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andreweibi2013

Build energy saving success on three crucial pillars

It sounds a bit pejorative. But constructing an effective policy programme for energy saving is very like persuading donkeys to do what you want.

Donkeys are stubborn creatures, not that malleable. Obtaining co-operation requires three things, mostly operating together. These are carrots (to motivate) and sticks (to enforce). And most important of all, tambourines (to retain attention). Every single effective energy conservation programme incorporates one or more, preferably all three, aspects.

First, consider sticks. In other words, regulations and standards and, importantly, their effective policing. That means tougher building regulations, for existing as well as newly constructed buildings. It means outlawing the worst energy performing products, and ensuring any energy labelling is accurate.

It means ensuring full and purposeful compliance with all the Articles (not just some) included in the pertinent European directives – like the Energy Performance of Buildings, Eco Design and the new(ish) portfolio Energy Efficiency directive.

It means local authorities using their Housing, Health and Safety Rating system powers to enforce high standards in their local housing market. It means councils requiring minimum energy standards as a condition of licensing the renting-out of homes in multiple occupation.

Second, there are carrots. Effectively, these mean financial incentives – together with the removal of glaring disincentives. It means ensuring that when a cashback scheme is created, the entry point for deliverers is not made too exclusive as to deter participants. Only 4 per cent of the 2013 Green Deal
Cashback money – the only carrot supporting this flagship policy – was ever claimed. It means new structural energy efficiency incentives – adjusting stamp duty, council tax and business rates in accordance with buildings’ energy performance.

It means ensuring that the UK Government puts up the best case in the European Court for retaining a 5 percent VAT rate for many energy-saving items. Because otherwise we will revert to the absurd tax distortion of charging VAT on energy consumption at 5 percent, but charging 20 per cent on all forms of energy conservation.

It means backing the Energy Bill Revolution campaign, in arguing for the ring-fencing of the £4bn a year raised in energy taxes. It means maximising the potential of the UK electricity demand reduction pilot this autumn, and seeking the full integration of demand-side solutions into the entire Electricity Market Reform experiment.

And it means bringing England back into line with the policies of all three devolved nations – and providing public funding again for English fuel poverty home improvement programmes.

Third, and absolutely pivotal to success, is the consistent use of tambourines. Drawing attention to good practice pour encourager les autres; to bad practice, by naming and shaming. Publicising A to G labels has transformed the energy performance of white goods like freezers and washing machines. Such labelling needs to be consistently visible (and accurate) for all buildings where occupancy changes. The mandatory display “in a prominent place” of such certificates in qualifying public and commercial buildings is altering behaviour- and would be doing so even more if properly policed (sticks in action!).

One effective entity

Next year the Energy Saving Opportunity Scheme will start, providing the potential to draw together previous programmes like sector-specific Climate Change Agreements, and the emasculated Carbon Reduction Commitment scheme, into a single effective entity. To be effective, and deliver the anticipated £3bn benefits potential, will require constant promotion to its target market in the medium-sized business and “third” sector.

Similarly opportunities need to be taken to promote the effectiveness of the Green Deal’s assessment, certification and accreditation networks – critically, to provide reassurance regarding their value to current and prospective participants.

The most effective programmes have incorporated all three “donkey” requirements. The classic is the Climate Change Agreements policy. The carrot is the heavy discount offered on the Climate Change Levy to companies operating in the 62 participating sectors. The stick is the knowledge that if their sector fails to deliver the agreed level of energy savings, then subsequently the levy will be – and importantly, has been – imposed in full. And the tambourine is the fact that such failures will require additional payments not just to energy suppliers, but also more importantly to the taxman, a process that tends to involve (irate) finance directors.

The Carbon Reduction Commitment (CRC) was designed with all three factors in mind. It was intended to operate as a trading system within the commercial sector, with pooled funds redistributed annually, rewarding those companies which had saved energy, penalising the laggards. Criminally, just before launch, the Coalition Government scrapped its trading arrangement and its league tables. And turned it into a very blunt and cumbersome tax – with little impact upon energy usage, but raising £900m a year for the Exchequer. Almost as idiotic as scrapping the “consequential improvements” policy, the “stick” that could have delivered 2.2m Green Deals.

