Energy and Climate Change CommitteeSupplementary written evidence submitted by the Department of Energy and Climate Change
Response to the ECCC Questions
The Committee raised a number of questions in and after the Green Deal watching brief hearing on the 6 February. Detailed below is DECC’s response to these questions.
1. DECC’s current targets for the Green Deal/ECO, (eg, no. of jobs to be created, level of energy savings, etc)
DECC has set carbon emissions reductions and bill savings targets in legislation, which together comprise the Energy Company Obligation (ECO). These targets are set out in the ECO order. They are set to deliver lifetime carbon emissions reductions of 6.9 MtCO2 from the Carbon Savings Communities obligation, and 20.9 MtCO2 from the Carbon Savings obligation; and lifetime notional space and water heating bill Savings of £4.2 billion from the Affordable Warmth target. These savings result from energy efficiency measure installations. DECC has not yet set targets beyond March 2015.
DECC has not set targets of the number of measures which should be installed, nor the number of jobs which should be created by the Green Deal and ECO. Energy Suppliers are free to meet their obligations through any mix of eligible measures (as defined in the ECO order) they choose. This is to allow energy companies to deliver as flexibly and cost effectively as possible.
In the Green Deal and ECO final Impact Assessment we present our central estimate of the most cost effective path of delivering the ECO targets on the basis of the available evidence, however these projections are not to be taken as targets. On the basis of our central delivery projection, the Green Deal and ECO are expected to support between 39,000 and 60,000 jobs in the insulation sector alone by 2015 (up from 26,000 in 2011).
2. DECC’s current estimates of the carbon savings likely to be achieved under the Green Deal/ECO, and the extent to which these estimates have been reduced from previous estimates. (Please see excerpt of transcript below—Qs 55–58—showing the exchange between DECC officials and Mr Gardiner on this issue during the evidence session of 6 February.)
By 2020 the Green Deal and ECO are predicted to reduce emissions from British businesses and homes by 4.5MtCO2 per year (source 2012 DECC emissions projections, see table below). The analysis underpinning the Green Deal and ECO final Impact Assessment feeds into the Updated Emissions Projections (UEP) publication 2012, which reports DECC’s estimated policy impact on emissions.
This estimate updates the 2011 emissions projections’ estimate of 5.6MtCO2 (see table below), which was based on a strictly illustrative scenario. Analysis underpinning the Green Deal Primary Impact Assessment (Dec 2010) fed into the 2011 UEP publication. The change reflects the process of consultation and final policy design, and the improvements to the modelling and evidence base. For example since the 2011 projections consultation on the policy framework has resulted in the earmarking of funds to tackle fuel poverty through the Affordable Warmth program, a key part of the Government’s response to fuel poverty, which is expected to lead to an increase in carbon emissions in non-traded emissions mainly from people switching from electric to gas heating in their homes. Additionally, updates to the evidence base on SWI savings mean we now estimate smaller carbon savings per SWI installed than were used in the 2011 publication.
|
2012 UEP |
2011 UEP |
|
|
Domestic Traded |
2.0 |
2.1 |
|
Non-Dom traded |
0.9 |
0.6 |
|
Domestic, non-traded |
0.7 |
2.2 |
|
Non-Dom, non-traded |
0.9 |
0.6 |
|
Total |
4.5 |
5.6 |
Breakdown Of Estimated Carbon Savings from Green Deal and ECO: 2012 UEP and 2011 UEP Publications
Whilst our estimate of domestic non-traded carbon savings had reduced from 2.2MtCO2 to 0.7MtCO2 in the most recent update, non-domestic non-traded and both sectors’ traded savings estimates are similar or have increased since our 2011 estimate.
3. Details of whether DECC will monitor separately the carbon savings achieved under the Green Deal and those achieved under ECO, and if so how. (Please see excerpt of transcript below—Q85—showing the exchange between DECC officials and Sir Robert Smith on this point during the evidence session.)
DECC will monitor in detail the carbon savings associated with the Green Deal and ECO. It will use information from a variety of sources to identify these savings. They will come in two stages:
Estimated energy & carbon savings made through measures installed will be available through information collected on Energy Performance Certificates and through the ECO system.
