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COMMUNITIES AND LOCAL GOVERNMENT SELECT COMMITTEE
The Existing Housing Stock and Climate Change Inquiry
Joint Memorandum by the Departments for Communities and Local Government, Environment Food and Rural Affairs, Business Enterprise and Regulatory Reform, and Innovation Universities and Skills
Executive Summary
The subject of the Committee's inquiry is broad and goes much wider than the policy responsibilities of Communities and Local Government. This memorandum has been prepared jointly by the Departments for Communities and Local Government (CLG), Environment Food and Rural Affairs (Defra), Business Enterprise and Regulatory Reform (BERR), and Innovation Universities and Skills (DIUS) to provide a coherent overview of current policies and programmes and possible future activity designed to address the impact of existing homes on climate change.
New build accounts for a very small proportion of the total housing stock in any given year. Dwellings are designed to last a long time so the homes that exist today will continue to comprise the bulk of the housing stock for many decades to come. But many of them were constructed to much lower energy efficiency standards than are required today and the even higher ones that will be introduced over the next 9 years. So improving the energy efficiency of the existing stock will be a critical element in delivering the Government's carbon emission reduction targets.
Energy efficiency measures offer householders improved thermal comfort and often significant savings on their energy bills. Many measures are highly cost effective, quickly repaying their investment costs through reduced bills. But the Government recognises that a number of barriers exist that discourage or prevent householders from installing these measures.
This memorandum describes the policies, actions and programmes that are in place or are being developed to overcome these barriers. These seek to significantly improve the information available to householders to enable them to make better informed decisions. They provide financial assistance, where justified, with a particular focus on those on low incomes or otherwise considered to be fuel poor. They cover the privately owned, rented and social housing sectors. And they support research and development for new and immature technologies and markets where products are either not yet fully effective or low demand results in prohibitive costs.
It is expected that this broad range of interventions will make a significant contribution to delivering the overall carbon emission targets the Government has set but the Government acknowledges that further action will be required, and describes further initiatives that are currently being developed or are planned for the future to help close the remaining gap.
The Annex to this memorandum brings together and summarises information that we have provided in the main body of the text to address the specific topics identified in the Committee's Call for Evidence. SECTION 1 - INTRODUCTION
1. There is now a clear consensus that climate change is the greatest long-term challenge facing the world today.
2. This Government has committed itself to taking action to dramatically reduce green house gas emissions from all sectors of our economy including the built environment and has already made significant progress:
· We are one of only a few countries on course to meet and go beyond our commitments under the Kyoto Protocol: our green house gas emissions are projected to be almost 20% below 1990 levels during the Kyoto period 2008-2012.
· We have also set a challenging national target of achieving a 60% reduction in carbon dioxide emissions by 2050 compared with 1990 levels. And the Prime Minister has asked the climate change committee to consider whether this target should be even stronger.
3. Achieving such significant reductions will be far from easy. In 2005 the UK emitted more than 550 million tonnes of carbon dioxide (MtCO2), the main green house gas driving climate change. Energy use in buildings accounted for nearly half of these emissions and more than a quarter came from the energy we use to heat, light and run our homes (about 150MtCO2).
4. For several years, changes in the building performance standards demanded through building regulations and other policy interventions have been driving a steady reduction in carbon emissions from buildings. But recent policy announcements have demonstrated a determination to speed up the pace of change and make a much more significant contribution to tackling climate change within a much shorter timescale.
5. The announcement in July this year that the Government would adopt a target for all new homes to be zero carbon by 2016 is at the centre of this new commitment. This target will be delivered through regulation and will sit alongside other policy initiatives which will encourage change in the new homes market such as the Code for Sustainable Homes[1].
6. Building on this, work is also currently underway to determine whether a similar long-term target can be set for dramatically reducing the emissions from our new non-domestic buildings. And we are also working with industry to understand the barriers to and potential options for driving improvement in the existing non-domestic market.
7. This Memorandum concerns the remaining sector of the built environment and the subject of this inquiry - existing homes. Even taking account of the Government's commitment to dramatically increase housing supply in the coming years, around two thirds of the homes that will be standing in 2050 will have been built before 2005. The majority of these will have been built to standards significantly below those we expect from homes we build today and therefore are likely to be responsible for the great majority of household carbon emissions.
8. The Government has consistently recognised this fact and has in place a wide range of mutually reinforcing policies and programmes which are designed to tackle these emissions. These schemes, which include the introduction of energy efficiency requirements for thermal elements into the Building Regulations and key programmes such as the Energy Efficiency Commitment (EEC), Warm Front and Decent Homes, are expected to deliver reductions in emissions from existing homes of around 23MtCO2 by 2020 and represent a total investment by Government and energy companies of over £1 billion a year.
9. The Government recognises, however, that we need to seek out further opportunities to tackle emissions from existing homes and at the same time contribute to issues such as fuel poverty and the diversification of energy supply. This memorandum summarises the key actions we are taking in this critical area, the rationale for those actions and our analysis of the impact they are having.
10. As the range of policies covered here will demonstrate this is not an issue that can be tackled by any one Department. Many Departments have a role to play and these Departments work together closely to ensure that the best outcome is achieved from their combined efforts. In order to provide a coherent description of Government policy and actions in this area, the Departments for Communities and Local Government, Environment Food and Rural Affairs, Business Enterprise and Regulatory Reform, and Innovation Universities and Skills have worked together to provide the overview in this memorandum, updating and bringing together the policies and measures already detailed in the Climate Change Programme 2006, the Energy White Paper 2007, and the Energy Efficiency Action Plan 2007.
SECTION 2 - THE CHALLENGE
11. At the present time there are over 26 million homes in the UK; over 23 million in England and Wales alone. These homes vary dramatically in age, size, condition, tenure and in their energy efficiency. As mentioned above, together, these homes are responsible for around a quarter of our carbon dioxide emissions, mainly through the provision of heating and hot water. The contribution each individual home makes to this total depends on a number of factors and the most cost effective solution for reducing that contribution will vary significantly depending on those factors.
12. Not tackling existing homes is not an option; they represent more than 99% of the building stock at any one time, with new construction running at less than 1% each year. As around two-thirds of homes that will be standing in 2050 have already have been built, the majority of the 2050 housing stock will still be performing very significantly below today's building standards unless they are improved.
The energy efficiency profile of our existing housing stock
13. In determining our approach it is very important to understand the profile of the existing homes that we may need to improve. The energy performance of individual buildings is measured using the Government's Standard Assessment Procedure (SAP, a rating scale of 1 to 100) which takes account of the fuel efficiency of the heating systems and thermal efficiency of the building fabric, i.e. how well it retains heat in winter, as well as many other factors including type of construction (eg cavity-wall or solid wall, terraced, semi-detached, detached, flats) building shape, size and orientation, window sizes and distribution.
14. An analysis of the data that is available on our existing homes shows that large, irregular-shaped, detached houses are typically the least energy efficient (primarily as a result of the larger external surface area through which heat is lost), and that mid-floor flats and mid-terraced houses are typically the most energy efficient. The relatively poor energy performance of larger homes is confirmed by the early emerging findings from the roll out of Energy Performance Certificates (EPCs) to four bedroom homes:
· they typically receive an 'E' rating (on the A-G scale); · the installation of EPC-recommended energy efficiency measures could potentially raise this to a 'C' rating; and · annual fuel bills could be reduced by £270 (£180 heating; £60 lighting; £30 hot water) as a result.
15. Further analysis of the available data also reveals that, although the energy performance of many older homes will have been improved by the owners over the years (through draught proofing, insulation, upgrading of roof insulation, windows, heating systems etc), there remains a close correlation between the age of the property and its energy performance as measured by the SAP methodology. The English House Condition Survey[2] reveals that pre-1919 homes have an average SAP rating of 39. This rises progressively through all the property age bands to an average of 65 for post-1990 dwellings.
