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The market is not a black box

Louise Sunderland freelance built environment sustainability consultant. She previously worked as Senior Policy Advisor at UKGBC and before this in both the research and parliamentary teams here at ACE.

The ruling theory governing energy efficiency policy has for some time now been that the ‘market will deliver’ the energy and carbon savings we as a society need. And the guiding framework for national and European policy is based on interventions to enable the market to deliver.

But as we know ‘markets’ are not sentient beings that make decisions. What we actually mean by ‘the market will deliver’ is that huge numbers of diverse consumers will respond to market signals and engage, behave and invest (often) their own money in “rational” ways that deliver against policy goals. They will change energy profligate behaviours, they will undertake disruptive works to their homes and businesses, they will purchase equipment, materials and services in exactly the ways that ‘socially’ we need them to.

In the last decade we have seen headline European buildings policy begin to make useful interventions to enable the consumer overcome market barriers – the building energy information tool, the Energy Performance Certificate (EPC), was introduced about 15 years ago and more recently there has been a focus on energy use awareness through accurate billing and ‘smart meters’, and the provision of finance to overcome investment barriers.

But what we haven’t really cracked is getting under the skin of what consumers really need ‘end to end’ to enable them to do what society needs them to – for example taking on deep renovations of their buildings. There is no definition of consumer information or advice provision in the relevant European energy efficiency directives (the 2010 Energy Performance of Buildings Directive [EPBD] and the 2012 Energy Efficiency Directive [EED]), there is no indication of what level of consumer support might be needed to achieve our existing buildings refurbishment ambitions (stated in the EPBD as incrementally moving the existing stock to nearly zero energy [and sometimes carbon] buildings!), and current advisory services (with a few notable exceptions) across Europe are inadequate to address the needs of consumers to achieve these aims.

Unfortunately, we haven’t thought seriously enough about the consumer journey and how well the policy framework supports every step. We also haven’t given sufficient focus to those few examples of really rigorous energy advice and support ‘one-stop-shops’ in Europe – like those in France and Germany – and evaluated these and other programmes to develop understanding and evidence of what support produces what results. This reveals a major blind spot.

Focussing on the market rather than the consumer allows us to imagine a kind of black box – ‘the market’ – in which the most difficult questions, like how does an uninformed consumer negotiate conceiving, financing, managing and getting feedback on a complex whole building renovation, get answered by undefined forces or market players. Until we open this black box and do the work to figure out exactly what we need to put in – what support consumers actually need – to get out what we know we need to get out then the market can never be expected to deliver sufficiently to meet our long-term climate and energy objectives.

Louise, as a member of the Energy Advice Exchange, has recently published a discussion paper and briefing (downloadable here) on revisions to the European energy efficiency package which aim to stimulate exchange and debate on the subject and propose improvements to the key European Directives. Louise has also recently posted a blog on her reaction to the European Commission’s recent “winter package” on sustainable energy (downloadable here).

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Energy Bill Revolution,Revenue Recycling

Using carbon revenues to cut costs and carbon

Next year the EU Emissions Trading Scheme (EU ETS) will, for the first time following a long period of ramping up, allow the trading of the majority of the eligible emissions in Europe.

With the auctioning of allowances will come significant new revenue, estimated to be between €10bn and €20bn per year to 2020, depending on the carbon price.

As the realisation of the new revenues approaches, Member States are beginning to announce intentions with regard to the use of the funds. A good number of countries have made announcements and begun legislative processes that will establish the use of the ETS Phase III revenues for climate protection purposes.

This short briefing reviews some of the plans in place in Member States and considers the UK’s position on the use of the revenues, which are expected to be £2bn in 2013 and an average of £4bn a year over the next 15 years.

Read ACE’s briefing here.

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Fuel Poverty,Hills Review

Hills Review Briefing

One of the Hill’s Review of Fuel Poverty’s main conclusions on policies to address fuel poverty was:

Narrowly targeted supplier-driven policies would have the largest effects on fuel poverty, on the assumption that suppliers reacted to their incentive to maximise cost-effectiveness.

Given the regressivity of raising funds for an energy efficiency programme from energy bills, it seems to be counter intuitive that a supplier funded programme would be more effective than a publically funded one.

ACE explores how this misleading conclusion was arrived at.

Read ACE’s briefing.

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Government slashes fuel poverty spending

Government has released its fuel poverty figures for 2010 today. The figures show the numbers of households suffering from fuel poverty fell by 0.4m in the year of highest expenditure on energy efficiency.

The official projections for this year see levels rise again to 3.9m households which is close to the 13 year high of 4m households in 2009.

In a statement released alongside the figures, DECC acknowledges that higher incomes and greater improvements in energy efficiency in the housing stock are the cause of the fall in fuel poverty in 2010.

In 2009/10 investment in energy efficiency targeted at fuel poor households was at a recent high of over £1.1bn. However, a briefing released by ACE today shows that investment in energy efficiency, has suffered cuts of 17-18% for two years and will have been slashed by over 50% of the 2009/10 levels next year.

Total expenditure taregted on alleviating fuel poverty has been cut by almost 30% in 3 years.

Clearly investment in energy efficiency of the housing stock is effective at addressing fuel poverty. That is why ACE has joined with 80 other organisations in calling for the Government to support the Energy Bill Revolution, a campaign asking for carbon tax revenues to be used to make our homes highly energy efficient, prioritising those of the fuel poor.