Actual energy & carbon savings made through measures installed will be available by matching information collected on Energy Performance Certificates and through the ECO system to energy consumption data. This data will be analysed in a similar way to the current CERT scheme.
In the short term, DECC will be able to collate and analyse the estimated energy and carbon savings. In the longer term, with actual energy consumption data from households, DECC will be able to look at actual energy and carbon savings.
4. DECC’s projections for the savings and costs expected to result from its environmental policies. (Please see excerpt of transcript below—Qs 50–54—showing the exchange between the Minister and Mr Lilley on during the evidence session.)
The costs and savings a household might achieve through installing a measure under the Green Deal are very dependent on the household’s particular circumstances and the property’s construction. The Green Deal Assessment allows these factors to be taken into account. The latest summary information can be found in the pack DECC has provided to the Green Deal Supply chain:
Whilst DECC cannot guarantee savings, the Green Deal Framework has been designed to help increase confidence for consumers and promote the installation of fit for purpose products. RDSAP is used by the Green Deal assessors to calculate the energy savings from different measures at an individual property level. In-use factors are invoked at the end of the calculation to adjust for the difference between measured and modelled savings from measures.
An occupancy assessment is undertaken by a Green Deal assessor at each property to check whether the energy use by the current occupants meets the predicted energy use from the Green Deal assessment. This information is then shared with the bill payer so they understand how the estimated savings from measures have been calculated. It is then the choice of the bill payer if they wish to continue to get the measures installed.
5. Details of all the indicators that DECC will use to monitor the progress of the Green Deal and of how this monitoring will be done.
DECC is monitoring implementation of the Green Deal and ECO, focusing initially on the development of the supply chain as that has been where the first hard numbers are. We have also started to put in place our plans for longer term evaluation and have already undertaken one survey of the domestic consumer experience.
More specifically, we will be looking for indicators of:
capacity that responds to demand, through levels of installers, assessors and providers;
flexibility to respond to consumer demand, including geographical coverage;
real choice for consumers of packages and providers; and
consumer trust in assessments and products, and confidence in the overall experience.
We’ve established clear data-sharing agreements with organisations at the heart of the system to ensure that we can gather information as it operates. Many of these are our contractors:
Landmark- providing information on Energy Performance Certificates to monitor the number of assessments and measures installed under a Green Deal in England and Wales.
Central Charge Database—recording the number of Green Deals and finance packages taken out.
Oversight and Registration Body—recording organisations accredited to deliver the Green Deal.
Incentives administrator—recording the amount of money provided through the cash back scheme.
ECO administrator (Ofgem)—recording the measures installed under ECO and the costs associated with delivery of the obligation.
Energy Savings Advice Service (ESAS)—recording the number of calls answered relating to Energy efficiency including Green Deal, and the number of affordable Warmth ECO referrals to energy companies.
DECC will release from March, monthly fully quality assured statistics on Green Deal assessments, plans and measures installed under Green Deal and ECO, with a more detailed quarterly statistical release in June.
In addition, DECC’s initial response provides a wide list of indicators and early thoughts for monitoring plans:
http://www.publications.parliament.uk/pa/cm201213/cmselect/cmenergy/writev/greendeal/m12.htm
6. If not covered in questions 5 and 6, details of whether DECC will be monitoring the effects of the Green Deal/ECO on fuel poverty, and if so how
Through monitoring and evaluation of our policies we will know which types of households are getting support, the type of support provided and how much the ECO costs to deliver. Fuel poverty is measured on the basis of how much energy households need to heat their homes to an adequate standard. Because it is measured in this way we are able to estimate relatively accurately the impact that measures like insulation and efficient heating will have on required energy.
Professor Hills’s review highlighted serious flaws with the way in which fuel poverty is being measured. As a result, we have committed to moving away from the current definition of fuel poverty, and proposed adopting the indicator suggested by Professor Hills which found 2.7 million households to be fuel poor in 2010. We recently consulted on that approach and will publish our response to the consultation shortly. We have announced that we will be publishing a refreshed strategy for tackling fuel poverty in 2013.
March 2013