16. There are also significant differences in SAP ratings between different types of tenure, with homes in the private sector typically having lower average SAP ratings than those in the social sector. Although social rented housing accounts for only 18% of the total stock, approximately 38% of homes with a SAP rating of 60 or more (relatively good energy efficiency) are in this sector. In contrast private sector housing accounts for 82% of the total stock, but 93% of housing with a SAP rating of 30 or less (ie poor energy efficiency).
17. Overall the private stock tends to be older and have more houses than flats, all of which tend to be less energy efficient. Not only is the social sector inherently more efficient, it has also improved more than the private sector since 1996 - the average SAP rating across all stock in the social sector rising from 47 to 57, but across all stock in the private sector only rising from 41 to 46.
18. This relative improvement is seen across all housing types in the social sector and reflects the impact of programmes such as Decent Homes and the Energy Efficiency Commitment, and the efforts of the Housing Corporation and housing associations and local authorities across the country. Much of this activity is described in more detail in the Housing Corporation's memorandum to the Committee.
19. Looking over the whole of the existing housing stock, SAP data shows us that action to improve the energy efficiency of buildings over the years has had some impact, with average SAP ratings increasing for all property age bands between 1996 and 2005, and the overall average for all dwellings rising from 42 to 48 over this period.
20. Progress reflects a combination of factors - improvements in the energy performance of existing buildings, demolition of some older, less energy efficient stock and improvements in the standards to which new homes are built. Improvements in SAP ratings are seen for all age groupings and types of property with the exception of converted flats between 1996 and 2005.
21. Overall, the proportion of homes with a SAP rating greater than 60 has increased from 9% in 1996 to 22% in 2005, whilst the proportion of homes with a SAP rating below 30 has fallen from 17% in 1996 to 10% in 2005.
22. However despite this progress there is still much to be done. The latest available results of the EHCS show that:
· the oldest housing stock has not improved as much as properties built since 1919. More generally the least efficient housing stock is improving less than the more efficient stock · only 40% of properties with cavity walls have cavity wall insulation · only 30% of properties with a loft have insulation to a depth of 150mm or more (although most properties with lofts now have some insulation).
23. The table below provides a summary of the numbers of homes in England categorised by age, type, tenure and sector. For each category it shows the percentages with SAP ratings of 30 or less and 60 or more, and average SAP scores for 2005 and 1996 (ie tracking the improvement of the existing stock over 10 years) from the latest English House Condition Survey Annual Report.
24. The table clearly illustrates the correlation between the age of properties and their energy efficiency. Purpose-built flats and mid-terraced houses stand out as being generally more energy efficient than other dwelling types. And social sector dwellings typically perform better than those in the private sector. While there appears to be little between owner occupied and rented homes in the private sector in terms of energy efficiency, the former comprise a much larger proportion of the total housing stock (about 70% compared with 11%) They, therefore, represent the most significant and challenging target for delivering improvements, with a particular focus on older detached, semi-detached, end of terrace and converted flats as being the least energy efficient property types.
Current and future patterns of energy use in homes
25. The task of reducing emissions from homes is not likely to get easier in terms of the amount of energy home owners are using.
26. In 2005, almost three quarters of the total emissions from existing homes arose from heating - 53% from space heating and 20% from water heating. Over the long term, the use of energy for heating has remained fairly stable, with increases in demand being offset by improved insulation and more energy efficient heating systems. Lighting and appliances are the main growth area, with domestic energy use in this area increasing by over 60% between 1971 and 2001. Current demand for more energy-hungry consumer electrical goods, which often encourage householders to use energy-consuming standby modes rather than switching off, suggest that this trend will continue.
27. As indicated above, heating of water for showers, baths and taps accounts for a significant proportion of the energy used in homes (as much as 60% in small flats). This does not include water heated in appliances such as kettles, washing machines and dishwashers, nor the energy costs of purifying and delivering water and treating effluent. The carbon footprint of domestic water use is therefore significant, accounting for about 30 MtCO2 a year - over 5% of the UK's carbon emissions.
28. Climate change itself is also likely to have an impact on the energy we use in our homes. As higher temperatures become more common it is likely that we will see a reduction in demand for heating but an increase in the take up of energy intensive air conditioning systems which could further increase the growth in demand for energy to power appliances.
29. Current projections of the future UK climate are consistent in their predictions of hotter drier summers, warmer wetter winters and more winter storms and intense precipitation and that the most significant climate change will occur in the south east. However, there is considerable uncertainty about the most probable scale of changes or on the chances of specific thresholds being exceeded and how frequently. Such information is essential if we are to properly assess the risks associated with climate change and to identify the most effective approaches that Government can adopt to help householders adapt their properties. The UK Climate Impacts Programme (UKCIP) will be delivering the first probabilistic scenarios in October 2008 and these will be essential to future work in this area.
Barriers to change
30. It is generally in the interests of households to improve the energy efficiency of their homes as the savings on energy bills can be significant, with several energy efficiency improvements such as draught-proofing, cavity wall and loft insulation quickly repaying their installation costs. However, even the most rational households are often faced with barriers to investing in energy efficiency measures which can be difficult to overcome:-
· hassle - difficulty commissioning work and the inconvenience and disruption caused during installation; · trust - householders often lack confidence in their ability, through lack of experience, to identify reliable installers/contractors and are suspicious of energy suppliers offering them energy saving deals; · up-front costs - although some measures are inexpensive, others involve significant capital outlay and relatively low energy prices result in lengthy payback periods. The cost of treating different houses also varies considerably with older houses often costing more because of the number and type of measures needed (e.g. solid wall insulation rather than the much cheaper cavity wall insulation); · information/knowledge - lack of knowledge of what can be done, how to obtain grants and subsidies and where to go for advice; · split incentives - with rented property, typically the landlord would meet up-front installation costs and the tenant would benefit from the reduced energy bills; this is reflected in the fact that the private rented housing sector includes some of the least energy efficient homes; · technological immaturity - many zero or low carbon technologies are still low volume and relatively expensive; · risk - households may not be certain whether their tenure will be sufficiently long for future energy bill savings to repay the initial outlay. They may also be wary of the risk associated with new (or unfamiliar) products or services; and · other priorities - householders will often have higher home improvement priorities, for example preferring to invest larger sums in visible improvements such as an extension or kitchen and bathroom remodelling (with obvious implications for property values) rather than much smaller sums in "invisible" energy efficiency improvements, such as cavity wall insulation, which would nevertheless quickly pay for themselves through reduced energy bills.
31. As this summary of the existing analysis around energy efficiency in existing homes shows, any strategy for tackling these buildings needs to be flexible and multi-faceted enough to deliver solutions which recognise and respond to a wide variety of different circumstances. Some home owners may only need information; some may need help organising work; some may have particularly hard to treat houses which require particular approaches or technologies; and some may need full financial support. The Government's approach to dealing with this is set out below.
SECTION 3 - APPROACH TO DATE AND IMPROVEMENTS DELIVERED
32. With the exception of some new and emerging technologies, primarily those concerned with microgeneration, renewable energy and low carbon technologies, the products and materials required to improve the energy efficiency of existing homes are well known and have well established markets. Details of some of these, their costs and savings were set out in the November 2006 CLG initial analysis[3] and more recent data were included in Defra's carbon saving allowances under the forthcoming Carbon Emission Reduction Target published in March 2007[4].
