House of Commons - Environment, Food and Rural Affairs

Select Committee on Environment, Food and Rural Affairs Second Report

Second Report

1. Our Eighth Report of Session 2006-07, Climate Change: the "citizen's agenda", was published on 13 September 2007 as HC 88.

2. Our Report concluded that Government was failing properly to involve people in the fight against climate change and to help the many individuals and community groups keen to cut their greenhouse gas emissions. The stream of ministerial speeches and initiatives urging citizen engagement with the issue were not backed up with adequate resources to enable individuals and community groups to play their part in helping to reduce carbon emissions. We believed that more needed to be done to co-ordinate publicly-funded messages and strategies on climate change so that people were not left feeling powerless to 'do their bit'.

3. We received the Government's response on 15 November 2007, and we publish it as an Appendix to this Report. We are disappointed by aspects of the response, and in particular its unnecessarily negative approach to a number of our practical suggestions. We set out our views in more detail below.

Timing of the Government response

4. Defra and the Prime Minister and Defra made important statements on 18 and 19 November, including announcing a new Green Homes Service with £100m of funding.[1] We welcome the Green Homes initiative, which looks to be a positive development in encouraging households to reduce their homes' carbon impact, but our inquiry demonstrated that advice needs to be backed up by effective financial incentives to improve homes' environmental performance.

5. We are puzzled that the response appears to have been written without regard to these announcements of 18 and 19 December. We received the document from the Department for Environment, Food and Rural Affairs (Defra) on 15 November. It was already two days late, and we question why the Department did not wait a few days more in order to provide us with a complete and up-to-date document. If on the other hand these announcements were a surprise to those in Defra responsible for preparing and authorising the response, it reflects badly on the processes of government.

Other comments on the Government response

ASSISTANCE TO LOCAL AUTHORITIES

6. In response to Conclusion 10 the Government says that its Community Energy Efficiency trial has provided a total of £6.3m of grant funding to 48 projects "to provide local communities a holistic package of energy efficiency support". Such 'bottom up' action needs to be much more widely encouraged. We urge the Government also to come forward with a scheme to give financial encouragement to local and community renewable generation and energy saving programmes. As we said in our report, there are many in the country who want to 'do their bit', and need only a small amount of help to get them started. Local authorities should have an important role in providing community leadership and practical help with energy efficiency and renewable generation. Woking and other like-minded councils have shown what local authorities can do, especially when it comes to the installation of decentralised heat and power schemes. The Government needs to help disseminate best practice and listen to the views of these leading local authorities with a view to removing the barriers that prevent councils doing more.

7. Clause 147 of the recently introduced Planning Bill places a duty on local planning authorities when preparing their development plan documents to include policies in relation to the development and use of land which take action on mitigating and adapting to climate change. Authorities will be required to have regard to the national Planning Policy Statement on Climate Change. We ask the Government to explain how it expects the Planning Bill to assist local authorities in bringing forward decentralised generation schemes.

SUPPLIER OBLIGATIONS AND ENERGY SERVICES

8. The Government says in response to our Conclusion 10 that a "clear sense of direction" will emerge by 2008 on the carbon abatement obligations that will apply to energy suppliers up to 2020. As our Report states, the Government has been studying the idea of suppliers becoming energy service companies since 2000, so progress is very slow.[2] In some ways utilities such as EDF seem to be ahead of the Government, by saying that they will soon be no longer just selling units of energy but will focus on services (including energy saving measures and micro-generation).

9. We were very surprised to read in response to our Conclusion 18 that the Government is unwilling for customers to be told the fact that they themselves are paying through their bills for the energy efficiency measures of the Energy Efficiency Commitment. This lack of transparency is very difficult to understand if—as our evidence suggests—lack of trust is thought to be a barrier to people taking up the opportunities the EEC offers.

METERING

10. The Government's response to our Conclusion 15 does not make its strategy very clear. We are not convinced that the Government yet grasps the need to require any meters or displays that consumers receive over the next few years to be 'future proofed'. It seems to be treating real time displays and 'smart' meters separately rather than thinking in an integrated way about these complementary—rather than alternative—technologies. We are aware that members of the British Electrotechnical and Allied Manufacturers' Association (BEAMA) have developed a 'Smart enabled meter' specification designed to be installed in all new properties and in all meter replacement situations. Energy suppliers would be able to install systems with more functionality but the basic functions of the systems would be inter-operable.[3] We are surprised that the Government makes no mention of this work when it describes its consultation on the subject.

