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Energy Efficiency,European Commission

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The UK’s hidden agenda

Heads of European Governments have ignored all the evidence on energy efficiency and failed to set binding targets. What was behind the UK’s opposition?

Not that long ago, I recall visiting the offices of those overseeing UK energy policy, to be greeted with a large poster that read: “Real Men Build Power Stations.” How things have changed, you might think.

The International Energy Agency now routinely describes energy efficiency as “the first fuel” option. This March the heads of the 28 European Union governments unanimously agreed that increasing investment in energy efficiency should be the “first step” taken to reduce energy imports and increase energy security.

The day after he became Secretary of State for Energy and Climate Change, Edward Davey launched the Energy Efficiency Deployment Office, promising that improving energy saving would be his “number one priority.”

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Energy Efficiency,Europe

EU 2030 energy efficiency target sends all the wrong signals to investors and means 56m Europeans will continue to live in cold homes

ACE has reacted angrily today to the news that European leaders have adopted a 27% non-binding energy efficiency target, which represents a slowing of current progress on energy efficiency and will mean 56m Europeans will continue to live in homes they cannot afford to heat.

Jenny Holland, Head of ACE’s Parliamentary Team, said:
“We have long campaigned for a 40% EU energy efficiency target, which would have been the most cost-effective way to deliver emissions reductions, greater energy security and an end to the misery of 56m Europeans who have to live in homes they can’t afford to keep warm.
“The 30% target proposed by the European Commission already represented a regrettable lack of ambition, amounting only to a continuation of current rates of energy efficiency improvement. But the 27% non-binding target agreed by Europe’s leaders last night amounts to a slowing of current progress on energy efficiency. It means that the opportunity has been squandered to lower energy bills for households and businesses by a whopping €239 billion each year by 2030.
“For the energy efficiency industry, this unambitious target sends out all the wrong signals about Europe as a place in which to invest for the longer term. With the promise of a review of the target in 2020, we will be keeping up the pressure on both the UK Government and the European institutions to put in place a much more ambitious target at the start of the new decade.”

For more information, contact: Jenny Holland, jenny@ukace.org, 07875 629781

Note for editors:
See below for a more detailed ACE commentary on the EU 2030 energy efficiency target:
“Energy efficiency is now universally regarded as the first fuel. It is the key to reducing CO2 emissions at least cost, it creates sustainable employment where and when we need it most, it saves consumers money and helps the 56 million Europeans who cannot afford to heat their homes adequately, it improves the state of public finances, enhances competitiveness and increases GDP. More pertinently than ever, it is the best way to enhance Europe’s energy security, by reducing the need to import fossil fuels from dangerous places. It is the one sanction on Putin that has real bite, and does not hurt Europe’s own economic interests.
“The European Commission recommended a binding 30% energy efficiency target for 2030. Whilst this would have represented a continuation of business as usual energy efficiency improvement, it would have at least brought up the rear, ensuring that the costs of meeting CO2 targets are reduced and the benefits increased. A binding 40% target would have ensured minimised costs and maximised benefits, alongside massively reducing dependence on Russian gas.
“While the 2030 target for reducing CO2 emissions by 40% is to be commended – particularly in the context of securing a global climate deal – and the at least EU-level binding status of the 27% renewables target is to be welcomed, the end-result of a non-binding energy efficiency target of 27% is appalling. Instead of taking its rightful place as first fuel, energy efficiency has been relegated to the position of Europe’s energy Cinderella.
“The UK Government, while an important player in securing the CO2 target, had previously been opposed to an energy efficiency target of any description, even a non-binding one. But agreeing to 27% is cold comfort. It is below the business as usual rate of energy efficiency improvement in the EU, and sends out a discouraging signal to investors. Moreover, the European Council agreed in March that energy efficiency was the top priority for energy security and boosting growth, but now:
• The CO2 target will be achieved at far less net economic benefit than it could be
• Compared to a 40% target, over three million jobs in the construction and manufacturing sectors will be foregone by 2030
• Net gas imports will be 45% higher than under a 40% target
• Energy costs to consumers will be unnecessarily high
“The status of the energy efficiency target will be up for formal review in 2020, where the Commission will consider a 30% target. Had European leaders at least agreed to make 30% binding, it would have guaranteed €2.5 trillion in savings to European consumers to 2030. We will be working hard with others to ensure that the European Parliament pushes the target back up and is made binding as well, levelling the playing field for energy efficiency, thus securing its status as an integral part of Europe’s energy infrastructure.”