33. The existing policy framework for tackling energy efficiency in existing homes directly reflects the point made above about the need for a range of interventions which recognise the barriers which individual householders may face and which may prevent them from taking action. This policy framework is described below and is made up of:
· minimum standards for all existing homes that undergo building work; · action to inform, support and incentivise those who are prepared/able to change their behaviour and/or take action in their own homes (including the use of obligations on other parties such as energy suppliers); · financial incentives to tackle issues such as split incentives, encourage innovation and improve the uptake of low and zero carbon technologies; and · action to ensure that the most vulnerable in society - those that are least likely to be able to improve their own homes and those that are most likely to suffer from fuel poverty - are assisted.
Setting a Minimum Standard
34. The statutory minimum energy efficiency requirements for homes are set out in the Building Regulations. In recent years the energy efficiency standards for new homes and existing dwellings undergoing extension or major renovation have been progressively raised culminating most recently in the April 2006 revision to Part L of the Regulations which requires standards 40% above pre-2002 levels and 70% above 1990 levels.
35. For any existing home that is undergoing extension or major refurbishment, these more rigorous requirements have three key implications:
· that the work itself must comply with the new standards; · that it should not result in a worsening of the overall energy efficiency of the building concerned; and · that if 25% or more of the surface area of any thermal element (eg a wall or the roof) is being renovated, the entire element should usually be improved (the 25% limit is intended to exclude minor repairs but to ensure that any significant upgrading incorporates energy efficient construction).
36. As the Government has already announced[5], the standards set by the Building Regulations will continue to rise over the coming years - increasing by a further 25% in 2010; 44% in 2013 and reaching zero carbon levels in 2016.
37. Recent changes to the Building Regulations have also resulted in some specific requirements which have additional implication for the energy efficiency of existing homes. These set energy efficiency standards at component level when certain types of building work are carried out including the replacement of windows and doors, boilers and hot water systems.
38. To support the changes to Building Regulations, the Government has also taken a number of actions to improve compliance with the standards they set out. Building Regulations is a fully devolved system and Local Authorities and Approved Inspectors are responsible for ensuring building work complies. Prior to the introduction of the 2006 standards there was significant concern about the level of compliance that was being achieved. A Building Research Establishment study in 2004 suggested that only 43% of new homes that were tested conformed to the airtightness requirements in the regulations and although this told us nothing specifically about compliance in existing homes it was an indication of the existence of a wider problem.
39. As part of the introduction of the 2006 regulations the largest ever training and dissemination campaign associated with a Building Regulations change was undertaken. This ensured that every building control officer in the country had access to training on the new Part L. We also introduced a number of Competent Person Schemes for work relevant to part L which are designed to ensure that work is carried out by competent individuals who are fully trained and whose work is regularly sample checked for compliance.
40. We are still in the early stages of the implementation of the 2006 Part L and it is difficult to establish at this stage whether our efforts to improve compliance have been successful. Even a year after the change in the regulations, builders are still completing new homes that received their original approvals against the previous regulatory requirements. However, we are already gathering information from stakeholders on how implementation is progressing and will ensure that this is taken into account in our review of the implementation of 2006 Part L which will take place in 2008.
41. Clearly, using regulations to mandate minimum levels of improvement helps in overcoming the risk of householders' other priorities taking precedence - one of the barriers to change identified above.
Informing, Supporting, Incentivising
Energy Performance Certificates
42. The introduction of Energy Performance Certificates, which are currently being phased in for all homes - new and existing - when they are constructed, sold or rented out, represents a major step forward in improving the provision of information to homeowners about the energy efficiency of the home they are intending to occupy at the point in time when they are most likely to consider making improvements and most likely to take account of the cost and benefits of such improvements in their forward planning.
43. Energy Performance Certificates are designed to help potential building owners and occupiers understand the current and potential energy performance of the building they are considering occupying, and provide advice on how they can make cost effective changes to improve its performance. The Certificate also contains behavioural advice on saving energy in the home, and suggestions for more expensive measures (such as the installation of low and zero carbon technologies) that could be pursued.
44. Energy Saving Trust and CLG research suggests that, in the early stages of rolling out Energy Performance Certificates, home buyers are most likely to act on the recommendations and make changes to their homes. Longer term, however, the market may make energy efficiency a greater factor in the decisions that people make about which buildings they choose to buy or rent, and landlords and sellers should become more likely to make changes to improve the market appeal of their buildings.
45. CLG's Regulatory Impact Assessment sets the net cost of domestic Energy Performance Certificates at £81 million per year, for which a saving of around 0.9 million tonnes of carbon per year is expected to be delivered by 2020[6].
46. The implementation of Energy Performance Certificates for the domestic sector is being accompanied by a communications campaign to inform all those who will be receiving or providing certificates of the benefits and obligations associated with them. Communications is a key part of the implementation of Energy Performance Certificates because there is no legislative requirement for building owners to act on the advice given in them. Achieving carbon savings is dependent, therefore, on incentivising consumers to act.
47. Communications work is being carried out in conjunction with the Energy Saving Trust (see below), who will act as the main point of further information for consumers on Energy Performance Certificates and advice on making energy efficiency improvements and adopting more energy efficient behaviour.
48. The introduction of Energy Performance Certificates is a significant response to the information/knowledge barrier identified in Section 2 above.
Energy Efficiency Commitment (EEC)
49. The Energy Efficiency Commitment is an obligation on electricity and gas suppliers in Great Britain to promote and deliver improvements in energy efficiency in households.
50. Energy suppliers can deliver their obligation and meet their target by mixing and matching a range of measures and activities. So far, in the first two 3-year phases (2002-05, 2005-08) they have focussed on cavity wall and loft insulation, providing low-energy light bulbs and subsidising the installation of energy efficient appliances. The scheme has also encouraged innovative approaches to the delivery of energy efficiency, including partnerships with Local Authorities, charities and community groups and has provided incentives for the deployment of new innovative energy efficient technologies.
51. In total EEC phase 1 (2002-05) stimulated about £600 million of investment in energy efficiency, will save around 0.3 MtC (million tonnes of carbon) a year by 2010 and delivered net benefits to householders in excess of £3 billion. Detailed evaluation of the programme showed that, for every £1 spent by suppliers, householders benefited by about £9. Most low income households in Great Britain benefited from this phase of the scheme - mainly from appliances and lighting savings. The markets for fridges, freezers, washing machines and dishwashers have been transformed, while the growth of condensing boiler sales and associated installation experience during the course of this phase was part of the reason the Government decided to legislate through the Building Regulations to bring about a radical transformation of the residential boilers market.
52. The current phase of the scheme, EEC 2 (2005-08), requires broadly double the level of activity of EEC 1 and is expected to deliver savings of 0.5 MtC annually in 2010. The next phase, starting in April 2008, will be called the Carbon Emission Reduction Commitment, and is expected to require a further doubling of supplier activity (see section 4 for further detail).[7]
53. Whilst it does not have a specific fuel poverty objective, the Energy Efficiency Commitment does require suppliers to direct 50% of energy savings towards a priority group of low-income customers. The scheme has been important, therefore, in supporting Local Authority objectives under Decent Homes, the Home Energy Conservation Act and Warm Front (see below). Evaluation of the first phase of the scheme suggests that this priority group benefited from increased comfort and reductions in energy bills worth around £1.8 billion.
54. This scheme addresses several of the identified barriers to change by reducing the up-front costs and by beginning to help address the hassle and trust barriers by providing the service through approved contractors, or through innovative energy efficiency schemes in which the energy supplier partners a local authority or other third party (eg supermarkets, department stores, appliance retailers and DIY stores). It also drives suppliers and installers to initiate their own marketing and communication campaigns.