Please join the Energy Bill Revolution by signing the petition.

Download the ACE Briefing on National fuel poverty budgets

See the ACE Press release- Fuel poverty spending levels plummet

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Consumer Focus,Energy Company Obligation,Green Deal,Solid Wall Insulation

Scaling the solid wall

A report for Consumer Focus investigating the issues and barriers around the delivery of solid wall insulation

The Government anticipates that ECO, working alongside the Green Deal Finance mechanism, will play an important role in transforming the emerging solid wall insulation industry – the next major challenge for improving our housing stock. It also anticipates that social housing will be at the vanguard of such a transformation. However, large scale installation of solid wall insulation carries many challenges. It is expensive, disruptive to consumers and entails major logistical effort. But it also has the potential to dramatically reduce the fuel costs of low-income consumers, many of whom live in solid wall housing, as well as improve health and well-being.

Consumer Focus therefore commissioned the Association for the Conservation of Energy to investigate the issues and barriers that will need addressing if the solid wall insulation industry is to take off. Is social housing able to carry out the role the Government expects of the sector? What support does it require? Can social housing stimulate wider delivery of solid wall insulation in surrounding private tenure areas?

This report presents the findings of research into the experience of delivering SWI to date, based on interviews with stakeholders and a review of SWI schemes and trials. It highlights a range of issues that will need addressing if SWI installation is to take off.

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Domestic Emissions,Evaluation,Global Action Plan,Hackney,Housing

Evaluation of Hackney CO2 Reduction Pilot

Independent evaluation of the Hackney carbon emissions reduction pilot

Over fourteen months in 2010 and 2011 the ACE Research Team, in partnership with Blooming Green and Dr Joanne Wade, carried out an rolling evaluation of a pilot project aiming to promote energy use and carbon reductions in the housing stock in one Hackney ward. The project was commissioned by the Sustainable Environment Group of Hackney’s Local Strategic Partnership.

team hackney  smallThe evaluation team worked alongside Global Action Plan, the organisation that delivered the project, to provide input into the ongoing development of the approach and to produce a final evaluation of the project against its objectives. The evaluation report brings together the lessons from all stages of the project evaluation and sets this learning in the context of the future landscape that Hackney partners will face when continuing with work to reduce energy use in the future.

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Energy Efficiency Partnership for Homes,Hard-to-Treat Homes

Hard to treat homes

Review of the delivery tools used to improve hard to treat homes research for the Energy Efficiency Partnership for Homes.

The Energy Efficiency Partnership for Homes comissioned ACE to undertake a review of the delivery tools used to improve hard to treat homes (HTTH). The aim of the research was to produce a raft of informed policy recommendations to promote a significant scale up of the improvement of HTTH and and inform the future activities of the Partnership’s HTTH sub-group.

The project involved an analysis of the measures that are needed to improve HTTH that are not at present being delivered at sufficient scale, the funding available now and in the near future and the delivery mechanisms, in the form of projects and programmes, that have been used to deliver HTT measures (see database below).

The research report outlines a detailed raft of recommendations arising from the research which centre around the need to mainstream the more expensive measures that are used to treat hard to treat homes. The report also reveals the need to place more emphasis on insulation measures and urgently address the current situation in which the fuel poor living in hard to treat homes are paying for energy efficiency schemes but are not benefitting from the most appropriate improvements to their homes.

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Compact Fluorescent Lightbulbs,Low Energy Lamps,Megaman

Mapping knowledge on low energy lamps and health

Mapping knowledge on low energy lamps and health

(A report for Megaman®)

This study reviews the current literature, and maps the existing knowledge and opinion on the links between three types of low energy lamps (CFLs, LEDs and metal halides) and health, in order to establish the level of current understanding.

The study was undertaken in the context of the early stages of the voluntary agreement between Government and major retailers to implement a stepped phase‐out of all incandescent lamps by not replenishing stocks. This voluntary agreement and the widespread provision of CFLs directly to households through the Supplier Obligation (EEC 1 and 2 and CERT) have placed considerable attention on CFLs, which, in the short term at the very least, will be the successors to incandescent lamps. The two other low energy lamps, metal halides and light emitting diodes (LEDs), have received far less academic and media attention, since, for the former, the lamps are unlikely to be used in a domestic setting thus reducing public concern, and the latter, because the technology at the time of writing was not yet widely commercially available at competitive prices.

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Buildings,Energy Display

CYBER Display

Communicate Your Buildings Energy Rating

(funded by Intelligent Energy – Europe)

CYBER Display® is a continuation of the successful European Display® Campaign, which is a voluntary scheme designed by energy experts from 20 European towns and cities. It aims to encourage local authorities to publicly display the energy and environmental performances of their public buildings using the same energy label that is used for household appliances.

The Research Team is involved in CYBER Display® on behalf of EuroACE, leading a work package focused on taking the Display® Campaign into the private sector. This will involve:

  • Creating a pilot group of private sector organisations to test the Display® poster in their administrative buildings, and assess how the Display® tools can be adapted to best meet the needs of the private sector.
  • Undertaking a wider-scale roll-out of the Campaign in the private sector, informed by the pilot group findings and a workshop.
  • Creating case studies on private sector members’ experiences with the Display® Campaign and communication tools, and identifying common threads between public and private sector experiences.

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