Appendix
GOVERNMENT RESPONSE
INTRODUCTION
The Government is grateful to the Select Committee
for its report into the role of the citizen in helping tackling
climate change. If we are to meet our ambitious target of reducing
CO2 emissions by 60% by 2050, Government, business
and civil society, including individual members of the public,
all have to act together. The Government appreciates the Committee's
recommendations and suggestions of ways in which we can meet this
vital challenge.
There is a great deal of activity in this area and
a broad range of initiatives including: grant programmes/subsidy
schemes such as Energy Efficiency Commitment (EEC), Warm Front
and Decent Homes; advice and information campaigns run by Government
and the Energy Saving Trust; voluntary approaches with retailers
(for example, in the area of lighting); as well as attempts at
EU-level to improve the regulation of products. Sometimes these
measures do not have a high public profile (for example, as the
Committee notes, the £400 million of investment into domestic
energy efficiency measures generated each year through the Energy
Efficiency Commitment is not well known). However, this is not
to suggest that we have done enough. Given the significant barriers
to individual action, including apathy, hassle factor, up-front
costs, and poor information, there is still a long way to go.
The key challenge will be to make the help that is available to
individuals much clearer, accessible and easily understandable.
For this to happen, the different activities must be brought together
as a holistic package, making it easier for individuals to be
taken on a journey of awareness, engagement and action.
RESPONSE TO CONCLUSIONS AND RECOMMENDATIONS
Information and awareness raising
Stimulating behavioural change
1. Raising awareness and citizen involvement at
a domestic level is fundamental to tackling climate change. However,
we remain unconvinced that all that needs to be done to maximise
this is actually being done. We are concerned that the Government
is giving out mixed messages and continues to display a fundamental
lack of joined-up thinking. It is clear that so far efforts to
alert the public to the dangers of climate change, and the need
for personal behavioural change to deal with it, have met with
mixed results. More needs to be done to achieve greater coordination
of publicly funded messages and strategies to deal with the problem
so that people are not left feeling that they cannot make a difference.
We call upon the Government to review its efforts in this area
and publish—within six months—details of its proposals
for a more effective public communication strategy in this area.
(Paragraph 18).
Awareness of climate change is now almost universal
(97%) as is concern about its impact (81%) but there is considerable
confusion about how individuals can address it (only 26% feel
they can influence climate change). This is in part due to the
confusing and often contradictory messages on climate change in
the media and from the many organisations involved. Our research
also suggests that the public now feel that overt Government leadership
is both missing and would make a direct difference to their level
of personal engagement.
Consequently Defra's communication strategy was revised
in the second half of last year. This involved working closely
with DfT and hence the joint development and then the launch of
the Act on CO2 brand, which is designed to work
across government climate change communications and be
suited for "action-oriented" campaign work.
DfT have been running an advertising campaign on
smarter driving and car purchasing since earlier in the year and
Defra has developed the "Footprints" advertising campaign.
(Hitherto, Defra had always devolved mainstream public facing
campaigns to its funded delivery bodies.) This is a multi media
campaign of TV, press, on line and public relations activity that
was launched in July. This complemented and linked into other
Defra public facing initiatives such as the launch of the web-based
Act on CO2 calculator. The initial results of this
have been very encouraging for the advertising campaign, with
a comparatively high level of awareness generated (on a relatively
modest media spend) and success in driving nearly half a million
visitors to the website to assess their personal footprint on
the carbon calculator.
DfT and Defra Communications teams have recently
appointed the same specialist marketing suppliers (advertising,
media, research and marketing agents) as another means of getting
our publicity more "joined up" and messages to the public
on climate change more consistent and hence less confusing.
DEFRA and DFID are also working closely to ensure
joined up messages to the public on how climate change impacts
on poor people and on efforts to reduce global poverty.
We are continuing to review achievements to date,
and accept that there is more to be done, especially:
o Building
on this initial pilot, a high impact and sustained communications
campaign (similar in scale to other successful Government behaviour
change campaigns such as drink - drive, anti smoking etc); and
o Taking
further steps to enhance the coordination of climate change communications
beyond this (especially from delivery bodies and other government
departments) both in terms of consistency of message and exploiting
opportunities to link them together using the unifying brand of
Act on CO2.
Defra is developing its proposals as part of a more
sophisticated strategy based on social marketing principles, including
the identification of key behaviour change goals and a more detailed
audience segmentation. Funding for this work will need to be considered
later this year alongside other priorities following Defra's CSR
settlement. It will publish plans once the future direction is
agreed.
Defra has meanwhile treated civil servants as an
audience segment and liaised with internal communications managers
across government to publicise Act on CO2 messages.
Government departments have encouraged staff to calculate their
carbon footprint on the Act on CO2 calculator, promoted
the launch of the Act on CO2 campaign, invited staff
to sign up for climate change seminars and film screenings (An
Inconvenient Truth). There has also been a co-ordinated approach
to Energy Saving Week, with cross-departmental competitions and
the opportunity for staff to ask questions about climate change
which will be published within every department.
Energy Saving Trust
2. Given the urgency the Government purports to
place on tackling the threat of climate change, we recommend that
the Government ensures that the Energy Saving Trust does not suffer
the consequences of any tightening or reprioritising of the Departmental
budget, as the cut in funding in 2006-07 suggests it did. (Paragraph
20)
The Government recognises the value the Energy Saving
Trust brings to helping the Government meet its climate abatement
targets. We have provided the Trust continued and significant
sponsorship funds since its inception. The work of the Trust is
integral to underpinning our household energy efficiency and carbon
abatement policies and the Trust is recognised to be a trusted
independent voice at a time when we need consumers to act further.
The impact of, for instance, the Trust's Energy Saving Recommended
scheme is testament to this. Future support for citizen engagement,
including the role of the Energy Saving Trust, will be part of
Government's Comprehensive Spending Review (CSR) priorities.
3. In its response the Government and Energy Saving
Trust must provide details of the future of the Sustainable Energy
Network pilot and if so, whether the intention is to roll this
out more widely and over what timescale. Furthermore, the Energy
Saving Trust should provide details as to how the 50% figure for
overall carbon savings was determined, as we are concerned that
tools to calculate domestic emissions are still at a very early
stage of development. (Paragraph 22)
The Trust seeks to roll-out the Sustainable Energy
Network on a national basis by the end of October 2008. Full roll-out
can, though, only progress on the basis that appropriate funding
is available beyond 07/08, which hinges on decisions following
the CSR for 2008-2011. In the Review, Government will be looking
at the best way of providing advice and support to households.
The Trust has a two phase proposed roll out in England,
the first to commence immediately after a positive decision on
funding and the second to follow soon after. However, given the
readiness of the North West Region and the active support for
consumer transport activity to be provided through the network
it has been agreed to further accelerate the roll-out of the Sustainable
Energy Network in the North West Region.
The Trust has agreed to provide the Committee information
on their emissions calculations directly.
4. We recommend that additional Government funding
is made available to the Energy Saving Trust specifically to tackle
greenhouse gas emissions from personal transport. We recommend
that the Department for Transport (DfT) recognise its responsibility
to ensure that the EST has appropriate funding to pursue its transport
emissions reduction programme. The DfT should now confirm what
steps it will take to tackle this problem. (Paragraph 23)
The Department for Transport has provided £225,000
of funding to the Energy Saving Trust in the 2007-08 budget to
provide consumers with transport advice and information about
the DfT's Act on CO2 communications campaign through
the Energy Saving Trust Advice Centres.
EST will report to the DfT on the outcomes of this
initial work. This will help inform the EST's business planning
process for 2008-09, what funding will be available in the future
for personal advice on transport, and how EST contributes to the
department's activities aimed at encouraging lower CO2
emissions from personal transport.
EST's work with DfT in this area complements the
Government's wider programme to promote changes towards more sustainable
patterns of travel behaviour. This includes using a range of measures
collectively known as Smarter Choices, such as workplace, school
and personalised travel planning.
