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Dr Alan Whitehead (Southampton, Test) (Lab): I have detected that in recent contributions we seem to be falling into something of a nuclear idyll, so I want to try to pour a little cooling water, shall we say, on that particular idyll. We need to recognise that nuclear power and its consequences-irrespective of whether they are loved by local citizens or built in the Corby constituency-are some way away. There will in all probability be no nuclear power coming on stream until the early 2020s. If and when it comes on stream, assuming that new nuclear power stations are built at no public expense, they will be relatively small in output over the early years.
This emphasises that nuclear power is not coming over the hill tomorrow to save us all as far as low-carbon energy is concerned. The targets on carbon emissions reduction and, indeed, the replacement of something like 40% of our generation and transmission capacity by the early 2020s will have to be achieved without nuclear power by means relating to renewable energy, the building of conventional power plants-I trust with carbon capture technology-and, of course, a very substantial step forward in energy efficiency.
Thomas Docherty: My hon. Friend has not mentioned the issue of life extensions to existing nuclear power stations such as Hunterston B and Torness, which would certainly take us through the gap period.
Dr Whitehead: My hon. Friend raises the interesting point of the possible life expectancy of nuclear power plants. I recognise that there is something of a dilemma in respect of old and new nuclear power stations and predictions of extensions, and that there are issues such as core cracking and whether extensions can be safely undertaken. He makes a fair point, however, that some extensions might be undertaken to bridge the gap. The key point, however, is that one of the best ways to ensure our energy supplies are secure over the coming period and that the generation meets the demand is to ensure that there is less demand for energy, and that the energy we do use is used much more efficiently.
I agree with my hon. Friend that even if we start building nuclear power stations now, there will be a 10-year period before they really start to have an
impact, but unless we take that decision now we will face an even greater gap in future, which we will have to fill by some other means. Just putting that decision off until tomorrow will make the matter worse in future.
Dr Whitehead: My hon. Friend is tempting me into an entirely different debate, in which there are very interesting considerations relating not least to a new report on the renewable valuation around our coasts and on our land and how we might be able to use those renewables for our long-term, as well as our shorter-term, future energy supply. I suspect, however, that if I were to address that topic, you might suggest that I have strayed rather far from the issues we are debating today, on which I do want to concentrate, Mr. Deputy Speaker.
Energy efficiency is a crucial component of our future energy landscape. I am pleased that the energy efficiency ambitions that the new Government have set out continue those proposed, and acted upon, by the previous Government. I recognise that the new ministerial team has strong personal commitments to these issues, and therefore energy efficiency has a bright start in terms of ambition and of understanding that this area is crucial. After all, 40% of our energy is consumed in buildings and that represents 40% of our carbon emissions. About 80% of household energy goes on heating our homes and water, and that alone represents some 13% of the UK's greenhouse gas emissions. Therefore, getting a serious grip on energy efficiency in our homes and commercial and industrial buildings offers potentially enormous, and relatively early, rewards in respect of our overall position on carbon emissions and energy consumption.
However, we as a country face this situation from a poor position historically. It is true that the previous Government made enormous strides in improving energy efficiency, particularly of public sector homes, and homes provided by registered social landlords. The Committee on Climate Change report that was published today conspicuously states that its indicators for activity on loft insulation, cavity wall insulation and energy efficiency in homes were met during the last year of the previous Labour Government. Considerable progress has been made, but our private sector homes remain energy-inefficient. The average standard assessment procedure rating in private sector homes is 49, which is a long way from level that we ought to aim for if we are to have a reasonable expectation that homes will be relatively energy-efficient and will have a low output of waste and energy emissions as far as the activities of the people who live in them are concerned.
We can all agree that this House has substantial energy-efficiency ambitions, that there is urgent action to be undertaken and that a number of programmes are in process and a number of ambitious new programmes, some of which we have heard about this afternoon, could get under way to address those issues. We need to examine whether the ambitions are being met, whether we have the ability to make those changes in practice and whether other things might be done to ensure that the ambitions are realised.