Energy Saving Trust
55. The Energy Saving Trust (EST) was established following the 1992 Earth Summit in Rio de Janeiro and plays an important role in helping the Government to meet its climate change targets. It is part grant-funded by Government to work directly with householders and through local authorities and other key stakeholders to encourage and promote the sustainable and efficient use of energy in homes.
56. The Trust engages with over one million households annually, providing advice on energy efficiency and carbon emissions reductions. Energy Performance Certificates have raised, and will continue to raise, the public profile of the Energy Saving Trust by directing householders to them for further advice on improvement measures and grants and subsidies.
57. The Energy Saving Trust, therefore, is a key player in the Government's efforts to address the information/knowledge barrier. They have several core activities directed at household consumers:
· a network of Energy Efficiency Advice Centres (EEACs) providing advice to consumers to help them assess their energy use and signpost grants and subsidies available in the householder's area; · accreditation of products under the Energy Saving Recommended label (which signposts consumers to products that save the most energy) and maintenance of an on-line searchable database of energy efficient products; · the "Commit to Save Your 20%" consumer marketing campaign, which is the source of information and call to action for consumers to reduce their energy use and install energy efficient measures; · administering a number of programmes for local authorities and registered social landlords, including Practical Help, a tailored source of information and support on delivering energy efficiency to their communities; and · On-line Home Energy Checks - a personalised report showing consumers how much energy and money they can save in their home.
58. This is another significant measure to address the information/knowledge barrier but, through endorsing materials, appliances and promoting grant/subsidy schemes, the Energy Saving Trust also address the hassle, trust and cost barriers.
Increasing Awareness of Climate Change
59. All of our policies and programmes are underpinned by the need to generate an increased awareness and understanding of the link between individual action and climate change, through carbon dioxide emissions. In addition to the targeted policies and programmes highlighted above we are also working more generally to promote behaviours such as insulation installation, the take up of energy efficient products and better home energy management through:
· Grant funding for communications projects through the Climate Change Communications Initiative focused on shifting attitudes towards tackling climate change. This has provided £8.5 million in grant funding to 83 local and grassroots projects helping to encourage more positive attitudes towards tackling climate change; · Freely available communication resources, including a website www.climatechallenge.gov.uk, a booklet Climate change: your guide to inspiring action, an award-winning two-minute film about the causes of climate change that has achieved over £8 million of free air time, and a new short film My CO2 about the links between individual/household energy use and climate change; · Provision of "information tools" to help individuals take action. As part of this, we have launched the Act on CO2 calculator[8] to increase awareness of the different actions people can take in their everyday lives to help tackle climate change. The calculator has already seen almost half a million individuals and households find out their CO2 footprint. The calculator also enables users to receive a tailored action plan with recommendations about how to reduce their emissions (eg by installing insulation). It also directs the public to links on further information in Directgov's Greener Living Guide and other websites; · A new cross-departmental campaign brand "Act on CO2." This has been used by both Defra and the Department for Transport (on eco-driving). The key message in Defra's campaign is that carbon dioxide emissions cause climate change and that over 40% of emissions in the UK come directly from individual behaviour. The campaign tells people the simple, easy things they can do to reduce their impact on the climate, which will often save them money too. It has used TV, press and digital advertising, as well as promotional methods (for example, a roadshow promoting the calculator at regional shopping centres).
60. This is another range of measures that address the information/knowledge barrier.
Direct Fiscal Incentives
VAT reduction on energy efficiency materials/products
61. The Government recognises that fiscal incentives can play an important role as part of a package of measures tackling energy efficiency. In successive Budgets since 1998, the Government has rolled out a reduced VAT rate of 5 per cent for the professional installation of certain energy-saving materials including insulation, draught proofing, hot water and central heating controls, and microgeneration (solar panels; micro wind and water turbines; ground source and air source heat pumps; micro combined heat and power (micro-CHP); and wood fuelled boilers). In addition, the reduced rate applies to professional installation of central heating systems, heating appliances and factory-insulated hot water tanks when they are part of grant-funded installations in vulnerable households.
62. The Government continues to lobby for the introduction of a reduced VAT rate for to energy-efficient products as an incentive for the private consumer to make more sustainable decisions. In March 2007, Gordon Brown, as Chancellor, wrote to Commissioner Kovacs and other EU Finance Ministers on this issue. In October, at the time of the 2007 Pre-Budget Report, Alistair Darling wrote again, this time jointly with the French Finance Minister.
63. These measures help to address the barriers of up-front costs and technological immaturity by reducing costs and helping to stimulate the emerging markets for microgeneration and renewable energy technologies.
Incentivising energy efficiency in rented properties
64. In Budget 2004, the Government introduced the Landlords Energy Saving Allowance (LESA), which provides an allowance of up to £1,500 for landlords who invest in cavity wall and loft insulation. This allowance has since been extended to solid wall and hot water system insulation as well as draught proofing, and floor insulation. The availability of the allowance has been extended from 2009 to 2015 and it now applies per property rather than per building, ensuring smaller properties have access to the full allowance. The Government is also seeking State Aid approval to extend the availability of the Landlords Energy Saving Allowance to all corporate landlords and bring more private rented properties within the scope of the scheme.
65. This allowance seeks to address the split incentive barrier which has held back energy efficiency improvements in the private rented sector and therefore makes a significant contribution to achieving carbon reductions in one of the least well performing sectors.
Supporting Microgeneration/renewables
66. Microgeneration has a significant role to play in meeting our goal of achieving sustainable and secure energy for all. The Energy Saving Trust estimated that by 2050, microgeneration could provide around 30-40% of the UK's electricity needs and help to reduce carbon emissions by 15%[9].
67. The Government's Microgeneration Strategy (published in March 2006) sets out to create the conditions under which microgeneration could become a viable alternative or supplementary energy source for individual householders, communities and small businesses.
68. The strategy identified actions designed to tackle all of the main barriers to widespread take-up of micro-generation, including issues around cost of installation, lack of information and technical constraints.
69. Following the publication of the strategy the Government launched the Low Carbon Buildings Programme (LCBP). This is an £86 million grant programme which is designed to demonstrate the potential for encouraging both energy-efficiency and microgeneration technologies in a range of buildings, as well as driving down costs and making the microgeneration market more sustainable.
70. The Low Carbon Buildings Programme offers capital grants to successful applicants. To date, £21.5 million has been committed to projects in a range of buildings that include households, schools, social and local authority housing, businesses, charities and the public sector - including nearly £7million to over 4,000 households.
71. Other measures to tackle cost include enabling microgenerators to gain better access to the rewards for generating electricity such as easier access to Renewable Obligation Certificates (ROCs) and rewards for exporting excess electricity to the grid.
72. The new UK Microgeneration Certification scheme will provide consumers with independent certification of microgeneration products and services and a route for complaints. Over 200 installer companies have registered to join the scheme which builds on existing accreditation schemes.
73. Route maps are being created for each of the key technologies, focussing on opportunities and barriers to deployment, and giving a clear indication of the research and development need.
74. Finally, the Distributed Generation Review[10], published alongside the Energy White Paper[11], has identified further practical proposals to encourage more widespread deployment of distributed generation and enabling it to compete effectively with larger scale centralised generation. Most notably, the Energy White Paper gave a commitment for BERR and Ofgem to consult later this year on options for more flexible market and licensing arrangements for distributed low carbon electricity, to be implemented by the end of 2008. The measures will seek to make it easier for smaller operators to establish local energy schemes, to participate in the energy market, and to obtain value for excess electricity generated.
75. This activity addresses the technological immaturity barrier and, as a result, will contribute to reducing up-front costs.
