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andreweibi2013

Ed Davey must plug in to the efficiency of appliances

The Prime Minister is unequivocal: “To those who say we just can’t afford to prioritise the green agenda now, my view is: we can’t afford not to”.

Government energy policy is prioritising that agenda. A significant component of that agenda is electrifying the economy – our transport, our buildings, and most particularly our electricity generation.

Business as usual won’t deliver this. So the government is deliberately stepping in to alter the merit order for generation. Nobody denies that will mean that the cost per kilowatt-hour generated will grow.

If the equation stopped there, you would understand why every household, every business might start looking distinctly green in the sickly sense.

But of course, as every EiBI reader knows, what matters most of all to everybody is the final fuel bill paid. Rather than the cost per unit. And of course in almost every case, we can all of us enjoy precisely the same services as today – whether light, heat or motive power – while using a fraction of the fuel we burn today.

In the same Royal Society speech from David Cameron that I cited earlier, made to launch his government’s Energy Efficiency Mission, he promised that Britain will become “the most energy efficient country in Europe.”

 Simple deal

The deal which Energy Secretary Edward Davey sets out is simple. By delivering the PM’s pledge, the average overall fuel bill in 2020 will be 11 per cent lower than it would otherwise be – in other words, if business-as-usual had been permitted to happen. His plans mean, in Mr. Davey’s words, that we would be “saving 196 terawatt hours, equivalent to 22 power stations through socially cost-effective investment in energy efficiency.” It would also “reduce carbon dioxide emissions by 41 million tonnes”.

The strategy behind the Energy Efficiency Mission (EEM) covers buildings, both homes and non-residential. It covers process industry. It covers transport. All well-publicised, much-discussed policy areas in this context.

Each features strongly within the famous energy efficiency marginal abatement cost curve, that key economic graphic which demonstrates so clearly why purposeful, interventionist energy saving policies are thoroughly justified. In economic terms. In ecological terms. In energy security terms.

But guess which is the energy use area that is set to deliver the largest set of cost-effective savings of the lot? The answer is “none of the above.” It is the policy area that for inexplicable reasons got left behind in DEFRA, the environment department, when the Department of Energy was recreated back in 2007 – and all the rest of the energy efficiency policy teams joined it.

The Market Transformation Programme deals with consumer products. And Annex E of the EEM strategy reveals clearly that it is these unsung policies of product standards and labeling which are absolutely central to realizing that “11 per cent lower costs than business-as–usual” ambition really does come true.

It covers white goods (like freezers and dishwashers). It covers brown goods (like TVs and computers). Much of it is delivered via European-wide directives, which introduced the famous A to G labeling concept and eliminated the gas guzzlers from the market place.

Importantly the energy savings from Tranches 1 and 2 of industrial product policy are evaluated separately within industrial energy efficiency policy.

To give some idea of just how critical product efficiency is, the American government has published a detailed rundown of the impact of tougher product efficiency standards introduced in the first four years of Barack Obama’s Presidency. Just by upping three key standards – covering appliances like refrigerators and clothes washers, heating equipment, and lighting – the cumulative effect is to save consumers over $100bn in energy and related costs during these products’ lifetimes. That is equivalent to eliminating every kind of US energy consumption for four months.

Then consider China. Its Three Gorges Dam generates 100TWh annually. Efficiency standards for just fridges and air conditioners will be saving 200TWh each year from 2020.

In a more electric future, the plug-in products we use become even more central to that overall commitment to lower fuel bills by making us “the most energy efficient country in Europe.” It is absolutely vital that the savings identified in each of the economic impact assessments undertaken by DEFRA for each product standard upgrade is realised, in practice not just in theory.

This will mean ensuring that the right stimuli are available to ensure that consumers do buy, or lease, or use, the least profligate options. I have looked at the four key objectives that environment secretary Owen Patterson has set for his Department. It is not clear to me that ensuring that revolutionising the marketplace for energy efficient consumer products fits into any of them.

There is a very strong case for letting this key policy area rejoin the rest of energy efficiency. Driving smart product policy needs to become part of Mr. Davey’s direct responsibility.

 

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    Tony O'Donnell

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    Andrew, DEFRA and DECC are not the only Departments creating policy and regulation that drives energy efficiency. Impending changes to the Companies Act 2006 from 1st October 2013, mean that all listed Companies on the London Stock Exchange need to report their emissions of greenhouse gases annually in their annual report. This policy is designed to support better corporate governance and transparency. The GHG element was designed by DEFRA, but the impact of creating reputational risk for these large companies will catalyse investments in your Members’ products and services. Vendors can discover more about these market opportunities in a free 50 page market research report available from our website. http://www.cambiumllp.com/resources/greenhouse-gas-report-download

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