As a small indicator of the difference between ambitions and realisation I shall discuss the new part L of the building regulations, which were published recently. I had anticipated that it would contain new guidelines on the energy efficiency of circulation pumps in central
heating. If, as was suggested during consultation by the previous Government, the regulations had mandated new and very energy-efficient circulation pumps, we could have saved as much as 2% of the electricity consumption in households-that could have been done by that measure alone. However, the new regulations state that it is perfectly okay to have circulation pumps that are A to G rated, not the A to C rated that had been anticipated. That shows an immediate difference between ambition and practice. I sincerely hope that the Minister of State, Department of Energy and Climate Change, the hon. Member for Bexhill and Battle (Gregory Barker), who has been inviting various other people to come to see him about various issues, will invite me in the very near future to a round-table meeting on circulation pumps and why they should be more energy-efficient. I am sure that he will find time in his busy diary to have a substantial round-table meeting on that pressing issue. I cite that issue as a small example to show that one needs to keep one's eye closely on the difference between the reality of achievement and the ambition that one has when one puts forward new plans.
The plan that has been the centrepiece of this afternoon's discussion is the green deal. I feel like someone who is being told that a great new concerto is coming out, that it is about to be performed and that when people turn up to the concert hall they will find that it is terrific, but who has not been told whether it is by Mozart or Salieri. I presume that when we get to the concert hall we will find out whether the green deal is as good as we are led to believe. On the surface, a green deal that takes away the idea of an up-front loan and places the onus on the long-term consequences of the bills of those household consumers, their descendants or the next people who come along to the house appears to represent a positive way forward. We must recognise that that has limitations. Just as the pay-as-you-save scheme implemented by the previous Government had its limitations, this green deal also has potential substantial limitations.
Gregory Barker: This is a very important point. The hon. Gentleman is absolutely right. We do not for a minute expect the green deal to be able to cover the whole gamut of energy-efficiency installations. I think I said in my opening speech that there will be hard-to-treat properties and that some of the most vulnerable fuel-poor will not be covered sufficiently by the green deal pay-as-you-save model. That is where we will look to restructure completely and focus even more the ongoing long-term energy supplier obligation.
Dr Whitehead: I thank the Minister for that clarification. He anticipates, to a little extent, some of the things that I was going to say about the consequences of the green deal and the issues that surround it, such as the problems of hard-to-treat homes, which we need to take seriously if we are to make progress as far as energy efficiency is concerned.
Let us be clear: the green deal will concern itself primarily with owner-occupied houses in the private sector where there is a deal on hand. I stand to be corrected, but it seems to me that there is substantial work to be done as far as the social housing sector, the public housing sector and, indeed, hard-to-treat properties are concerned.
Gregory Barker: The beauty of the green deal as conceived and as we intend to implement it is that it applies to all sectors of housing. It is most applicable to the area that has been hardest to treat and in which there has been least progress in the past-that is, the private rented sector. It will finally cut through that Gordian knot as landlords will not have to pay the up-front costs for benefits that will accrue to their tenants. There will now be a real incentive and no financial disincentive for landlords to upgrade their properties and increase the quality of life of their tenants while decreasing their energy bills. That will be a real bonus.
Dr Whitehead: Again, I thank the Minister for that clarification. The beauty of the concert that we are about to hear is being talked up again. However, the questions of hard-to-treat properties, rented properties, landlords and partnerships are all issues that we must consider very carefully in deciding how the green deal and other elements will work best together as far as energy efficiency is concerned.
We have heard mention this afternoon, for example, of the partnership between local authorities, third sector organisations and consumers in the comprehensive redevelopment of energy-efficiency retrofitting of homes. We have heard about the very good example of Kirklees borough council. Interestingly, the example of Kirklees was based on the injection by Kirklees of £10 million into the process in partnership with other local authorities.
In that context, thinking, among other things, about the debate that we had in this House yesterday on local government financing and local government cuts, I ask a question of myself. As a result of the cuts being handed out to local authorities, will there be local authorities that have £10 million to invest in future partnership arrangements? That will be very important in getting progress on the future arrangements represented at present by the community energy saving programme as far as whole-area developments in local authority areas are concerned. Will the enfeeblement of local authorities' ability to undertake such new initiatives be such that we will have eliminated one of the partners in that process in the not-too-distant future?
