Memorandum submitted by Eaga plc
EAGA PLC—BACKGROUND
eaga plc welcomes the opportunity to respond
to this consultation. We welcome the attempt to address the central
role of improving existing housing stock to meeting Government's
climate change and carbon reduction targets.
In order to put our comments into context, it
may be helpful to briefly outline our role in the provision of
services across the UK.
eaga has worked with Government and local authorities
to help fight fuel poverty for over 17 years. eaga provides services,
products and solutions that address the social, environmental
and energy efficiency objectives of Government and the private
sector throughout the UK, as well as in North America, India and
the Republic of Ireland. The largest provider of residential energy
efficiency solutions in the UK; we are a majority employee-owned
plc working for Defra, Welsh Assembly Government and the Department
for Social Development in Northern Ireland, Utilities and Local
Authorities in managing the delivery of energy efficiency programmes
throughout the UK for the past 17 years. We fit or repair a central
heating system every minute of every working day, and deliver
improvements in over 1,000 UK homes every day. To date we have
delivered assistance to over five million vulnerable households
in the United Kingdom through the installation of heating and
insulation measures. Our response will focus on the steps Local
Authorities can take on Climate Change Mitigation and Fuel Poverty.
We have also pioneered the development of Benefit
Entitlement Checks (BEC) throughout the UK. BEC is a telephone
service that offers confidential advice to people regarding the
benefits they claim and what further benefits they may be entitled
to. Through its dedicated team, eaga plc delivered roughly 70,000
BECs in 2006. Thanks to the recent expansion of the programme
we expect to offer advice to over 95,000 people in 2007.
As well as our energy efficiency and social
commitment, we are committed to helping the environment and combating
climate change. eaga Renewables provide renewable energy solutions
to private and social housing, specifically through the installation
of solar thermal panels. This work is carried out in the private
sector, both with private-funded work and public-funded work.
For example, eaga Renewables and eaga Social Housing Services
is currently working on a large-scale installation of solar-thermal
systems for Birmingham City Council.
Additionally, the independent Eaga Partnership
Charitable Trust (Eaga-PCT) is a grant-giving trust that currently
supports projects and research in two main areas: the relief of
fuel poverty and the promotion of energy efficiency; and vulnerable
consumers—multiple needs and preferences. Since 1993, eaga
has given over £3.1 million to the Charitable Trust to distribute
grants.
1. The significance of existing housing compared
to new build and the different levels of performance each display
eaga has long recognized that the greatest contribution
the built environment can make to Government's carbon reduction
targets is through improving existing housing stock, rather than
regulation focusing on improving new developments' performance.
Even by 2050 it is estimated that over 60% of all UK buildings
will pre-date 2006 regulations[54].
Their standards must be improved—they are the key to meeting
Government carbon emissions targets. The emissions of these homes
can be substantially reduced by improving the thermal efficiency
of the building itself, alongside improving the efficiency of
heating systems.
Modern properties are far more energy efficient
than older buildings, but new build accounts for only a very small
percentage of total housing stock every year. The age of a home
is a determining factor affecting its energy efficiency. In delivering
Warm Front eaga has performed energy efficiency measures on millions
of homes, the vast majority of which have been existing stock
rather than new build. Providing energy efficiency measures to
existing housing is an extremely cost-effective method for lifting
people out of fuel poverty, and for making substantial carbon
savings. Existing homes account for a clear majority of the 150
million tones (a 27% share) of the UK's carbon emissions that
housing is responsible for. Space and water heating accounts for
between 73% and 80% of these emissions[55].
As well as carbon savings, the health benefits
of warm, damp free housing are well documented, as are the detrimental
effects of poorly performing houses on social inclusion and educational
performance. Since it may be reasonably argued that homes constructed
to current building standards are free from cold and damp, these
factors must weigh in favour of further investment in retrofit
energy efficiency to older stock over comparable investment in
further improvements to new build.
