Memorandum submitted by Calor Gas Ltd
Energy Performance Certificates (EPCs) must
now accompany the sale of all homes in the UK with 3 or more bedrooms.
They will gradually become compulsory to cover all house sales.
They are designed to influence consumer behaviour in the purchase
and alteration of homes; and, it is clearly hoped that house builders
will have an eye to favourable EPCs being awarded after construction.
The aim is to push the housing market towards lower carbon outputs.
They suffer from a fundamental flaw inherited
from a system of grading houses by their notional cost of providing
energy for heating and hot water per square metre. SAP ratings
between 1 and 120 must be provided before buildings can be erected
or converted. The lower the energy cost, the higher the rating.
These SAP ratings are effectively transposed into the EPCs where
they are shown in the form of bands from A (cheap to heat) to
G (expensive to heat). The essential purpose was, as a Government
consultation put it: "A reduction in the carbon emissions
they [homes] would otherwise produce." Thus, the flaw at
the heart of the system is the link assumed between heating costs
and carbon output. But this is unfair to a premium fuel such as
LPG which is often cleaner in its emission profile on a range
of pollutants, often including carbon—see above.
We propose as a replacement to the Energy Efficiency
banding a banding based solely on dwellings' carbon emission rate
(calculated at the same time as SAPS). The following data is taken
from a model, based on SAP Worksheet (Version—9.80 draft
July 2004), which illustrates how SAP scores are calculated. In
comparing four methods of heating (LPG, oil, electricity and mains
gas) we found the following results based on a constant four bedroom
house with identical solar, internal and external gains all being
constant with the fuel used for the central heating system being
the only variable.
MODEL BASED ON A 4 BEDROOM DETACHED HOUSE
| Electricity
| LPG | Oil |
Mains Gas |
| Dwelling Volume | 240 | 240
| 240 | 240 |
| Total fabric heat loss | 106.2
| 106.2 | 106.2 | 106.2
|
| Ventilation heat loss | 47.5
| 47.5 | 47.5 | 47.5
|
| Total InternalGains | 747.7
| 747.7 | 747.7 | 747.7
|
| Total Solar Gains | 485.6 |
485.6 | 485.6 | 485.6
|
| Space Heating Requirement | 4906.42
| 4131.72 | 4094.83 | 4131.72
|
| Total energy cost (£/year) | £263.05
| £336.77 | £154.34
| £155.28 |
| SAP Rating (Under current proposals) | 56
| 47 | 73 | 73
|
| Total CO2 (Space and Water) kg/year
| 3291 | 2107 | 2267
| 1658 |
| Dwellings Carbon Emissions rate | 33
| 21 | 23 | 17
|
| |
| | |
The data illustrates that under the current fuel cost based
calculation for SAPs, a more expensive fuel such as LPG, which
produces considerably less CO2 than both heating oil
and electricity, is penalised and given a far lower rating under
this system—actually two bands less than oil. By translating
the bottom line figure into "bands" a more accurate
indication of the true environmental impact of a home can be communicated
to the consumer. In this example, oil and LPG would actually be
in the same band (or depending on the band range, LPG might be
one better).
The Scottish EPC system is intriguingly different. It contains
a banding system A-G, but this is solely related to relative carbon
output. In England there are two illustrations side by side—the
first being the A-G banding based on cost called an Energy Efficiency
Rating, and the second being the Environmental Impact Rating (CO2
emissions). The Scottish EPCs contain a space for advice on low
cost measures for cost-effective energy savings. The Scottish
system does not unfairly skew the housing market, complies with
EU legislation, and gives useful information on how to save money.
If consumers thinking of purchasing or renting a home, or house
builders are forced to comply with a system of skewed price signals
it could alter the pattern of our housing stock for the worse,
not the better.
The English EPC system has another potential flaw because
the snapshot taken of heating costs does not take the volatility
and relative volatility of fuel prices adequately into account.
Volatility in energy prices over recent years has been influenced
by more labile meteorological patterns, and by political factors—not
least nervousness over the price of oil, and by relatively sharp
variations in demand, including, for instance, dramatically increased
levels of demand for energy in China. With continued uncertainties
over pipeline integrity in chronically unsettled parts of the
world, and with the decline in North Sea production it could well
be that such volatility is likely to increase rather than decrease.
In the UK we are seeing a tightening of markets because of declining
UKCS gas production, making us more susceptible to the vagaries
of European gas prices derived as they are from a less liberalised
market context. A statement of the relative expense of one form
of domestic heating over another is therefore unlikely to hold
stable over a 15 year period, and the risk is that the certificate
will be an unreliable indicator.
OFGEM's recent "Probe Into Wholesale Gas Prices"
(October 2004) was sparked by wholesale gas prices increasing
by over 80% in October 2003 compared with gas for delivery in
October traded in September: "The traded gas markets have
seen unprecedented volatility . . . in recent weeks with significant
and rapid movements seen in both prompt and forward gas prices
on a number of days. The increase in gas prices has also had a
significant impact on the wholesale price of electricity . . .
since September 2003, the wholesale price of electricity has risen
by over 43%. This has been largely driven by increases in gas
prices although increases in international coal prices have also
played a part . . . " So, there is energy price volatility,
and although the prices of oil and gas are linked: "As competition
develops in key European markets the link between oil prices and
gas prices is likely to break down or be significantly diluted".
In other words, an EPC relating to the heating costs of a home
delivered in one month may have little bearing on the outturn
price, and increasingly in future fuels may be expected to vary
relatively in price over time rather than maintain a constant
or predictable relationship. This is another reason for adopting
the Scottish format.
RECOMMENDATION
— The Scottish EPC system should be adopted in England
and Wales.
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