Energy Bill [Lords]

Memorandum submitted by the Mayor of London and London Councils (EN 26)

Summary

The Mayor of London and London Councils are committed to reducing CO2 emissions from London’s homes and workplaces. London has already developed delivery models that can attract large scale private sector funding into energy efficiency retrofitting and that have seen high levels of uptake. These programmes have provided the Mayor and London Councils with a special interest and knowledge in:

· Large scale delivery of retrofitting programmes of homes and public buildings, and creating levels of uptake of energy efficiency schemes up to three times higher than similar schemes.

· Tackling regional-specific challenges around delivery of homes energy efficiency programmes.

It is against this background that the Mayor and London Councils welcome the Energy Bill’s provisions to create a market for retrofitting homes and businesses through the Green Deal and to secure the UK’s energy supplies. We look forward to working with policy makers to ensure that the Bill and its supporting secondary legislation can successfully deliver carbon emissions reductions and fuel poverty targets for London and the UK.

We would, however, like the Committee to be aware that:

· London has a large proportion (22% [1] ) of England’s solid walled properties, which the Green Deal aims to treat, yet historically has seen a lower than equitable share of installations under national energy efficiency schemes. To maximise CO2 emissions reductions, we strongly urge the Government to enable the provision in the Energy Bill for regional targets to be enacted for the energy company ‘carbon emissions reduction target’ as soon as possible when drafting the secondary legislation.

· When taking into account the higher costs of living, 760,000 households are defined as living in fuel poverty in London [2] . With the Government committed to eradicating fuel poverty by 2016 we strongly urge Ministers, when drafting the secondary legislation, to enable the provision in the Bill for regional targets to be enacted for the energy company ‘home-heating cost reduction target’ as soon as possible when drafting the secondary legislation.

· To reach UK and London CO2 emissions reductions targets and maximise uptake, homes need to be retrofitted with both energy efficiency and energy supply measures. The energy company ‘carbon emissions reduction target’ and ‘home-heating cost reduction target’ should therefore include a subsidy for energy supply measures such as low and zero carbon microgeneration and combined heat and power generation.

· A large potential for retrofitting loft and cavity walls exists. Although the Green Deal aims to fill remaining lofts and cavity walls, without the subsidies offered to households under CERT and the EEC, this is likely to be considerably more expensive for households and reduce uptake, particularly in the early years of the Green Deal. To maintain demand and supply chains for loft and cavity wall insulation (and the jobs associated with them) a target should be included in the ‘carbon emissions reduction target’ and ‘home-heating cost reduction target’ to fill remaining loft and cavity walls, where practical, in the early years of the Green Deal.

· The Bill provides for the collation of data on installations under the energy company ‘carbon emissions reduction target’, and the ‘home-heating cost reduction target’, and data from energy performance certificates (EPCs). However, the Bill, as currently drafted, misses the opportunity to widen this so that all energy efficiency data is collated. This data is vital for Green Deal providers and financers to understand the market opportunity and to increase uptake. This data should be made available to local authorities for free.

1. Introduction

1.1. The Mayor of London and London Councils welcome the Energy Bill’s provisions to create a market for retrofitting homes and businesses through the Green Deal and to secure the UK’s energy supplies. We look forward to working with policy makers to ensure that the Bill and its supporting secondary legislation can successfully deliver carbon emissions reductions and fuel poverty targets for London and the UK.

2. London retrofitting programmes to deliver the Green Deal   2.1 London has already developed delivery models that can attract large scale private sector funding into energy efficiency retrofitting and that have seen high levels of uptake. These can be used as delivery mechanisms for the Green Deal in homes, businesses and the public sector across the country. Lessons from early delivery phases, and the expertise that has already been accumulated in London, will be crucial to informing the secondary legislation and the national rollout of the Green Deal in order to meet UK CO2 emission reduction targets:  

RE:NEW

2.2 This scheme uses an area-based approach, providing free whole-house energy surveys during the first home visit, alongside free energy efficiency advice and ‘easy’ energy efficiency measures such as real time displays. Households are then referred on to programmes that offer loft and cavity wall insulation. This is a similar model to that proposed for the Green Deal and can therefore be easily adapted to deliver the Green Deal.

