Memorandum submitted by the Energy Services
and Technology Association (ESTA)
The Energy Services and Technology Association
(ESTA) represents over 100 major providers of energy management
equipment and services across the UK.
1. EXECUTIVE
SUMMARY
1. Although the current emphasis on low-carbon
technologies focuses on the issue of climate change, the concept
of a "green economy" is much wider than this and is
much more concerned with resource efficiency. Energy management
products and services address both concerns.
1.1 Much of the policy discussion about
low-carbon energy technologies relates to electricity generation
and supply-side issues. However, a focus on demand-side considerations
can achieve savings (in cost and carbon) more immediately as well
as stimulating the employment market as the economy starts to
recover from the current recession.
1.2 Energy efficiency technologies can tackle
the emissions from existing buildings—those built to a much
lower efficiency level than new buildings. Deployed in non-domestic
buildings they can make a real and immediate impact on the UK's
carbon emissions as the non-domestic sector is better placed to
install and optimise these technologies than the domestic sector.
1.3 Existing technologies are not being
used to their maximum effect. There are great opportunities, for
example for lighting controls being used in washrooms and conference
rooms—places with intermittent use where automatic switching
of lights could save significant amounts of energy. While the
development of new technologies is vital, it is equally important
to ensure that existing technologies are used to the full.
1.4 ESTA's view is that the carbon savings
required in the first carbon budgets announced by the Government
under the Climate Change Act can only be achieved by concentrating
on energy efficiency.
1.5 There is a need for a robust, transparent
system for measuring and verifying real carbon savings in buildings
and the wider economy. ESTA believes that the Display Energy Certificate
(DEC) system, which incorporates an operational rating showing
just how efficiently a building is actually being run, provides
a powerful yet simple tool to achieve this in the built environment.
1.6 In order to maximise efficiency we need
trained energy managers to do the job effectively. In any technologically
advanced field, trained personnel are essential to maximise the
opportunities. This is a skills issue. ESTA is involved at both
national and international level in producing standards which
will ensure that energy managers know how to gain maximum savings
from the available technologies.
1.7 ESTA believes that tens of thousands
of jobs could be created by a greater focus on energy efficiency
technologies. Furthermore, that potential would be realised much
more quickly than any created in large power station construction
programmes (where specialist labour may in some cases be drawn
from abroad, rather than the UK).
1.8 Public procurement budgets provide a
key means of encouraging development and deployment of these technologies.
The public sector can play a leading role in this endeavour.
1.9 However, we must in the UK be more ambitious
in our plans and targets for a green economy.
2. INTRODUCTION
2.1 In the UK, we now have a statutory
commitment to reduce greenhouse gas emissions by at least 80%
(compared to 1990 levels) by 2050. However, a commitment
to "green" the economy cannot be concerned with carbon
emissions alone. It must surely relate more generally to reducing
humanity's overall environmental "footprint". Therefore
the first priority for any green economy is to minimise consumption
of scarce resources: in other words resources must be used as
efficiently as possible. This holds true for energy as well: in
a truly green economy, the provision of low-carbon or carbon-free
energy is only part of the equation. Using it as efficiently as
possible is also vital.
2.2 As we progressively move towards a green
economy, one key way to keep our carbon emissions—and our
environmental footprint—as small as possible is to maximise
the efficiency gains through the use of technology enhancements.
As the 2007 Energy White Paper notes: "The starting
point for our energy policy is to save energy. It is often the
cheapest way of reducing carbon emissions, certainly in the short-term.
It can also contribute to security of supply, for example by reducing
our need for energy imports, and reduce fuel poverty through lower
bills."
2.3 ESTA would add that energy efficiency
technologies can provide significant opportunities for employment.
These jobs can be realised in the short term, unlike many of the
capital-intensive energy-generation programmes which may take
a decade or more to come to fruition.
2.4 These technologies can reduce the carbon
emissions of buildings—particularly in existing buildings
which have not been constructed to the standards set out in the
current edition of the Building Regulations. They can reduce energy
consumption, which will reduce emissions, environmental impact
and cost.
3. SUPPLY AND
DEMAND
3.1 "Low carbon technologies in a green
economy" means different things to different people. To deliver
a low carbon energy economy—which is part of the remit of
ESTA—a distinction needs to be drawn between the supply
side and the demand side. The debates on the supply side are currently
concerned with the decarbonisation of electricity, through the
encouragement of renewable energy and nuclear power as well as
the development of Carbon Capture & Storage (CCS) technologies
for fossil fuel generation. These are programmes that require
large sums of money and will take more than a decade to begin
to deliver large scale carbon savings. Yet the Government has
adopted a target, under the Climate Change Act, of achieving a
34% reduction on 1990 levels in just over 10 years.
3.2 ESTA's view is that the carbon savings
required in the first carbon budgets can only be achieved by concentrating
on energy efficiency—not just insulating homes and increasing
thermal performance standards, but also using the latest energy
management techniques, like advanced metering (the merits of which
the Government has now recognised) and advanced building management
technologies.
