Memorandum by National Energy Action
INTRODUCTION
National Energy Action (NEA) welcomes the opportunity
to submit evidence to the Science and Technology Committee to
inform its inquiry into the Government's policies on energy efficiency.
For more than 20 years NEA has been actively
involved in the campaign to eradicate fuel poverty in the UK.
Throughout this period the emphasis of our practical demonstration
programmes, and the campaigning activity which advocates their
wider replication, has been on improving standards of insulation
and heating in properties occupied by those most at risk. We believe
this to be the most cost-effective and environmentally sustainable
solution to a widespread problem.
Whilst we understand the Committee's interest
in the contribution that energy efficiency can make to the achievement
of CO2 reduction targets the Energy White Paper gave
equal priority to the objective of ensuring that "every home
is adequately and affordably heated". In NEA's view it is
particularly important that affordability is addressed as a matter
of urgency if the poorest households are not to be further disadvantaged
by pursuit of the environmental objectives of energy policy. That
said, we acknowledge the unique potential for energy efficiency
improvements to serve both a social and environmental objective,
enabling some low-income households to enjoy increased comfort
at lower cost, both to themselves and the wider environment.
The Sustainable Energy Act requires local authorities
to prioritise fuel poverty within their energy efficiency programmes.
NEA hopes that the Committee will also give due weight to the
contribution that energy efficiency can make to the achievement
of the Government's fuel poverty reduction targets. Whilst the
comments which follow reflect our concern that energy efficiency
programmes to tackle fuel poverty should take precedence, we recognise
that many of the issues identified by the Committee are generic
to the domestic sector as a whole.
THE BEHAVIOURAL
ASPECTS OF
ENERGY EFFICIENCY
SCHEMES—THE
QUANTITY AND
QUALITY OF
INFORMATION AVAILABLE,
PUBLIC KNOWLEDGE
AND MOTIVATION
It is widely accepted that public awareness
of the benefits of energy efficiency is negligible and that motivation,
even among relatively well informed consumers, is weak. Consequently,
the quality and availability of information is a minor concern.
In fact most of the literature produced, by fuel supply companies,
the Energy Saving Trust and others, is clear, helpful and attractively
presented (although it mostly requires a fairly high degree of
literacy).
It seems evident that few consumers enquire
about energy efficiency per se. For example monitoring
by Ofgem of calls to fuel suppliers indicates that of around 24
million households in GB only 110,000 enquirers were given verbal
advice about energy efficiency in 2003. 200,000, some of whom
will be the same people, received printed information. In both
cases these figures were lower (by 18-25 per cent) than in the
previous year. Only 10,000 people in 2003 were referred for grants
to help them install energy efficiency improvements, despite the
fact that all these enquirers, and indeed all consumers, are theoretically
eligible for assistance via the fuel companies' Energy Efficiency
Commitment schemes. Only one enquirer in five was told about these
schemes.
However there is some potential to adopt a more
proactive role in promoting energy efficiency as a solution to
the problems which consumers themselves identify. At least for
those on low incomes these are much more likely to be expressed
in terms of difficulty in paying bills or in keeping homes warm
enough. NEA welcomes the research undertaken by Ofgem to try to
sensitise fuel suppliers to the capacity for call centre staff
to recognise such situations as opportunities to provide energy
efficiency advice. Whilst there is some evidence of improvement
in this regard Ofgem has concluded there is room for considerably
more.
More generally we concur with the view expressed
in the Government's energy efficiency implementation plan (Energy
Efficiency: The Government's Plan for Action, Defra, April 2004)
that strong Government action is needed, embracing leadership,
awareness raising and education, coupled with strong support programmes.
We would emphasise that such a campaign needs to be sustained
over a long period. This has not always been the case hitherto.
On occasions information campaigns have been hastily withdrawn
to cater for other priorities (as when the "Are you doing
your bit" information campaign was withdrawn to release resources
to deal with foot and mouth disease). Similarly, budgets for successive
domestic energy efficiency schemes, from the Homes Insulation
Scheme of the 1970s to Warm Front today, have been characterised
by a stop go approach.