The Sustainable Development Commission highlighted
the linkage between existing and new homes when it suggested low
carbon and low-water homes could be delivered by " . . .
[offsetting] any increase in CO2 emissions or water
consumption in the new Growth Areas by matching this with a commensurate
reduction in carbon emissions or water consumption in existing
homes in the same region."[56]
This step would have the advantage of providing funding for energy
efficiency improvements in existing housing, paired with enabling
developers to cut the carbon emissions building new homes.
2. The respective roles of residents, homeowners,
landlords, local government, central government and the energy
industry in promoting and delivering greater energy efficiency
Improving existing stock through schemes such
as Warm Front has been central government's largest and most effective
contribution to improving the performance of existing housing
stock.
The main mechanisms currently in place for addressing
energy efficiency in homes include the Energy Efficiency Commitment
(EEC), Warm Front in England, HEES in Wales and Warm Homes in
Northern Ireland. These latter three are the leading government-funded
projects to deliver greater energy efficiency in private housing.
Other local area based schemes have also proven effective on a
smaller scale. Central government funding of national schemes
has focused on privately owned or rented housing. Smaller schemes
have targeted private and social housing. The Decent Homes Standard
has required Local Authorities improve social housing stock to
higher levels of energy efficiency. The replacement of boilers
with energy efficient condensing boilers has been prominent in
the social housing sector, but the vast majority of housing stock
(80%) is privately owned.
Local authorities have successfully improved
the energy efficiency of a great deal of social housing stock,
as recently noted by the Minister for Housing. They also work
in partnership with eaga and other schemes to ensure residents
in non-social housing are aware of assistance to improve their
home, but more could still be done in this area. Furthermore,
councils could introduce energy efficient related Council Tax
discounts when re-banding, so those with particularly efficient
homes receive discounts, and those without do not. This, along
with measures to assist those on low incomes, would provide an
incentive for homeowners to improve the energy efficiency of their
home. The savings on council tax, coupled with the "payback"
of reduced energy bills in the longer term, make a compelling
argument for those able to take such steps to do so. Those unable
to do so should be better signposted to existing schemes.
Landlords should be given more concrete incentives
to improve their properties. At present they see little benefit
in spending considerable sums of money improving properties to
cut their tenants' fuel bills (and tenants see little benefit
in paying to improve a landlord's property). This has particular
impact on low income tenants in low quality or already hard to
heat rented properties. Owners of private rented housing rated
using the Energy Performance Certificate (EPC) should be required
to carry out minimum energy efficiency improvements before the
house can be let to new tenants to give the scheme maximum impact.
In some cases required improvements would already be funded by
the existing Warm Front scheme, based as it is on the residents'
benefit entitlement. The Landlords Energy Savings Allowance (LESA)
could be amended to provide further support for landlords to provide
a safety net for those unable to pay for improvements, ensuring
their tenants would not be forced to live in cold, damp, unhealthy
homes.
Energy companies could aid in giving control
back to individuals with the introduction of smart meters. While
many able to pay consumers see energy efficiency as a low priority
compared to other financial considerations, enabling them and
other customers to better control their consumption may help overcome
a lack of desire to improve their homes' energy efficiency. Smart
meters would allow customers to more accurately decide when and
how to heat their homes and cut heat wastage dramatically.
The Energy Efficiency Commitment has the potential
to be the key tool to ensure energy companies enable customers
to improve their energy efficiency. For example, they could be
incentivised to assist certain customers in installing microgeneration
technology by requiring them to reduce the consumption of their
customers over time, an idea put forward in the recent Carbon
Emissions Reduction Target (CERT) consultation[57].
3. Energy performance certificates
Energy Performance Certificates will identify
issues in existing housing stock for new purchasers and this may
over time drive up energy saving initiatives by house owners to
help sell their property. However, this will be a slow process
and will not impact where it is most needed: those private homes
held by the more elderly in our society with little capital saved
to invest in energy efficiency.