Pledge schemes
5. Pledge schemes clearly have a role to play
in raising awareness about climate change and what individuals
can do to address this problem. However, there is a plethora of
such schemes with a multiplicity of messages. This degree of multiplicity
may result in confusion, particularly as schemes are often couched
in different terms—some to save tonnes of carbon dioxide,
others to reduce your carbon footprint, and others to 'save your
20%'. We are also concerned by the lack of appropriate monitoring
of these pledge schemes. Whilst there is some evidence that information
and awareness translates into action, it is difficult to be sure
how far this impact goes. We recommend that Defra invite the promoters
of pledge schemes to attend a seminar designed to address these
problems and improve the quality, effectiveness, objectivity and
performance of such schemes. Monitoring of impacts must also be
co-ordinated. (Paragraph 31)
The Government agrees that coordination
of climate change communications is vital to provide the public
with much greater clarity through consistency (see response to
recommendation 1, above). As part of an attempt to develop greater
consistency in such engagement activities, we have, for example,
developed a standardised set of data and calculations showing
the CO2 emissions from everyday actions. This is used
in the Act on CO2 calculator and is being made freely
available to organisations wishing to encourage behaviour change
in this area. A wide range of organisations are already making
use of this opportunity.
We also recognise that monitoring
and evaluation of engagement activities is essential, although
challenging: there is, for example, ongoing work being carried
out to assess the impact of initiatives such as the Act on CO2
campaign, the Climate Challenge Fund and the Energy Saving Trust's
activities, and to share lessons learnt.
Government accepts the recommendation
and will seek to host a seminar to encourage the promoters of
pledge schemes, specifically with the objective of encouraging
"improvements in quality, effectiveness, objectivity and
performance".
The role of Local Government
6. Although there is a lot of ad hoc activity,
there is no concerted central Government strategy to help local
authorities to develop local greenhouse gas reduction programmes.
Furthermore, it appears to us that community and local government
initiatives are often taking place in spite of, rather than because
of, Government activity. The Government must take visible steps
to remove barriers to encourage local authorities to be more proactive
in this area. It should publish before the end of 2007 its proposals
to achieve this objective. (Paragraph 40)
7. Funding and activity clearly needs to be coordinated
at a regional level between local authorities, Regional Development
Agencies, and the Energy Saving Trust's Energy Efficiency Advice
Centres and Sustainable Energy Networks, amongst others, to ensure
that everyone has regional access to credible and independent
advice, whilst avoiding unnecessary duplication of effort. The
Government must make clear in its response how it proposes to
do this. (Paragraph 40)
Government policy to support and
incentivise increased local authority action on climate change
is set out in the 2006 UK Climate Change Programme and the 2006
Local Government White Paper.
Since publication a new national
indicator set has been developed, as part of the Comprehensive
Spending Review 2007, that reflects the Government's national
priorities.
For the first time, there will
be performance indicators on climate change mitigation which will
send a clear message to local councils about where we expect them
to focus their carbon reduction efforts—in their own operations
and buildings, through the delivery of their services, and as
leaders of their communities. These indicators are designed to
incentivise more authorities to reach the levels of the best.
Performance against each of the 198 indicators will be reported
for every Local Strategic Partnership in a unitary authority or
county council (where it is a two tier area). The Government has
also recently published the 'Energy Measures Report: Addressing
Climate Change and Fuel Poverty - energy measures information
for Local Government'. The report sets out the steps which local
authorities can take to improve energy efficiency, increase the
levels of microgeneration and other low carbon technologies, cut
greenhouse gas emissions and reduce the number of households living
in fuel poverty. It does this by focusing on key local authority
activities such as community leadership, planning, housing, transport
and the powers which local authorities already have at their disposal.
It also seeks to pull together
existing sources of help and advice to local authorities on climate
change and fuel poverty, such as EST's practical help service,
into one place. The guidance will assist Local Authorities to
perform well against the new performance indicators on climate
change.
Additionally in 'Planning for a
Sustainable Future' the Government committed that it would set
out clearly in the Planning Bill, the role of local planning authorities
on energy efficiency and climate change.
Future funding in this area will
need to be considered alongside other priorities following Defra's
CSR settlement later this year.
Household energy efficiency
New build—the Code for Sustainable Homes
8. The Government must set out a clear timeline
delineating the proportion of all new housing stock which will
be built as 'zero carbon' homes on a year by year basis. We further
recommend that the 2016 Zero Carbon Homes Taskforce incorporates
within its terms of reference the intention to report on steps
to be taken to achieve 'zero carbon' homes as soon as possible.
(Paragraph 52)
Following a consultation exercise during the first
half of the year, the Government published alongside the Housing
Green Paper in July, a policy statement 'Building a Greener Future'[7]
which set out a clear timetable for zero carbon homes. The timetable
involves three steps: moving first, in 2010 to a 25 per cent improvement
in the energy/carbon performance standards set in Building Regulations
(Code for Sustainable Homes level 3); second to a 44 per cent
improvement in 2013 (level 4); and then zero carbon in 2016 (level
6). These steps would be achieved through changes to the Building
Regulations.
The policy statement also set out the Government's
definition of zero carbon.
The Government believes that a phased approach in
this way will be more effective than specifying that a proportion
of new homes should be zero carbon on a year by year basis. This
is to allow the industry to plan for the change, test approaches,
and for the supply chain to be geared up to deliver the new products
needed to achieve the new standards. The consultation exercise
showed broad support for this timetable.
The Government has decided that new homes funded
through the Housing Corporation should be built to Code Level
3 from April 2008. English Partnerships are currently running
a carbon challenge for developers to bring forward developments
meeting Code levels 5 and 6. An announcement on the successful
developer for the first site will be made by the end of the year.
The terms of reference for the zero carbon homes
task force already include looking at the barriers to achieving
zero carbon homes and the measures which need to be put in place
to deal with them. The task force is considering the implementation
plan. The Government also expects that the Callcutt review into
housebuilding delivery (to report shortly) will comment on the
programme for zero carbon homes. It will be for the task force
to consider what material it will want to publish, but the Government
expects that it will issue reports on progress towards zero carbon
homes as the programme unfolds.
9. The Government must not only require all new
houses to be built to a 'zero carbon' standard well before 2016,
but must ensure that existing regulations are rigorously enforced.
(Paragraph 53)
The Government consulted fully on the proposed timetable
confirmed in 'Building a Greener Future' and 39% of respondents
believed that the 2016 timetable for zero carbon homes is achievable
whilst recognising the challenges involved. Only 16% said it was
not stringent enough. Based on consultation responses and discussions
with the housebuilding industry, we believe that the timetable
is already sufficiently ambitious.
The Government agrees that there needs to be effective
enforcement of Building Regulations. Enforcement of Building Regulations
is the responsibility of local authority building control services.
When Part L of the building regulations (conservation of fuel
and power) were changed in 2006 the Government made a number of
changes to reinforce Local Authorities' ability to enforce the
requirements (for example, introducing post-construction testing)
and also undertook the most comprehensive communication and training
programme ever carried out for a change to the building regulations.
A review will be undertaken in 2008 which will look at the success
of implementation of Part L and consider whether further action
is necessary.
Existing housing stock
10. Where energy efficiency measures in existing
homes are simply impractical or too expensive, an alternative
approach is to include the incorporation of renewable electricity
and/or heat technologies. This could either be within individual
dwellings (e.g. solar water heating) or to supply groups of properties
or a community (e.g. solar photovoltaic and wind generation; combined
heat and power). The German programme to refurbish all pre-1978
housing stock such that they attain contemporary energy standards
has much to commend it. The Government should evaluate the application
of such a programme to UK circumstances, with particular emphasis
on instances where older properties are substantially improved
or extended. Planning permission should not be granted where the
proposed modifications will increase the carbon footprint of the
building. (Paragraph 59)
We agree with the Committee that if we are to continue
to improve the carbon footprint of UK households as a means of
helping us achieve our overarching carbon reduction ambitions,
we need to look to support the uptake of all cost effective energy
efficiency and microgeneration measures that can help maximise
that carbon saving potential.