I have a small point to make regarding landlords. The changes in housing benefit that are coming about might cause landlords at least to question whether to invest in their properties given the return that they might get in rent, so there are side effects, in relation to other policy decisions, that might have an impact on ambitions for the green deal.
One important issue that I have mentioned is whether the green deal simply includes passive insulation and energy-efficiency measures such as loft insulation and cavity wall insulation. Does it go beyond that to include householders' ability to generate their own energy and therefore to operate much more efficiently in terms of net emissions? In the code for sustainable homes, the target for 2016, in terms of new build housing, will include accession to a level 6 arrangement, but that could not be adhered to without some form of microgeneration power production being built into those homes when the zero-carbon target is agreed.
The Minister is right to say that we should not substitute microgeneration for energy-efficiency measures, as they are consequent on each other. However, in a real
programme for developing energy efficiency in homes over the medium term, microgeneration has to be seen as very important within any efficiency drive in those homes. If we simply eliminate microgeneration from the process, we will put back for a considerable time the possibility of microgeneration following on from those energy-efficiency arrangements.
It was interesting to see nothing in the Budget for Warm Front. I assume that, in the vision put forward by the Government, it will effectively be subsumed into the green deal because it apparently has very wide effects. If Warm Front is simply collapsed within a few years' time, the works that have been undertaken under Warm Front, which include the possibility of putting microgeneration devices into homes, will be lost and a group of hard-to-reach consumers who might not be particularly advantaged by the green deal will also be lost in the process.
Gregory Barker: On Warm Front, let me assure the hon. Gentleman that more than £300 million is available for a programme of work through this year and the winter to March 2011. That stands, and no long-term decisions have yet been made about Warm Front. As I have said, we recognise that there will always be a need for special arrangements for the most vulnerable people and hard-to-treat homes, and that we cannot just depend on pay-as-you-save schemes. Obviously, Warm Front will be subject to the comprehensive spending review this autumn, as all other Government programmes will be.
Dr Whitehead: I thank the Minister for that further clarification, but his comments support my feeling that there is no clear understanding of what will happen to Warm Front after the current period of investment in that programme expires. Similarly-this relates particularly to my points about the need to include microgeneration in the aim of improving general household energy efficiency over the medium to long term-there seems to have been no clarification regarding the future of the renewable heat incentive. If, for whatever reason, the renewable heat incentive is abandoned-a process that I suspect is under way at the moment-the ability of homes to install equipment vital for long-term energy efficiency, such as solar thermal devices, or ground source or air source heat pumps, will be severely undermined.
The Minister has said that households that enter a deal, whether it is loan-based or part of a pay-as-you-save arrangement, will have to pay the money back when the investment period comes to an end. The RHI is therefore absolutely essential, and I fear for the sector's future if it is abandoned or undermined.
Gregory Barker: I am not in a position to make a statement about the RHI today, but I can assure the hon. Gentleman that we are committed to an ambitious renewable heat agenda. We hope to make an announcement as soon as possible.
Dr Whitehead: I thank the Minister for that intervention, and for promoting me to the Privy Council. I look forward to that announcement, and I sincerely hope that my concerns about the RHI are misplaced. It is essential that the initiative goes ahead next year, so that it can underpin the revolution that is taking place in the development of microgenerated heat.
The Minister also said that it will cost something like £10,000, at the very least, to treat each hard-to-treat property. Inevitably, therefore, such properties, whatever they are like, will be outside the green new deal. It is essential that programmes are brought in alongside the green deal at an early stage, to ensure that the 6 to 7 million homes in the hard-to-treat category get the energy-efficiency uprating that they need.
The other point that I want to emphasise is that energy efficiency is not just about conserving the energy that we use in domestic properties. We have heard already this afternoon about the great gains that can be made by increasing energy efficiency in commercial and industrial properties, but we also have to look at the enormously inefficient way that we produce our energy at the moment. By the time that a single kilowatt comes out of a conventional electricity power station, 55% cent. of the energy in the fuel used to produce it has been lost. A further 15% of the energy in the original source is lost in transmission, and a further 10% is lost through the inefficiency of household equipment. In a very real sense, therefore, the so-called "10% light bulb" is real, and that is because, by the time we switch a light on, we have squandered 90% of the energy that we could have used to power the bulb.