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Domestic Energy Consumption,Energy Efficiency,Energy Policy

It’s official. Energy consumption in the UK is on the way down

Here is a simple test for everybody. By how much has UK energy consumption already increased during this century? Actually, this isn’t just a question for generalists. I have been regularly trying it out on energy specialists in companies, in trade bodies. Even among the senior civil service. The answer given varies. But almost without exception, the response is that consumption has gone up. Sometimes by 5 per cent, sometimes 10 per cent, sometimes 20 per cent or more.

I then ask: how much do you think the country’s wealth has increased over the same period? And when I tell people that – even despite the recession – Gross Domestic Product (GDP) has risen by no less than 58 per cent between 2000 and 2012, I instantly get a re-evaluation of how much energy consumption has grown.

“Ah well, in that case, we are probably talking about a similarly high figure for energy usage. Not 20 per cent, but 40 per cent. Even 50 per cent.”

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Emissions Targets,Europe

Heading in three directions makes a lot more sense

Ever since he took up his post two years ago, UK Energy Secretary Edward Davey has championed tirelessly the need for a binding target across Europe of a 40 per cent cut in carbon dioxide emissions between 1990 and 2030. It now looks pretty certain that his campaign will be successful.

The European Parliament has voted in favour. A large number of national governments are concurring. The European Commission has published a detailed policy paper, endorsing this figure.

So far, so uncontroversial.

But that target, Mr Davey argues, is sufficient by itself. He does not believe it necessary to have any related targets – whether covering renewables or energy efficiency. “Adopting an ambitious and binding greenhouse gas target will provide…a compelling reason for us all to do more on energy efficiency. But we should not prejudge the balance between increasing efficiency and deploying other low carbon measures to meet the greenhouse gas targets,” he maintains.

Others differ. Among those acknowledging the need for further statutory, as opposed to just aspirational, objectives are his opposite numbers from most of the western European governments: France, Germany, Denmark, Austria, Ireland, and many others.

 Three energy targets

At present, the European Union does have three energy-related targets for 2020. Each is based upon an emblematic 20 per cent reduction. These are to cut greenhouse gases by 20 per cent; to boost the proportion of renewable energy to 20 per cent; and to improve energy efficiency by 20 per cent.

These may appear equal in timescale and objective. But they are not equal in stature. The first two both have the force of Community law behind them, effectively compelling each government to adopt appropriate policies. In contrast, the energy-saving target does not have the same status at all. It is far from compulsory, just an indicative aspiration.

Does this distinction matter in practice? You bet it does. The consequence of this “also ran” status is plain. Whereas there is confidence that the first two targets are on track to being met (indeed exceeded), you can find nobody who right now believes the 2020 energy efficiency “target” will be met.

The European Commission is due to publish in June its best forecast as to just how significant the under performance is likely to be.

But even before then, it has published some very telling evidence that suggests that those who pursue only a single 2030 target may well be guilty of deliberately frustrating many other worthwhile objectives.

It is official European policy that all new proposals must be capable of being justified via the accompanying economic impact assessment. Each new European Commission policy document is rightly required now to have a detailed Impact Assessment published alongside it.

This one demonstrates clearly that adopting complementary targets covering energy efficiency and renewables, as well as greenhouse gas emissions, would result in higher benefits relating to a whole variety of other public policies.

It is clear from this analysis that concentrating upon greenhouse gases alone means approaching the entire policy area from too narrow a standpoint. Granted the threat of runaway climate change requires effective action to contain its worst excesses. But there are a number of other policy priorities out with carbon abatement that all of Europe is seeking to address simultaneously.

The conclusion of the Impact Assessment is stark. And it is unequivocal. There would be many further benefits, above and beyond the climate changes ones, which would be obtained only via the adoption of new and very specific targets for both energy efficiency and for renewable energy.

These are adumbrated succinctly. To quote paragraph 85 of the Executive Summary of the Impact Assessment, they include: “improvements in fuel efficiency, security of supply, reduction of the negative trade balance for fossil fuels, localised environmental impacts, and health benefits.”