3.3 There are other benefits to be gained
from such a policy emphasis. The Government and the European Commission
both believe a 20% reduction on energy consumption by 2020 can
be achieved through cost-effective measures. Information gathered
from ESTA members shows that a 20% reduction is eminently achievable.
The target will in fact increase should a global carbon reduction
agreement be reached in Copenhagen at the end of this year.
3.4 Demand-side policies can also have a
beneficial effect on supply-side programmes. A reduction in demand
of 20% over the next decade would ease the pressure on the UK
on meeting our reduction targets and would also allow the UK to
better manage the current "interim" period when older
generating capacity is being phased out and newer technologies
brought on stream. With some commentators predicting that the
UK will "run out of energy" one winter soon, a focus
on reducing consumption can reduce that danger.
4. THE NON-DOMESTIC
SECTOR
4.1 Most ESTA members deal with the non-domestic
sector. Buildings in this sector account for around 18% of total
UK emissions. Here, energy efficiency is good for business, because
it reduces waste improves profitability. However, there are a
number of studies (such as the Carbon Trust's) which show that,
especially for SMEs, this is not seen as a core concern—perhaps
because energy is still a relatively small component of overall
business expenditure. The Government, though, has recognised in
setting up the Carbon Reduction Commitment that there is a large
aggregate saving to be made from energy efficiency improvements
in the non-domestic sector.
4.2 Our experience in dealing with our customers
has highlighted several drivers for business to act to reduce
energy consumption and carbon emissions. These are:
— Compliance—with the Building Regulations,
the Energy Performance of Buildings Directive (Energy Performance
Certificates, Display Energy Certificates) and, soon, the Carbon
Reduction Commitment (CRC).
— The cost of energy—and its volatility.
— Security of supply at the factory gate
or the issue of business continuity. For business, security
of supply ultimately comes down to a question of the cost of down-time
in terms of lost production due to a loss of energy supply.
— Brand value and Corporate Responsibility
(CR). The need to be seen to be green. Here, the relative positions
of competitors on the CRC league table could become a driver for
further action.
4.3 The non-domestic sector has a greater
opportunity for achieving carbon savings in the short term than
the domestic sector. Many of the new technologies are electronic
and they will increasingly use electronic forms of communication.
Most organisations are accustomed to electronic systems and most
are internet-enabled. The kinds of products and services offered
by members of ESTA can be tailored to meet the needs of different
customers—and these services are increasingly being delivered
online. So the non-domestic sector has the capacity and the potential
to respond faster then the domestic sector, particularly in the
areas of adopting new, greener technologies.
5. CLEAR, INTEGRATED
POLICY
5.1 Government has introduced a number of
policy measures to encourage the take-up of low carbon technologies.
However, there is little sense of an integrated programme—certainly
not one that businesses can perceive. Too often, organisations
are responding to the latest piece of regulation. We now have
firm forward targets for reducing carbon emissions. It is time
to spell out specific goals for different policy areas over longer
timeframes so that business can factor them into their own planning.
For example, if it were stated that performance levels of buildings
will have to improve by a set amount in each of the carbon budget
periods set by the Government under the Climate Change Act, then
organisations would start to seek ways to achieve those savings
now rather than waiting till specific measures become imminent.
5.2 There is still no one department that
has responsibility for energy. DECC has now assumed the lead on
many aspects, but planning still comes under CLG's remit and BERR
has its own low-carbon unit which is promoting low-carbon investment.
This has the potential to lead to confusion with different policies
serving several policy agendas at the same time.
5.3 There is also the concern about achieving
real savings and how to verify them. All the evidence suggests
there are significant opportunities for carbon reduction here
in the UK. Organisations should not therefore be able to claim
"green credentials" by offsetting their emissions against
overseas reductions. We are therefore very pleased to see that
the Government is not allowing offsetting as a way of achieving
its target during the first carbon budget period announced at
the time of the Budget.
5.4 Actually accounting for, and verifying,
real reductions in emissions achieved here in the UK is a related
issue. Any accounting regime must be robust and transparent. There
is still some uncertainty about aspects of accounting under the
Carbon Reduction Commitment for example. Here energy management
technologies can help. The latest automatic Monitoring & Targeting
(aM&T) systems are now licensed to produce Display Energy
Certificates which indicate just how efficiently a building is
being operated.
6. THE MARKET
FOR ENERGY
EFFICIENCY TECHNOLOGIES
6.1 ESTA members have seen signs of a remarkable
resilience in the sales of energy efficiency products and technologies.
The area of metering has seen steady sales and demand for the
latest automatic Monitoring & Targeting (aM&T) systems
is seeing growth in the order to 25% per annum. Lighting control
systems are likewise showing continued growth (a slightly lower
figure of around 10% per annum).
