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Energy White Paper 2007

The UK White Paper on Energy, released 23rd May 2007, set out to address two long-term energy challenges:

  • Tackling climate change by reducing carbon dioxide emissions both within the UK and abroad; and
  • Ensuring secure, clean and affordable energy as the UK becomes increasingly dependent on imported fuel.

The paper proposed to meet these challenges through saving energy, developing cleaner energy supplies, and securing reliable supplies of energy at prices set in competitive markets.

The report states that “increasing our energy efficiency is the least expensive and most immediate way of addressing all our energy and climate goals simultaneously” since it reduces carbon emissions, improves security of supply through reducing the need for energy imports, and reduces fuel poverty through lower bills.

Alongside pushing for international agreements on higher standards of energy efficiency, the UK is to take domestic action in order to help meet the EU target of a 20% saving in energy consumption through energy efficiency by 2020. Existing energy saving policies are set to reduce carbon dioxide emissions by 10 MtC by 2010, accounting for 40% of annual UK carbon savings. By 2020 these same policies should provide a reduction of 12-13 MtC compared to a business as usual scenario.

The white paper identifies further savings that can be made in the Household, Business and Public sectors, and the policies to do so.

Reducing Energy Demand in Households

Existing energy efficiency policies, such as Warm Front, Decent Homes, and the Energy Efficiency Commitment (EEC) are estimated to have reached half of all UK homes. However, additional opportunities for energy savings remain. For example, there are an estimated 8 million homes that could benefit from cavity wall insulation, and addressing this, together with the further deployment of energy efficient boilers, could produce 9 MtC savings by 2020. Therefore existing policies still have a lot of potential.

It is planned to replace the EEC from April 2008 with the Carbon Emission Reduction Target (CERT). Under CERT, energy suppliers will be required to double their carbon reduction target, but will be able to draw upon a greater range of measures to achieve this, including micro-generation.

→ ACE is broadly supportive of the move to CERT but is concerned that the flexibility arrangements will not supply significant amounts of micro-generation. Visit ACE’s Response to the DEFRA Consultation on CERT for further information.

Increasing the provision of information to households about their energy consumption is a key policy of the white paper. In future, customers will be able to view historic information on their energy bills, as well as being able to compare their consumption with similar types of houses. Smart meters, which can display accessible real time information on energy consumption and allow for accurate billing by suppliers, will be present in all households within 10 years. From May 2008 every new or replacement meter should have a real time energy display and any household wanting a real time energy display should be able to request one for free.

→ ACE’s view is that real time energy display units will help reduce domestic energy demand in the years before smart meters are available, though it is important to ensure that gas consumption is also metered. See ACE’s Response to the DTI consultation on metering & billing for further information.

The introduction of Energy Performance Certificates (EPCs) for homes will provide households with further information on their home’s energy performance, energy running costs, and ways to improve the energy efficiency to reduce fuel bills and carbon emissions.

→ ACE’s view is that EPCs should facilitate many domestic energy efficiency improvements. For more information see The Warren Report: ‘Long awaited buildings directive creeps towards finishing line’.The Warren Report: ‘Long-awaited buildings directive creeps towards finishing line’.

Reducing Energy Demand in Business

Currently, energy demand in business is being reduced through Climate Change Agreements (CCAs) with the State. CCAs require businesses to meet a negotiated target of energy efficiency improvements or carbon emissions reductions. In exchange for meeting these targets, the business is given an 80% reduction in the Climate Change Levy – the level of tax on their energy use.

→ ACE is concerned that many of the sectors currently receiving an 80% reduction on the CCL are not meeting their CCA targets. See The Warren Report: ‘When passing laws to save energy means putting our heads in the sand’.

To reduce the emissions used by businesses not covered by CCAs, the Carbon Reduction Commitment (CRC) is being introduced. The CRC is a cap and trade emissions reduction scheme limited to businesses with an electricity consumption of over 6000MWh per year. All emissions covered by CCAs are exempt from the CRC, as are those emissions administered under the EU Emissions Trading Scheme. If over 25% of any business’s emissions are covered by a CCA then the emissions from the entire organisation are exempt. The initial allowances under CRC are allocated by auction, with the revenue received then recycled to the organisations taking part in proportion to cumulative emissions – rewarding companies that have reduced their emissions the most.

→ ACE supports the introduction of a mandatory CRC scheme. However, this is conditional on it being more ambitious in terms of carbon saved. We proposal a savings target of 3MtC by 2020, representing a 20% reduction from the sector. See ACE’s response to the DEFRA consultation on CRC.

Improving the provision of information is also a key policy in reducing business consumption. The requirement for businesses to display EPCs is being consulted on. Smart meters are to be provided to all but Small and Medium Sized Businesses (SMEs) over the next five years.