 Fear of ‘lower GDP’

To cap it all, those who seek to limit Europe to a single, solely ecological, target – in the objective view of the Impact Assessment – are endorsing a policy that will “result in lower GDP and employment, compared to a framework based on more ambitious targets for renewables and energy efficiency.”

As you can see, the conclusion is pellucid. European climate policy should not be developed in a silo, concentrating upon just a single climate-oriented policy outcome.

We need also to be concerned about improving public health. And increasing Europe’s competitiveness. And creating new jobs, new industries. And reducing levels of energy imports. And indeed ensuring that we can keep the lights on.

For all these reasons, when later this year all the European institutions do formally agree a policy framework for both climate and energy policy in the period from 2020 to 2030, there can be no question as to the best outcome. Three places to head are better than one.

 

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David Cameron’s speech at the launch of DECC’s Energy Efficiency Mission

On Monday, February 4 at the Royal Society, David Cameron gave a very important speech about energy efficiency at the launch of the DECC’s Energy Efficiency Mission. It is quite astonishing that neither No. 10 nor DECC have published this speech on their websites. Huge credit to businessGreen for doing government officials’ job. Arnold Schwarzenegger introduced David Cameron via video-link from a sustainability conference in Austria, and the former Governor’s speech was recorded. In any case, here is the speech in full. It makes for very interesting reading.

I want to tell you why I believe energy efficiency is so important. Yes of course it is a vital part of how we cut carbon emissions and continue to meet the ambitious targets set out in the Climate Change Act, which will allow us to meet growing energy demand in a way that protects the environment for our children, grandchildren and generations to come. Of course that is important, but my argument today is not just about doing what is right for our planet, but doing what is right for our economy too.

Because make no mistake we are in a global race and the countries that succeed in that race, the economies in Europe that will prosper, are those that are the greenest and the most energy efficient.

Let me be clear why that is. Energy consumption is set to grow by a third over the next two decades alone. And in a race for limited resources it is the energy efficient that will win that race.

It is the businesses that are best insulated from energy price shocks who will be the most successful, it is the consumers who are the least vulnerable to energy prices whose household bills will be the lowest and who can be the most confident about their future. And yes, it is the countries that prioritise green energy that will secure the biggest share of jobs and growth in a global low carbon sector set to be worth $4tr by 2015.

So to those who say we just can’t afford to prioritise green energy right now, my view is we can’t afford not to.

Far from being a drag on growth, making our energy sources more sustainable, our energy consumption more efficient, and our economy more resilient to energy price shocks – those things are a vital part of the growth and wealth that we need.

Already today Britain is one of the best places for green energy, green investment, and crucially for green jobs anywhere in the world.

We have the world’s first payments for business for generating renewable heat, we have a pioneering carbon capture and storage programme, we have the largest offshore wind market in the world.

In the City of London we’ve got the world’s number one financial centre for low carbon industries, and vitally we are putting energy efficiency where it should be at the heart of our energy policy.

Our Green Deal will mean thousands of families can afford to insulate their homes for less, our reformed feed-in tariff is helping drive the growth of a vibrant and entrepreneurial decentralised energy sector, providing communities and business with a range of innovative clean technologies.

And our Green Investment Bank – political parties across the world talked about a Green Investment Bank – is the first of its kind in the world and has £3bn to invest in green energy projects, with a particular focus on energy efficiency.

When I become Prime Minister I said I wanted Britain to have the greenest government ever and I am as committed to that today as I was then. But I want to go further. I want Greg [Barker] to bring together everything we are doing in one coherent strategy to make Britain the most energy efficient country in Europe.

I think there’s a huge opportunity. If you look at all the individual things I have mentioned that the government has committed itself to, the whole is much greater than the sum of anyone. I want to bring these together and really explain to the world, and particularly investors, what is available here in Britain.

I want you to help. It is a shared endeavour. It cannot be done by government alone.

You are the companies and contractors that can develop Britain’s expertise in energy efficient technology, you are the global investors who can get behind those companies and pioneer the new financial instruments that can take investment in green energy to the next level, you are the manufacturers who can use this technology to cut their costs, compete, create new jobs and win new contracts for Britain. And you are the experts who can help us build the right framework within government to get this right, who can use the consultation on the Energy Bill to shift policy and make us simplify the regulatory environment.