For that reason, arrangements such as district heating and combined heat and power are absolutely vital if we are to make progress in using energy in the best way that we can. There is a huge capacity for CHP district heating schemes in UK cities. For example, Aberdeen Heat & Power Ltd has shown how that can be done, and similar results can be seen in Southampton and Birmingham. We need to take the role of CHP very seriously, either at the micro level-my hon. Friend the Member for Sheffield, Heeley (Meg Munn) spoke about that earlier in connection with home energy improvements-or through district heating schemes. Finally, industrial companies that have their own heat networks can have their existing boilers replaced with CHP plants. Such commercial schemes can result in enormous gains in energy efficiency. Local authorities were given powers and resources to develop district heating schemes in the paper on home heating and energy supplies put forward by the previous Government. It would be encouraging if the powers envisaged under that programme were preserved and enhanced by this new Government.
We should not neglect the role that energy efficiency plays in combating fuel poverty. If all homes had a standard assessment procedure rating of, say, above 65, it is unlikely that much fuel poverty would exist in this country, simply because it would be difficult for households to spend more than 10% of their income on fuel. It is predicted that the target of eradicating fuel poverty under the terms of the Warm Homes and Energy Conservation Act 2000 will be missed by a large margin, and the main reason for that is that as fuel prices rise, more people are placed in fuel poverty. As we have already discussed this afternoon, enormous rises in fuel costs have blown off course some very creditable efforts to combat fuel poverty, not least efforts that target the homes of the fuel-poor to make them more energy-efficient.
For every 1% rise in fuel prices, 40,000 people are placed in fuel poverty, so we need to be aware of the obligations being placed on energy companies and the
effect that they have on additional prices. If, as a result of the green deal and other new arrangements, we place additional obligations on energy companies and they pass on the effects of those obligations to their customers, we will find not only price rises but many more people going into fuel poverty as those new schemes unfold. There are already obligations on energy companies relating to carbon capture and storage, the carbon emissions reduction target, the community energy saving programme, and the smart meter roll-out. I imagine that the acceleration of that roll-out, which was recently announced by the Minister of State, Department of Energy and Climate Change, the hon. Member for Wealden (Charles Hendry), will place additional obligations on companies, as they will have to underwrite that roll-out.
Either those additional obligations should be underwritten with public money to limit their effect on fuel prices, or energy companies need to be prevented from passing on the effect of the obligation to the customer. In that context, we need to look at the role of Ofgem. Should it be translated into a champion of escape from fuel poverty and an agent of a rapid rise in energy efficiency, or should it simply pass on the price of those changes to customers? That is worth examination.
I applaud the idea that we need to move rapidly on energy efficiency. If the green deal is as good as its proponents suggest, I will applaud it taking forward from the previous Government ways to build energy efficiency into how households work. However, we need to look at the detail very carefully to ensure that, this time, we get it absolutely right, because we have only a very short time in which to do so.
Mr Tobias Ellwood (Bournemouth East) (Con): "Vote blue, go green" was one of our lasting slogans from the general election, so I welcome the Minister of State, Department of Energy and Climate Change, my hon. Friend the Member for Wealden (Charles Hendry), to his Front-Bench position. I am pleased that we are having a debate on energy efficiency so early in the calendar, as the subject is so important in this day and age.
Before I go any further, I congratulate my hon. Friends, including my hon. Friend the Member for South Ribble (Lorraine Fullbrook), on their astounding maiden speeches. My hon. Friend, and close friend, the Member for South Dorset (Richard Drax), spoke passionately about the beauty of Dorset. As we in Bournemouth are sort of part of Dorset, although we have a unitary authority, I fully concur with him on that, and I wish him well in hosting the Olympics events that are to be held in that neck of the woods. I also pay tribute to the hon. Member for Wells (Tessa Munt), who spoke passionately about her constituency. She represents the Liberal Democrats, and ousted our good friend David Heathcoat-Amory. It is sad to see him go, but I must welcome her, because we are now all friends in this coalition.
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