Too often, policy makers concentrate upon just one facet of an energy saving policy, ignoring the two other key components. That always delivers less than optimum results.

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Comments (7)

  • Avatar

    Phil Beynon

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    Carrots, sticks and tambourines; I do not feel that the coalition has much appetite to use the stick. In a recent Government document (may be ESOS) consultation there was a statement indicating that we may see no more “gold plating” of European policy, or at least that one policy mechanism.

    So, will the carrot and tambourines work?

    Again, I feel that so much time and effort has been spent on carrots that in the main appear have been unpalatable to the mass of energy consumers; and the tambourine beating about the same things over and over again, may have the opposite affect to that intended.

    I always use fuel switching as a typical example; Government go on and on about it being free, quick and easy, yet few switch, despite the sizeable savings involved.

    Now, if Government used a carrot and guaranteed consumers that they would save by switching; then things may change; but I cannot convince myself.

    If the energy switching carrot worked, then the same approach could be adopted and extended to increase energy saving activity; but it would take a seriously committed Government to take on such a risk and challenge.

    Finally, I am not much in favour of sticks, as I feel that UK consumers are already over laden with increasing burdens of bureaucracy and controls that cause fatigue and despair to emerge as a result. This opens the door for anyone offering or appearing to offer refuge from such mechanisms.

    Keep up the good work

    Phil

    Reply

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    ralph perry robinson

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    A sound concept well expressed but how can local government actually disseminate these ideas when national government is so disjointed; take the Dergulation Bill and the Infrastructure Bill side by side as an example. One cuts England out of the ability to set CSH levels while the other sets CSH4 as the baseline.

    Or the contrast between DECC and DCLG… but don’t get me started.

    Excellent article; thank you. I shall try to push it in front of my highers up.

    Ralph ( Energy Policy:Wiltshire)

    Reply

    • Avatar

      Andrew Warren

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      Ralph

      Excellent news for you, the Government is NOT going to use the Deregulation Bill – or anything else – to remove the right of progressive English local authorities to set higher than minimum energy building regulations standards for new homes.

      Reply

  • Avatar

    Stanley Rayfield

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    Carrot, stick and tambourines. Excellent analogies and well put.

    Reply

    • Avatar

      Andrew Warren

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      Thank you for these compliments, much appreciated.

      Reply

  • Avatar

    ralph perry robinson

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    Hi Andrew

    Thanks for the encouraging words; are you referring to Oliver Letwin’s remarks to Jonathan Reynolds in the Deregulation debate

    or

    do you have another proof of the government’s good intentions about energy efficiency?

    Sorry to be sceptical but I circulate all the latest ramifications of the bill to various LA sustainability officers and we’re all a little punch drunk with the erosion of the Code and the slowness of Part L reform.

    Reply

  • Avatar

    Andrew Warren

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    THIS IS THE REFERENCE:

    Before saying a few words about the Bill, I will say something that I know the Solicitor-General would have liked to say at the end of Report, before he was timed out. I see the hon. Member for Stalybridge and Hyde (Jonathan Reynolds) is in his place, and he will know that the Queen’s Speech outlined the steps we will take to deal with zero-carbon homes and establish allowable solutions. We are aware that within that framework, the decision on the commencement date for amendments to the Planning and Energy Act 2008, which restrict the ability of local authorities to impose their own special requirements, must be made in such a way that the ending of those abilities to set special requirements knits properly with the start of the operation of standards for zero-carbon homes and allowable solutions. I hope that will make the hon. Gentleman—and, indeed, my hon. Friends who are concerned about the same question of timing—rest easy.

    Rt Hon Oliver Letwin, third reading, Deregulation Bill. 23/06/14

    Reply

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