House of Commons - Environmental Audit Committee

Greening Government - Environmental Audit Committee Contents

Memorandum Submitted by the Association for the Conservation of Energy ACE

INTRODUCTION TO THE VIEWS OF ACE

The Association for the Conservation of Energy is a lobbying, campaigning and policy research organisation, and has worked in the field of energy efficiency since 1981. Our lobbying and campaigning work represents the interests of our membership: major manufacturers and distributors of energy saving equipment in the United Kingdom. Our policy research is funded independently, and is focused on three key themes: policies and programmes to encourage increased energy efficiency; the environmental, social and economic benefits of increased energy efficiency; and organisational roles in the process of implementing energy efficiency policy.

SUMMARY

— Radical and urgent steps are needed to ensure that Government meets its own carbon reduction and energy efficiency targets.

— Current targets are merely set as aims or goals and should be made mandatory.

— Government has failed to introduce new requirements for the procurement of energy efficient public sector buildings pursuant to Article 5 of the Energy Services Directive.

— All targets should be extended to cover Executive Non-Departmental Public Bodies, in addition to Government Departments and Executive Agencies.

— Display Energy Certificates (DECs) should be widened to cover all public buildings and the Department for Communities and Local Government (DCLG) should share this information with the Office for Government Commerce (OGC).

— The public sector must acknowledge its capacity to transform the wider commercial property market.

— Targets must be met through improving the energy efficiency of the Government estate and not through offsetting.

— The public sector must lead by example to demonstrate unequivocally that it is serious about leading the way in the fight against climate change.

The role of the Centre for Excellence in Sustainable Procurement and the Minister for Transformational Government in co-ordinating and driving forward activity across Government.

1. In September 2008 the Community Energy Saving Programme was announced, also with the initials CESP; we find it extraordinary that Government is running two programmes with the same initials as this will inevitably be very confusing.

2. Nevertheless, the Association welcomes the creation of a central body to take on sole responsibility for meeting sustainability targets and agrees that a Cabinet Office Minister should be responsible for ensuring that Government meets its sustainable operations and sustainable procurement targets. This will help to overcome the problem of fragmentation of policy responsibility amongst Government bodies for improving environmental and sustainability performance.

3. However, the Sustainable Operations on Government Estate (SOGE) targets are merely aims or aspirations and unless these targets are made mandatory and a duty placed on the responsible Minister for reaching them, the Association has limited confidence that they will be met.

The Extent to which Government Commitments and Mandated Targets are being Enforced

4. The Sustainable Development Commission (SDC) Annual Report of 2007, Sustainable Development in Government, highlights that individual Government departments are not on track to meet their SOGE targets and nearly two-thirds of departments are not on track to meet their own 12.5% carbon emission reduction target by 2010-11[1]

5. If the Government were on track to meet its target to reduce carbon emissions by 12.5% by 2010, Departments should have reduced emissions by 1% per annum—which would have meant an 8% reduction by 2007. However, the actual reduction achieved across the Government estate was only 4% in total.[2]

6. The energy performance of departments varies widely with 17 out of 21 Government departments not on track to meet their energy efficiency targets and 13 out of 21 Government departments not on track to meet their carbon reduction targets.[3] The Environmental Audit Committee (EAC) themselves has voiced their concern that the "trajectory (for carbon emissions) is going so dramatically in the wrong direction"[4]

The reasons behind the continuing poor progress on reducing carbon emissions from offices

7. ACE believes that the reason for this lack of progress is that currently all targets are merely set as aims or goals and it is not mandatory for targets to be met.

8. The Government should seize the opportunities provided by Article 5 of the Energy End-Use Efficiency and Energy Services Directive to introduce requirements to procure energy efficient public sector buildings. Article 5 of the Directive requires the public sector in member states to fulfil an exemplary role in driving forward energy savings. In particular member states must ensure that energy efficiency improvement measures are taken by the public sector, focusing on cost-effective measures which generate the largest energy savings in the shortest span of time. To do this member states must introduce at least two energy efficient public procurement measures from a list of six eligible measures.

9. Instead of seizing these opportunities the UK Government has deliberately opted to fulfill its obligations under Article 5 merely by implementing requirements to purchase energy efficient equipment and vehicles. It has opted not to introduce new requirements for the procurement of energy efficient public sector buildings, the single biggest energy user. We believe this is a huge missed opportunity to improve on the poor energy performance of public sector buildings. We would urge the Government to revisit the potential identified under Article 5.

