Select Committee on Merits of Statutory Instruments Sixth Report


APPENDIX: EXPLANATORY INFORMATION


Draft Electricity and Gas (Carbon Emissions Reduction) Order 2008

CARBON EMISSIONS REDUCTION TARGET 2008-11:

PRIORITY GROUP OBLIGATION

Under the draft Electricity and Gas (Carbon Emissions Reduction) Order 2008, covering the period 1 April 2008 to 31 March 2011, energy suppliers are required to achieve at least 40% of their carbon emissions reduction obligation by promoting measures to the priority group. The priority group is defined as those in receipt of at least one of the benefits and tax credits that are listed in Schedule 2 to the Order, or to those aged 70 or over.

The priority group aims to ensure equity for those who spend a larger proportion of their incomes on energy. In providing particular help to low-income consumers and the elderly, it is expected that it will contribute to the alleviation of fuel poverty.

A priority group of 40% is challenging for suppliers, but achievable. It reflects that maximum practical potential in terms of the numbers of measures that may delivered to these consumers, particularly the number of remaining unfilled cavities that could be insulated.

Under the current Energy Efficiency Commitment (EEC), which runs from 1 April 2005 to 31 March 2008, energy suppliers are required to achieve at least 50% of their energy efficiency obligation by promoting measures to a priority group of consumers in receipt of income/disability benefits and tax/pension credit. (The EEC 2005-08 priority group does not include those aged 70 or over).

Although the figure of 40% for the priority group under the Carbon Emissions Reduction Target (CERT) might seem to imply a lower level of activity than the EEC 2005-08 priority group obligation of 50%, it represents an actual increase in the level of activity aimed at low-income and elderly consumers. This is because CERT requires a broad doubling of activity compared to EEC 2005-08. As a result, the amount of activity in the priority group will increase by about 60%.

In terms of investment by energy suppliers under CERT, an estimated £1.5 billion will be directed to the priority group, or about 55% of their total investment for the CERT programme. Under EEC 2005-08, an estimated £775 million will be directed to the same group of consumers (the EEC 2005-08 low-income priority group, plus those aged 70 or over).

Under CERT, the draft Order allows energy suppliers to achieve a proportion of their priority group obligation by directing specified measures to consumers in the private housing sector who are in receipt of income/disability benefits or tax/pension credit. Under this option, measures more likely to remove households from fuel poverty are directed at precisely those households who are more likely to be in fuel poverty.

Department for Environment, Food and Rural Affairs

December 2007




 
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