Helping the most vulnerable
76. Government has a statutory requirement to eradicate fuel poverty, as far as reasonably practicable, in all vulnerable households by 2010 and in all households across England by 2016. Households deemed vulnerable include those with members who are elderly, disabled, have a long term sickness and/or are low income families with children. Clearly these households are also going to be amongst those who are least likely to be able to undertake physical improvements to their homes on their own.
77. Commitment to these targets has been underlined by increased funding. The 2004 budget increased funding to the Warm Front Scheme (the main fuel poverty programme in England) by £140m and the 2005 pre-budget report committed a further £300 million across the UK, with £250m for England. Total funding for the 2005-08 period in England is now more than £850 million.
78. Considerable inroads have been made on fuel poverty with figures falling from 5 million households in England in 1996, of which 4 million were vulnerable, to 1.2 million and 1 million vulnerable in 2004. However, due to the unprecedented increases in fuel costs since 2003 it is estimated that an additional 1.2 million households are in fuel poverty in 2006 compared to 2004.
79. Fuel poverty is driven by three elements: household energy efficiency, income and fuel prices. Action is needed on all fronts to address the challenges in a sustainable way.
80. The following sections highlight two of the key actions we are taking which aim to tackle fuel poverty through tackling the energy efficiency of existing homes. By providing financial support they address the barrier of up-front costs while also focusing on the properties in greatest need of improvement and households least able to afford those improvements themselves.
Warm Front
81. The Warm Front Scheme is the Government's main programme for tackling fuel poverty in the private sector in England, through the direct provision of a range of heating and insulation measures to householders. Assistance from the scheme is enabled through receipt of a qualifying income or disability related benefit, thereby focussing on vulnerable households. Since its inception in 2000 Warm Front has helped over 1.5 million vulnerable households feel warmer and more comfortable in their homes.
82. Changes to the scheme have been made since 2000 including the offer of central heating for all qualifying applicants, benefit entitlement checks and a £300 scheme to assist pensioners who are not in receipt of any qualifying benefits, towards the cost of gas central heating installations.
83. Action undertaken by Warm Front has had a significant impact on the aim of reducing carbon emissions. In total, Warm Front is expected to save 0.5MtC each year by 2010. In 2006-07 alone Warm Front activity in the households they worked with resulted in:
· an average SAP improvement of 16 points, from 40 to 56. · an average reduction in carbon dioxide emissions of 0.81 tonnes a year · an average saving of almost £200 in energy running costs every year.
84. There is still much to do but the Government remains committed to meeting its fuel poverty targets. Subject to final decisions, the combination of Warm Front and the focus on low-income customers through the priority group obligation in the Carbon Emission Reduction Target mean that spending on energy efficiency and other measures in low-income households will rise in the 2007 Comprehensive Spending Review (CSR07) period compared to the previous spending period.
Decent Homes
85. We are committed to ensuring that all social homes are made decent by 2010. The Decent Homes standard is designed to ensure that social landlords tackle the worst housing conditions across a range of criteria. By ensuring that homes are warm, dry and have reasonably modern facilities, the delivery of the Decent Homes target has helped to make homes more energy efficient, as well as contributing to other cross-Government commitments to reduce health inequalities and tackle fuel poverty.
86. To be classed as decent, a home must provide a reasonable degree of thermal comfort, which means it must have effective insulation and efficient heating. Improvements to insulation and heating are a major focus of the decent homes refurbishment works.
87. Between 2001 and 2006, central heating improvements have been made to over 700,000 local authority dwellings, over 600,000 have benefited from insulation improvements, and over 800,000 have had double glazing installed. Progress is being made on thermal comfort at a faster rate than the other components of the Decent Homes Standard, and the number of social sector homes failing on that criterion has more than halved since 1996 - down from nearly 2 million to 850,000.
88. The Decent Homes programme also includes a target for vulnerable households in the private sector to increase the proportion living in decent homes to 70% by 2010. Progress has been good, with the proportion living in decent homes increasing from below 43% in 1996 to 66% now.
89. The Decent Homes standard acts as a threshold that triggers action to improve homes which fall below it, rather than a standard to which work is carried out. This ensures that resources are targeted at properties in the worst condition which will benefit most from improvement works. Furthermore, when carrying out these improvement works, landlords are encouraged to deliver a higher standard. Research by the Buildings Research Establishment[12] found the vast majority of local authorities and Registered Social Landlords (RSLs) are carrying out work well in excess of the thermal comfort standards with 90 per cent planning to install both cavity wall insulation and loft insulation in homes with gas or oil programmable heating where only one form of insulation would be required by the standard. The research survey also estimates that by 2010 around 85% of lofts in social rented homes will have at least 200mm of insulation whereas the standard states that homes with less than 50mm must be improved.
90. By 2010 we expect 95% of the stock to be decent, with the majority of landlords making all their stock decent in this timescale. Work will have been completed to 3.6 million homes, with improvements for 8 million people in total, 2.5 million children among them.
SECTION 4 - THE NEXT STEPS
91. The key policies and programmes we have described above are expected to deliver reductions in carbon emissions of around 19 MtCO2 (million tonnes of carbon dioxide) a year by 2020.
92. There is no assumption on the part of the Government that each sector of the built environment or the economy as a whole must carry an equal burden in terms of reaching the Government's 60% target, and given the difficulties identified earlier, it may not be cost effective to seek to achieve the full 60% from existing homes. However, it is clear that we need to continue to seek new opportunities to achieve further reductions in carbon emissions from existing homes where these are practical and cost effective.
93. Below we have set out a number of areas of ongoing work which are either in the process of being developed or already planned for the future which will make a further contribution.
Future development of Energy Performance Certificates
94. The recent launch of Energy Performance Certificates offers government a powerful new route for active engagement with householders as well as other market players on the issue of energy efficiency. As well as ensuring active communication and engagement with householders to encourage them to act on the recommendations, the Government is keen to look at the further opportunities that EPCs open up and to work with others to develop ideas around this.
95. As a result of EPCs, for the first time householders will have detailed information about the energy performance of the house they occupy and clear advice on how to act on it. One possible route for making the most of this increase in information could be to encourage the development of market-based mechanisms which would draw on the information to develop and offer affordable, hassle free and comprehensive energy efficiency packages at the point in time when householders are most likely to consider them.
96. There may be a number of ways of doing this. Mortgage lenders might team up with energy suppliers and product installers to offer packages at the time of arranging the mortgage; or energy suppliers might develop their own packages to offer customers who wish to act on EPC improvement recommendations.
97. All proposals are at an early stage and Government will continue to work with stakeholders to establish what role it should play in the development of these products and to fully understand the costs and benefits of the various approaches.
98. The future of the Energy Performance Certificate is also likely to be linked in to the wider Government climate change agenda in other ways. One of the predicted benefits of Energy Performance Certificates is the increase in consumer interest in energy efficiency measures.
99. Longer term developments in policy are likely to depend on the results of the current implementation phase, and also developments in Europe. The Commission has stated its intention to strengthen the Energy Performance of Buildings Directive, and any changes in domestic policy would need to reflect these changes. Communities and Local Government is planning to take an active role.
The next phase of the Energy Efficiency Commitment
100. Defra has recently completed a statutory consultation on a new Carbon Emission Reduction Target (CERT) for energy suppliers for the period 2008-11. This will replace the Energy Efficiency Commitment - the change of name reflects the fact that it now includes the full spectrum of carbon emission reduction measures, going beyond energy efficiency and including all microgeneration technologies as well as behavioural measures. The Government proposes an increased carbon target on energy suppliers, effectively requiring them to double their current effort, significantly increasing activity in well established markets like insulation while encouraging a big push into new markets like microgeneration. The increased level of activity means that even more customers are likely to benefit from supplier activity.