2.3 RE:NEW is a collaboration between the Mayor of London, London Councils, the London boroughs and the Energy Saving Trust. Trials and demonstration projects have already taken place in 9,000 homes across nine London boroughs and will be rolled out to 55,000 homes by May 2012. The trials and demonstrations show that an area-based approach, with local authority branding and support, significantly increases uptake rates, with up to 35% of homes in targeted areas accepting a home energy visit. This is three times higher than other schemes.

RE:CONNECT

2.4 Ten Low Carbon Zones have been established in London. These zones, managed by London boroughs, work with community groups and others in a geographic areas to retrofit homes, businesses, schools and other community buildings. They also integrate energy saving advice, and other environmental objectives, such as waste and recycling, in the zone. The zones aim to reduce CO2 emissions by 20% by 2012.

RE:FIT

2.5 This programme uses an innovative energy performance contracting model to retrofit public sector buildings. The pilot retrofitted 42 GLA group buildings, identifying average energy savings of 28% across the portfolio of buildings, saving £1 million a year in energy costs and creating a payback period of 7 years. It is now available to all public sector organisations throughout the UK.

3. The Bill:  

Part 1 – Energy Efficiency  

Chapter 2 – Private Rented Sector: England and Wales

3.1 London has a high proportion of homes in the private rented sector (20% in London compared to 13% nationally [1] ). We therefore welcome the provisions in the Bill for a review of energy efficiency in the private rented sector, and the Secretary of State’s commitment that from April 2016 landlords will not be able to refuse reasonable requests from tenants, or local authorities acting on behalf of tenants, to improve their property, and from April 2018, to make it unlawful to rent out a house or business premise which has less than an "E" energy efficiency rating.

3.2 The Bill proposes that the enforcement of standards for the private rented sector is carried out by local authorities. We welcome the commitment by Baroness Northover, during the Bill’s Committee Stage in the Lords, that a full costing of this will be undertaken as part of the Bill’s ‘Review of energy efficiency in the private rented sector’ and that the Government remains committed to "ensuring that new burdens on local authorities are properly funded to avoid pressure on council tax."

Chapter 4 - Reducing carbon emissions and home-heating costs

Area-based targets for the carbon emissions reduction target

3.3 Some regions have previously received a low share of installations under national energy efficiency schemes. For example, London received only 4.5% [2] of insulation measures under the Carbon Emissions Reduction Target (CERT), and its predecessor the Energy Efficiency Commitment (EEC) even though it has 12% of the population. As these schemes have focussed on loft and cavity walls insulation, this means that London still has a large numberof lofts and cavity walls to be filled.

3.4 London has been less able than other regions to attract national funding streams due to higher delivery costs. London’s homes energy efficiency programmes are developing models which bring down costs that the Mayor and London boroughs can control. However, inherent costs, including higher times to get between jobs and higher living costs, mean that London is likely to continue to be disadvantaged under the Green Deal.

3.5 This could undermine delivery of the Green Deal nationally. The Green Deal aims to retrofit solid walled properties, and current government proposals are for the ‘carbon emissions reduction target’ for energy companies to be based on subsidising solid walled properties. Fifty-seven per cent of London’s homes have solid walls, compared to 31% in the rest of England [3] . This means London has 22% of England’s solid walled properties. Due to the inherently higher costs of delivery in London, if a regional target is not set for the ‘carbon emissions reduction target’, it is likely that energy companies will retrofit properties elsewhere in England and this opportunity for CO2 emissions reduction will be missed, undermining UK CO2 emissions reduction targets.

3.6 We therefore welcome the provision for placing allocations on the ‘carbon emissions reduction target’ to be delivered in specified areas. When drafting the secondary legislation, we would encourage the Government to enable this provision to be enacted as soon as possible, and base the target upon a region’s share of UK solid walled properties.

Area-based targets for the home-heating cost reduction target

3.7 We welcome the introduction of a ‘home-heating cost reduction target’ for energy companies. Under the Government’s definition of fuel poverty, in 2008, 318,000 households in London were in fuel poverty. However, this definition fails to take into account the higher costs of living in London. When they are taken into account, this more than doubles to 760,000 [4] .

3.8 With the Government committed to eradicating fuel poverty by 2016, we believe that regional delivery allocations should also be applied to the ‘home-heating cost reduction target’.

