Low carbon technologies in a green economy - Energy and Climate Change Contents


Memorandum submitted by the Energy Saving Trust

1.  INTRODUCTION

  1.1  The Energy Saving Trust was established as part of the Government's action plan in response to the 1992 Earth Summit in Rio de Janeiro, which addressed worldwide concerns on sustainable development issues. We are the UK's leading organisation working through partnerships towards the sustainable and efficient use of energy by households, communities and the road transport sector and one of the key delivery agents for the Government's climate change objectives. Our response focuses on the key areas of the Energy Saving Trust's activities and related issues that are relevant to the inquiry. We do not attempt to answer questions out of our area of expertise. Please note that this response should not be taken as representing the views of individual Energy Saving Trust members.

2.  THE ROLE OF INDIVIDUALS

  2.1  The Growth Potential for Microgeneration in England Scotland and Wales (2008) found that under the right policy scenario, microgeneration technologies could contribute up to 30 MtCO2 reduction by 2030, equivalent to a 5% cut in total 2006 UK CO2 emissions. This would require a number of policies including:

    — A long lasting Feed In Tariff and Renewable Heat Incentive, set at high enough levels to encourage widespread uptake.[38]

    — Intervention to either capitalise energy savings and subsidies (front loading payments) or spread capital investments (soft loans and Energy Services Company (ESCo) approaches)

    — High levels of onsite renewables for zero carbon homes

    — Heavy investment in new and emerging technologies such as fuel cell CHP

    — Continued consumer campaigns to improve consumer accounting for energy-based decisions.

3.  THE ROLE OF COMMUNITIES

  3.1  Our report Power In Numbers (2008), examines the potential and benefits for CO2 and cost savings of distributed heat and power generation at the community scale—as opposed to individual microgeneration. It found that with appropriate policies, the potential for community distributed generation could rise to 108Mt CO2 saving per year, representing 65 per cent of the annual UK household CO2 emissions. This policy could help meet 18 per cent of the total UK energy demand. However In some community types and sizes, even though there is already an economic case today for community action, relatively limited activity has occurred because of the "non-technical" barriers including:

    — A lack of clear financial drivers to initiate community energy projects.

    — Very high set-up costs (planning, legal costs, coordination), which are at risk before the project is built and operating.

    — The time and skills required to coordinate the diverse interests within the community itself, as well as the range of other stakeholders (local authorities, utilities, finance providers etc).

    — A lack of replicable, well-tested models for deploying community energy projects.

    — A lack of finance for the apparently risky smaller community energy projects.

    — For projects involving district heating systems, there are difficulties in coordinating the retrofit of a community system into a diverse range of domestic properties.

  3.2  These could be overcome through:

    — Financial incentives (RHI and FIT)

    — Supplementing these financial support mechanisms with low interest-rate finances

    — Raise awareness of the benefits of community-wide distributed generation and providing on the ground advice and support.

  We therefore urge the Committee to consider the potential for householders and communities to make a meaningful contribution towards the 80% CO2 reduction target.

RESPONSE TO QUESTIONS

4.   What opportunities exist for the creation of a green new deal whilst pursuing a low carbon economy? Which technologies have the biggest potential? Has the Government done enough in its stimulus package?

  4.1  The Energy Saving Trust believes a higher percentage of the stimulus package should have been devoted to the green sector. The UK devoted only 7% to green initiatives. This compares to France (21%) and the USA (12%). If the UK intends to be a leader in the green sector then far more investment is needed in areas such as the renewable energy industry and energy efficiency initiatives.

  4.2  We believe that a number of microgeneration technologies have the potential to deliver on this front. Our report The Growth Potential for Microgeneration in England Scotland and Wales found that a number of plausible policies could lead to well over 2 million microgeneration installations by 2020, and 3 million installations by 2020. Fuel cell CHP systems were found to have particularly large potential to reach mass market uptake post 2015. Please refer to the report for further details of this.

5.   How important is it to the UK economy that it becomes a leading developer and exporter of low carbon technologies? What Government policy needs to be in place to do this?

  5.1  We believe this is hugely important. Investment in R&D is vital for all low carbon technologies however, the current level is insufficient. A recent report by UKERC found that low carbon technologies have significant prospects for accelerated development. Technology acceleration through a combination of increase public and private funding will lead to cheaper low carbon power and reduce the cost of reaching an 80% cut in CO2 by 2050. The report found that the average benefits over the next 40 years are just under £1 billion per annum. However, there is a need for a step change in R&D funding to enable this to happen.

  5.2  R&D budgets should not be solely focused on large scale solutions but should give adequate attention to household and community scale ones (including demand side management). There is huge potential for the UK to take a lead in this side of the industry as we have already done in the small scale wind sector.

6.   What is the potential role for public procurement and policies such as the 2016 zero carbon homes target in driving investment, development and job creation?

  6.1  Public procurement which promotes these technologies is vital. If government is seen to be taking a lead on this issue, then it will inspire others to do so and add weight to their claims to be a leader on tackling climate change. Public buildings are also ideal in terms of providing anchor loads for large scale district heating and CHP systems. These can then be expanded to include building in the nearby areas.

  6.2  The zero carbon homes target has a vital role to play in the growth of the microgeneration sector. The report we did in conjunction with BERR in 2008[39] found that microgeneration installations in the future are highly dependent on the strictness of the definition. With no offsite solutions roughly 2.5 million installations could be expected by 2020 (see graph below). Whilst we do not believe that the definition should be this inflexible (as often this is not feasible) we do believe that on-site microgeneration should be maximised. This will in turn lead to significant job creation in the sector.

  6.3  Through encouraging the growth of the UK's microgeneration industry there is significant potential for job creation in the installation and maintenance sector. Our report The Growth Potential for Microgeneration in England Scotland and Wales found that up to 39,000 jobs could be created by 2050 (see table below). However, several policies can influence the demand for installers and servicing personnel considerably. For example, a restrictive definition of Zero Carbon Homes causes a large jump in personnel required between 2015 and 2020. For the implementation of any policy to succeed it is essential that the industry develops clear expectations of likely growth, so that staff can be trained for the appropriate technologies at the right times.

May 2009






38   The report states that support levels required today to stimulate substantial uptake are over 40p/kWh (in addition to the electricity price) for renewable electric technologies (micro wind and PV), over 5p/kWh for microCHP-derived electricity and over 2p/kWh for heat technologies. Back

39   The Growth Potential of Microgeneration in England, Scotland and Wales Back


 
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