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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