Inclusion of energy supply measures under the carbon emissions reduction target and home-heating cost reduction target

3.9 Research has shown that households find energy supply measures appealing. For example, a phone poll of a cross-section of 1,000 Londoners in 2010 found that 37% would be interested in installing solar panels. This compares to 24% interested in installing solid wall insulation [5] .

3.10 In addition, modelling for London’s draft Climate Change Mitigation and Energy Strategy shows that microgeneration and connection to heat networks in London’s homes is essential to meeting Mayoral and UK CO2 emission reduction targets, contributing a reduction in CO2 emissions of around 1.3MtCO2 by 2025 [6] .

3.11 The inclusion of renewables is therefore vital for increasing uptake of the Green Deal, and meeting CO2 emissions reduction targets. We therefore welcome the inclusion of energy efficiency, low and zero-carbon microgeneration, and combined heat and power measures within the scope of the Green Deal.

3.12 However, we are concerned that the current proposals for secondary legislation will not allow for energy supply measures, such as renewables, to be installed under the Green Deal as they will not meet the Government’s proposed Golden Rule and will not be eligible for the proposed energy company ‘carbon emissions reduction target’. We believe that this is a missed opportunity that should be addressed through secondary legislation.

3.13 Therefore, to ensure a whole-building approach, in enacting secondary legislation, the ‘carbon emissions reduction target’ and ‘home-heating cost reduction target’ should subsidise energy efficiency and energy supply measures from their introduction in 2012.

Insulating remaining lofts and cavity walls

3.14 It is estimated that a large potential for retrofitting loft and cavity walls exists. For example, it is estimated that up to 790,000 lofts remain unfilled or require further insulation in London, and up to 850,000 cavity walls remain unfilled in London [7] . Although the Green Deal aims to fill these remaining lofts and cavity walls, without the subsidies offered to households under CERT and the EEC, this is likely to be considerably more expensive for households. This will therefore likely reduce uptake even further, particularly in the early years of the Green Deal.

3.15 To maintain demand and supply chains for loft and cavity wall insulation (and the jobs associated with them) a target should be included with the ‘carbon emissions reduction target’ and ‘home-heating cost reduction target’ to fill remaining loft and cavity walls, where practical, in the early years of the Green Deal. This would provide a transition from the current CERT period to the Green Deal, maintaining supply chains and jobs.

Chapter 5 - Information about energy consumption, efficiency and tariffs

3.16 Experience from RE:NEW and RE:CONNECT has shown that information on tenure and types of homes, energy use, EPC levels, and energy supply and efficiency measures already installed in individual households is required to enable the cost-effective targeting of households with energy efficiency measures. Using this data, the RE:NEW programme has targeted areas and seen uptake rates for home energy surveys of up to 35% - three times higher than similar schemes.

3.17 We welcome the provisions in the Bill to collate data on installations under the energy company ‘carbon emissions reduction target’, the ‘home-heating cost reduction target’, and from energy performance certificates (EPCs).

3.18 However, we feel there is a missed opportunity to widen this, so that all energy efficiency data is collated. To provide confidence to the market, government should collate, and make available to local authorities for free, address level data on: tenure and types of homes; energy efficiency measures installed to date; and EPC data. This could be achieved by bringing together data from the Census, Survey of English Housing, the Home Energy Efficiency Database, the Energy Performance Certificate database and fuel poverty data.

June 2011


[1] CLG Live table 110 , figures from 20 08 ( http://www.communiti e s.gov.uk/documents/housing/xls/table-110.xls )

[2] GLA, Fuel Poverty in London (2008)

[1] CLG Live table 109, figures from 2007 ( http://www.communities.gov.uk/documents/housing/xls/table-109.xls )

[2] Homes Energy Efficiency Database (HEED)

[3] English Housing Condition Survey, 2003

[4] GLA, Fuel Poverty in London (2008)

[5] Climate Change/energy use August 2010 telephone survey briefing, GLA Intelligence, September 2010 .

[6] GLA modelling, 2010

[7] GLA modelling, 2011. Due to limited national data, which is in some cases based on small sample sizes, this is a high level indicative estimate only.

Prepared 16th June 2011