The Government has in place a wide range of mutually
reinforcing policies and programmes which are designed to promote
the uptake of low carbon measures, including through the Building
Regulations, which set energy efficiency standards at component
level for the replacement of windows and doors, boilers and hot
water systems, and key programmes such as the Energy Efficiency
Commitment (EEC), Warm Front and Decent Homes. Whilst we have
made some good progress—EEC has, for example, delivered
substantial carbon savings and supported improvements in millions
of homes—we recognise there is still some way to go. Looking
over the whole of the existing housing stock, Standard Assessment
Procedure (SAP) data shows us that action to improve the energy
efficiency of buildings has over the years had an impact, with
average SAP ratings increasing for all property age bands between
1996 and 2005, although more generally the least efficient and
older housing stock is improving less than the more efficient
stock.
In order to make further progress, 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. We are
developing the next stage of the EEC (now called the Carbon Emissions
Reduction Target) to run from 2008-2011 and are aiming to put
the relevant legislation to Parliament shortly. We have made effective
use of the Climate Change and Sustainable Energy Act to allow
us to amend the primary legislation so that microgeneration and
behavioural measures can be included for the first time. This
means that CERT will support householders in understanding and
addressing the whole carbon footprint of their home. It will also
allow energy suppliers the opportunity of using a broader range
of tools in providing help and support to householders and for
working in conjunction with local authorities, retailers and other
stakeholders. As part of this, we intend to introduce creative
and significant support for innovation, offering space for energy
suppliers to explore and experiment with totally new routes for
carbon abatement in the household sector, helping the UK to prepare
for the challenges ahead, including getting carbon saving measures
into hard to treat homes such as those with solid walls. We intend
to support energy suppliers who wish to focus some of their work
with low-income customers on those who are especially vulnerable
or at risk of fuel poverty in hard to treat homes and are unlikely
to have benefited from previous supplier obligations. We intend
to introduce all these new routes while continuing to build on
the success of the existing framework in delivering cost-effective
carbon abatement and wider social benefits. The three-year programme
is expected to deliver double the annual carbon savings of EEC2,
to generate about twice as much activity by energy suppliers and
will mean that about twice as much resource is directed at low-income
customers.
We are committed to an obligation on suppliers out
to 2020, at least as ambitious as the Carbon Emissions Reduction
Target and are now working to establish an evidence base on which
to set framework decisions. It is clear that as the most cost-effective
opportunities to improve energy efficiency of existing homes are
taken up, realising savings will become increasingly difficult
to achieve. We will need consumers to demand and pay for low carbon
measures if we are to continue to deliver carbon savings from
households equitably. We intend to issue a clear sense of direction
on the Obligation by 2008, looking to learn from international
evidence and best practice as we do, including from the German
retrofit programme.
We are also working to maximise the impact of our
policies on the ground and through our £6.3m Community Energy
Efficiency trial, have provided 48 projects grant funding to provide
local communities a holistic package of energy efficiency support.
The aim is to overcome barriers to the take up of energy efficiency
such as hassle factor and lack of information through innovative
means which facilitate the joined-up delivery of assistance and
measures through the Energy Efficiency Commitment (and subsequently
Carbon Emmissions Reductions Target) and Warm Front.
In total, policies 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 around £1.5 billion a year.
We cannot, at this stage, accept the Committee's
recommendations on consequential improvement. Having previously
considered this issue, the Government decided that it was not
in a position to judge whether the potential benefits of introducing
this requirement outweighed the possible social consequences and
the difficulty of enforcing such measures, and that it could not
therefore proceed with such a proposal at this time. Any existing
home that is undergoing extension or major refurbishment must
already: comply with increasingly stringent statutory minimum
energy efficiency requirements set out in the Building Regulations;
not result in a worsening of the overall energy efficiency of
the building concerned; and, if 25% or more of the surface area
of any thermal element (e.g. a wall or the roof) is being renovated,
require the entire element usually to be improved (the 25% limit
is intended to exclude minor repairs but to ensure that any significant
upgrading incorporates energy efficient construction). The proposed
review by the European Commission of the Energy Performance of
Buildings Directive in 2009, including of the application of its
existing requirement that, where an existing non-domestic building
over 1,000m2 was being extended, certain consequential
improvements to existing structure should be made to offset the
increased carbon footprint of the building, will present an opportunity
to revisit this issue, taking into account the Committee's views.
11. We recommend that the Government provide a
stamp duty rebate to homepurchasers who improve the energy performance
of their property within one year of purchase. (Paragraph 65)
The Government continues to consider all avenues
for improving household energy efficiency and to overcome some
of the key barriers to the uptake of energy efficiency measures
such as lack of information and access to up-front capital as
well as the hassle factor. However, there are significant administrative
hurdles to using stamp duty land tax as a lever. If such a broad
rebate were introduced wherever a property included energy efficiency
measures, this would imply quite considerable additional resources
to police the allowance.
Equally, a stamp duty land tax (SDLT) rebate to home
purchasers who improve the energy performance of their property
would not represent value for money, since it would fund activity
which may have happened anyway in response to other Government
initiatives to promote household energy efficiency, including,
as identified by the Committee, Energy Performance Certificates.
It would seem sensible first to assess the impact of this measure
on the housing market, once fully rolled out. Moreover, proposals
for the Carbon Emissions Reduction Target (2008-2011) will see
supplier led energy efficiency activity driven at around twice
the level of the current Energy Efficiency Commitment (2005-08).
The SDLT exemption for new zero carbon homes is a
more cost effective way of improving the energy efficiency of
homes. This measure will help kick-start the market for new highly
efficient technologies in homes, both for the fabric of the building
and in the use of microgeneration, and sets a gold standard for
green homes. The tax relief is designed to encourage innovation
in advance of the 2016 target for mandating a zero carbon standard
for all new homes. The exemption applies from 1 October 2007 and
is time-limited for five years to 30 September 2012. The exemption
applies when the home is first sold; homes costing less than £500,000
will pay no SDLT whilst homes over £500,000 will have their
SDLT reduced by £15,000.
Tenanted properties
12. Meaningful information regarding the thermal
properties of these buildings, as well as the energy ratings of
heating systems and appliances, must be made available to incoming
tenants. Energy Performance Certificates for rented properties
should be introduced as soon as possible, ideally before 2009.
(Paragraph 69)
The Energy Performance of Buildings (Certificates
and Inspections) (England and Wales) 2007 set the timetable for
the introduction of Energy Performance Certificates (EPCs) over
the next year. EPCs on marketed sales are being introduced in
phases from 1 August 2007. During 2008, EPCs on construction,
sale and rentals of all buildings (domestic and commercial) will
be introduced, in accordance with the Energy Performance of Buildings
Directive. This includes domestic rentals (both social and private).
From 1 October 2008, landlords will be required to make an EPC
available to prospective tenants, and give the EPC to the final
tenant.
EPCs 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 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.
Energy Saving Trust and CLG research suggests that,
in the early stages of rolling out EPCs, 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.
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[8].
The implementation of EPCs 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 EPCs because there is no legislative
requirement for building owners to act on the advice given in
them.
Communications work is being carried out in conjunction
with the Energy Saving Trust, who will act as the main point of
further information for consumers on EPCs and advice on making
energy efficiency improvements and adopting more energy efficient
behaviour. We are also working closely with private landlords
and local authorities/Registered Social Landlords, including a
pilot of EPC production for the social sector during summer 2007.
Over 100 social landlords took part, and the results will be used
to inform guidance for this sector.
