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Energy Efficiency HOUSE OF LORDS Science and Technology Committee 2nd Report of Session 2005-06 Energy Efficiency Volume II: Evidence Ordered to be printed 5 July and published 15 July 2005 Published by the Authority of the House of Lords London: The Stationery Office Limited £25.50 HL Paper 21-II CONTENTS ORAL EVIDENCE Department of Environment Food and Rural Affairs Written evidence 1 Oral evidence 3 November 2004 27 Supplementary written evidence 39 Carbon Trust Oral evidence 10 November 2004 43 Association for the Conservation of Energy Written evidence 55 Oral evidence 10 November 2004 63 Professor Sandy Halliday, Ms Lynne Sullivan, and Professor Tadj Oreszczyn Written evidence (Professor Tadj Oreszczyn and Professor Robert Lowe) 70 Oral evidence 17 November 2004 74 Supplementary written evidence (Professor Sandy Halliday) 83 Supplementary written evidence (Lynne Sullivan) 87 Mr Steve Irving, House Builders’ Federation and The Peabody Trust Oral evidence 17 November 2004 87 UK Energy Research Centre, Professor Geoff Hammond, and Mr Richard Starkey, Written evidence (Richard Starkey and Dr Kevin Anderson) 95 Oral evidence 1 December 2004 100 Supplementary evidence (Richard Starkey and Dr Kevin Anderson) 113 Energy Saving Trust Written evidence 116 Oral evidence 8 December 2004 122 Scottish and Southern Energy, and British Gas Written evidence (Scottish and Southern Energy) 131 Oral evidence 8 December 2004 135 International Energy Agency Oral evidence 12 January 2005 146 Intellect, and the Institute of Refrigeration Oral evidence 19 January 2005 156 Market Transformation Programme Oral evidence 162 Building Research Establishment Oral evidence 169 Dr Leonard Brookes Written evidence 179 Oral evidence 9 February 2005 185 Confederation of British Industry (CBI) Oral evidence 2 March 2005 190 Aluminium Federation, British Cement Association and Castle Cement Written evidence (British Cement Association) 197 Oral evidence 2 March 2005 203 Supplementary written evidence (Aluminium Federation) 209 Supplementary written evidence (British Cement Association) 213 Sir Michael Willcocks KBE, Gentleman Usher of the Black Rod, and Mr Henry Webber, Director or Parliamentary Estates Written evidence (Director of Parliamentary Estates) 217 Oral evidence 9 March 2005 220 Combined Heat and Power Association Written evidence 227 Oral evidence 9 March 2005 240 Lord Whitty, Minister for Food, Farming and Sustainable Energy, Miss Jackie Jones, Department for Environment, Food and Rural Affairs, and Mr Simon Barnes, Office of the Deputy Prime Minister Oral evidence 6 April 2005 250 WRITTEN EVIDENCE A Power for Good Ltd 264 Ms Sonia Boehmer-Christiansen 265 British Nuclear Fuels Plc 267 Calor Ltd 271 Cavity Insulation Guarantee Agency and the National Insulation Agency 272 Energy Advice Providers Group of the Energy Efficiency Partnership for Homes 274 Energy Retail Association 277 Environmental Industries Commission Climate Change Group 282 Ms Tina Fawcett and Dr Mayer Hillman 284 Fells Associates 289 Mr John Field 290 George Wimpey UK 292 Institute of Physics 297 Institution of Electrical Engineers 299 National Energy Action 302 National Energy Foundation 305 Ofgem 306 Planning Officers’ Society and Local Government Association 309 Research Councils UK (RCUK) 313 Council for the Central Laboratory of the Research Councils (CCLRC) 317 Engineering and Physical Sciences Research Council (ESPRC) 319 Economic and Research Council (ERSC) 321 Natural Environment Research Council NERC) 323 Royal Academy of Engineering 324 The Royal Society 327 Royal Society for the Protection of Birds 328 Sciotech 332 Solar Thermal 335 Mr Paul Spare 338 United Utilities 340 NOTE: The Report of the Committee is published in Volume I, HL Paper No. 21-I. 3012071001 Page Type [Ex 1] 07-07-05 18:45:37 Pag Table: LOENEW PPSysB Unit: PAG1 Minutes of Evidence TAKEN BEFORE THE SCIENCE AND TECHNOLOGY COMMITTEE WEDNESDAY 3 NOVEMBER 2004 Present Lewis of Newnham, L Platt of Writtle, B Lindsay, E Sharp of Guildford, B Patel, L Wade of Chorlton, L Paul, L Winston, L Perry of Southwark, B Young of Graffham, L (Chairman) Memorandum by Defra Introduction 1. Energy EYciency has been identified as the most cost eVective way to deliver all four of the Government’s energy policy goals, as set out in the Energy White Paper: reducing carbon emissions, and ensuring security of supply, competitiveness and that every home is adequately and aVordably heated. 2. In April 2004 Energy EYciency: The Government’s Plan for Action1 was published, fulfilling a commitment in the February 2003 Energy White Paper to publish an implementation plan setting out in detail how the Government intended to deliver the strategy outlined in the White Paper. At the same time the Government also published the first annual report on the Energy White Paper, the second annual report on the Fuel Poverty Strategy and the CHP (Combined Heat and Power) Strategy. 