10. The Government has itself identified[5] that strong leadership on the energy standards of the buildings it purchases, leases or procures can start to transform the wider commercial property market. This is an extremely important and perceptive statement and recognises that the public sector is always the preferred tenant by any landlord for the simple reason that it always (eventually) pays its bills and never goes bankrupt. Few landlords wish to rule their properties out from consideration by this preferred tenant, and will be prompted to improve their properties in order to encourage such tenants to consider their properties.

11. In the 2004 Energy Efficiency Action Plan, the Government committed themselves to "procure only buildings in the top quartile of energy performance" and to widen this to the rest of the public estate as soon as practicable.[6] This commitment has been restated several times over the last four years—most recently in the 2007 Energy White Paper.

12. ACE promoted a Private Members' Bill in the last Parliamentary session which aimed to give statutory effect to this "top quartile" commitment. The provisions of this Bill are now enacted in the Climate Change Act 2008. Section 86, Report on civil estate, requires Government to report on the progress made in ensuring that buildings that become part of the civil estate fall within the top quartile of energy performance. If a building does not fall within the top quartile of energy performance the report must state the reasons why the building has nevertheless become part of the civil estate.

13. The OGC is responsible for ensuring that buildings are procured in the top quartile and the Association hopes that this commitment will be met and that the EAC will track progress on this initiative. This will not only reduce emissions from public sector buildings but will help transform the wider property market by creating demand for low carbon buildings. Government will be much better able to monitor this commitment as the performance of the building stock is easily known through DECs.

14. Another reason behind poor performance is that energy costs form a very small part of departmental budgets. Facilities managers are far down the hierarchy and have little control over budgets.

15. It is vital that as much information as possible on the energy performance of public buildings is in the public domain. DECs displaying clearly the actual energy usage of buildings will perform this function. The information provided will be examined every year and this will be a great advantage as for the first time we will have an objective method of analysing how wasteful our publicly funded buildings are. We would commend the Scottish executive's example of using DECs for all public buildings including those substantially smaller than 1000m2.

16. There are currently 17,000 public buildings which are required to have a DEC. However the OGC's role is merely to look at buildings in the central Government estate, only around 1,500 buildings. ACE strongly believes that the OGC remit should be widened to cover all public buildings.

17. The use of DECs will also help circumvent the problems the EAC encountered in the past when trying to compare different Government Departments. Now that energy performance is directly related to buildings, comparisons can be made much more easily and provide a truer picture.

18. This too will avoid situations where distorted pictures of performance have been reported, such as last year when Government reported a 4% decrease in carbon emissions which was due to the privatisation of part of the defence agency; if the Ministry of Defence was excluded emissions went up by 22%.[7]

19. The relevant statutory instrument has led to DCLG holding the details of the DEC ratings for all Government buildings but not being able to share this information with any other Government department. This has created the ludicrous situation where, for instance, the OGC is having to gather this same information again from scratch. ACE strongly recommends that DCLG not only shares the information of the DEC ratings with the OGC, but with the rest of the public sector, in order to help spread best practice.

20. ACE believes that public sector sustainability targets should be extended to cover all Executive Non-Departmental Public Bodies. This would mirror the scope of the Common Minimum Standards for the Procurement of Built Environments in the Public Sector, which quite clearly covers Non Departmental Public Bodies as well as Government Departments and Executive Agencies.

21. The Department of Work & Pensions has recently entered into a Private Finance Initiative (PFI) to manage the monitoring of emissions from their offices. They have sought to publicise the results and have reduced energy consumption by 10.8% in 2008 due to improved monitoring and targeting.[8] ACE recommends that other departments follow suit and ensure that their energy use is made available to the public.

The reasons for the wide variations in departmental performance

22. ACE believes that the reason behind wide variations in Departmental performance is due to the relative importance attached to meeting these targets by the relevant Ministers and civil servants within each department. The SOGE targets set by Government are not overly ambitious, and could be easily attained as long as concerted efforts are made and programmes are put in place as soon as possible.