Product standards
13. We appreciate that "the end of standby"
cannot be achieved unilaterally, but the Government must make
every effort to drive forward improved product standards and eliminate
the appalling waste of energy caused by leaving equipment on standby.
It must make clear the efforts being made in international negotiations
to achieve the "end of standby", and provide an indicative
timetable detailing when it anticipates agreement is likely to
be reached. As an interim measure the Government should initiate
voluntary agreements with manufacturers on improving product standards.
As a bare minimum they should include the energy labelling of
consumer electronics—as is already in existence for "white
goods" such as refrigerators—within the next twelve
months. (Paragraph 73)
The Government remains fully committed to raising
product standards and aiming to limit stand-by power consumption.
In the recent Energy Review Report—The Energy Challenge,
the Government confirmed that it will continue to press at international
level for full implementation of the International Energy Agency's
1 Watt initiative to reduce stand-by power consumption which aims
to limit stand-by for the majority of appliances to 1 watt by
2010.
However, the rapid expansion of ownership of consumer
electronic products does mean that the amount of domestic electricity
consumed by standby is increasing in real terms. At the same time,
some gains in product efficiency, such as external power supplies
(e.g. mobile phone chargers now generally consume less that 1
w when in stand-by) means that this growth is less rapid than
may otherwise have occurred.
Under the framework directive on the Eco-Design of
Energy-Using Products (EuP), proposals are currently being developed
which will allow standards to be set for a wide range of electrical
and electronic products. If agreed, a recent proposal by the Commission
under EuP would see stand-by power restricted to 2 watts for the
large majority of energy using products within a year of implementation
- with many restricted to 1 watt - and within 3 years of implementation
all products within the scope of the proposal would be required
to achieve the 1 watt standard. The UK intends to support this
proposal when it comes forward for negotiation.
The Retailers' Initiative, announced in Budget 2006,
is also a key element of our products programme. The Government
is working with major retailers and the Energy Saving Trust to
encourage retailers to take voluntary action to improve the energy
efficiency of the goods they procure and sell. Consumer electronics,
including the power they consume in stand-by, are the first products
being considered. A meeting between Government and the major consumer
electronics retailers to consider how this can best be moved forward
is scheduled for November.
Under EU Single Market rules the UK cannot by itself
require any freely traded product to carry an energy efficiency
label. Such action would need to be taken at EU level. We are
therefore continuing to press the European Commission to expand
its current mandatory energy labelling scheme to cover a wider
range of products including consumer electronics. However, the
UK has already started taking voluntary action in this area via
the Energy Saving Trust's Energy Saving Recommended logo which
identifies the most energy efficient products available. This
already includes energy efficient Integrated Digital Televisions,
including their stand-by power consumption and is in the process
of being expanded to include ICT equipment.
14. We recommend that the Government give serious
consideration to taxing energy inefficient consumer electronics
and lighting in order to reflect the wider environmental impact
of choosing and owning poorer performing products. Revenue raised
could then be used to offset financial incentives established
to encourage environmentally beneficial behaviour. Any tax increase
must, however, be combined with the provision of better information
on the availability, environmental and cost benefits of energy
efficient alternatives. (Paragraph 81)
Whilst the Government recognises a potential role
for the use of fiscal instruments in encouraging consumers to
change their behaviour, there are a number of factors which must
be taken into consideration to ensure that the most cost-effective
and best targeted measure is chosen including the distributional
impact of such a measure, as well as the cost to both business
and Government of administration and collection. To take account
of these considerations, the Government has introduced an innovative
range of measures since 1997 to encourage greater energy efficiency
in products and, more widely, behaviour of households. For instance,
voluntary agreements are effective instruments and the Government
announced on 27 September 2007 that major retailers, with the
support of manufacturers and energy companies, have agreed on
an ambition to phase out inefficient incandescent light bulbs
by 2011.
Acknowledging the potential role of a fiscal measure
in encouraging consumers to purchase more energy efficient alternatives,
the Chancellor and the French Finance Minister have written to
the relevant European Commissioners to press for the introduction
of a reduced rate of VAT for the most energy-efficient goods,
building on the letter sent at Budget 2007 by then Chancellor
Gordon Brown. At the same time the Chancellor and the Secretaries
of State for BERR and Defra also wrote to Member States and the
Commission, calling on the EU to take more urgent action to improve
energy efficiency of consumer goods.
We would agree that information is critical to the
proper functioning of the market. We are already working both
within the UK and the EU to expand the range of products for which
reliable energy efficiency information is provided. For example
the Energy Saving Trust has recently expanded its Energy Saving
Recommended (ESR) scheme and has uplifted its eligibility criteria
to identify and endorse the most efficient consumer electronics
and lighting products. The EST also publishes a comprehensive
range of consumer advice and information on energy efficient products.
We have been actively engaging with the European Commission as
they undertake their review of the EU Energy Labelling Scheme
which could, if agreed, expand the number of products for which
mandatory energy labelling information is required. We expect
to see proposals from the Commission early in 2008. More fundamentally,
the Government, in the Energy White Paper, announced that it would
publish its analysis, targets and indicative standards for energy
efficient products, setting out its ambition for improving the
energy efficiency of the most important products and informing
such things as EU mandatory eco-design requirements and Government
procurement standards. We have consulted on product standards
for consumer electronics and will be publishing our response to
the consultation shortly. We hope to publish consultations on
other sectors before Christmas.
Smart metering, information displays and better
billing
15a. We are disappointed by the recent provision
in the Energy White Paper to provide householders with real-time
displays on request from 2008. Real-time displays are not smart
meters. This is a wasted opportunity and displays a sorry lack
of ambition. (Paragraph 89)
In the Energy White Paper, the Government set out
its expectation that, within the next ten years, all gas and electricity
customers would be provided with smart meters. The Government
is using its current consultation on metering and billing, as
well as additional work within Government and by the industry,
to obtain further information about the costs and benefits of
smart metering and the appropriate mechanisms for providing them
to customers. It will set out its views on next steps following
the consultation.
However, initial consultation with industry suggests
that it will be approximately six years before the majority of
households receive a smart meter and another four before a national
roll-out is complete.
Research suggests that a visual reminder of energy
consumption is an effective way of encouraging people to reduce
energy wastage and this is why the Government set out its display
device policies in the Energy White Paper. This will ensure that
customers are provided, at the earliest possible point in time,
with real-time information that will help them to reduce their
energy use. It is also consistent with the Government's commitment
in the Climate Change Programme to seek a 0.2MtC saving from better
billing and metering by 2010, and with the requirement in the
Energy Services Directive to provide consumers with actual time
of use information from May 2008.
Although the proposed requirement is for a display
that will provide real-time information about consumption and
cost, most displays can, for example, show cumulative data in
graph form and compare electricity use between time periods, to
highlight if electricity is being saved or wasted—and innovation,
supported by expertise in design and behaviour change, continues.
Suppliers that provide displays that exceed the minimum requirement
may be able to claim CERT (Carbon Emission Reduction Target) credits.
More work is now needed on the potential for displays
to affect gas consumption.
The Government's consultation on metering and billing
provides an opportunity for consultees to advise Government on
any implications that the display policy may have for the Government's
expectation that all customers will be provided with smart meters
within ten years.
15b. At the very least, all displays must be 'future-proofed'
to facilitate upgrading to two-way communications between meter,
consumer and supplier, and to provide time-of-day pricing. (Paragraph
89)
The Government proposes to give gas and electricity
suppliers as much flexibility as possible in determining which
device they provide. It is, therefore, for suppliers, subject
to available technology, to decide what functionality they wish
to incorporate in the device.
Full two-way communications between suppliers and
customers, including the provision of services such as time-of-day
pricing, require smart technology. The Government understands
that real-time display technology is technically capable of being
developed to enable the devices to communicate with a smart meter
and that the use of open protocols for data communication could
allow displays to be "future proofed" to do this.
