Memorandum by The Royal Society for the
Protection of Birds
EXECUTIVE SUMMARY
This inquiry is timely because the UK's carbon
dioxide emission projections have just been revised upwards, with
the result that the cuts previously expected from the current
suite of emission reduction measures will fall significantly.
There is thus an urgent need for the UK either to put in place
additional reduction measures or strengthen existing ones, or
both.
In this memorandum, the RSPB outlines current
energy efficiency policy in the UK and the measures that the Government
has or will put in place in order to achieve the carbon reduction
targets set out in the Energy White Paper 2003. We discuss the
barriers to improving energy efficiency along with additional
measures that the RSPB advocates.
We believe that much of the emphasis on making
energy efficiency improvements has been placed on industry and
that successive governments have failed adequately to tackle energy
efficiency in the commercial sector or in households. With regard
to households, there continue to be unnecessary trade-offs between
improving energy efficiency and tackling fuel poverty.
In principle, we welcome the proposals to extend
the Energy Efficiency Commitment (EEC). But in light of the revised
carbon dioxide projections for the UK, we consider that the EEC
for the period 2005 to 2008 should be strengthened by the obligation
being set at 200 Terrawatt hours, rather than the 130 Terrawatt
hours proposed. This would yield a carbon saving of about 1 MtC
per year and should be achievable at net financial benefit.
We are broadly in favour of the proposed amendments
to Part L of Building Regulations to improve building energy efficiency
by 25 per cent. However, the Government should ensure that the
Regulations are implemented, monitored and enforced. In addition,
further amendments need to be undertaken as soon as possible in
light of the Sustainable and Secure Buildings Act 2004.
We believe that targeted economic instruments
will provide the correct signals to encourage householders to
make energy efficient choices. A combination of price reductions
for the most efficient products and price increases for the least
efficient will give consumers a clear indication of the UK Government's
commitment to energy efficiency.
INTRODUCTION
1. The Royal Society for the Protection
of Birds (RSPB) is Europe's largest wildlife charity with over
one million members. We manage one of the largest conservation
estates in the UK with 182 nature reserves, covering more than
126,846 hectares. The RSPB is part of the BirdLife International
partnership, a global alliance of independent national conservation
organisations working in more than 100 countries worldwide.
2. We consider that human-induced climate
change poses the biggest long-term threat to global biodiversity.
We therefore support policies and measures that reduce the anthropogenic
greenhouse gas emissions that cause climate change. We generally
support the conclusions of the Energy White Paper, in particular
its long-term target of reducing emission by 60 per cent by 2050.
3. To help meet that threat, we believe
the heaviest emphasis must be on the largest, cheapest and least
damaging source of carbon reduction—energy efficiency and
lowered demand, in both the energy and transport sectors. Estimates
of the cost effective savings from energy efficiency vary but
are uniformly high. Currently, neither reductions in energy consumption,
nor the adoption of energy efficiency measures and devices approach
cost effective levels, and much more should be done through policy
and public outreach to close the gap.
4. In addition to its long-term target of
reducing carbon dioxide emissions by 60 per cent by 2050, the
UK Government aims to reduce carbon dioxide emissions by 20 per
cent by 2010, and comply with its formal Kyoto Protocol target
to reduce emissions of the six main greenhouse gases by 12.5 per
cent by 2010. This inquiry is timely because the UK's actual carbon
dioxide emission projections have just been revised upwards, with
the result that the cuts previously expected from the current
suite of emission reduction measures will fall from 15.4 per cent
from 1990 levels by 2010 to 14.3 per cent. Even if new measures,
such as the EU emissions trading scheme, are taken into account
CO2 emissions are projected to fall by only 15.2 per
cent by 2010, compared with the previously expected 16.3 per cent,
well short of the UK target of 20 per cent. There is thus an urgent
need for the UK either to put in place additional emission reduction
measures or strengthen existing ones, or both.