101. The legislation for the Carbon Emission Reduction Target is expected to be in force by the end of 2007, allowing the scheme administrator (Ofgem) and energy suppliers to prepare for the April 2008 start. To facilitate a smooth transition from EEC2 to CERT, Defra published the carbon savings to be attributed to established energy efficiency measures allowed under the new scheme earlier this year[13]. Energy suppliers are able to start work on their targets early and are able to carry-over any over achievement against their current EEC2 targets so there is no need for them to scale down activity now if they have already achieved their Energy Efficiency Commitment targets for 2005-08 early.
A Longer-term Supplier Obligation from 2011-20
102. In last year's Energy Policy Review the Government committed to continue some form of household supplier obligation until at least 2020. The level of the target will be similar to that under the Carbon Emission Reduction Target, delivering cumulative annual savings of 3 to 4 MtC by 2020.
103. As the most cost-effective opportunities to improve energy efficiency of existing homes are taken up over time, realising savings will become increasingly difficult to achieve. If we are to continue to deliver carbon savings from households, we need to bring about a change in consumers' approach to energy use. Suppliers and customers need to have a shared incentive to reduce emissions. Creating this shared incentive will require an innovative policy, which changes the way the supplier views their relationship with customers. Rather than simply selling units of energy, the suppliers' focus needs to shift to the marketing of energy services.
104. Encouraging suppliers to make this change will be challenging, and cannot be made in one step. It will require suppliers to develop alternative business models, earning profits through a combination of low carbon measures, related services and sales of energy. The Carbon Emission Reduction Target is a first step towards creating such a marketplace, with its rewards for innovative approaches and domestic microgeneration.
105. Market transformation will also require changes to other aspects of energy markets. Steps to improve billing, and over time, to roll out smart meters to domestic customers will improve the opportunities for suppliers to develop alternative business models. Energy services relationships are likely to involve longer-term contracts between suppliers and customers. Such contracts will be further facilitated by Ofgem's recent removal of the "28 Day Rule"[14]. Removing this rule makes it possible for suppliers to offer more innovative contracts to customers, whereby the supplier makes investments in the customer's home in return for the customer committing to a fixed term contract, for example.
106. The Government intends to reach a clear conclusion on the direction for the post-2011 supplier obligation in 2008. The options under consideration include setting supplier targets in terms of absolute reductions in carbon or delivered energy as discussed in the Energy Review Report, as well as alternatives such as a further evolution of the measures-based approach as under the Energy Efficiency Commitment and Carbon Emission Reduction Target. As part of this policy development process Defra issued a Call for Evidence to enable interested parties to offer their views at an early stage in the policy development process. The Call for Evidence closed on 14 September and Defra will be publishing a summary of responses later this year.[15]
Further action to increase awareness of climate change
107. Improving awareness of climate change and energy efficiency and the role of individuals will continue to be an important Government activity.
108. Since 2005-06, the Energy Saving Trust have been piloting a Sustainable Energy Network (SEN), building on their network of Energy Efficiency Advice Centres, as a new delivery route for more effective advice to consumers, engaging proactively and enabling individuals to make personal commitments to reduce carbon. In addition to energy efficiency, Sustainable Energy Networks promote carbon saving through renewable energy technologies and low carbon transport. Government is now looking actively at the emerging results of this pilot, the Act on CO2 calculator, Climate Challenge Fund, and other public engagement initiatives and will determine the future direction for continued roll out of these information tools and programmes in the light of the 2007 Comprehensive Spending Review settlement and other competing priorities.
109. The Energy Saving Trust will also be piloting a "green concierge" approach with the Greater London Authority, through which householders will be offered a complete service including energy audits, advice, help with financing measures as well as assistance in finding and managing contractors. If successful, they aim to promote the approach with local authorities in 12 core cities across the UK.
Real time displays, smart meters and home automation
110. The provision of better information to consumers about their energy use and how much it is costing them has been shown to be an effective way to drive behavioural change. Studies have shown that direct feedback, in real-time, is the most effective means of inducing behavioural change because it's the easiest way to identify waste and how much appliances cost to run. Accurate and more frequent bills have also been shown to help consumers understand their energy use better and motivate them to invest in energy efficiency measures - Government has announced a policy that energy suppliers, from May 2008, should provide a graph of actual historic consumption on domestic energy bills.
111. The Government has announced that from as early as possible in 2008, for a period of two years, households will be able to get a free display from their energy supplier. The Government has also announced that all new and replacement electricity meters from May 2008 should be provided with a real-time electricity display. This provision applies to any meter installed, so if a smart meter is installed it too would have to come with a real-time electricity display. The Government is further considering the potential for providing more frequent information to households about their gas consumption by real time display.
112. Further, the Government has a vision that every household should have a gas and electricity smart meter in the next decade and is considering the costs and benefits of different roll out scenarios. Smart meters primarily provide benefits to energy suppliers as they can reduce their meter reader and call centre workforce along with other reductions in the costs of serving their customers. Energy suppliers will have much more information about their customers' energy consumption if smart meters are installed and could, potentially, provide this information to their customers in ways that would improve understanding of their energy use.
Changes to the Planning System
113. In April this year CLG launched a consultation on proposals to change the planning system to allow householders to install microgeneration equipment without the need to apply for planning permission. While the proposals seek to increase the take-up of microgeneration by removing a regulatory burden that can be costly in terms of both time and money, they also try to ensure there are safeguards in place to ensure proposals do not have a significant impact on others.
114. The consultation period closed on 27 June. Whilst there was general support for what the proposals sought to achieve, there was a significant amount of detailed comment on the various conditions and limits proposed to protect the impact on others. The department is currently considering the responses.
115. In May this year the Government also published the Planning White Paper: Planning for a Sustainable Future[16]. The White Paper underlined the important role of regional and local planning in actively planning for, and supporting, renewable and low‑carbon energy supplies. It makes clear that local planning authorities have a crucial role to play in tackling climate change and states that the Government 'intends to legislate to set out clearly the role of local planning authorities in tackling energy efficiency and climate change.
116. The Planning White Paper confirmed the Government intention to publish the final Planning Policy Statement (PPS): Planning and Climate Change later this year. We are fully committed to this. It will set out how planning, in providing for the new homes, jobs and infrastructure needed by communities, should help shape places with lower carbon emissions and resilient to the climate change now accepted as inevitable. The consultation draft of the PPS, published at the end of 2006, attracted significant support and responses made clear the value put on using planning positively to help tackle climate change.
Encouraging action by local authorities
117. The Home Energy Conservation Act (HECA) places a duty on all Energy Conservation Authorities to produce improvement plans aimed at achieving a voluntary 30% energy efficiency improvement in all housing in their areas, within ten to fifteen years i.e. by 2006 - 2011. It has raised the importance of energy efficiency within the areas for which local authorities are responsible and encouraged them to work together with a number of other agencies, including voluntary and business sectors, to ensure a holistic approach to improving household energy efficiency.
118. In the period 1 April 1996 to 31 March 2006, English authorities reported an overall improvement in domestic energy efficiency of all housing in their area of over 19%, as measured against a 1996 baseline. These improvements were as a direct result of other policy programmes, notably the Energy Efficiency Commitment, Warm Front and Decent Homes. Defra is currently consulting on a review of the Act, as implemented in England, to assess its future role in our framework of action to improve household energy efficiency.
119. Given the significant role that local government can play in tackling climate change the Government has committed[17] that the new performance framework, which is to be implemented from 2008, will also have an appropriate focus on climate change. Decisions on national outcomes, indicators and targets will emerge from the Comprehensive Spending Review. The new performance framework for local government will provide stronger mechanisms for ensuring that national priorities such as climate change are translated into effective action both in their own estate and across their communities, bolstered where appropriate, with local targets and indicators.