15c. As an interim measure, better billing must
be in place within the next 12 months. This must incorporate not
only energy consumption in kWh, but how this relates to cost,
carbon dioxide emissions, and with individual historical usage
to help consumers make informed decisions about energy use reduction
and efficiency savings. (Paragraph 89)
Electricity customers are already provided with information
about carbon dioxide emissions under the Electricity (Fuel Mix
Disclosure) Regulations 2005. The Government shares the view that
the provision of additional information on bills can promote energy-saving
by customers. It therefore proposes to require suppliers to provide
historic information, preferably in graphical form, that compares
energy usage in one billing period with the same period in the
previous year on domestic customers' energy bills or statements
or, for those customers with internet-based contracts, electronically.
The Department for Business, Enterprise and Regulatory Reform
is currently consulting on this proposal, with a view to its being
implemented in 2008.
The Government notes the Committee's recommendation
that bills should include information on how energy consumption
in kWh, cost and carbon dioxide emissions relate to each other.
However, following consultation prior to the publication of the
Energy White Paper, the Government does not consider that, overall,
it would currently be useful or cost-effective to require such
information to be provided on bills.
The Energy Efficiency Commitment (EEC)
16. We are concerned by the apparent poverty of
Government ambition for the Energy Efficiency Commitment (EEC;
now the Carbon Emissions Reduction Target, or CERT), which compares
poorly with the ambition of the emission reduction targets outlined
in the draft Climate Change Bill. The existing targets are so
undemanding that suppliers had already met 93% of the target for
EEC2 (2005-08) by the end of the second year. Given that the Energy
Efficiency Commitment is not even funded from the Government's
own budget, this demonstrates a woeful lack of ambition. (Paragraph
101)
In its consultation proposals for the Carbon Emissions
Reduction Target (CERT) 2008-11, issued in summer 2007, the Government
sought to set the overall target at as challenging level as possible.
As the Committee noted, the level of activity proposed for CERT
will broadly double that which energy suppliers must deliver under
EEC2 and is expected to deliver around twice the level of carbon
savings.
The target was proposed following detailed analysis,
set out in an illustrative mix of possible measures that suppliers
might utilise to meet their targets. This was constructed to be
as ambitious as possible and generally the capacity for the most
cost-effective measures was understood to be close to the maximum
number that could feasibly be installed, in terms of supply and
installation capacity, in the CERT period.
While maximising the carbon abatement of CERT, the
Government's proposals took account of the need to maintain equity
for low-income consumers, including those likely to be in fuel
poverty. It was proposed that suppliers should be required to
direct at least 40% of the carbon savings of the CERT to a priority
group of consumers in receipt of certain income or disability
benefits or tax/pension credits. It should be noted, however that
suppliers' costs of promoting measures in the priority group are
higher than in the non-priority group.
Recognising that the suppliers' costs of achieving
their CERT obligations are passed on to consumers through their
bills, the Government sought to ensure that costs to consumers
are kept at a reasonable level.
The scale of the target proposed by the Government
was therefore set at the most challenging level possible, while
maintaining the cost-effectiveness of the EEC mechanism and taking
account of wider social considerations.
17. We are pleased to see that CERT (EEC3) makes
provision for the inclusion of microgeneration technology. However,
the proposed size of CERT means that the amount of microgeneration
it supports is likely to be small because suppliers expect to
focus on cheaper ways of saving carbon dioxide. Therefore, once
the existing programme of microgeneration grants has expired,
the Government must not rely on this support mechanism alone until
the market is sufficiently mature to stand alone without financial
support. If the Government does go ahead with CERT as planned,
and intends to use it as the sole support mechanism for microgeneration,
then the level of CERT must be considerably bigger. (Paragraph
102)
The inclusion of microgeneration technologies will
allow a more holistic approach to carbon abatement in the household
sector and will provide suppliers with more flexibility in measures
they can employ to meet their CERT obligations. The Government
is keen to encourage innovation through CERT and has proposed
a new route for demonstration activity to support trials of innovative
approaches. It also proposes to continue the support given to
market transformation under the current EEC. Under the market
transformation incentive, as proposed, Ofgem would attribute an
additional 50% carbon savings to measures that were not qualifying
actions under EEC 2002-05 and which would achieve a significantly
greater carbon saving than any similar qualifying action. Since
microgeneration technologies have not been included in EEC to
date, they would potentially qualify for this incentive.
The Government's strategy for developing microgeneration
technologies is wider than CERT and is described in response to
the Committee's recommendation 21.
18. The Government must match ministerial rhetoric
with tangible regulatory reforms that change incentives on suppliers.
We commend the move to an energy services model beyond 2011, but
the Government must make clear in its response what its intentions
are to inspire consumer confidence in this model. Given the volume
of evidence we received discussing the 'credibility barrier' associated
with the Energy Efficiency Commitment (EEC), it must be made crystal
clear to consumers that this is something that they are paying
for through their bills. We recommend that householders' contributions
to the EEC are listed separately as part of the Government's move
towards better billing. (Paragraph 111)
Government's commitment in the 2006 Energy Policy
Review to some form of obligation on household energy suppliers
out to at least 2020, and at a scale equivalent to the Carbon
Emission Reduction Target (CERT) 2008-11, has given the household
sector unprecedented long term certainty on the ambition and scope
of the household policy framework. It is clear that if we are
to continue to deliver cost effective carbon savings from households,
we need to bring about a change in consumers' approach to energy
use. Suppliers and their customers need to have a shared incentive
to reduce domestic emissions, and to work in partnership to achieve
this.
Encouraging suppliers and consumers to make this
change will be challenging, and cannot be made in one step. Creating
this shared incentive will require an innovative policy, which
changes the way suppliers engage with the end consumer. Our vision
is to see this carbon reduction obligation as one that works with
rather than against the grain of the supply businesses. 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.
Market transformation will also require changes to
other aspects of energy markets. Government's 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. Equally, our commitment to roll out Energy Performance
Certificates and Real Time electricity displays should allow consumers
a better understanding of their energy use. Energy services relationships
are likely to involve longer-term contracts between suppliers
and customers. Although not the sole barriers, such contracts
have been further facilitated by Ofgem's recent removal of the
"28 Day Rule", making it possible for suppliers to offer
more innovative contracts to customers, whereby the supplier makes
investments in the customer's home in return for a fixed term
contract, for example.
Defra issued a Call for Evidence earlier this year
on the post 2011 supplier obligation, to enable interested parties
to offer their views at an early stage in the policy development
process. Further detail on the type of business models suppliers
could offer consumers to incentivise uptake of energy service
approaches were an important part of this. We are now looking
to commission work to precisely look at consumer responsiveness
to a range of supplier offerings as well as the role of trusted
intermediaries such as local authorities or NGOs. The Government
intends to reach a clear conclusion on the direction for the post-2011
supplier obligation in 2008.
The Government does not consider that making it clear
to customers that they are paying for EEC or CERT through their
bills would necessarily provide a better environment to promote
an energy services model. While the draft Impact Assessment published
with the CERT consultation proposals estimates the overall cost
to all suppliers of meeting their obligations, the estimated cost
at household level is an average: individual suppliers will pass
on costs in different ways. It is not clear that a supplier would
be able to include anything but a notional cost on bills. Furthermore
it may not be helpful to consumers if they interpret the bill
information as an opportunity to receive direct assistance from
the supplier, since a supplier's costs may have been directed
to promoting measures through other routes, for example retail
schemes. For the purposes of EEC/CERT, the lack of information
on customers' bills does not appear to have been a barrier to
suppliers achieving their targets.
The Government is, however, considering more widely
the potential for improving the information on customers bills,
including in relation to broader environmental initiatives, as
well as the potential to better explain to the public the different
instruments being used to tackle climate change and energy efficiency.
