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Lord Dixon-Smith: My Lords, again, this set of regulations is welcome, as is anything that works towards better energy efficiency or economy. I must admit that I still have some difficulty with them. Unless one is an expert, these seven pages are couched in such terms that they are incomprehensible. We should attempt to write this sort of regulation in language that ordinary people can read and understand, although I accept that for the aficionados there is inevitably a complexity when dealing with a subject of this sort.
To a degree, the Minister has already responded to my next problem, which was to decide whether the regulations were directed at energy efficiency or more at attempting to find solutions to fuel poverty. There is no doubt that the specification, shall we say, that has been drawn up is being biased within the general community. That is fair enough. I accept that fuel poverty is a particular problem for a large group of people. Anything that alleviates it is desirable. Coming from a Government who resisted attempts in the Housing Bill to raise the fuel efficiency of buildings, it is good to see a conversion.
I have a technical problem, which no doubt the Minister will be able to explain, with the words "fuel-standardised" on the first page of the regulations. We say that a fuel-standardised sum is the amount of actual saving multiplied by different factors depending on the particular fuel that is the source of the energy.
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My first problem arises where the source of the energy is electricity. In my experience, which is somewhat limited, electricity has to be generated. I have never heard of electricity generating electricityI think that the only free electricity floating around is lightning. So I am rather fascinated about why that is included as a source of energy in the first place. No doubt the Minister will be able to explain that.
But that has of course what I would call the strongest multiplier against it, which means that economy is achieved where the source of energy as electricity had the least effect, counting against the amount that has to be saved. That multiplier reduces the saving that is counted in the fuel-standardised context to 0.2 per unit saved. Where the source of the energy is coal, gas or oil, there are lesser multipliers.
Given that a great deal of energy supplied still comes from nuclear, which does not generate carbon dioxide at all, one could have an argument that because there is no carbon dioxide generated, fuel economy is not required except to the extent that we would like to reduce the total capacity of generation. But if we seek long-term environmental benefits and ways to tackle the problems of carbon dioxide emissions and global warming, we would not introduce a multiplier for coal at all. We should offer every possible incentive to shut down coal generation. These factors require further justification. Again, when the Minister responds to this brief debate, will he be able to explain the background to the factors set out on the first page of these regulations? I suspect that he may prefer to write to me in more detail.
I turn now to the inconsistencies of the background policy, in which one finds an immediate nonsense that has not been thought through. The rate of VAT on fuel is 5 per cent, while on insulation it is 17.5 per cent. That is a perverse disincentive. However, I accept that it has nothing to do with these regulations and that we are stepping out of the field of the order before us and into the field of general policy.
Not the least of the difficulties of encouraging householders to take a proper interest in energy saving that the Minister has himself explained is their reluctance to do so under the present circumstances. We shall not solve the problem without going far wider than the specific issues addressed in these regulations. I hope that the Minister will accept that there is a wider context in which these matters have to be addressed. Perhaps he will give me an assurance that the Government are also considering the far more fundamental issues, otherwise it will be difficult to ensure that these regulations are successful. I appreciate that the regulations will work because the incentive is placed on the suppliers, who cannot afford to fail. But the task would be made much easier if the consumer himself were given greater incentives.
Baroness Miller of Chilthorne Domer: My Lords, I should start by declaring an interest. I have just installed a solar water-heating system on my roof, having benefited from a government grant to cover one-quarter of the cost. I am grateful that we were able to take advantage of such a grant. The system is so incredibly
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efficient that if the sun is out for only two or three hours, we have ample hot water to meet our needs all day. All noble Lords are welcome to come and have a look at the system and, indeed, to take a bath in our solar heated water.
I, too, warmly welcome the order as it marks an important step in achieving energy efficiency in the home. Unlike the noble Lord, Lord Dixon-Smith, I have benefited from being able to consult my noble friend Lord Ezra. Unfortunately he is unable to be in his place this afternoon, but he translated the order excellently for me. I acknowledge that the Government published accompanying Explanatory Notes, but I found my noble friend's interpretation infinitely more helpful and brief. Indeed, the notes would have benefited from being divided into explanations addressed specifically to the order, followed by background information. At present the notes are helpful but slightly confusing, given that some of them do not relate directly to the order.
Both my noble friend Lord Ezra and I would like to welcome in particular the innovative action to be taken on micro-generation. We are pleased to see that.
I have one or two questions for the Minister. What is the Government's current energy savings target for the domestic sector by 2010? Is it 5 million tonnes of carbon, or 4.2 million tonnes? I ask that because I think both figures have been mentioned. Although my noble friend Lady Maddock has not asked me to speak on her behalf, I know that she would want the point to be made that it is regrettable that the Government resisted an amendment to the Housing Bill which would have introduced a more substantial provision than that contained in the Act.
Although we welcome the order it does not mean that we have not noticed that departments other than the Minister's own, Defra, seem constantly to be watering down efforts to achieve energy efficiency and sustainability.
The measures under the order will, if successful, contribute savings of 0.7 million tonnes of carbon by 2010. Do the Government have any further proposals on how the remainder will be achieved? Is the Minister aware of any further measures that may be introduced in the near future?
I ask the Minister, again, about the issues that we debated at length during the passage of the Energy Bill. He has just referred to an extra £3 million being given to the Energy Saving Trust, but I remind him that the services offered by the trust are not very widespread or well known on the streets of Britain. Indeed, from my own experience of buying a solar water-heating system, I know that it is difficult to access advice about systems, suppliers and installers. I am sure that the Minister will refer me to the DTI website, but not everyone has access to a computer or the ability to use it. Many of those in particular need of advicefor instance, those suffering from fuel povertyare exactly the people for whom website access is difficult.
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I return to my request that far more information on energy saving should be given out in places where people habitually and easily gofor instance, pubs, supermarkets and doctors' surgeries, which I know contain some information on energy saving but not nearly enough. I ask the Minister to consider whether the Energy Saving Trust should look at more innovative ways of reaching the general public.
The Government estimated that fuel poverty affected about 3 million households in 2001. Given that there has been a substantial rise in the price of energy, what is the Minister's estimate of the number of households that are now in fuel poverty? This should, of course, affect the resources that the Government are putting into this area of work.
I noticed an interesting paragraph in the explanatory notes to the order which perhaps answers the query of the noble Lord, Lord Dixon-Smith. It states:
"Energy improvement is defined as the benefit to the household from an energy efficiency measure, either from lower bills, or from increased comfort".
That is a sentiment with which I entirely agree, although it does not need to be "or" and could be "and". It is an important point to bear in mind.
Finally, I should like to put on record how pleased I am at the Ofgem decision last week on transmission price controls for renewable generation. The price controls were last set in 2000. In 2006, prices will reflect the cost of transmissionparticularly from distant parts of Scotlandof energy generated through renewable sources. I welcome Ofgem's move on that front.
We welcome the order and hope that the Government will take more action in this very important area of work.
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