Memorandum submitted by the National Insulation
Association
1. This submission is from the insulation
industry and has been produced by the National Insulation Association
(NIA). The NIA represents the manufacturers and installers of
insulation products including cavity wall insulation, loft insulation
and other innovative products.
2. Since the Climate Change Levy was introduced
to increase energy efficiency through the Climate Change Agreements
it has had little impact on smaller users who view it as an energy
tax. This is due to the fact that the financial penalty is not
high enough to affect change in smaller businesses as this is
such a small percentage of their overall costs. This is particularly
acute where a company subleases the property as there is not a
driver for action from either the tenant or the landlord.
3. Smaller businesses premises share many
of the physical attributes of the residential sector and therefore
proven cost effective insulation measures exist which would improve
their extremely poor levels of insulation. A policy lever to raise
such standards in a systematic way must be investigated as a matter
of urgency.
4. The potential within this market is huge
as is highlighted from the following information published by
the Federation of Small Businesses:
— there are 4.3 million small businesses
in the UK (up from 4 million in 2003);
— 97% of firms employ less than 20
people;
— 95% employ less than 5 people;
— 12 million people work in small firms;
and
— small firms contribute more than
50% of the UK turnover—about £1,200 billion.
5. According to information published by
Defra around 8MtC or 15% of total CO2 used by the business and
public sectors are used by micro or small firms. Around 70% of
this energy consumption is associated with building services such
as space heating which demonstrates that there is enormous potential
for carbon savings which must be explored.
6. However, there are similar barriers to
the uptake of energy saving measures in this sector as in the
residential sector such as a lack of understanding as to the benefits
of insulation, payback periods and the like. Compared to the many
pressing problems facing smaller businesses, climate change is
not the top priority for management action. We believe this area
has been ignored to date by the present Government and this is
clearly untenable moving forward and in direct opposition to European
edicts. The Energy End-Use Efficiency and Energy Services Directive
applies to all energy users including this market and therefore
Government has a responsibility to ensure that policy measures
are initiated to cover this sector which will drive action.
7. The Government is currently consulting
on the Carbon Reduction Commitment which will capture emissions
from energy use of any organisation whose energy use has a mandatory
half hour metered electricity consumption of more than 6,000 MWh/year.
This will generally capture those organisations with an annual
energy bill of over £500,000.
8. But this omits smaller businesses where
there is a need to encourage action to reduce carbon emissions.
Therefore we believe that the monies raised through the levy must
be focussed on programmes which will directly incentivise this
sector to carry out appropriate measures.
9. This should be in the form of specific
advice or grants which focus and overcome the barriers directly
experienced by this sector. Whilst the Carbon Trust has demonstrated
great expertise in incentivising and encouraging action amongst
larger energy users they have not demonstrated the same expertise
in relation to smaller businesses. This is due to the fact that
such businesses have far more in common with the domestic retrofit
market which is currently engaged in energy efficiency matters
by the Energy Saving Trust. Therefore, if such an initiative were
implemented then it would be essential that the expertise of the
Energy Saving Trust was utilised.
10. In technological terms this should encourage
the uptake of proven technologies such as insulation measures
where the life time carbon savings are the greatest and the payback
periods the shortest.
11. At the moment such smaller businesses
are paying towards the Levy but not receiving the benefits which
would lead to a reduction in their carbon emissions. It is vital
that if energy use is to be reduced then this market is incentivised
and the current arrangements do not do so and represent a real
policy gap in the Government's carbon agenda.
12. The most robust option to ensure that
carbon emissions are reduced within the smaller business sector
would be to draw on the vast success and very cost effective carbon
savings which have been achieved in retrofit domestic properties
via the Energy Efficiency Commitment. A similarly structured scheme
ring-fenced for the smaller business sector would prove to be
very cost-effective as was demonstrated under the Energy Efficiency
Standards of Performance scheme when this not only covered the
domestic market but also small businesses.
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