Memorandum submitted by the Association
for the Conservation of Energy
INTRODUCTION
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.
The Committee's 3 questions
2. The Committee has asked three questions.
We answer them below.
3. Question 1: The Prime Minister continues
to identify climate change as "probably the greatest long
term challenge facing the human race". Does the 2006 Climate
Change Programme represent a realistic strategy to prepare the
UK to meet this challenge?
3.1 The government has set two targets for
reduction in emissions of the main greenhouse gas, CO2,
in order to meet this challenge:
— a 20% reduction in CO2
emissions by 2010 based on 1990 levels; and
— a 60% reduction in CO2
emissions by 2050 based on 2003 levels (accepting the recommendation
of the Royal Commission on Environmental Pollution).
Those targets are widely accepted as necessary,
and indeed the minimum required—particularly as regards
the latter target. Both Sir David King and the former Environment
Minister Elliot Morley have intimated that the UK reduction might
have to be greater in order to achieve the 60% global reduction
needed by 2050.
3.2 Climate Change—the UK Programme
2006 does not set out a strategy to achieve either of those necessary
(minimum) targets. The Executive Summary states its intent and
objective as follows:
"The package of existing and new policy
measures in this programme are projected to reduce carbon dioxide
emissions to 15-18% below 1990 levels by 2010"[1]
So the objective of this Report is to fail to
reach the government's own 2010 target by between 10 and 25%.
3.3 And considering that when the climate
change review was launched about eighteen months ago CO2
emissions were then projected to be only 13% below 1990 levels
by 2010—ie the severe shortfall regarding the 2010 target
was already known at that point—this means that the government
has spent some eighteen months responding to that known shortfall
producing new policies that will only guarantee a reduction of
CO2 emissions by a further 2%. Given that we are facing
what the Prime Minister himself has called "probably the
greatest long term challenge facing the human race" this
is little short of policy negligence.
3.4 And as regards the 2050 target, there
is no attempt at all to set out even an intended framework for
long term action to achieve this.[2]
We accept that 2050 is a long way off and that an exactly quantifiable
emissions reduction strategy may be impossible: but a broad framework
(eg of long term measures under consideration) is certainly possible—but
is lacking.
3.5 It may be argued that no government
can be expected to plan, or even broadly plan, for that far ahead.
To that we say three things:
— Either this is "probably the
greatest long term challenge facing the human race" or it
is not? If it is, then not to prepare long term to meet it is
indefensible.
— Compare this lack of even a broad
framework for 2050 for "probably the greatest long term challenge
facing the human race" with the government's long term plan
for pensions. Important as that issue may be it cannot, by definition,
be as important as "probably the greatest" threat—a
point reiterated by the Rt Hon Margaret Beckett MP in her first
speech as Foreign Secretary to the Global Alliance Business Coalition
at the Banqueting House on 24 May 2006.
— The government is certainly, at the
very least, considering[3]
"the nuclear option". But such an option cannot be for
2010 and will be for 2020-50. In other words at least one very
long term policy option is under consideration: so why not others?
Why, for instance, are there no 2020 or 2030 plans for the cheapest,
cleanest and safest way of reducing emissions[4]—energy
efficiency? Put another way—why "consider" long
term plans for an option that is not the cheapest and safest before
such plans for one that is?
3.6 So there is a severe inadequacy of policy.
We comment on some of that in response to the Committee's question
2. But one overall omission stands out and "merits"
general comment: The Treasury must be central to any strategy:
yet it is given little role in "Climate Change—the
UK Programme 2006". There is no fiscal strategy at all. The
most influential government department is just not included in
the so-called long term plan to deal with climate change.
3.7 The answer to question 1 can only be
a definite "No".
4. Question 2. Does the government need
to do more, and if so what, to try to ensure that it meets the
20% reduction in carbon dioxide emissions by 2010?
4.1 The answer to the first part of this
question is, manifestly, "yes". The policies in "Climate
Change—the UK Programme 2006" are only intended to
achieve an 18% reduction at best. So clearly more must be done
to achieve 20%.