7. THE POTENTIAL
7.1 The vast majority of the current building
stock was constructed to energy performance standards that are
far below those expected today. Looking forward, much of it will
remain in use for decades to come. While it is relatively simple
to make requirements for new buildings much stricter in terms
of energy/carbon performance, it is much more difficult to do
so with existing buildings. Refurbishment cycles can take place
over decades, yet it is clear that the vast majority of building-related
emissions will come from this area. How can we ensure the deployment
of new energy efficiency technologies here?
7.2 ESTA would recommend that the current
energy certification schemes are extended and strengthened. In
particular we would wish to see more use made of Display Energy
Certificates (DECs), which use the concept of an "operational
rating" measuring how efficiently a building is being used.
7.3 These are currently only required in
the public sector, on large buildings (more than 1,000 m3 of
useful area) which are visited frequently by members of the public.
ESTA believes this tool should be used on all buildings, except
the smallest. Where they are already in use, they must be renewed
annually and we see this as a useful tool for building operators
to assess—and improve—building energy performance
on a regular basis. The Government could also mandate minimum
levels of performance for different types of building and increase
the efficiency requirements over time. There would, however, need
to be a robust and transparent verification process. Yet several
of the latest automatic Monitoring & Targeting (aM&T)
systems have the capability to produce DECs so this should not
present a problem.
7.4 For many organisations in both private
and public sectors, there are significant advantages to be gained
from outsourcing energy management to an external specialist.
Contract Energy Management (CEM) is already widely used in the
UK, with sales of these services by ESTA members currently amounting
to around £1.2 billion a year. However, our research
indicates that there is a potential within the UK for a doubling
or tripling of this level, to £3 billion or more. And
with that potential for expansion comes the associated extra employment.
On the basis of existing employment levels within our member companies,
we believe that an increase in CEM activity of £1 billion
would result in around 10,000 new jobs within the industry.
While some of these would replace staff in the organisations doing
the outsourcing, in many instances energy management is an additional,
non-specialist function to other roles. Outsourcing energy management
would not therefore necessarily result in job losses within these
organisations. Outsourcing would result in energy savings, reduced
emissions—and financial savings for the organisations concerned.
7.5 Looking at other sectors covered by
members of our organisation, we would suggest that greater attention
to energy efficiency would result in more employment here as well,
whether in manufacturing equipment or installing it.
8. OPERATING
EFFICIENTLY
8.1 ESTA has found through painful experience
that full use is not being made of existing technologies. There
can be little point in pouring investment into new techniques
if existing opportunities go to waste. We need to ensure that
all the tools at our disposal are used to their maximum in reducing
energy consumption and cutting emissions. Better training of energy
managers would go a long way to ensuring take-up of cost-effective
technologies.
8.2 Our suggestion that the Display Energy
Certificate provides a means of driving greater efficiency in
non-domestic building is based on its incorporation of an operational
rating which measures on a regular basis how efficiently the building
is being run. The latest energy efficient systems and equipment
will not of themselves create an energy efficient building—and
this is the fundamental flaw in relying on the more widespread
Energy Performance Certificates. Buildings will only function
in a low-carbon manner if the people responsible for operating
them (and their systems) do so correctly. This is the reason why
ESTA has been heavily involved in working with the global community
to develop international standards for energy management. Ensuring
that people have the right training to extract the maximum efficiency
out of the energy systems is vital—there is a real skills
issue here.
9. PUBLIC PROCUREMENT
9.1 It has been accepted by politicians
both in the UK and in Europe that the public sector has to play
a leading role in delivering a green economy. With around £175 billion
a year spent by the public sector, it clearly has a major role
in influencing the development and deployment of new technologies.
9.2 The public sector owns or occupies an
enormous stock of buildings. It therefore has a unique opportunity
to promote green technologies throughout its estates, providing
a readily accessible market for those businesses involved in researching,
developing and manufacturing the technologies that are necessary
for a low-carbon economy. The public sector must now show that
it is serious about taking the lead on this issue.
9.3 On energy, for example, if the public
sector insisted that every building has an "A" or "B"
operational rating—as set out on a Display Energy Certificate—it
has the critical mass to create a real step-change in building
energy performance. There has been a great deal of talk about
the need for such a step-change: here is one way of achieving
it.
10. CONCLUSION
10.1 We need to be more ambitious in our
demand-side policies. The savings are there to be made and many
of the technologies already exist—although they are being
enhanced continually.
10.2 Improving energy efficiency can make
the UK greener, more protected against energy shocks and better
able to manage its transition to a low-carbon economy. It has
a fundamental role to play in achieving our early goals (certainly
to 2020) under the Climate Change Act.
10.3 Energy efficiency technologies can
create jobs for UK people—and jobs now, not just in five
or 10 years time.
10.4 When the battle against anthropogenic
climate change has been won, a much more all-encompassing one
concerning sustainable consumption patterns will still need to
be addressed. Experience gained from maximising the efficient
use of resources such as energy will put us in a good position
to tackle this issue—and to lead globally on it.
May 2009
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