BACKGROUND TO
UK ENERGY EFFICIENCY
POLICY
5. The UK plans to achieve the bulk of its
emission reductions by reducing energy demand, mainly by increased
energy efficiency. However, especially in the case of the 60 per
cent target, it would be impossible to expect to achieve all reductions
in this way. Assuming an increasing improvement in living standards,
there are limits below which reducing energy demand (including
energy efficiency) becomes increasingly expensive whilst improved
energy intensity (more low or zero carbon energy supply) is comparatively
cheap, especially if economies of scale are realised. Emissions
reductions of 60 per cent or more require both energy efficiency
(and demand reduction) and renewable supply.
6. The exact balance among energy efficiency
(and demand reduction) and renewable technologies, and among the
various efficiency and renewable technologies, could vary considerably.
The main factors in deciding how policy should seek to affect
that balance are cost, technical potential, and the potential
impacts on health, safety and the environment, including wildlife.
Political will, public education and people's eventual willingness
to modify lifestyles can also play an important role.
7. With respect to the balance between efficiency
and renewable energy, in terms of both cost and impacts on wildlife,
energy efficiency and demand reduction measures are generally
to be strongly preferred in reducing greenhouse gas emissions.
Demand reduction is almost inevitably cost beneficial and many
forms of energy efficiency can be delivered at zero cost or, often,
net benefit.
8. As energy efficiency and demand reduction
offer the prospect of saving money at the same time as combating
climate change, most of the climate change-related policies and
measures adopted by the UK are primarily about efficiency and
demand reduction. The table below shows those measures which are
targeted at improving energy efficiency.
UK POLICIES FOR
GREENHOUSE GAS
EMISSION REDUCTIONS[34]
|
| Estimated carbon saving (MtC equivalent) pa
|
|
| Policy | 2005
| 2010 | 2015
| 2020 |
| Climate Change Levy (CCL) | 1.0
| 2.0 | 2.0
| 2.0 |
| CCL exemptions | 0.3
| 0.5 | >0.5
| >0.5 |
| Climate Change Agreements and IPPC | 1.3
| 2.5 | 3.3
| >4.2 |
| UK Emissions Trading Scheme[35]
| 2.0 | 2.0
| >2.0 | >2.0
|
| Building regulations | 0.8
| 1.4 | >1.0
| >1.0 |
| Energy use in buildings | 0.0
| 0.1 | 0.1
| 0.1 |
| Energy Efficiency Commitment[36]
| 2.0 | 2.6-3.7
| 4.5 | 4.5
|
| Home energy efficiency scheme | —
| 0.2 | [37]
| |
| Standards and labelling | —
| 0.2-0.4 | [38]
| |
| Central heating for fuel poor | —
| 0.1 | 0.1
| 0.1 |
| Public sector targets | —
| 0.5 | 0.5
| 0.5 |
| Fuel duty escalator to 1999 | —
| 1-2.5 | 1.8
| 1.8 |
| EU voluntary agreements[39]
| — | 4.0
| 5.75 | 7.5
|
| Ten Year Plan | —
| 1.6 | 1.6
| 1.6 |
| Sustainable distribution | —
| 0.1 | 0.1
| 0.1 |
| Total carbon saving in 2010, compared to 1990 levels (all gases).
| 25.95[40]
| | |
| Total percentage saving in 2010, compared to 1990 levels
| | 23 per cent
| |
|
9. The Energy White Paper suggests that, of the additional
cuts of 25 MtC needed by the UK by 2020, 8-12 Mt are likely to
come from energy efficiency (plus a further 2-4 Mt from the EU
emissions trading scheme, which will itself tend to drive energy
efficiency), and only 3-5 Mt from an increase in renewables.
10. To a large extent, current carbon reduction policy
already tends to favour energy efficiency over renewable supply
because of the strong preference for market-based fiscal (and
voluntary) policy instruments, such as emission trading, the climate
change levy and associated agreements. This approach inherently
favours energy efficiency and demand reduction over renewable
supply options, since market solutions rationally lead to the
least cost solution, and efficiency is generally cheaper than
renewable supply.