Green tariffs
19. We are concerned that the provision of 'green
tariffs' by energy suppliers may not be as transparent or consistent
as it could be. This could cause confusion and, at worst, result
in a loss of consumer confidence in these products. The use of
green tariffs could be an important step forward in the UK emissions
reduction strategy, especially in those households where it is
difficult to reduce emissions through energy efficiency measures.
It is vital that Ofgem and bodies like energywatch investigate
the plethora of tariffs which claim to be green and develop an
independent assessment of those proposed in order to boost consumer
understanding and confidence in reducing emissions via this approach.
We look forward to the results of Ofgem's consultation on Developing
Guidelines on Green Supply. (Paragraph 112)
We agree with this recommendation. The Government
is committed to working with Energy Saving Trust to ensure consumers
have access to impartial information and advice on tackling climate
change including options on what individual householders can do;
and working with Ofgem and energywatch to ensure all consumers,
including business customers, have independent, accessible, transparent
and user friendly information on the "green electricity"
tariffs. There were Government representatives at the consultation
workshops which were organised by Ofgem and the Energy Saving
Trust. We look forward to revised guidelines on green supply from
Ofgem as the first stage in this process.
Microgeneration
The Low Carbon Buildings Programme
20. We are concerned that householders will lose
interest in the Low Carbon Buildings Programme, despite the additional
£6m announced in Budget 2007. We remain to be convinced that
the LCBP is the most appropriate support system. The Government
should provide details of its intentions regarding the future
of the programme once the current phase ends. We further recommend
that the Government consider proposals for longer term alternatives
to the current system, such as providing targeted grants for people
on lower incomes and the use of tax incentives. (Paragraph 125)
Government published its Microgeneration Strategy,
'Power from the People', in March 2006. Our objective is to create
conditions under which microgeneration becomes a realistic alternative
or supplementary energy generation source for householders, communities
and small businesses. The Low Carbon Buildings Programme (LCBP)
is just one of many measures aimed at tackling widespread take-up
of microgeneration.
The LCBP was designed as a "pump-priming"
scheme, following earlier successful Clear Skies and Major (solar)
PhotoVoltaic Demonstration grant programmes, to bring about a
significant increase in microgeneration installations in households
and other buildings. The microgeneration technologies that the
LCBP supports are proven technically, but tend to have relatively
high upfront costs, as compared with fossil-fuel based alternatives.
The LCBP's £86m of support is divided into two phases, with
the overarching aim of helping to build a sustainable microgeneration
industry that can thrive without grants.
Part of a long-term, post-grant, framework will include
ensuring that microgenerators can receive a fair price for any
surplus electricity exported to the Grid. Government asked the
regulator, Ofgem, to look at this in the last Budget and Ofgem
is expected to report on its findings later this financial year.
All six major electricity suppliers have committed to publishing
easily accessible export tariffs; we are aware that some already
offer such a tariff, as do some of the smaller companies.
We have already taken actions to make it easier for
householders to claim the financial benefits available to them
under the Renewables Obligation for all of the renewable electricity
they generate. The use of agents and aggregation of outputs across
several households is now permitted, and Ofgem has streamlined
and simplified the procedures for householders who prefer to handle
the administration themselves. We also want to make sure that
microgenerators realise the full benefit of the additional income.
So we have introduced changes which mean households are exempt
from tax on any payments received under the Renewables Obligation
or for their exported electricity. These changes are in addition
to the lower 5% VAT rate which already applies to the purchase
of most microgeneration technology.
We are also making the process of installing microgeneration
simpler. Government recently launched a robust certification scheme
to build consumer trust in products and installers, and we are
proposing the removal, later this year, of unnecessary controls
in the planning consents regime. Government acknowledges that
there needs to be better information about the wider measures
to support and reward microgeneration. The Energy White Paper
commits us to ensuring that this improved information provides
a comprehensive picture of all the options, costs and benefits.
We are also proposing to allow energy suppliers to
use microgeneration to meet their 1.1MtC reduction target under
the next phase, 2008-11, of the Energy Efficiency Commitment.
In particular, we are proposing changes that would encourage energy
suppliers to look at innovative solutions, including microgeneration,
and to consider providing such technology to customers, particularly
those on lower incomes, at a reduced cost.
In paragraph 123 of its report, the Committee states
"The Committee would be grateful if the Government could
provide precise actual monthly expenditure committed through the
Low Carbon Buildings Programme since its relaunch in May 2007,
including details of previously committed expenditure which will
no longer be spent as a consequence of households 'dropping out'
of the scheme."
| Commitments
| | Expirations/
Withdrawals
| |
| Month | No.
| Values | No.
| Value |
| May-07 | 301 | £320,770
| 45 | £42,009 |
| Jun-07 | 295 | £275,202
| 36 | £23,918 |
| Jul-07 | 242 | £229,979
| 7 | £8,701 |
| Aug-07 | 203 | £166,705
| 1 | £600 |
| Sep-07 | 214 | £183,113
| 7 | £7,000 |
Note: Figures were prepared on 5 October 2007. These numbers will
change subsequently as the expiry date on each application is
passed. For example, some applications made in May have not yet
been completed so these could expire/be withdrawn in November;
in cases where the offer expires, the previously committed funds
are returned for awarding to other applicants.
Feed-in tariffs
21. The current system of Renewable Obligation Certificates
(ROCs) for individual householders is too unwieldy for microgeneration,
and risks losing citizen engagement. We recommend the Government
replace ROCs and export payments with a feed-in tariff with a
single fixed rate per kWh, varying according to the type of generation.
(Paragraph 131)
To set an absolute feed-in tariff
would be a significant intervention in the energy market. It would
run contrary to the Government's established position of facilitating
a highly competitive market with the attendant benefits that brings
for consumers. Feed-in tariffs tend to be set a long way ahead
and cannot respond to market changes. Moreover, they can also
be very costly; any premium would ultimately be passed on to consumers
with the associated impact on fuel poverty.
We will continue to review the support needed for
microgeneration, but Government remains committed to flexible
market-led mechanisms such as the Renewables Obligation, which
is our key mechanism for encouraging large scale renewable generation.
Along with exemption from the climate change levy, the Renewables
Obligation will be worth up to £1b p.a. to the renewables
industry by 2010. We have recently consulted on proposals to 'band'
the Renewables Obligation, which would provide different levels
of support for different renewable electricity generating technologies
with the aim of bringing forward an increase in renewable generation
from a wider range of sources.
All six major electricity suppliers have committed
to publishing easily accessible export tariffs - we are aware
that some already offer such a tariff, as do some of the smaller
companies. Ofgem are currently examining the prices paid to green
homes when they sell electricity back to the grid. In considering
this they will also be looking at how easy it is for green homes
to access this information and determine the value of the excess
electricity that they sell.
Distributed generation—local energy networks
22. There is a distinct lack of national focus
on community level microgeneration with an over-emphasis on individual
households, and we remain seriously concerned that renewable heat
is still the 'poor relation' to renewable electricity, despite
recommendations in our Report into The Role of Bioenergy and the
work of the Biomass Task Force. The Government should initiate
a study on barriers to progress to the widespread development
of community-level Combined Heat and Power, and should look at
financial instruments—including localised financial instruments—to
encourage investment at community level. This should be published
within six months. The Government must then work with the Local
Government Association and Rural Development Agencies to move
this type of agenda forward. As a start, the Government should
lift the limit on the size of private wire networks to encourage
more distributed energy. (Paragraph 139)
The Energy Review Report, published in July 2006,
highlighted the need for more work to investigate the extent to
which decentralised or distributed generation could complement
the centralised system, as well as the specific incentives and
barriers that impact upon it. In light of this, BERR and Ofgem
jointly undertook a Review of Distributed Generation to consider
these issues. The Review considered technologies on a range of
scales from microgeneration to community schemes incorporating
the use of combined heat and power.