There is an opportunity for Government to meet
this challenge through additional grant support. Funding could
be channelled down this route following the completion of Decent
Homes in 2016, although that would mean delaying urgently required
action. Government support in the private sector is already considered
necessary. For example, in many cases, elderly people with some
savings are not able to receive grants to offset the cost of carrying
out energy efficiency work, and many more people are asset rich
but still in or close to fuel poverty. The issue of the elderly
who do not qualify for grants could even be met by having the
work funded by the Government, and the value of the work being
gathered upon the sale of the property (or transfer of ownership)
after the owner's death.
The recommendation report resulting from an
EPC could be used to require the buyer and/ or seller of the home
to make minimum improvements to meet an agreed standard of energy
efficiency (funded by agreement of both parties in the sale of
the home), rather than simply being a source of information. While
this could have the effect of promoting the sale of newer build
homes over existing properties, it would mean every house sold
would have markedly improved energy efficiency.
4. The provision of information for households
and prospective house buyers, including energy performance certificates
The extent of the debate on climate change has
ensured that more individuals than ever have some understanding
of the link between their life choices and their impact upon the
environment. Better information on the costs and benefits of the
most important energy efficiency measures (wall and loft insulation,
a modern central heating system, and so on) should be communicated
to consumers. While millions of households benefit from Warm Front
schemes or Local Authority improvements, millions more living
in private housing are not eligible for assistance. Many of these
are likely to be able to pay for improvements, but do not investigate
the possibility due to incorrect assumptions about the likely
cost. This will only be overcome by providing clearer information
on the costs and benefits of improving the energy efficiency of
homes.
The steps detailed in the DCLG Green Paper Homes
for the Future (August 2007) suggest Government is making
efforts to provide a more unified and user-friendly service to
provide householders with detailed information on the importance
of energy efficiency and how to achieve it. Better information
for residents and homeowners would also enable them to take greater
control of their energy use. While space and water heating is
the largest part of domestic energy use, there are other areas
which individuals could impact upon. For example, while it is
not the remit of this consultation, extending the energy ratings
on electrical appliances to high-consumption products such as
large screen televisions, "mini-fridges", outdoor heaters
etc could impact on sales of those products in the same way it
has done so in other markets, and therefore reduce domestic energy
consumption.
Energy Performance Certificates have the potential
to be an important factor in improving the energy efficiency of
owned homes in the UK, but their impact is likely to be slow and
gradual. Additionally, they will have minimal impact upon privately
rented housing, an area where energy efficiency is recognised
as a particular problem, in their current form.
5. Government efforts to reduce carbon emissions
from existing housing stock whether in private or public ownership
and other related programmes including Decent Homes
Existing policies are expected to lead to a
16% reduction in household CO2 emissions (from 1990
levels) by 2010, considerably below the 20% target. The Energy
Efficiency Innovation Review 2005 states that this is achievable
by 2015[58].
Since 2002 the Energy Efficiency Commitment
has been the Government's main instrument to deliver carbon savings
from energy suppliers. By targeting priority groups who pay a
larger proportion of income on energy bills, it plays an effective
role as part of the Government's Fuel Poverty Strategy. eaga has
submitted a full response to the consultation on The Carbon Emissions
Reduction Target (EEC3).
As detailed earlier in this response, eaga delivers
Warm Front and HEES on behalf of Defra, England and Wales' largest
domestic energy efficiency programmes for private housing. These
schemes have been extremely successful in lifting qualifying recipients
out of fuel poverty. Local authorities have delivered even greater
improvements to social housing stock. The Government and energy
companies currently fund over £1 billion worth of energy
efficiency measures in housing ever year[59].
The Decent Homes Standard has been extremely
successful in delivering energy efficiency improvements to social
housing. Despite only 20% of housing stock being social housing,
it includes over one third of those in fuel poverty. The Standard
Assessment Procedure (SAP) rating system is extremely useful,
but limited to providing average measure of social housing within
each Local Authority area. Earlier this year eaga provided funding
for the Energy Audit Company (EAC) to deliver more detailed SAP
information for Local Authorities[60],
enabling more effective targeting of resources.