BARRIERS TO
UPTAKE OF
ENERGY EFFICIENCY
MEASURES
11. Energy efficiency normally has clear advantages in
terms of emission abatement, cost, technical feasibility and impacts
on wildlife, but it is often practically and politically difficult
to devise and implement policies that encourage its widespread
take-up. The first reason is that energy costs in both business
and in homes typically represent quite a small proportion of total
outgoings. There is thus little financial incentive to cut energy
use, although recent rises in energy prices will increase this
incentive in all sectors. Linked to this is the fact that energy
saving devices sometimes require significant capital outlay, typically
being more expensive than less efficient products that fulfil
the same function. Thus, although they save money in the longer
term, the higher initial cost is often a significant barrier to
their exploitation. Also, there is often a reluctance to switch
from a tried and tested technology to another, newer one.
12. As a consequence, energy efficiency measures and
technologies, even when they yield significant costs savings and
are subsidised by government, usually have slow and limited take-up.
Examples of this include energy saving white goods (such as fridges,
washing machines and condensing boilers) and compact fluorescent
light bulbs. With the establishment of the EU appliance efficiency
labels, this situation is beginning to change.
13. The slow acceptance of energy saving appliances is
compounded by an ongoing trend to consume more energy. In the
domestic sector, for example, the average home not only has far
more energy consuming devices than it did a few decades ago but
the perception of what constitutes a comfortable living temperature
has also risen. In fact, domestic energy efficiency in homes has
risen significantly over the decades but it has been offset by
the increase in energy use.
14. A major hindrance to the widespread uptake of energy
efficiency and reduced demand has been political—a reluctance
by successive governments to introduce policy that would force
more action from ordinary people by, for example, taxing domestic
heating fuel, or applying the climate change levy "downstream"
directly on ordinary homeowners. A justifiable fear that such
policies would exacerbate fuel poverty has also been a powerful
political constraint on action in that sector. Even when it has
attempted to influence individuals in the domestic sector, the
Government has preferred to act indirectly, through the energy
supply industry. For example, the Energy Efficiency Commitment
places an obligation on electricity and gas suppliers to meet
efficiency targets on behalf of their customers by persuading
them to purchase more energy saving goods. While the Energy Saving
Trust is focused principally on improving efficiency in the domestic
sector, it has been given few resources or policy tools to go
far beyond the provision of advice.
15. Partly because of political factors constraining
action in the domestic sector, the Government has increasingly
turned to putting the onus for achieving efficiency gains upon
big business and industry. Most of the contribution to carbon
reduction in the next few years will come from energy efficiency
in this sector brought about by a combination of the emissions
trading scheme and the climate change levy and its associated
agreements. Even in the industrial sector, however, perceived
impacts on the competitiveness of UK industry have acted to constrain
Government's ambitions, with the result that industrial targets
for carbon reduction have generally been weak, and have been confined
to some sectors and not others. For example, under pressure from
strenuous lobbying from industry, the UK National Allocation Plan
(NAP) under the EU Emissions Trading Scheme (ETS) ended up with
a very small target reduction, focused exclusively on the power
generation sector, since power is not internationally traded.
In fact, subsequent analysis by the Carbon Trust has revealed
that adverse impacts on UK industry will be negligible, except
in the case of aluminium.[41]
Even for firms that are captured under one or more of the general
fiscal instruments, economically rational efficiency decisions
are often missed, especially by smaller firms for whom energy
represents a relatively small proportion of expenditure. For this
reason the Government has employed a number of flanking policy
instruments, including direct support for business efficiency
through the Carbon Trust, and indirect support through enhanced
capital allowances for eligible efficiency technologies, to increase
and accelerate uptake of business energy efficiency.
16. The fundamental problem with this approach is that
potentially large, inexpensive, and environmentally benign carbon
savings from energy efficiency and demand reduction are being
missed, especially in the domestic sector. It is also arguable
that, in spite of the emphasis of current policy on business energy
efficiency, insufficient policy instruments are available to increase
the uptake of energy efficient measures in commercial sectors,
especially among small and medium sized enterprises.
RSPB POLICY ON
ENERGY EFFICIENCY
AND DEMAND
REDUCTION
17. In general, the RSPB advocates much greater Government
action to improve energy efficiency and reduce energy demand.