→ ACE’s view is that SMEs should be provided with smart meters as argued in The Warren Report: ‘The UK must not miss this opportunity to grab the neglected SME market’.The Warren Report: ‘The UK must not miss this opportunity to grab the neglected SME market’.

Reducing Energy Demand in Public Buildings

Each Government Department has a target to reduce carbon emissions relative to 1999/2000: 12.5% by 2010/11, and 30% by 2020. The Government estate should also be carbon neutral by 2012, including the use of carbon offsets. There is also an energy efficiency improvement target from 1999/2000 levels: 15% by 2010, and 30% by 2020. The introduction of the CRC should help achieve the above targets.

In addition, £110 million has been allocated to improving energy efficiency in refurbished schools. All future Service Families Accommodation should meet rating 3 of the Code for Sustainable Homes (see below), while public buildings and those providing a public service greater than 1000m2 will be required to display an EPC in a visible place.

→ ACE’s view is the requirement to display EPCs should be interpreted in the spirit of the Energy Performance of Buildings Directive, with all buildings used by the public requiring a certificate to display. See ‘This Is One Opportunity That Must Not Be Missed’.ACE Warren Report (2004-07-08) – This is one opportunity that must not be missed (EPBD transposition)

Raising Product Standards

Increasing the energy efficiency of products could save an estimated 1-3 MtC by 2020. In part this will be achieved through international agreements such as the IEA “1 watt initiative” to reduce standby consumption, and the Eco-Design of Energy-using Products (EuP) directive which requires mandatory improvements. In addition, the White Paper gives a commitment to phase out GLS bulbs by 2011 where an efficient alternative exists.

→ ACE is very supportive of the phase out of inefficient products such as the GLS.

Raising Building Standards

With 45% UK emissions coming from buildings (Housing 27%, non-Domestic 18%) and an estimated 9 million new homes being constructed by 2050, the White Paper has set out an ambitious target of all new homes being carbon zero by 2016. This will require that over a year the net emissions from a home be zero, and will involve both energy efficient homes and the use of renewable energy installed in the home or locally. To achieve this goal, progressive improvements will have to be shown, with a 25% improvement by 2010, rising to 44% by 2013.

The Code for Sustainable Homes is a national standard that defines the sustainability of a home based on it’s energy requirements, but also on criteria such as waste, ecology, water, and materials. Houses are grouped into 6 star categories, with each category representing a percentage improvement on homes that are built to Part L of the Building Regulations in 2006. For example a 3 star rating is 25% better, while 5 star represents a 100% improvement. Carbon zero homes are given a 6 star rating. To encourage 6 star rated zero carbon homes, stamp duty has been abolished on such houses’ values up to £500,000, with a £15,000 reduction on stamp duty for houses over £500,000. The Department for Communities and Local Government have promised to deliver over 1000 new 5 star rated homes. Social landlords, and new homes developed by English Partnerships, together with the 2012 Olympic Village, will have to meet at least a 3 star rating.

→ See ACE’s response to the PPS on planning and climate change.

The White Paper addresses a concern over non-compliance with the Building Regulations, which has occurred due to a lack a training of inspectors and therefore a lack of prosecutions. It highlights a large training and dissemination program over 2005/6 to improve awareness and compliance.

→ ACE is concerned by the amount of carbon savings attributed to improvements in the building regulations, as studies show that the required levels of compliance are not being achieved. See Assessment of Energy Efficiency Impact of Building Regulations Compliance and Compliance with Part L1 of the 2002 Building Regulations.

Addressing Fuel Poverty

The number of households in the UK in fuel poverty (where 10% of income is spent on energy bills) fell from 6.5 million in 1996 to 2 million in 2004. However, increasing energy prices between 2004 and 2006 increased this figure to 4 million1. No new policies were announced in the White Paper to address this but extensions to existing policies include:

  • Energy efficiency and income assistance to 100,000 Pension Credit recipients.
  • Providing £75 million to help identify fuel poor households and offer tailored energy efficiency advice.
  • Increasing the flexibility of the EEC (now to be CERT) by allowing suppliers to target a smaller share of households from the vulnerable group, providing they direct more expensive measures towards them.

→ See section 5 within ACE’s Response to the DEFRA Consultation on CERT.

In total the new polices announced in the White Paper are estimated to save between 7 and 11.7 MtC with 4.7-7.6 MtC from Housing, 1.6-2.9 MtC from Business, and 0.7-1.2 MtC from the Public sector.

To see the full version of the White Paper and associated papers go to: http://www.dti.gov.uk/energy/whitepaper

1 http://www.defra.gov.uk/environment/climatechange/uk/household/fuelpoverty/fpag/pdf/fpag-annualreport0607.pdf

 

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