Further Changes to Part L of the Building Regulations
120. As stated previously, we have set out our intention to accelerate the process of raising the statutory energy efficiency standards for new dwellings, with improved Building Regulation standards in 2010 and 2013 culminating in a zero carbon new home requirement by 2016. Based on projected levels of new build and demolition, we estimate that around one-third of the homes that will exist in 2050 will have been built between now and then. This raising of Building Regulations standards is therefore intended to ensure that we do not needlessly exacerbate the problem of the existing housing stock in the period leading up to 2050.
121. Existing standards focus strongly on the conservation of heat in winter. Between now and 2016 we will be introducing higher standards for summer performance to take account of the increased popularity of domestic air conditioning. From 2016, we intend that air conditioning energy consumption will be included in the net annual zero carbon dioxide emission calculation.
122. The proposed review by the European Commission of the Energy Performance of Buildings Directive in 2009 may require other changes to the Building Regulations. It may present a further opportunity to consider what other measures might reasonably be taken to improve the energy efficiency of the existing housing stock. . Supporting energy efficient lighting
123. Gordon Brown, as Chancellor, announced in March 2007, his aim for the UK to be one of the first countries to phase out inefficient light bulbs and set an ambitious target date to achieve that by 2011, ahead of possible mandatory measures under the EU Framework Directive on Energy-using Products. In September 2007 Hilary Benn announced that the major retailers and energy suppliers have responded positively to this and that they will be driving a voluntary initiative, with the strong support of the lighting manufacturers, to help phase out traditional high-energy light bulbs. This action will also see consumers saving money on energy bills.
Longer-term support for new and emerging technologies and industries
124. The Government supports a wide range of measures to stimulate research and development in low carbon technologies throughout the R&D energy innovation chain.
125. All energy technologies broadly go through the same stages of development: research through to deployment, each stage requiring different types of support. In reality, this process is rarely linear and projects at the demonstration and deployment stages often have further research and development needs.
126. The Government has announced an Environmental Transformation Fund (ETF), within which Defra and BERR will use a domestic fund of £370 million to support the demonstration of new energy and energy efficient technologies. Defra and BERR will work closely with DIUS to develop a strategy for the low carbon framework across the full energy innovation chain from initial research and development to demonstration, deployment and diffusion.
127. Support for the research, development and demonstration of new technologies forms the technology push aspect of innovation. Market pull comes by providing the market mechanisms and incentives that help create the demand for the wider deployment of new technologies, such as the Renewables Obligation which is currently being banded to offer greater support to emerging technologies.
128. Public sector funding for technology push is increasing steadily, both in the UK and EU. Within the UK there are also major changes being made to how this funding will be delivered in future. These changes will ensure that our energy industries are in an excellent position to contribute to and gain from the move to low and zero carbon energy generation. The key bodies involved, most of which are funded through DIUS, are:
· Research Councils - funding the development of new renewable energy sources to replace or complement existing or future low carbon energy generation, as well as improving existing energy generation and energy utilisation. Their budget in 2007-08 will amount to over £70m. Activities include the Carbon Vision project which supports action to identify carbon-saving technologies which could be fitted in existing buildings, and to examine policy, economic, social and technical issues to help achieve a radical transformation in CO2 emissions from the UK building stock.
· Technology Strategy Board - oversees the Technology programme which is designed to stimulate innovation in the UK economy and provides funding to support Collaborative Research & Development (CR&D) and Knowledge Transfer Networks (KTN). Priorities for the Technology Programme have included low carbon energy technologies including renewables, and sustainable production and consumption.
· Energy Technologies Institute - due to be launched later this year - is a joint venture partnership which brings together public and private sector R&D in the UK to set strategic direction in low carbon energy research and fund its delivery. Current partners include BP, E.ON UK, Shell, EDF Energy, Rolls-Royce and Caterpillar. It will provide the UK with a world-class means for delivering applied energy technology research to underpin deployment. The Institute currently has a budget of up to £600m over ten years, which will rise (to take up Government matched funding up to £550m) as new members join.
· Framework Programme 7 - the EU's Framework Programme for Research and Technological Development is the main instrument through which research is supported at European level. The Seventh Framework Programme (FP7) will be accelerating the development of energy technologies and ensuring that European industry can compete successfully on the global stage. FP7 has a budget €50.5 billion over the period of 2007 to 2013 of which €2,350 million is available for the Energy Theme.
Personal carbon allowances
129. The Government is looking into the potential value of personal carbon trading. This is just one of a number of potential long-term options being explored for making individuals better informed about, and involved in, tackling climate change. Following an initial scoping study produced for Defra by the Centre for Sustainable Energy (CSE), the Government is now carrying out a pre-feasibility study to assess whether personal carbon trading might be a practical and feasible policy option, compared with other measures for constraining emissions. This work programme complements the research and academic work being undertaken by researchers and academics such as The Tyndall Centre for Climate Change, the Environmental Change Institute and the Royal Society for Arts.
Adaptation to Inevitable Climate Change
130. As indicated earlier, a degree of climate change is inevitable and measures to reduce carbon emissions take many years to have an appreciable impact on the rate of climate change. So, in addition to reducing the impact of our existing homes on the environment, we also need to adapt them to these inevitable changes in the UK climate. The main risks to which our homes are likely to be exposed, which are already all too familiar to us, are:-
· Higher average and extreme temperatures; · Increased risk of flooding; · Increased risk of ground subsidence and heave; and · Increased risk from storms and storm damage
131. CLG has already initiated work to review homeowners' experiences to date, lessons from existing work on adaptation and resilience led by others, and the evidence base for specific and relevant changes in the climate. Some threats and appropriate adaptations to them are already well researched and documented, eg the recent CLG/Defra/Environment Agency publication on flood resilient construction[18]. Future work will focus on tackling those areas where gaps in our understanding of the threats, opportunities and barriers are less well understood or documented, with a view to identifying areas where CLG and other government departments might be able to make a positive intervention. This is most likely to be with regard to overheating and minimising storm or heave damage. This is an area at early stages of development with regard to policy.
SECTION 5 - CONCLUSIONS
132. Our policies need to respond to different market failures in different ways. In some cases regulatory interventions (e.g. Building Regulations) can be the most effective and cost effective response. There is also a role for better information (e.g. product labelling, real time displays), incentives (Warm Front, LESA); and market mechanisms (e.g. EEC). Existing policies and programmes have already delivered significant improvements to millions of existing homes. But the existing housing stock is very large - over 23 million homes in England and Wales - and their longevity means that the bulk of the houses that exist today will still be here in 2050. So investing in energy efficiency improvements to existing homes is not just worthwhile; it is crucial to the achievement of the Government's overall carbon emission reduction target for 2050.
133. Sections 3 and 4 of this memorandum set out the existing and planned policies and programmes which exist to increase the rate of improvement. Together, these measures will deliver a reduction in domestic carbon emissions of around 41MtCO2. But these measures are not the end of the story.
134. In the period leading up to 2050, yet further measures will be required. These will need to take account of the impact of the new measures now being put in place and of future technological developments that may make significant further improvements more readily achievable and more cost effective.
135. We will continue to seek to identify further measures, targeted at the barriers to improvement and at those sectors of the stock in most need of improvement, to ensure that we are able to deliver an appropriate contribution to the overall carbon emission reduction target. To that end, we are undertaking a review of existing buildings focusing on a number of different work streams. The initial analysis of existing housing energy efficiency was published on the CLG website in November 2006[19]. This work was then developed by the Office of Climate Change as part of their wider household emissions project. Their analysis will feed into future policy decisions by all departments on how to further improve the energy efficiency of existing homes.
