Energy efficiency: building towards net zero: Government Response to the Committee’s Twenty-First Report of Session 2017–19
Eighteenth Special Report
On 12 July 2019, the Business, Energy and Industrial Strategy Committee published its Twenty-first Report of Session 2017–19, Energy efficiency: building towards net zero (HC 1730). The response from the Government was received on 12 September 2019. The response is appended below.
Appendix: Government Response
On 12 July 2019 the Business, Energy and Industrial Strategy Select Committee published their report on energy efficiency. The report makes 25 recommendations to which this document provides a response.
The report draws the conclusion that a major upgrade of the energy performance of the UK’s entire building stock will be a fundamental pillar of any credible strategy to reach net zero emissions, to address fuel poverty and cut energy bills. The report also concludes that Government is presiding over failed policy which needs to be revived to get back on track to meet energy efficiency targets.
The Government agrees wholeheartedly that energy efficiency is a fundamental pillar of our approach to reaching net zero emissions, addressing fuel poverty and cutting energy bills. This is why the Government has set ambitious energy efficiency targets.
The Government disagrees that energy efficiency policy is failing. Since 1990 the energy demand of the average home has fallen by 16%, emissions from non-domestic buildings have reduced by over 20% and emissions from business and industry have halved.
Energy efficiency has been an important part of this reduction in energy demand. For example, over 2 million homes in Great Britain, more than 1 in 14, have benefited from energy efficiency measures under the Energy Company Obligation since 2013. Investment in energy efficiency delivers benefits for individual households and businesses and the public purse is saving over £100m per year thanks to progress against our Greening Government Commitments.
We do, however, agree that a significant increase in deployment rates will be required in order to deliver the transition to net zero. In the Clean Growth Strategy we set out our strategic aims for energy efficiency on homes, businesses and the public sector within the context of our legally binding fuel poverty and carbon reduction targets.
We remain committed to achieving the aims set out in the Clean Growth Strategy and considering where we can go further in the context of our net zero commitment. Since publishing the Clean Growth Strategy have made clear progress on the policies to deliver those aims. Progress includes:
- Continued to enable greenhouse gas emission reductions through the Public Sector Energy Efficiency Loan Scheme managed by Salix Finance. To date, Salix Finance has funded over 17,000 projects in the public sector, reducing greenhouse gas emissions and achieving estimated savings to the public sector of more than £70 million in 2018/19.
- Agreed a 43% greenhouse gas emission reduction target for government departments by 2020 (based on 2009/10 levels), having achieved the original target of a 32% reduction, three years earlier than required, saving the public purse an estimated £112 million in 2017/18.
- Continued to build on existing programmes and policies that incentivise energy efficiency such as the Climate Change Agreements scheme (worth over £200 million a year across 53 industrial sectors) and the Energy Savings Opportunity Scheme.
- Introduced a new Streamlined Energy and Carbon Reporting framework under the Companies Act from April 2019 to make it easier for businesses to identify where they can save energy and reduce emissions, and disclose action they have taken.
- Launched the £18 million Industrial Heat Recovery Support programme to increase industry confidence in identifying and investing in opportunities for recovering and reusing waste heat from industrial processes and increase the deployment of recoverable heat technologies in industry.
- Announced a £315 million Industrial Energy Transformation Fund to support businesses with high energy use to cut their bills and emissions through increased energy efficiency and help them transition to a low carbon future.
- Committed £6 million to the current Boosting Access for SMEs to Energy Efficiency (BASEE) competition to develop new business models or solutions that reduce costs, simplify processes and encourage the take-up of energy efficiency by SMEs at scale. This aims to overcome access to finance barriers around scale.
- We also plan to consult on tightening the non-domestic minimum energy efficiency standards, which we introduced for privately rented non-domestic buildings in April 2018, in summer this year and are continuing work to develop an energy efficiency scheme for SMEs as announced at Spring Statement this year.
- Introducing Private Rented Sector Minimum Energy Efficiency Standards regulations, and further strengthening these from April 2019, to require landlords to contribute up to £3,500 towards domestic energy efficiency improvements. We will be consulting on the trajectory for raising those standards over time later in the year.
- Reformed the Energy Company Obligation to focus on those households in or at risk of fuel poverty, increasing support for poorer and vulnerable households from £310 million per year to £640 million per year. ECO is worth £640 million a year and has already installed 2.5 million measures since 2013. We have confirmed that investment in energy efficiency will continue, at least at the level of the current ECO, until 2028.
- Implemented the majority of the Each Home Counts review recommendations on consumer advice, protection and standards, including launching the reformed TrustMark Government endorsed quality scheme in October 2018 and publishing new technical standards for domestic retrofit in June 2019. We are consulting on incorporating the new quality scheme and standards into ECO through secondary legislation in Autumn 2019.
- Launched the Buildings Mission, the first Clean Growth Grand Challenge mission, to halve the energy use of new builds by 2030 and halve the cost of renovating existing buildings to similar levels of energy performance.
- Announced the Future Homes Standard for new build homes to be future-proofed with low carbon heating and world leading levels of energy efficiency by 2025, to create healthy homes that are fit for the future, have low energy bills, and are better for the environment.
- Launched a £10 million innovation challenge fund to reduce the cost of whole house retrofit and a separate £5 million innovation fund to support the development of innovative green finance products to enable homeowners to improve their homes
- Launched and funded six local supply chain demonstration projects, which focus on reducing the cost for retrofit and building supply chain capacity whilst also addressing the non-financial barriers to deeper retrofit, such as supply chain fragmentation and the high hassle costs of installing measures.
- Launched Simple Energy Advice, a new digital and phoneline service launched last year to provide homeowners with impartial and tailored advice on how to cut their energy bills and make their homes greener, as well as information on any available financial support.
- Allocated budget to BEIS’s Local Energy Hubs to carry out feasibility studies with local authorities on using fiscal incentives to encourage homeowners to improve their homes.