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


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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