Whatever the effort dedicated to raising awareness
NEA believes this will largely be wasted unless prior attention
is paid to simplifying the arrangements which apply to support
programmes. We see no value in endeavouring to persuade consumers
to take action if it is not subsequently a simple and straightforward
process to do so. We outline below our view of how this might
be best accomplished.
THE SCOPE
AND INCENTIVES
FOR IMPROVING
ENERGY EFFICIENCY
NEA commends the thorough investigation of the
potential savings from domestic sector energy efficiency improvement
outlined in the energy efficiency implementation plan. However,
we believe the real challenge will be in realising this potential
given widespread public indifference. We are aware that even in
the experimental Warm Zones, where systematic marketing techniques
are deployed, including street by street approaches, and offers
of free or substantially discounted improvements are made, as
many as 20 per cent of householders refuse these offers or cannot
be helped.
We have no reason to doubt the efficacy of the
research undertaken by Government itself into the barriers to
improving energy efficiency in the domestic sector and spelt out
in both the Defra energy efficiency implementation plan and HM
Treasury's consultation on fiscal incentives to improve energy
efficiency. These identify lack of information, apathy, the cost
of improvements and disruption and inconvenience as the primary
factors inhibiting action on the part of householders. We also
acknowledge that, until the recent reversal of the trend, a decade
of progressively declining fuel prices has also acted as a disincentive.
However, in NEA's view the current institutional
arrangements affecting energy efficiency programmes represent
a further obstacle to be negotiated before these barriers can
be overcome. The plethora of different schemes, each with varying
qualifying criteria, offering a different range of measures, and
sponsored by different private and public bodies, is seen as a
source of confusion even by those with a professional interest
in advising consumers about energy efficiency. NEA favours simplifying
these arrangements by creating a single national programme. We
consider that this would help to overcome barriers to take up
of assistance and help to communicate a clear and straightforward
message about the importance of saving energy.
Such a programme could be constructed by combining
the resources from existing programmes, although we accept that
additional money will have to be allocated to meet more challenging
targets for CO2 reduction. Ideally, this programme
should be funded by taxation, releasing fuel suppliers, and therefore
their customers, from their current financial obligations. NEA
sees this as more equitable, being based on ability to pay, but
also as providing a clear indication of an important national
priority. As a means of raising at least some of the resources
required we support recent suggestions that a windfall tax be
applied to the excess profits made by North Sea oil and gas production
companies and to the proceeds of the sale of distribution networks.
The programme should be comprehensive in form,
both as regards the measures it provides and its availability
to all. Following the precedent of the Homes Insulation Scheme
(the original domestic energy efficiency programme) it should
offer grants to all households that can benefit. Costs should
be met in full for those on low incomes with a taper being applied
to determine the level of household contribution expected from
those who are more affluent. NEA believes that universal entitlement
is likely to maximise take up and avoid some of the difficulties
in marketing programmes exclusively for poorer households.
The objective of the programme should be to
make homes as energy efficient as possible using technically feasible
and cost-effective measures and setting a target energy rating
of SAP 70—the approximate equivalent of current Building
Regulations. It should apply to both owner occupiers and tenants.
We believe that it is desirable to focus on
properties with the lowest SAP ratings in the initial marketing
of the scheme since this will go some way to identifying those
households at greatest risk of fuel poverty. We also believe that
the programme should be able to explore the potential benefits
of renewable sources of energy, domestic CHP and other measures
to solve the particular problems of homes which are hard to heat
economically because they are not connected to the mains gas network
or because the construction type precludes the most common and
cost effective insulation measures.
THE POTENTIAL
FOR TECHNOLOGICAL
IMPROVEMENTS TO
THE ENERGY
EFFICIENCY OF
BUILDINGS
The energy efficiency implementation plan focuses
on the most cost effective improvement measures using proven technologies.
Clearly this is to be commended, particularly since the costs
of these measures will be borne by consumers themselves, including
those who currently have the greatest difficulty in paying for
fuel. However NEA believes that it is neither sufficient nor equitable.