3. The Action Plan stands as an up-to-date compilation of the Government’s delivery plans, but a number of significant developments have taken place since its publication: — Defra consulted publicly on the proposals for the next phase of the Energy EYciency Commitment (EEC) between May and August. The proposal for the 2005–08 phase of EEC was in line with that outlined in the Action Plan. The details of the scheme will be finalised in a Statutory Instrument to be laid before the end of the year; — In July, ODPM issued the public consultation document on Part L of the Building Regulations. Consultation concluded on 22 October;2 — In July, the Government issued its response to the Sustainable Buildings Task Group, agreeing, amongst other things, to develop a Code for Sustainable Buildings, going beyond the minimum standard set through regulations. Key elements of the Government’s response are included at Annex 4.1; — In September, Defra announced the terms of reference for the review of the Climate Change Programme. A period of public consultation is due to start in November, with an updated programme published in the first half of 2005. The review will oVer the opportunity to update the UK’s emission and energy projections, evaluate existing policies and appraise options for new or enhanced policies and measures. Summary of the Government’s Existing Energy Efficiency Policies 4. In the Energy White Paper we announced our long-term goal to reduce the UK’s carbon emissions by some 60 per cent by around 2050, with real progress by 2020. This will build on our existing goal of moving towards a 20 per cent reduction in carbon dioxide by 2010. We will need to make a step change in the rate of improvement in energy eYciency if we are to successfully make this transition to a low-carbon economy. 1 www.oYcial-documents.co.uk/document/cm61/6168/6168.htm 2 Available at www.odpm.gov.uk/stellent/groups/odpm–buildreg/documents/page/odpm–breg–029821.hcsp 3012071001 Page Type [E] 07-07-05 18:45:37 Pag Table: LOENEW PPSysB Unit: PAG1 2 energy efficiency: evidence 5. Energy eYciency has been improving steadily over recent years, but the technical potential to further reduce energy use, using tried and tested technologies, is well established. Across the economy as a whole it is estimated3 that we could reduce energy use by around 30 per cent. The White Paper identified potential savings of around 10 million tonnes of carbon (MtC) by 2010, and a similar quantity by 2020. The Energy EYciency Action Plan set out how we will achieve such a step-change and deliver these savings, with a particular focus on the period to 2010. 6. Although huge opportunities exist to improve energy eYciency in a cost-eVective way, they are not being taken up at the rate we need. Individuals and businesses could make financial savings by using energy more eYciently, yet they frequently do not do so despite measures being cost-eVective. The key barriers to action are behavioural and organisational, such as lack of senior board level commitment in large organisations; the landlord/tenant barrier in commercial property; and the hassle-factor in private homes. Barriers such as lack of awareness of the most cost-eVective options, or financial ones, such as the lack of up-front capital, are all aggravated by a relatively weak energy price incentive which, for most consumers, is a small element of overall expenditure. Low energy prices have, of course, had major benefits for other objectives such as fuel poverty and competitiveness. Recent price rises may help to stimulate increased interest in energy saving, but it is too early to determine whether this is the case. Other barriers may include: the perception that energy use is an uncontrollable overhead; the fact that its use is often driven by habits which may not be cognitive; and products, systems and emotional needs which lock us into particular behaviours; all of which may not be amenable to solutions based on rational choice, but which may respond to enabling measures transforming the market. 7. The key lesson we have drawn from our experience and research to date is that individuals and organisations respond best to a combination of strong, consistent government action including regulatory mechanisms, fiscal incentives, leadership, awareness-raising and education, coupled with eVective market- facing support programmes delivered by organisations like the Carbon Trust and the Energy Saving Trust. The Action Plan set out a balanced package of measures designed to overcome these barriers to energy eYciency. 8. Key elements of the Plan, updated where relevant, are: — In households we aim to deliver savings of around 4.2MtC per year by 20104. Activity levels for the Energy EYciency Commitment (EEC) over the period 2005–11 will be roughly double those under the current EEC, with targets set in two phases: 2005–08 and 2008–11. In finalising the target for 2008–11 through a review in 2007, we will wish to ensure we have the most up-to-date information on measures, costs and industry capacity, as well as considering whether other possible carbon abatement options (such as emissions trading) could support the delivery of the EEC target.
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