136. If we are to increase household energy efficiency, all sectors of society need to play their part. This means creating the conditions for people and organisations to change; demonstrating the benefits (such as saving money, and improving the environment); and making action easier. It also means continuing to support innovation in technologies. Many players have a role to play: central and local government, agents such as the Energy Saving Trust, energy suppliers, house owners, occupants and landlords. At the end of the day, we remain committed to working to overcome the barriers to the take up of household energy efficiency measures identified in this memorandum, and to drive investment in energy efficiency measures. This is worthwhile for individual householders, in terms of offering them both better thermal comfort in their homes and lower energy bills. In many cases, the cost savings will quickly repay any up-front investment. Annex A
Summary responses to the issues highlighted in the Call for Evidence
The significance of existing housing compared to new build and the different levels of performance each display.
New homes account for less than 1% of the total housing stock in any given year. The longevity of houses means that around two-thirds of the homes that will be standing in 2050 had already been built before 2005. So today's existing housing stock is and will remain highly significant in terms of reducing carbon emissions. The energy performance of individual dwellings differs considerably as a result of many factors, but there is a strong correlation between the age of properties and their average energy efficiency. This has been particularly marked since 1990 following a series of improvements in the Building Regulations energy efficiency standards. Planned further improvements to these Regulations will ensure that future new homes achieve even higher energy efficiency standards. Sections 2, 3 (paragraphs 34-41) and 4 (paragraphs 120-122) of this memorandum give further details.
The respective roles of residents, homeowners, landlords, local government, central government and the energy industry in promoting and delivering greater energy efficiency.
All these players have important roles to play. Central government is responsible for setting the regulatory framework through the Building Regulations, for promoting energy efficiency primarily through the Energy Saving Trust, for providing financial support to more vulnerable households through grants, and for supporting technological development, where necessary, to ensure better materials and products reach the market. Government has also imposed an obligation on energy suppliers to promote and deliver energy efficiency in homes which has proved highly cost effective in improving large numbers of dwellings. Local authorities have a vital role in facilitating and joining up services locally. But, ultimately, householders have much to gain, in terms of improved thermal comfort and reduced energy bills so there are real incentives for them to invest in energy efficiency measures. Landlords, who might otherwise find themselves investing in improvements that resulted in cost savings for their tenants, are provided with a direct financial incentive through the Landlords Energy Saving Allowance (paragraphs 64-65). The roll out of Energy Performance Certificates to rented properties will provide clearer information on the specific improvements that could be made using the allowance. Further details of specific initiatives are at Sections 3 and 4 of this memorandum.
Energy Performance Certificates
Energy Performance Certificates are, primarily, a means of providing prospective householders with information about the current and potential energy efficiency of their homes, the measures they can take to realise that potential, and where to go for further advice on these measures and sources of financial assistance. Ultimately, as they become an established part of the property market, they are likely to have a greater impact on buying and renting decisions, and they may provide a platform for developing future policies and incentives. Details are given in Sections 3 (paragraphs 42-48) and 4 (paragraphs 94-99).
The provision of information for households and prospective house buyers, including Energy Performance Certificates
Energy Performance Certificates will form an increasingly important vehicle for providing more and better information to householders. The Government also part-funds the Energy Saving Trust to promote domestic energy efficiency. See Sections 3 (paragraphs 55-58) and 4 (paragraphs 107-109).
Government efforts to reduce carbon emissions from existing housing stock whether in private or public ownership and other related programmes including Decent Homes
The wide range of actions and programmes that address different sectors of the housing market and/or the various barriers to voluntary action are described in Sections 3 and 4.
The technologies available to reduce emissions and the Government's role in facilitating relevant technological development
Most materials and products to improve the energy efficiency of existing homes are well known and have well established markets. The Energy Saving Trust maintains an extensive web-based database of products carrying their "Energy Saving Recommended" endorsement. Sections 3 (paragraphs 66-75) and 4 (paragraphs 124-128) of the memorandum describe what Government are doing to promote immature and emerging technologies, particularly in the fields of microgeneration, renewable energy and low carbon technologies.
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
Many measures such as draught-proofing, loft and cavity wall insulation are relatively low cost, are not highly disruptive to have installed and quickly repay their installation costs through reduced energy bills. But Government recognises there are a number of barriers that may discourage or prevent householders or property owners from installing them; these are described at paragraph 30. The memorandum goes on to describe the range of actions and programmes that are designed to overcome these barriers and, in particular, to assist low income households and those considered to be in fuel poverty.
The specific challenges which may arise in relation to housing of special architectural or historical interest
Generally speaking, buildings of special architectural or historic interest and buildings in conservation areas do not have to comply with the energy efficiency requirements of the Building Regulations "where compliance... would unacceptably alter their character or appearance" (quote from Regulation 9 of the Building Regulations). However, English Heritage have worked closely and constructively with CLG to produce detailed guidance for owners of historic buildings and those in conservation areas on how they might reasonably comply with the requirements of the Regulations without compromising the historic value of their properties. English Heritage and the Commission for Architecture and the Built Environment (CABE) are expected to submit detailed evidence separately on this matter. [1] Code for Sustainable Homes: A step-change in sustainable home building practice http://www.planningportal.gov.uk/uploads/code_for_sust_homes.pdf [2] English House Condition Survey 2005 Annual Report http://www.communities.gov.uk/documents/housing/pdf/321566 [3] Review of the Sustainability of Existing Buildings: The Energy Efficiency of Dwellings - Initial Analysis http://www.communities.gov.uk/documents/planningandbuilding/pdf/154500 [4] Final energy and carbon savings for the EEC 2008-11 Illustrative Mix http://www.defra.gov.uk/environment/climatechange/uk/household/eec/pdf/illustrativemix-final2007.pdf [5] Building a Greener Future: policy statement (CLG July 2007) http://www.communities.gov.uk/documents/planningandbuilding/pdf/building-greener [6] Regulatory Impact Assessment: Energy Performance of Buildings Directive Articles 7-10, p29, http://www.communities.gov.uk/publications/planningandbuilding/regulatoryimpactenergyperformanc [7] Further details of the programme and evaluations are available on the Defra website at: http://www.defra.gov.uk/environment/energy/eec/index.htm [8] The Calculator is available at www.direct.gov.uk/ActonCO2 [9] Energy Saving Trust: Potential for microgeneration - study and analysis, 2005. [10] Review of Distributed Generation http://www.berr.gov.uk/files/file39025.pdf [11] Meeting the Energy Challenge: A White Paper on Energy http://www.berr.gov.uk/files/file39387.pdf [12] Implementing Decent Homes in the Social Sector http://www.communities.gov.uk/documents/housing/pdf/324500 [13] Final energy and carbon savings for the EEC 2008-11 Illustrative Mix http://www.defra.gov.uk/environ-ment/climatechange/uk/household/eec/pdf/illustrativemix-final2007.pdf [14] This rule required that all domestic supply contracts must be capable of being terminated with 28 days notice, and so may act as a barrier to contracts where suppliers make up-front investments in their customers' homes with the intention of recouping this investment over time [15] Further details are available from the Defra website at: www.defra.gov.uk/environment/climatechange/uk/household/supplier/index.htm [16] http://www.communities.gov.uk/documents/planningandbuilding/pdf/320546 [17] See Chapter 8, 2006 Climate Change Programme and Annex F: Strong and Prosperous Communities [18] Improving the Flood Performance of New Buildings; Flood Resilient Construction (CLG May 2007) [19] The Energy Efficiency of Dwellings - Initial Analysis http://www.communities.gov.uk/documents/planningandbuilding/pdf/154500 |