The results of the Review were published in a report
alongside the Energy White Paper 2007. The report set out a package
of measures aimed at addressing those barriers specific to distributed
generation which are not being addressed through Government and
Ofgem action elsewhere in the energy market. Notably this included
a commitment to consult on options for more flexible market and
licensing arrangements for distributed low carbon electricity,
to be implemented by the end of 2008. This was in response to
concerns raised in the Distributed Generation (DG) Review Call
for Evidence which suggested that current arrangements were unduly
complex for DG operators, requiring high levels of expertise to
understand and often involving disproportionately high costs.
An industry working group has been established to
advise on the development of options for new arrangements. BERR
and Ofgem will consult later this year. The Working Group is chaired
by Ofgem, with support from BERR. The Group includes representatives
across the range of industry, and is specifically focussing on
developing options for more flexible market and licensing arrangements
for distributed low carbon electricity. As also announced in the
Energy White Paper, the Government is separately conducting further
work into policy options to reduce the carbon impact of heat.
Government recognises that actions to decarbonise
the UK's heat supply will be a key aspect of future UK energy
and carbon policy. Heating accounts for almost half of UK final
energy use, and for 47% of our carbon emissions. In response to
this challenge Government directed the Office of Climate Change
(OCC), a cross-departmental strategy unit, to examine how heat
could contribute to the UK's climate change goals. The scope of
this work includes the potential contribution from community Combined
Heat and Power schemes.
The OCC has been working on the subject since January
and will report their findings to Ministers shortly, including
recommendations on next steps.
We recognise the potential benefits to having a more
decentralised energy system with local energy supply, ranging
from household to community-scale, which could play an important
part in meeting the challenge of climate change.
Personal Carbon Allowances
23. Personal carbon allowances (PCAs) are an interesting
'theoretical exercise', but we remain sceptical about the practicalities
of implementation. There are several substantial issues—not
least regarding the avoidance of 'double-counting' and considerations
of equity associated with such a scheme—which must be resolved
before a system of PCAs could be implemented. As an interim measure,
we recommend that voluntary personal 'indicative carbon budgets'
be considered as a valid alternative to a more formalised system
of Personal Carbon Allowances, thereby allowing individuals to
exercise self-discipline. To this end, we commend the Government's
'Act on CO2' calculator, although note that this translates into
a clear need for a comprehensive review of how people can gain
an understanding of their emission profile, for example by providing
information at the point of sale and the need for better billing,
as discussed earlier. (Paragraph 152)
The Government welcomes the EFRA Committee's views
on personal carbon trading (PCT), which coincides with our study
of PCT as just one of a number of potential long-term options
being explored for making individuals better informed about, and
involved in, tackling climate change. It is important to unlock
the potential for individuals and the household sector to contribute
more to tackling carbon emissions. Citizens need to be empowered,
not lectured; and they need the assurance that their actions are
worthwhile, and will lead to real and identifiable environmental
improvements.
Following the Centre for Sustainable Energy's (CSE)
initial scoping study "A Rough Guide to Individual Carbon
Trading: The ideas, the issues and the next steps", the Government
is conducting a pre-feasibility study designed to show whether
or not PCT is a realistic and workable policy option. A decision
will then be taken on whether or not to devote more time and resources
to this potential policy. The study is addressing high-level questions
relating to the economic value of PCT, equity and distributional
issues, public acceptability, technical feasibility and cost.
It aims to complement the 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
(through their CarbonLimited project).
As the EFRA Committee's report notes there are a
number of substantial issues that must be addressed, and resolved,
before it is viable to consider the detail of how such a scheme
could be implemented. This is why the Government's work programme
focuses on the four highest-level issues described above. This
work will cover key issues identified by the Committee including
equity and double-counting (i.e. the potential overlap of policy
measures and how different instruments interact). The Government
is not currently proposing to develop a voluntary PCT scheme,
as the EFRA Committee recommend, although it does not rule it
out for the future. Instead, as recommended by the scoping study
carried out by CSE in 2006, the Government has decided to address
the high-level questions surrounding PCT to inform consideration
about any next steps. We will also continue to enhance the engagement
of individuals in action to tackle climate change - and "CO2
literacy" - through tools such as the Act on CO2 campaign
and calculator. Indeed, the data and calculations underlying the
calculator are being made available to other organisations, including
a number who are developing carbon accounting systems.
Once Defra's pre-feasibility analysis has been completed,
ministers will take a view on whether to devote more time and
resources to this area. In the meantime, we await the results
of the pre-feasibility analysis, along with the results of RSA's
CarbonLimited project with interest.
Green taxation
24. The Government must do much more work to improve
the credibility of green taxation as part of its overall set of
policies designed to deal with climate change. Green taxes should
be developed to stimulate behavioural change but in such a way
that revenue derived via this route is seen to be being used to
fund further carbon dioxide emission reduction strategies. The
Government should consider, for example, increasing taxation on
poorly performing electronic goods, the revenue from which could
go into a fund from which individuals and community groups could
bid for support for emissions reduction projects. The Government
should encourage uptake of 'green' ISAs—which invest solely
in community-based emissions reduction projects and technologies—by
increasing individuals' tax-free entitlement if they invest in
them. 'Green' taxes must absolutely not be simply a means of revenue
raising in a green wrapper to increase palatability, as this will
ultimately devalue the perception of genuine green taxes. (Paragraph
159)
In its 1997 Statement of Intent
on environmental taxation, the Government committed itself to
use the tax system to support progress towards environmental goals.
It stated that:
- it will explore the scope to use the tax system
to deliver environmental objectives, as one instrument in combination
with others;
- over time, the Government will aim to reform
the tax system to shift the burden of tax from 'goods' (like employment)
to 'bads' (like pollution); and
- to ensure
that action taken to protect the environment is effective and
delivers net benefits, environmental taxation must meet the general
tests of good taxation.
It is important that the most effective instrument
for achieving environmental objectives is used in each circumstance.
In some cases, fiscal measures can be the most effective instrument
(e.g. tackling negative externalities); but in many circumstances,
other measures can be more effective (e.g. where a specific standard
of environmental behaviour is required).
Since 1997 the Government has introduced a number
of environmental tax measures including for housing the Landlords
Energy Saving Allowance, stamp duty rebates for zero carbon new
homes and reduced VAT for a range of professionally-installed
household energy-saving materials including insulation, draught
stripping, hot water and central heating, as well as microgeneration.
But tax is only one instrument and tax measures introduced since
1997 sit within a wider package of innovative measures to combat
climate change and other environmental priorities including new
kinds of policy instruments like trading and tradable regulations.
For example, the EU Emissions Trading Scheme (ETS) is now our
principle carbon-pricing instrument. Nearly 50% of the UK's emissions
are capped and priced through EU ETS. EU ETS sets quantity limits;
and it is much easier to do emissions trading internationally
than tax.
Tax does have a role - particularly
in areas not covered by EU ETS eg. fuel duty prices carbon emissions
from transport. And it can be key in encouraging energy or fuel
efficiency (eg. Climate Change Levy, Vehicle Excise Duty). However,
we should not over emphasise its role. It is also important to
remember that government action on the environment needs to be
the outcome of balanced decision-making, taking into account all
of the government's objectives. Environmental benefits should
not be achieved at the expense of wider objectives such as fuel
poverty or economic stability. These constraints may mean that
compromises have to be made in the design of a policy instrument,
or that the most effective instrument environmentally cannot be
used at all and an alternative is required instead.
The Government has achieved this
balance - as shown by the progress it has made on all environment
priorities whilst maintaining strong economic growth. The key
fact is that greenhouse gas emissions are falling and that the
UK is projected to reach its Kyoto target nearly twice over.