MICRO-GENERATION

11. We remain unconvinced that the Government has a clear policy to support micro-generation. Renewable Obligation Certificates (ROCs) are mentioned in response to Conclusion 21, but these were never designed to support micro-generation: the ROC system is too bureaucratic for that purpose. In May 2007, the former Department for Trade and Industry confirmed this, saying that "the Obligation was designed to support large scale deployment of renewables and we do not feel that it is the best way to deliver the incentives that the microgeneration industry require".[4] The response also says that electricity suppliers are publishing 'buy back' tariffs, but the fact that such a tariff exists on a voluntary basis is not the same as having a tariff which guarantees to give people a return over the period of the investment, as is the case with the German feed-in tariff system. The Government's attitude towards the German feed-in tariff is unnecessarily negative. We do not understand why it failed to outline in any detail why it believes it would not be applicable to the UK. The German approach has been far more successful in delivering micro-generation capacity than our ROC system has. Under the German system more than 10% of electricity came from renewables in 2005, whereas in this country the equivalent figure was just 4%. We do not believe that a feed-in tariff need cost consumers any more per unit of renewable electricity generated than ROCs. The average annual cost per customer of the German feed-in tariff is about £12, compared with about £7 for the ROC system. But the German system supports far more renewable generation.

12. We note however that the announcements from the Government on 18 and 19 November state that "other incentives for microgeneration, such as feed-in tariffs, will be investigated" alongside its 'Green Homes' initiative.[5] This is a welcome change of heart from Defra's view of the previous week, but it is rather vague and nothing may come of it in the end. Defra must publish the timescale and terms of reference of this investigation of feed-in tariffs, and publish the material it considers as well as its conclusions. A key issue is how the speedy transition to feed-in tariffs would be handled if the investigation finds that a change of policy is required.

13. In response to paragraph 123 of our original Report, the Government lists the amounts spent under the Low Carbon Buildings Programme since it was relaunched in May. Before May, £500,000 per month was available. Defra's figures show that the amount spent each month since May has been far below that figure. The Department offers no commentary as to why it thinks the monthly expenditure has dropped so much. Defra should be embarrassed at the low sums being spent on the revamped Low Carbon Buildings Programme, and we ask the Department to offer an explanation.

14. The Government mentions in response to our Conclusion 17 that the new Carbon Emissions Reduction Target for energy providers (which will replace the Energy Efficiency Commitment from 2008) will include micro-generation technologies, but we repeat our doubts that this will be of significant assistance to micro-generation.

15. The response to Conclusion 20 says that it proposes "the removal, later this year, of unnecessary controls in the planning consents regime" on micro-generation. Such a step would be welcome, and the Government should make clear how this will be done.

RENEWABLE HEAT

16. Renewable heat is mentioned in response to our Conclusion 22 but only to say that the Office of Climate Change has done a review. The Prime Minister's speech on 19 November mentioned a consultation on this early in 2008.[6] This is slow progress given that this Committee and many others have called for renewable heat to be treated seriously for a long while. If we are serious about playing our part in reaching the European Union target to generate 20% of EU energy from renewables by 2020, encouraging towns and cities across the country to put local energy networks in place is more urgent than ever.

'GREEN' TAXES

17. In response to Conclusion 24 the Government opposes earmarking revenue from environmental taxation for spending on measures to reduce emissions on the grounds that it would not guarantee value for money and would remove revenue from the overall Spending Review process. We find this argument odd given that the existing Climate Change Levy is recycled in the form of a reduction in employers' NI contributions and a small percentage of the tax take is passed to the Carbon Trust to support low carbon technologies and energy efficiency.

18. The Government must develop an overall strategy on grants and taxation that combines effective encouragement to climate-friendly behaviour and good value for the taxpayer.

Conclusion

19. For all its rhetoric, we are not yet convinced that the Government is ambitious enough in driving forward practical measures to help people reduce their climate change impact. The new Public Service Agreement 27—Lead the global effort to avoid dangerous climate change—that will come into force in April 2008 gives Defra a clear leadership role on this crucial priority of the Government as a whole, and we look forward to seeing the Department take a very active part in ensuring that the whole of Whitehall pays proper heed to the PSA. As part of that leadership role, Defra must also demonstrate that it has its own house in order.

20. We ask Defra to respond to the points raised in this report, and in particular to our observations in paragraph 5. We will also wish to take oral evidence from the Secretary of State on its response to our original Report.

1 See Defra news release, 18 November 2007, Benn launches plan for one stop shop for greener homes, and speech by Prime Minister on climate change, 19 November 2007 (http://www.number-10.gov.uk/output/Page13791.asp) Back

2 See paragraph 103 of our report Back

3 See BEAMA website, http://www.beama.org.uk/hottopics/Smart+Metering/challenges.asp Back

4 DTI, Renewable Energy: Reform of the Renewables Obligation, May 2007, page 21, paragraph 3.15 Back

5 Defra news release, 18 November 2007, Benn launches plan for one stop shop for greener homes Back

6 Speech by Prime Minister on climate change, 19 November 2007 (http://www.number-10.gov.uk/output/Page13791.asp) Back