Memorandum submitted by National Energy
Action (CIT 16)
SUMMARY
In considering action to tackle climate change
account must be taken of the impact of policy proposals on the
poorest households which experience the most difficulty in maintaining
health and comfort at an affordable price
The potential of emerging technologies such
as microgeneration and smart metering is acknowledged but the
first priority must be to install proven technologies, notably
insulation measures and low energy lights, in all UK properties.
The multiplicity and complexity of existing
energy efficiency programmes are a significant barrier to progress
and they should be replaced by a single national programme
This programme should be comprehensive, both
in the improvement measures it offers and its availability to
all. Costs should be met in full for low-income households and
in part for those who are more affluent
The objective of the programme should be to
make homes as energy efficient as possible using technically feasible
and cost effective measures to achieve a target energy rating
The portfolio of measures should include more
expensive measures such as solid wall insulation and new technologies
such as heat pumps, micro chp and roof mounted wind turbines and
solar panels.
The potential of tradeable carbon allowances
needs to be investigated further to examine the distributional
impacts on low income families, particularly those reliant on
coal, oil or electricity for home heating.
1. INTRODUCTION
1.1 National Energy Action (NEA) welcomes
the opportunity to submit evidence to the EFRA Committee inquiry
into the contribution that UK citizens can make to minimise the
impact of climate change. For more than 20 years NEA has been
actively involved in the campaign to eradicate fuel poverty in
the UK. Throughout this period the emphasis of our practical demonstration
programmes, and the campaigning activity which advocates their
wider replication, has been on improving standards of insulation
and heating in properties occupied by those most at risk and providing
advice on the means by which health and comfort can be assured
whilst using energy in the most efficient manner. We consider
this to be the most cost-effective and environmentally sustainable
means of ensuring that all homes are adequately and affordably
heated.
1.2 In considering action to tackle climate
change we believe it is essential to take account of the effect
of policy proposals on the poorest households which experience
the most difficulty in maintaining health and comfort at an affordable
price. We also consider that the experience we have developed
in promoting energy efficiency to low-income households has important
lessons for the domestic sector as a whole.
2. What is the real scope for individual
and local community action to contribute to tackling climate change?
2.1 The Government's recent Energy Review
reiterated that improvements in energy efficiency represent the
most cost-effective way of delivering the policy objectives identified
in the 2003 White Paper. NEA agrees that making energy efficiency
the first priority of energy policy is the best way to secure
both social and environmental objectives.
2.2 The theoretical potential for carbon
reductions in the residential sector was the subject of detailed
analysis in Energy Efficiency: The Government's Plan for Action
(Defra, April 2004). This clearly demonstrated the scope for making
extensive carbon reductions simply by focusing on the simple and
straightforward installation of cavity wall insulation and efficient
replacement boilers. However, we believe the real challenge will
be in realising this potential given widespread public indifference.
We are aware that even in the experimental Warm Zones, where systematic
marketing techniques are deployed, including street by street
approaches, and offers of free or substantially discounted improvements
are made, as many as 20% of householders either refuse these offers
or cannot be helped by the suite of improvement measures currently
available.
2.3 NEA notes the interest expressed by
the Committee in microgeneration, which we refer to in what follows,
and smart metering. We acknowledge the potential for emerging
technologies to contribute to enhanced energy efficiency but we
would emphasise that the first priority must be to ensure that
existing technologies with proven capacity to save energy, notably
insulation measures and low energy lights, are installed in all
UK properties where feasible.
3. What are the barriers to the uptake of
climate change mitigation strategies at the level of the individual
and how can they be overcome?
How can government and other agencies—at
national, regional and local levels—encourage the uptake
of domestic emission reduction measures?
What is the role of NGOs in delivering the citizens
agenda on climate change?
3.1 We have no reason to doubt the efficacy
of the research undertaken by Government itself into the barriers
to improving energy efficiency in the domestic sector and spelt
out in both the Defra energy efficiency implementation plan and
HM Treasury's consultation on fiscal incentives to improve energy
efficiency, as well as the more recent energy efficiency innovation
review. These identify lack of information, apathy, the cost of
improvements and disruption and inconvenience as the primary factors
inhibiting action on the part of householders. We also acknowledge
that, until the recent reversal of the trend, a decade of progressively
declining fuel prices has also acted as a disincentive.
3.2 Against this background NEA takes the
view that the current institutional arrangements affecting energy
efficiency programmes represent a further obstacle to be negotiated
in promoting domestic energy efficiency. The complexity and multiplicity
of different energy efficiency programmes seems to be a recipe
for sustaining consumer inertia and/or delivering sub-optimal
services. Many of these programmes duplicate each other to a greater
or lesser extent in terms of the measures they provide, and compete
with each other in terms of the consumer groups who are the intended
beneficiaries. EEC schemes run by fuel supply companies can open
and close, or switch geographical location, at short notice. Some
schemes are limited to owner-occupiers, others to tenants. Householders
can be alerted to the availability of these different schemes
by central government agencies, local authorities, housing associations,
contractors, health authorities, voluntary organisations with
concerns about social welfare or the environment, fuel suppliers
and consumer groups.