Earmarking environmental tax revenues
for investment in energy saving technology would mean that this
revenue is taken out of the overall Spending Review process and
would not guarantee value for money. Indeed, earmarking environmental
tax revenue in any way could create a significant obstacle to
shifting the burden of tax from 'goods' to 'bads'. Rather, it
is important to look for environmental policy to be supported
by an innovative range of measures that can tackle the environmental
challenges we face - not just relying on one or two instruments
such as spending measures, but also: emissions trading; regulation;
voluntary agreements; information services and fiscal measures.
This approach has been taken by the Government and has enabled
the UK to make significant progress against its environmental
targets whilst also supporting strong economic growth and sound
public finances.
The role of Central Government and the Government
Estate
25. There is an important role for public buildings
and public investment in leading the way by example, but very
little evidence of this taking place. We observe that Parliament
has an important role to play as an exemplar, and that more needs
to be done to improve its environmental performance. However,
we remain unimpressed by the Government's poor record regarding
its own buildings. It is failing to set a good example, and missing
a valuable opportunity to demonstrate the financial and environmental
savings that can be made. The Government must be a 'guiding light'
which individuals can follow, and if the Government is to be an
exemplar for citizens, then Defra should set the example for the
rest of Government. Accordingly, the Secretary of State should
be set binding targets and if these targets are missed for two
consecutive years, the Secretary of State should report to Parliament
the reasons why. The Government should reinforce guidance on energy
performance standards for public buildings and make it easier
for investment to be made in local energy generation/networks.
The UK Government must set an example, showing other developed
and developing nations that implementation of energy efficiency
measures is not detrimental to economic growth. (Paragraph 163)
The Government agrees there is an important role
for the public sector to lead by example in the management of
its buildings and investments. It also accepts that reports by
the Sustainable Development Commission, the National Audit Office
and others highlight the need for improved performance.
Government has committed to introducing the new Carbon
Reduction Commitment (CRC), aimed at large non-energy intensive
organisations in public and private sectors, in 2010. This will
include government departments, their agencies and Non Departmental
Public Bodies that meet the entry threshold of 6000MwH electricity
use a year through 100 kw metering systems (also known as mandatory
half hour meters). By putting itself at the heart of this innovative
scheme, the first in the world for non-energy intensive bodies,
Government is leading the way both domestically and internationally
and is ensuring that government departments, their agencies and
non departmental public bodies, as well as other parts of the
public sector including large local authorities, play a full part
in meeting the UK's commitments to reducing emissions and tackling
climate change.
CRC is a mandatory cap and trade scheme aimed at
large non-energy intensive organisations in the public and private
sectors. The Climate Change Bill will contain the necessary legislative
provisions. There will be an introductory phase, in which Government
will not set the cap, between 2010 and 2012, but from 2013 Government
departments will be included within a sector whose overall energy
related emissions are capped. The size of the cap will be set
by Government on the advice of the Committee on Climate Change,
as provided for in the Climate Change Bill.
Meanwhile the Government is also developing a range
of other policy measures for central government departments that
will help prepare departments for CRC, and, once it is operational,
will help them meet their obligations within it.
In June 2006 Government published revised targets
for sustainable operations on the central government estate, including
the achievement of a carbon neutral office estate by 2012. In
March 2007, plans for achieving a low carbon resource efficient
public sector were set out in the UK Government Sustainable Procurement
Action Plan. It commits each department to increase the level
of procurement professionalism, raising the status and standard
of procurement practice and ensuring rapid progress towards achieving
the sustainable operations targets.
Ministers and Permanent Secretaries are accountable
for the plans, progress and performance of their own departments.
The Cabinet Secretary holds ultimate accountability for the delivery
of the targets, while the Secretary of State for the Environment,
Food and Rural affairs is the lead Minister reporting to the Prime
Minister. A cross departmental board, chaired by the 2nd
Permanent Secretary of the Ministry of Defence, is in place to
support the Cabinet Secretary and Departmental efforts to improve
performance.
Defra is demonstrating its commitment to improving
its environmental performance through the implementation of the
Defra as Sustainability Leader (DaSL) programme. This programme
integrates sustainable development across many areas within the
department including operations and building management. Although
our last Sustainable Development Action Plan was judged 'leading
the pack' by the Sustainable Development Commission, we were only
placed in the middle on actual performance on operations targets.
Defra wants, and needs, to do better than that and has set up
this programme to help it achieve that improvement. For example,
Defra has made sustainable development a priority in the construction
of all new buildings to ensure they meet the Building Research
Establishment Environmental Assessment Methodology (BREEAM) "excellent"
standard. The new Alnwick development in Northumberland uses wind
turbines, photovoltaic (PV) solar electric, PV solar thermal and
biomass heating. Also, use of new technologies such as voltage
and boiler optimisation devices as well as retrofitting of fluorescent
tube lighting is being rolled out at locations on the Defra estate.
A range of measures are in place to support public
body efforts in this area, include the Carbon Trust's Carbon Management
Programme, a revolving loan scheme enabling bigger investments
in energy efficiency ('Salix'), and grants for microgeneration
available from BERR's Low Carbon Buildings Programme. In addition,
the Carbon Trust's Partnership for Renewables venture is supporting
the development of privately-financed renewable energy projects
on public sector land. As we take forward the Environmental Transformation
Fund, we are reviewing the support available to the public sector.
The performance of public bodies will also be driven
by other measures set out in the Energy White Paper. On buildings,
Government has reinforced guidance on energy performance standards.
From January 2009, under Article 7 of the Energy Performance of
Buildings Directive an Energy Performance Certificate must be
produced when buildings are constructed, sold or rented out. These
certificates will provide an energy rating (from A to G) for the
building and will set out what steps can be taken to improve its
energy efficiency. There is also a requirement for 'Energy Certificates'
to be displayed in "buildings with a total useful floor area
over 1,000m2 occupied by public authorities and by
institutions providing public services. These 'Display Energy
Certificates' will be developed from actual in-use energy consumption,
will show to employees and visitors how well buildings are being
used and managed. In addition, Article 5 of the Energy End-use
Efficiency and Energy Services Directive places a duty on the
public sector to fulfil an exemplary role in the context of energy
efficiency. Government will be launching a public consultation
on this article in December.
The Government already reports publicly on performance
via the independent Sustainable Development Commission's annual
review of progress against the targets for Sustainable Operations
on the Government Estate. Furthermore, the Climate Change Bill
will require Government to report annually to Parliament assessing
progress in meeting overarching targets set in the legislation.
While the exact content and format of the Committee's progress
reports are not known at this stage, it is possible that they
may include an assessment of performance in the public sector,
which would necessarily require a response from Government. In
the light of these processes and public reports, we do not consider
that additional reports to Parliament are necessary at this stage.
The Government is also the principal contributor
to an international initiative, REEEP (the Renewable Energy and
Energy Efficiency Partnership), which delivers projects on the
ground that demonstrate the potential for reform of energy policy
and financing frameworks in a sustainable way - providing the
basis for scale up and acceleration of investment in the markets
for energy efficiency and renewable energy to provide both economic
and environmental sustainability. All G7 countries are now REEEP
partners along with many key developing countries and international
agencies. REEEP has implemented over 80 projects globally.
The Government is also setting an example overseas
through its Sustainable Development Dialogues. These are in place
with five of the largest emerging economies—China, Brazil,
India, Mexico and South Africa. They provide a forum to share
information and best practice on a range of sustainable development
issues, promoting solutions which have economic, social and environmental
benefits. One of the themes of the SDD with China, for example,
is sustainable urban development, and we will be working with
the Chinese Government on sustainability in urban regeneration
and low-income housing.
Department for Environment, Food and Rural Affairs
15 November 2007
7 http://www.communities.gov.uk/publications/planningandbuilding/building-a-greener Back
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Regulatory Impact Assessment: Energy Performance of Buildings
Directive Articles 7-10, p29, http://www.communities.gov.uk/publications/planningandbuilding/regulatoryimpactenergyperformanc
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