4.2 But what? 2010 is but four years away,
so given that energy efficiency is the cheapest cleanest and safest
way of achieving emissions reductions (and indeed other energy
policy objectives) and that the policy options are available now
and will deliver reductions in the very short term we make the
following suggestions:
— A stamp duty rebate for all house
purchasers who install energy efficiency measures within, say,
12 months of purchase;
— A council tax rebate (centrally funded)
for householders who improve the energy efficiency of their homes;
— The above measures could also be
applied to microgeneration;
— A requirement for energy efficiency
improvements in offices at time of sale, lease, re lease or rent
review;
— A national target for improvement
of energy efficiency in the commercial and public sectors to achieve
a reduction in energy usage by at least 10% compared with the
general level of such energy usage in 2005—and then the
measures to achieve that target. The government has told Parliament[5]
that this is a cost effective option—so there can be no
rational case against it;
— An immediate change of planning
law enabling local authorities to require a higher standard of
energy efficiency than that required by building regulations as
a condition of granting planning permission. The government opposed
a clause to this effect being put into the Mark Lazarowicz Climate
Change and Sustainable Energy Bill, ODPM (now Community and Local
Government—CLOG) officials taking the view that energy efficiency
is not a planning matter. Cambridge City Council have recently
been overruled by an ODPM (now CLOG) Inspector when attempting
to do just that.
5. Question 3. To what extent, if at
all, will the outcome of the Energy Review affect the implementation
of the Climate Change Programme?
5.1 Clearly it should although we cannot
know whether it "will". However there must be a suspicion
that given that "Climate Change—the UK Programme 2006"
includes discussion of, and (albeit inadequate) policies on, energy
efficiency, renewable energy and combined heat and power but does
not even attempt develop a long term policy framework for achieving
2050 CO2 reductions, that that role is being "reserved"
for the one option not considered in the document—nuclear.
If that happens then a main "driver" of long term emphasis
on energy efficiency, renewable energy and combined heat and power
will have been removed.
5.2 Put another way—has a vacuum been
deliberately created to be filled by nuclear, which will then
lead to less emphasis on the alternatives?
SOME OTHER
POINTS
6. It is worth also drawing the Committee's
attention to some other points raised by "Climate Change—the
UK Programme 2006".
7. THE ENERGY
EFFICIENCY COMMITMENT
The Energy Efficiency Commitment (EEC) has proved
to be one of the most successful components of the climate change
programme. During its first phase (2002-05), it delivered 40%
more savings than anticipated. Although its second three-year
phase (2005-08) requires realisation of twice the levels of savings
of the first phase, after just one year the regulator OFGEM has
reported that 60% (rather than the pro rata 33%) of the new target
savings of 0.6 Mtc, have been achieved.
In the charts on pages 124-5 of "Climate
Change—the UK Programme 2006", the third phase (EEC3)
is forecast to deliver savings of 1.1 Mtc between 2008 and 2010.
Effectively this means that it is due to deliver at the rate of
nearly 0.6 Mtc each year for both those two years. This is the
same rate as the current second phase is officially scheduled
to deliver in total over its entire three years. The announcement
in Budget 2006, that some (but not all) of the Commitment bearers
amongst the energy companies would undertake extra insulation
installations during the next financial year, does suggest that
the government is not being over-ambitious in seeking to triple
the requirements under EEC3 as opposed to EEC2, especially if
credits for so doing can be "banked" during the current
phase.
However it is recognised that post 2010, the
overwhelming success of EEC, combined with a desire to reward
more experimental delivery techniques and technologies, confirm
that it would be more appropriate to allow EEC to evolve into
more of an overall "cap-and-trade" system; where the
government sets an overall cap on sales per capita for each participating
company, thus permitting expertise in delivery to be rewarded
via a limited access trading system.
8. THE CO2
REDUCTION CALCULATIONS
We have to say that we find some of the CO2
reduction calculations worthy of comment. For instance:
— On page 124 the Carbon Trust is deemed
to save 1.1 Mtc, whereas no similar allocation is given for the
Energy Saving Trust. Why?
— The Climate Change levy is posted
as delivering 3.7 Mtc savings (chart p 124). This is based on
the Cambridge Econometrics study which assumes that CCL rates
are raised in line with inflation from 2005.[6]
In reality the Budget only starts this from 2007.
— The introduction to Chapter 6 on
page 74 states that CO2 reductions in the domestic
sector will total 4.8 Mtc by 2010 including the new measures.
However, the government's statutory duty (under s 217 of the Housing
Act 2004) is to improve energy efficiency by 20% in the residential
sector by 2010 has been stated[7]
to be equivalent to a saving of 5 Mtc. When will the strategy
to achieve the statutory duty be published?
May 2006
1 Page 3. Back
2
Why? We ask. We comment on this in response to the Committee's
question 3 Back
3
Even if the widespread view that the government has made up its
mind on this issue is incorrect, the Prime Minister has certainly
said that it is under consideration. Back
4
As stated by the 2003 Energy White Paper. Back
5
Answer to PQ. Back
6
Footnote 1 page 124. Back
7
Answer to PQ Hansard 10.3.2003 col 11W. Back
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