3.3 It is scarcely surprising that individual
householders should be confused. Even people with a professional
interest in improving the energy efficiency of the housing stock
complain that it is almost impossible to have a complete and up-to-date
picture of what is available. This in turn makes advising householders,
insofar as their interest can be engaged, unduly difficult.
3.4 NEA favours simplifying these arrangements
by creating a single national programme. We consider that this
would help to overcome barriers to take up of assistance and help
to communicate a clear and straightforward message about the importance
of saving energy. We see this as entirely consistent with the
statement in the energy efficiency implementation plan that strong
Government action is needed embracing leadership, awareness raising
and education, coupled with strong support programmes.
3.5 The national programme we envisage could
be constructed by combining the resources from existing programmes,
although we accept that additional money will have to be allocated
to meet more challenging targets both for tackling fuel poverty,
in the light of recent price increases, and CO2 reduction, given
slower progress than anticipated in the Energy White Paper.
3.6 NEA takes the view that a national programme
should be funded by direct taxation. This is more equitable, being
based on ability to pay, but also provides a clear indication
of an important national priority. The current EEC programme meets
neither of these criteria. It is also beset by problems that are
a consequence of attempting to use a competitive market to deliver
social and environmental objectives, including suspicion and scepticism
amongst consumers about the motivation of fuel suppliers. We also
note that some suppliers have scaled back, or temporarily suspended,
their current activities because they have already met the targets
ascribed to them. Whilst we accept that taking action now to establish
new, and more challenging, targets for the post-2008 period is
a possible remedy, our preference is to release fuel suppliers,
and therefore their customers, from their current financial obligations.
This does not preclude suppliers from being involved in both marketing
and recruitment for a national programme, making use of their
existing relationship with customers, nor the establishment of
targets by Government or the industry regulator to optimise such
participation.
3.7 The reservations consistently and commonly
expressed about the current EEC arrangements focus on the funding
mechanism and the use of an energy saving target as the measure
of performance. The cost of delivering EEC programmes is recouped
via the prices charged to consumers by suppliers. Although commonly
expressed as an average £18 per year for a dual fuel customer,
this is not a fixed charge appearing on consumers' bills. The
consequence of linking these costs to consumption charges is that
a disproportionate share of the burden falls on those living in
older, less well insulated properties (often with solid walls)
with older and less efficient heating systems, predominantly the
poorer sections of the community. To compound this inequitable
arrangement, the establishment of an energy saving target means
that suppliers operating in a competitive market have an incentive
to deliver energy efficiency measures which yield the maximum
savings at lowest cost. Whilst the requirement to achieve 50%
of the savings in the homes of vulnerable groups provides some
compensation it nonetheless leaves many of those at greatest disadvantage,
living in exactly the kind of properties just described, effectively
ineligible for any assistance other than some free low-energy
lightbulbs.
3.8 In the event that EEC is retained as
a long-term contributor to fuel poverty and climate change programmes
NEA believes that it will need radical adjustment if it is to
accomplish either task efficiently and fairly. In particular if
there is an expectation that EEC has a social objective it will
be essential to establish more appropriate targets against which
to measure its performance in this regard.
3.9 A national energy efficiency programme
should be comprehensive in form, both with regard to the measures
it provides and its availability to all. Following the precedent
of the Homes Insulation Scheme (the original domestic energy efficiency
programme) it should offer grants to all households that can benefit.
Costs should be met in full for those on low incomes with a taper
being applied to determine the level of household contribution
expected from those who are more affluent. NEA believes that universal
entitlement is likely to maximise take-up and avoid some of the
difficulties in marketing programmes exclusively for households
in receipt of welfare benefits. One of the additional advantages
of this approach is that, in addition to the financial incentive
available, it helps to overcome the time, risk or nuisance costs
commonly identified as barriers to take up. All householders get
ready access to approved contractors working to industry standards
of best practice and whose work is subject to independent monitoring
and inspection, as currently applies in the case of the Warm Front
scheme.
3.10 The objective of the programme should
be to make homes as energy efficient as possible using technically
feasible and cost-effective measures and setting a target energy
rating. NEA welcomed the introduction of a SAP 65 target in the
most recent revisions to the Warm Front programme, accepting that
it would offer a guarantee against fuel poverty for all bar those
on the very lowest incomes. That said we note that recent price
increases will have diminished the degree of reassurance a figure
of SAP 65 offers. The programme we envisage would provide a comprehensive
package of improvement measures in all properties, regardless
of tenure. However, we accept that economies of scale could and
should be exploited in the social rented sector by devolving responsibility
to landlords. However, it will be important to ensure that there
is equivalence between programmes for owner-occupiers and tenants.