6. The technologies available to reduce emissions
and the Government's role in facilitating relevant further technological
development
As the majority of carbon emissions are generated
by space and water heating, the most effective way to tackle emissions
is to improve the thermal efficiency of the building to ensure
less energy is needed to heat the property. As noted, this means
a combination of improving insulation and using efficient heating
systems. Cavity wall insulation currently offers the largest potential
carbon saving per dwelling. Other cost effective measures generally
offer lower, but still relatively large potential carbon savings.
Unfortunately these options have relatively high up-front installation
costs that mean these are not particularly cost-effective for
householders, landlords or local authorities (without additional
support or incentives).
The Government's plan for the Technology
Strategy Board—Innovation Platform on Low Impact Buildings
to drive the development of new technologies and their growth
to market is a promising development[61].
Commercial partners should be given the opportunity to participate
in the proposed research and innovation groups to share costs
and build on existing knowledge and experience.
Renewable heat is also a cost-effective opportunity
to reduce the energy consumption and carbon emissions of housing.
At an average cost of £3,500 per building (falling with economies
of scale), solar thermal heating provides up to 70% of a homes
hot water needs annually, dramatically reducing carbon emissions
for space heating. The solar thermal system, as used by eaga renewables,
requires minimal maintenance and can be applied to almost any
home and added to existing heating systems. Small-scale micro-generation
such as wind or solar photovoltaic has many of these advantages,
but much greater average installation costs, lower energy conversion
efficiency and higher maintenance requirements. These micro-generation
technologies are currently much more expensive, and many cannot
be applied to all properties.
The Low Carbon Buildings Programme provided
grant based funding for some householders to install micro-generation
measures in their homes. The "competitive" nature of
the process, and complicated application process itself, is likely
to have meant many of those who would most benefit from such measures
were excluded from the chance of receiving assistance.
As earlier mentioned, one method of increasing
the take-up of renewable energy could be the introduction by the
Government of requirement for energy suppliers to support renewable
thermal/ microgeneration technology as part of the Energy Efficiency
Commitment. Its possible inclusion in CERT is an important step
in the right direction. This would improve consumer confidence,
reduce up-front costs and put in place a foundation for "buy
back" of surplus energy produced. Energy companies should
be required to deliver an agreed reduction in consumption by their
domestic consumers, incentivised by Government subsidy.
7. The costs associated with reducing carbon
emissions from existing housing, who should meet those costs and
particularly, in respect of low-income households, interaction
between carbon emission reductions and the Government's ambitions
to reduce poverty
As already established, improving the thermal
energy efficiency of homes with insulation and efficient heating
systems is the most cost-effective method of reducing their carbon
emissions. However, while the cost of doing so in non-hard to
heat homes is relatively low, it is still out of reach for many
groups. The impact of fuel poverty is particularly felt among
low income groups. Defra's Warm Front scheme is primarily a programme
to lift these households out of fuel poverty, and has had considerable
success in doing so. As a national scheme it is funded by central
government. As it is only available to those on qualifying benefits,
those groups who do not qualify but are still unable to fund energy
efficiency measures should be considered for receipt other forms
of assistance. Those in fuel poverty, such as asset-rich pensioners
or ineligible low-income households, do not always overlap with
those who qualify for appropriate benefits to receive Warm Front
(or HEES) grants. As the National Audit Office (NAO) has noted,
around a third of those who are fuel poor may not be eligible
as they are not on benefits, while between 40-70% of those who
are eligible are not fuel poor. As a result too many homes are
not targeted either for their lack of energy efficiency or because
their occupiers are fuel poor. The requirement that 50% of EEC
energy savings be made from fuel poor groups does not appear to
do enough to bridge this gap.