Whilst recognising the various practical and political constraints
on policy to encourage greater energy efficiency, we believe that
very much more should be done, especially in the domestic and
commercial sectors, where we would propose a target for a 40 per
cent improvement in energy efficiency by 2020. Rather than continuing
to use the scourge of fuel poverty as a reason to postpone or
weaken domestic action on energy efficiency, the existing fuel
poverty strategy should be significantly strengthened and resourced,
to accelerate the rate at which the problem is reduced and eventually
eliminated. Much more effort should be made to educate and inform
the public about the consequences of their energy choices, and
financial and other instruments put in place to channel those
choices in rational directions.
18. In principal, we welcome the proposed extension to
the Energy Efficiency Commitment (EEC).[42]
However, in the context of upwardly revised emissions projections,
the RSPB considers that the EEC for the period 2005 to 2008 should
be strengthened by the obligation being set at 200 Terrawatt hours,
rather than the 130 Terrawatt hours proposed. This would yield
a carbon saving of about 1 MtC per year and should be achievable
at net financial benefit (we note that it was originally Defra's
intention to treble, rather than double, the obligation and our
proposal is consistent with this). Consideration should also be
given to extending the EEC to the commercial sector.
19. The RSPB is also generally supportive of the proposals
to amend Part L of the Building Regulations to improve building
energy efficiency by 25 per cent.[43]
However, the Government needs to ensure that local authorities
are adequately financed so that building control departments can
ensure the regulations are implemented, monitored and enforced.
In addition, now that the Sustainable and Secure Buildings Act
has been passed by Parliament, the Government needs to ensure
that the new powers that this Act provides are used effectively
by amending Building Regulations as soon as possible. For all
new homes we recommend requiring that by 2006 the Ecohomes "Excellent"
standard is met.
20. The use of targeted economic instruments will also
provide the correct signal to encourage householders to make energy
efficient choices. A combination of price reductions for the most
efficient products and price increases for the least efficient
will give consumers clear direction of the UK Government's position
in relation to action to improve energy efficiency as part of
its drive to reduce UK carbon emissions.
21. The RSPB believes that lowering VAT on products with
an improved environmental performance will encourage consumers
to switch away from products that cause more damage to the environment.
In terms of energy efficiency, we support the introduction of
5 per cent VAT on:
— A-rated household appliances (especially cold
appliances).
— Compact Fluorescent Lamps (CFLs).
— DIY energy efficient products such as loft insulation
and draught stripping.
22. As an important complementary measure, the RSPB believes
that HM Treasury should impose a charge on the least energy efficient
products. These would include:
— A 10-20 per cent charge on household appliances
with an EU Energy label rating of C to G.
— A 50 pence charge on tungsten light bulbs.
23. In addition to these measures, we believe that homeowners
should be encouraged to improve the fabric of their property to
make it more energy efficient. Measures which should be adopted
to achieve this include:
— Stamp duty rebates for installing energy efficiency
measures.
— One-off Council tax rebates where energy efficiency
measures have been installed.
— Incentives for house builders to adopt standards
beyond Building Regulations. This could be offered as a rebate
on Corporation Tax or as a cash-back payment, linked to the extra
cost of construction.
24. It is uncertain that, even with the introduction
of all the measures outlined above, the Government will achieve
the carbon reduction targets that are needed from improved energy
efficiency. It is likely that other measures will also be needed.
This will include the provision of additional advice and information
to householders on energy efficiency and how this will contribute
to the reduction of the impacts of climate change.
October 2004
34
From the The UK's Third National Communication under the United
Nations Framework Convention on Climate Change, Defra 2001. Back
35
Soon to be supplemented and, in 2008 superseded by the EU Emissions
Trading Scheme (EU ETS). Back
36
Including the effects of other related measures. Back
37
After 2010, estimates are included under energy efficiency commitment. Back
38
After 2010, estimates are included under energy efficiency commitment. Back
39
Includes differentiated Vehicle Excise Duty and changes in company
car taxation concerning carbon dioxide. Back
40
The EU emissions trading scheme should give a further saving
of 1.5 MtC by 2008. Back
41
The Carbon Trust, The European Emissions Trading Scheme: Implications
for Industrial Competiveness (2004). Back
42
Defra consultation on the Energy Efficiency Commitment from April
2005 (August 2004) Back
43
ODPM Consultation on the Proposals for Amending Part L of the
Building Regulations (October 2004). Back
| 