For example it would not be satisfactory to retain the current
Decent Homes standard as the benchmark for the thermal performance
of dwellings in the social sector.
3.11 We believe that it is desirable to
focus on properties with the lowest SAP ratings in the initial
marketing of the scheme since this will go some way to identifying
those households at greatest risk of fuel poverty. We also believe
that the programme should be able to explore the potential benefits
of renewable sources of energy, domestic CHP and other measures
to solve the particular problems of homes that are hard to heat
economically because they are not connected to the mains gas network
or because the construction type precludes the most common and
cost-effective insulation measures.
3.12 The measures available via domestic
sector schemes will provide substantial benefits to those households
living in homes with cavity walls, accessible lofts and gas-fired
central heating. Those living in older, less energy efficient
properties, disproportionately the poorest individuals and families,
and those without access to gas will be disadvantaged by this
approach. Almost half of those in fuel poverty in England live
in homes without cavity walls. 36% have no gas boiler to upgrade
and almost 20% have no central heating at all. In this last instance
we acknowledge recent efforts to provide at least some assistance
to all pensioner households without central heating, whilst regretting
that it fails to match the provisions of the Scottish Executive
Central Heating Initiative. However, in our view, some action
will need to be taken to tackle hard to heat/expensive to treat
properties at some point if fuel poverty and climate change targets
are to be met. We see no justification for fuel-poor households
in particular being placed at the back of the queue, behind their
more affluent counterparts in more modern properties. It is particularly
disappointing that the implementation plan acknowledges these
deficiencies but effectively postpones any decisions, declaring
these to be issues to be tackled post-2010. Since these concerns
have been evident for some considerable time, and were acknowledged
in the 2001 UK Fuel Poverty Strategy, we believe that policy should
be going further and faster to provide remedies than is evidently
the case.
3.13 Accordingly NEA believes that the anticipated
portfolio of energy efficiency measures in the implementation
plan should be extended, embracing both existing, albeit expensive,
measures such as solid wall insulation and new technologies such
as heat pumps, micro CHP and roof mounted wind turbines and solar
panels. We note that the implementation plan refers to current
small-scale programmes to support some of these renewable options,
but without indicating any intention to make any of these measures
mainstream. Whilst the need to pilot those which are new and experimental
in the domestic sector is not in doubt, we believe that those
which subsequently achieve the status of tried and tested technologies
should be on the menu of energy efficiency improvements available
via schemes such as Warm Front and EEC.
3.14 We believe that a national programme
of this type will be much more straightforward to promote and
explain. All agencies, whether private, public or voluntary sector,
would be able to refer householders to a single scheme. We would
expect this to stimulate take up, but we also recognise the value
of engaging those agencies who are known to, and trusted by, local
communities in proactively promoting applications. We also acknowledge
the value of the area based approach adopted by warm Zones in
recruiting households who live in areas of greatest deprivation
to such a programme.
4. Are Domestic Tradeable Quotas a viable
option? What other economic and other incentives for behavioural
change might also be considered?
4.1 NEA notes the growing interest in the
concept of personal carbon allowances. We are aware of the suggestions
that this represents an equitable solution to household carbon
reduction because those on low incomes are more likely to be low
energy users because they live in smaller homes and own fewer
cars. However we believe the distributional effects of DTQs need
further investigation. We note that any such system will have
the same drawbacks as the current EEC programme in that the burden
will fall disproportionately on those living in older properties
with poor standards of insulation and inefficient heating systems,
predominantly poorer families. They will effectively subsidise
others living in modern properties with high SAP ratings. Similarly,
homes not connected to the gas network will be disadvantaged,
as will anyone who for whatever reason uses coal, oil or electricity
for home heating. Low-income households in rural areas, where
car ownership and use will also be more of a necessity, could
be severely penalised. Incentivising fuel switching in this way,
particularly to renewables, has obvious advantages in reducing
carbon emissions but account will need to be taken of the impact
on those unable to afford the capital costs of doing so.
4.2 We also have some concerns about possible
unintended consequences. Tradeable allowances create incentives
to reduce consumption which may provoke some of the poorest households
to sacrifice health and comfort for the purchase of other goods
and services. If those people already struggling to pay energy
bills react by limiting the number of rooms they heat or lowering
temperatures it seems to us that carbon is being valued more highly
than quality of life.
4.3 As regards other economic incentives,
NEA is aware of arguments in favour of both stamp duty and Council
Tax rebates. We have outlined above our vision of a universal
grant scheme which we consider to be a simpler arrangement, less
bureaucratic and costly than administering rebates and likely
to stimulate a better response.
National Energy Action
August 2006
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