The measures proposed will provide substantial
benefits to those households living in homes with cavity walls,
accessible lofts and gas-fired central heating. Those living in
older, less energy efficient properties, disproportionately the
poorest individuals and families, and those without access to
gas will be disadvantaged by this approach. Almost 45 per cent
of those in fuel poverty in England live in homes without cavity
walls. 36 per cent have no boiler to upgrade. Close to a quarter
have no central heating at all. We acknowledge that the UK Fuel
Poverty Strategy commits the Government to the eradication of
fuel poverty in England, as far as reasonably practicable, by
2016. Some action will need to be taken to tackle such circumstances
at some point. We see no justification for these fuel poor households
being placed at the back of the queue, behind their more affluent
counterparts in more modern properties. It is particularly disappointing
that the implementation plan acknowledges these deficiencies but
effectively postpones any decisions, declaring these to be issues
to be tackled post 2010. Since these concerns have been evident
for some considerable time, and were acknowledged in the 2001
UK Fuel Poverty Strategy, we believe that policy should be going
further and faster to provide remedies than is evidently the case.
Accordingly NEA believes that the anticipated
portfolio of energy efficiency measures in the implementation
plan should be extended, embracing both existing, if expensive,
measures such as solid wall insulation and new technologies such
as heat pumps, micro CHP and roof mounted wind turbines and solar
panels. We note that the implementation plan refers to current
small-scale programmes to support some of these renewable options,
but without indicating any intention to make any of these measures
mainstream. Whilst the need to pilot those which are new and experimental
in the domestic sector is not in doubt, we believe that tried
and tested technology should be on the menu of energy efficiency
improvements available via schemes such as Warm Front and EEC.
THE DEVELOPMENT
AND PROMOTION
OF ENERGY-EFFICIENT
CONSUMER GOODS
NEA welcomes the progress made in improving
the energy efficiency of household appliances by the combination
of regulation and labelling. We support measures to build on the
success of the Market Transformation Programme. However we believe
that there are additional measures which could usefully be taken
to enable people with lower incomes to benefit from the lower
running costs of A rated appliances.
Low-income households commonly have the oldest
and least efficient appliances and there are obviously financial
constraints affecting replacement which do not apply to those
who are more affluent. At worst this means buying second hand
goods which do not meet modern efficiency requirements and may
not comply with contemporary safety standards. The Fridgesavers
scheme, providing A rated cold appliances at a modest cost to
households in receipt of welfare benefits, is a good example of
an innovative response, particularly in view of its links to the
Warm Front programme. This was initially a national scheme, managed
by the Energy Saving Trust on behalf of all fuel suppliers. NEA
regrets that it has become a discretionary programme following
the introduction of EEC. Our understanding is that some, but not
all, suppliers continue to offer this scheme.
We believe a similar approach could be usefully
applied in the case of the Social Fund, administered by the Department
of Work and Pensions. Many thousands of claimants (sadly the Secretary
of State's Annual Report no longer reveals how many) apply for
grants and loans to fund the purchase of essential household items
such as cookers, washing machines and fridges. We think these
claimants should at the very least receive information about appliance
efficiency to assist their choice of product. Ideally the DWP
could collaborate with fuel suppliers' EEC programmes to offer
low cost A rated appliances, or establish its own procurement
scheme.
THE FUNDING
AND CO-ORDINATION
OF RESEARCH
NEA welcomes the recent establishment of a UK
Energy Research Centre. We hope that this will lead to better
coordination of a previously disparate and diffuse area of research
activity. However the relationship between the UKERC and the Towards
a Sustainable Energy Economy programme of which it is a part (itself
sponsored by three different research councils) remains unclear.
We would have expected an Energy Research Centre to co-ordinate
all research activity in this field. As we understand current
plans, more than half the research funds available will support
research that is independent of the UKERC, albeit intended to
be complementary. This seems to us an unduly complex set of arrangements.
We also have some concerns that the agenda for
future research will be dominated by supply side concerns such
as hydrogen fuel cells, renewable generation and the future of
nuclear power, to the neglect of energy efficiency in general
and fuel poverty in particular. NEA has proposed the establishment
of a centre of excellence for fuel poverty research but we are
not optimistic that this will attract support from existing research
councils. Since energy efficiency improvements are the cheapest,
easiest and cleanest solution to both social and environmental
problems, as the Energy White Paper acknowledges, we think it
will be a missed opportunity if research fails to focus on the
practical issues inhibiting their wider take-up.
October 2004
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