23. It is therefore a matter of great concern that Eland House, the headquarters for DCLG, has been given an F rating. The Department of Energy and Climate Change, responsible for implementing DECs, has one of the very worst of the G ratings yet recorded.

The gap between the level of ambition set for the UK by Government policies and the level of ambition the Government sets itself within the SOGE framework

24. The targets for offices are broadly in line with the targets as set out in the Climate Change Act 2008 of reducing carbon emissions by 30% by 2020 relative to 1990 levels. However, ACE believes that the Government should be leading by example and should therefore exceed the UK targets, in order to demonstrate unequivocally that it is serious about leading the way in the fight against climate change. By setting its own house in order, it can encourage others to do so from a position of strength.

25. Michael Kelly, the Chief Scientist at DCLG has said that the amount of carbon emissions from homes have fallen from 154 to 147 million tons of Carbon from 1990-2005 which is a 4% drop. In order to reach the Government's target of a 26% reduction in emissions from 1990 levels, domestic emissions have to come down to 114 million tonnes of carbon—this would be a 24% drop. This means that in order to reach the target there will need to be six times the amount of activity as has been happening over the last 15 years. We have every reason to believe that the same six—fold level of activity is needed in the public sector.

Whether attainment of SOGE targets at the level at which they are currently set would result in sustainable operations

26. According to the latest SDC report energy efficiency across the Government estate (excluding MOD) has worsened by 3.3% over the past year

27. ACE believes that the target for departments to increase their energy efficiency per m2 by 15% by 2010 and by 30% by 2020, although not very ambitious, is sufficient in terms of keeping to a trajectory towards an 80% cut in emissions by 2050, but it must be achieved.

28. Because this target measures energy use per square meter it can provide a misleading picture. The SDC has pointed out that a department could be seen to be to becoming more energy efficient when in reality they have just increased their floor area. We greatly sympathise with the EACs own proposal that the energy efficiency target should be replaced with a target for reducing absolute levels of energy use.

29. Government has committed the Central Government's office estate to be carbon neutral by 2012. ACE is concerned that the majority of these carbon emissions will merely be offset and that little effort will be made to improve the energy performance of the buildings. Work needs to be done now to set the UK on a low carbon path of development. This will ensure that we start an early transition to a low carbon economy, rather than allow ourselves to be locked in to a high carbon path which will be virtually impossible to break out of in the years to come. We strongly urge Government to step up their progress to ensure that this target is met through improving the energy efficiency of central Government offices and the use of local low carbon energy, not through expending taxpayers' money on dubious offsets.

The potential for interdepartmental carbon trading

30. The concept of keeping track of carbon trading between several different departments could turn into an extremely complicated and overly bureaucratic system. Much of Government is already involved with the forthcoming Carbon Reduction Commitment. ACE advocates that departments choose to reduce their emissions rather than trying to trade their way out of it.

The use of credits and offsetting in achieving targets

31. Given the EAC's concern with the validity of some current offset arrangements, particularly outside the UK, the Association would not advocate the use of credits and offsetting in achieving targets. If offset funds are created, it would make sense for these to paid into, for instance, a Warm Front scheme.

32. Long term investment in increasing the energy performance of buildings in the UK is an investment that will bring about savings in the future. It will reduce energy bills in the long term and reduce carbon emissions. The UK should start focusing policies and resources on using energy more efficiently in all sectors of the economy and money should rather be spent on decarbonising our energy systems than paying other countries to enable us to carry on polluting.

The planned review of the SOGE framework

33. ACE agrees that the present energy efficiency and carbon reduction targets are just about adequate. However we cannot, from a climate change point of view, afford for these targets not to be met. ACE recommends that the Government first meet these targets before performing endless reviews.

34. Over the last 20 years there have been at least seven House of Commons Select Committee reports examining energy use in the public sector. One of the complications is that the reports in question are seldom seen across Whitehall, but tend to be "pigeon holed" with the relevant Department—presumably now the Minister for Transformational Government. Given the demise of the green Ministers, it is unclear who else in Government will be alerted to this report. Who will be reading this report, and more importantly who will be implementing its recommendations?

35. Although Government is improving slightly, the improvements are a far cry from what is needed to ensure that we reach an 80% reduction in carbon emissions by 2050. The public sector needs to take radical and urgent steps to ensure that firstly its own targets are met so that it can then set an example to other sectors.

April 2009