Draft Electricity and Gas (Energy Efficiency Obligations) Order 2004
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Mr. Andrew Stunell (Hazel Grove) (LD): I am pleased to see you in the Chair today, Mr. Conway, and I extend my congratulations to the hon. Member for Salisbury, who I know is relishing getting back into the saddle, if that is the right way to express it. It is also a pleasure to be debating with the Minister. My normal task is to debate with one of a long succession of Energy Ministers from the Department of Trade and Industry, rather than from the Department for Environment, Food and Rural Affairs. However, matters of conservation of energy are DEFRA's responsibility. I endorse some of what the hon. Member for Salisbury said. The Government's somewhat fragmented approach has created some of the difficulties that he outlined. Last Friday morning, I made a belated visit during warm homes week to a constituent's home in my native Hazel Grove to look at some of the energy efficiency measures that had been installed as a result of the first stage of the energy efficiency commitment. The Minister and the Government can quite legitimately take credit for the operation of that worthwhile and valuable scheme. My constituent, a single mother with three children, was a very effective commercial for the value that she had gained from the investment made in her property. Without disclosing any personal details, let me say that it is clear that she could not have made that investment on her own. We should therefore recognise that the scheme does a valuable job, not just in saving carbon, but in bringing people out of fuel poverty and giving them a much better quality of life. It is in that context that I wish to make some remarks about the scheme before the Committee. I shall support its implementation, but I feel that it is disappointing in many ways and that opportunities have been wasted or missed. I, too, read the explanatory notes, which are very clear—perhaps too clear, from the Minister's point of view. Paragraph 7.3 on energy efficiency states that the Government
Column Number: 9 was pretty modest in the first place. The contribution that the improvement in the EEC is predicted to make must be measured against the fact that the height bar over which the Government say they are trying to jump has in fact been lowered.The Minister said that we should acknowledge that the new target is about double the first scheme's target. I am not sure whether that was in his brief or whether he ad-libbed that bit, but I notice that Ofgem's briefing on the energy efficiency commitment contains a useful chart that illustrates the fact that the new target falls a long way short of doubling the existing commitment. Indeed, the wording accompanying the chart says that
The Minister did not comment on one interesting provision of the new scheme, which is what I would call a discount for participating in energy services action—the crediting of additional carbon reductions if an energy supplier is delivering a wider range of energy services. It is a good idea to encourage companies to participate in energy services action and to broaden their remit from just a simple supply of power on the one hand and the provision of energy efficiency measures simply to respond to a piece of legislation on the other. I welcome that provision. I am sure that there is plenty of scope for discussing whether the discount is too much or too little, but it is to be welcomed as a way of encouraging the industry to participate. However, I have a concern about the proposed thresholds. The enhancement can be taken only if 5 per cent. of customers are included in the energy services provision and it ends if providers achieve a figure of 10 per cent. or more, so only a narrow band of participation is permitted. I shall be interested to hear the Minister explain the logic behind that and say whether he has any fears that we might see a parallel situation to that in hydro-generation of electricity . The fact that small hydro schemes are treated differently from larger schemes means that in Scotland some of the larger hydro producers are deliberately restricting their output to make them smaller providers, which runs entirely counter to the policy's aims. In the present case, it would be perverse of the Minister to say to an energy services provider that achieved the 10 per cent. threshold that if it got another couple of customers, the Government would cut it off Column Number: 10 without a shilling and no longer credit it with the discount for which the order provides. I should like to hear him explain that to the Committee.There is also a reference to encouraging micro-CHP. I strongly welcome that, and I believe that there is scope for rapid improvement. However, both the explanatory note and order are silent on the linked issue of metering. I am well aware that working parties have been beavering away behind the scenes, with representatives of about nine Departments, the Building Research Establishment and goodness knows who else, trying to reach a conclusion on two-way metering. Can the Minister give us any information on the progress of that working party and of the Government's thinking? The order seems to have provided another opportunity to include two-way metering as a more formal option, which would have been of major assistance in making progress. Reference is made to appliances as part of the energy services sector, which is obviously useful. The hon. Member for Salisbury mentioned low-energy light bulbs and other things in that respect. The Minister would assist the energy services industry if he encouraged his colleagues in the Department of Trade and Industry and elsewhere to set improved standards of energy efficiency as the bottom line for purchases. That is being done for central heating boilers—the scheme will start on 1 April 2005. That is welcome, but it is strange that the efficiency of a dishwasher, for example, is unregulated in this country, whereas on the continent—in Germany for example—it is regulated. Companies put a more stupid electronic chip in top-of-the-range German dishwashers that are sold in this country because they do not have to comply with the stringent regulations in Germany. There is a lot that we could have done, and it is a pity that nothing is in the order to cover those points. There is scope—the door is open—but we cannot see through the doorway to what the Minister has in mind. Let me pick up a couple of points in the impact assessment. I was interested in paragraph 26, which says that the Department has taken account of projected prices for 2010. Quite a few of us in the Room would be interested to know the Government's projection for prices in 2010, and for that to be on record. The Minister did not do justice to his case on payback times. Paragraphs 29 and 30 of the impact assessment state that, under the scheme, the average consumer might be faced with an additional £16 a year for three years—in other words, their bill would increase by £48. However, they would get a benefit of £15 a year for a period estimated to be between 10 and 40 years, so in fact they would get the money back after four years. They would pay £48 over three years, but if they pulled that sum back at a rate of £15 a year they would get back £60 in four years. Under to the measures that we are discussing, the payback period for the consumer will be less than four years. Perhaps when he promotes the scheme the Minister should make more of a song and dance about that. Paragraph 36 states that by 2020, consumers will have received about two and a half times their money back.
Column Number: 11 One of the problems is that the Government set off with ambitious targets, which they then water down; they then introduce proposals to achieve their watered-down targets in such a low-key way that achievement of the low-key targets is only the best that could be expected. It would be far better to start off with more realistic targets and schemes to achieve them that at least provided some opportunity to exceed them. I would have thought that the Government might feel more comfortable about over-achieving a modest target than under-achieving an unrealistic one. We are discussing an important jigsaw piece in an overall picture. To confuse my analogies, I wish it were a rather bigger jigsaw piece, because that would deal more effectively with the problem that everybody in this Room recognises.The Government had an opportunity to deal with the decent homes standard and standard assessment procedure ratings. The average house in this country has a SAP rating of 44; current building regulations will deliver a house that has a SAP rating of 70 or more. Greater emphasis ought to be placed on identifying low SAP rating houses and making the EEC a priority. At an early stage, a number of consultees made the point that the commercial sector could with benefit be drawn into the scheme, particularly small retailers and small commercial offices. Photocopiers, like dishwashers, could usefully be far more efficient with carbon savings to come. I expect that the majority of us have had experience of working in offices with photocopiers and I would be extremely surprised if anyone had the slightest idea of their energy consumption. The fastest growing sector of energy growth is the commercial sector, so it is a big opportunity. I could not finish without giving a commercial for my own Sustainable and Secure Buildings Act 2004, which recently received Royal Assent. The Minister would do well to examine the aims and objectives that many hon. Members have of reducing carbon emissions and achieving both our Kyoto targets and, beyond that, the target of a 60 per cent. reduction in carbon emissions by 2050. That will require a combined use of many different instruments—legislative, fiscal and market-oriented. The order is a welcome step, but a small one. It is a great pity that it is not more ambitious in its outlook and more thorough in its delivery.
10.29 am
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| ©Parliamentary copyright 2004 | Prepared 7 December 2004 |