The initial cost of energy efficiency measures
is invariably offset by reduced fuel bills in subsequent periods,
but to many householders this payback is too slow and incremental
to be a deciding factor. The aforementioned idea of reduced council
tax for those able to pay householders who improve the energy
efficiency of their homes could provide an incentive to do so
without creating an additional tax burden. The United States'
Residential Energy Efficient Property Credit[62]
also provides a model to enable householders to make selected
energy efficiency improvements (for example insulation, solar
thermal systems etc) tax-deductible. Able to pay customers should
be incentivised to improve their homes, rather than subsidised
to do so. Other assistance for residents, such as reducing or
eliminating VAT on the installation and materials for energy efficiency
measures, would reduce the cost hurdle considerably. The difficult
to implement concept of Personal Carbon Credits would serve to
ensure householders were regularly made aware of their home's
energy efficiency performance and could provide a further taxation
/ credit based incentive for those able to improve their homes
to do so[63].
More accurate information on the financial and environmental benefits
for individuals (for example, building on that provided by the
Energy Savings Trust in the Home Energy Check[64])
could also drive uptake.
8. The specific challenges which may arise
in relation to housing of special architectural or historical
interest
eaga has considerable experience in dealing
with hard to heat homes, which can mean those with non-traditional
construction, solid walls, or those not connected to the gas network.
These factors, which will also affect a great number of homes
of architectural or historical interest, mean that the most widely
used methods (cavity way and loft insulation), may not be appropriate
or indeed possible. For example, over four million homes currently
in use were built prior to World War One, and approximately one
seven million homes have solid walls (as cavity walls did not
become a building requirement until 1965)[65].
These considerable numbers mean any effort to improve the energy
efficiency of architecturally or historically important housing
must include exigencies to improve a wide variety of hard to heat
homes. eaga looks forward to the opportunity of working with the
proposed Technology Strategy Board on tackling the challenges
these millions of homes present.
When the simplest and cheapest measures become
inapplicable, other more expensive improvement options must be
considered. Other forms of insulation, such as external cladding,
is possible for hard to heat homes, but probably inappropriate
for those of architectural or historical interest. Internal cladding
is more viable, but necessarily disruptive to residents and relatively
expensive (when compared to cavity wall insulation). Of course,
careful choice of materials could mitigate some of these problems.
Dealing with homes like these would require a reassessment of
the cost/ effectiveness equation currently applied to schemes
such as Warm Front. Secondary glazing, as an alternative to double
glazing, could also be an appropriate efficiency measure.
Many homes of this type, such as those in rural
areas, may not be connected to the gas network, which incurs further
cost. Where appropriate, Warm Front installs oil based heating
systems in eligible homes. In cases where this is not possible
microgeneration becomes a more cost-effective option. Efficient
heating systems are still an effective method of reducing the
carbon consumption of homes of this type, and when combined with
a renewable option such as solar thermal would have considerable
impact upon their carbon emissions.
54 "Transforming Existing Buildings: The Green
Challenge", Royal Institute of Chartered Surveyors, 2007. Back
55
Stock Take, Sustainable Development Commission July 2006;
Review of Sustainability of Existing Buildings DCLG 2006. Back
56
Stock Take, Sustainable Development Commission July 2006. Back
57
http://www.defra.gov.uk/corporate/consult/cert2008-11/index.htm. Back
58
Data and citation from Stock Take, Sustainable Development
Commission July 2006. Back
59
Homes for the Future, DCLG Green Paper August 2007. Back
60
http://www.eaga.com/media_centre/press/may07/01_%20research_grant_brings_warmth_to_homes.html. Back
61
Homes for the Future, DCLG Green Paper August 2007. Back
62
http://www.irs.gov/newsroom/article/0,,id=153397,00.html. Back
63
Stock Take, Sustainable Development Commission July 2006. Back
64
http://www.energysavingtrust.org.uk/proxy/view/full/165/homeenergycheck. Back
65
Homes for the Future, DCLG Green Paper August 2007. Back
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