Together we can make Britain a global showcase for green innovation and energy efficiency.

Together we can do the right thing for our planet and, just as important, do the right thing for our economy too. With your help on this energy efficient mission we can make sure that now, and in years to come, Britain is open for business, winning in the global race, and doing it in a way that is green too.

[Asked by the Sun about the relatively slow take up of the Green Deal the Prime Minister responded:]

It’s very important with these big new programmes to get the balance right. On the one hand if you go off with an enormous advertising bang you will not have the capacity to meet demand and you will end up with disappointed consumers. You’ve got to try and balance that, this is a programme we want to build over the months and years ahead.

I think the advertising is effective think the name is very clear and understandable. The key to it is the basic promise that you are not making an upfront investment and the savings you will make over time will really benefit you… It will take time to build up because it is a new concept, but it [shows there is] vision from government, a commitment to energy efficiency, and big buy in from the private sector to help you deliver it.

Asked by the Daily Telegraph about his failure to deliver a big keynote speech on the environment the Prime Minister responded:

I think I have probably learnt my lesson about not pre-advertising major speeches in advance.

I think the important thing is judge a government on what it does, rather than the frequency of speeches. I really do think that if you look at the record of the government we have lots of first in the world, no other government has done what we have done on renewable heat, on the Green Investment Bank, on carbon capture and storage.

I accept there was a debate within government about the Energy Bill. I don’t hide that from anyone. People say it is because we are a coalition. But even if we weren’t a coalition there would still be a debate about the cost to consumers in the short run and subsidies that need to be given to help get new technologies off the ground. There is always going to be a debate about that.

We have had that debate, we’ve settled the debate and now we can go to international investors and say, ‘if, for instance, you invest in offshore wind if you build your turbine before the end of 2017 I can’t just tell you what you’ll earn for one year or two years, I can tell you what you’ll earn for 20 years. What other industry or business anywhere in the world has got that sort of certainty?

And then you look at the fact we have set the levy control framework beyond 2017, I really think Britain can get out there in the international market and talk to investors and talk to the big companies – the Siemens, the Gamesas, the Dows, and others – and say you have got absolute certainty investing in these markets. When it comes down to the nitty gritty of policy detail – the enormous commitment to the Green Deal, the enormous commitment to CCS, feed-in tariffs, to offshore wind industry and other areas – the commitment is all there.

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Energy Efficiency Deployment Office,Energy Efficiency Strategy,Energy Efficiency Targets

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Two Cheers for Government’s new Energy Efficiency Strategy

The Association for the Conservation of Energy has given a qualified welcome to the Government’s new Energy Efficiency Strategy, published today.

While welcoming the publication of a strategy dedicated solely to energy efficiency – the first of its kind since 2004 – ACE says that the Government has shirked its responsibility by failing to set out a clear target for energy efficiency. The Association is also disappointed that DECC has fought shy of setting out what further policies will be needed to plug the gap between what can be achieved and what current policies are expected to deliver.

ACE Director Andrew Warren said: “While welcoming the publication of a dedicated energy efficiency strategy and the establishment of a dedicated Energy Efficiency Deployment Office, the absence of clear targets for energy efficiency is a real disappointment. The Strategy tells us that 196TWh of energy savings are “possible” in 2020 – but totally fails to commit Government to achieving these savings. We have seen all too often how, in the absence of firm targets, Governments fail to put in place adequate policies or resources to achieve them. As things stand, this is a wish list, not a strategy.”

“We will therefore be urgently pressing Government to put binding targets in place. We will also be asking them to bring forward new policies to plug the 33TWh gap between what they say is achievable and what current policies are on course to deliver. The main way in which they can do this is by committing to use the carbon tax revenues they will get from next year to transform the energy efficiency of the housing stock – the central demand of the Energy Bill Revolution campaign. And if they’re really saying that we can save energy equivalent to 22 power stations, then why do the Government’s proposals for electricity market reform completely fail to give energy efficiency a chance to compete on equal terms with supply-side solutions?”

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Demand Reduction,EMR

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Electricity Market Reform and the demand side

newlogo (eggtimer only, small)The draft Energy Bill published by the Government this year sets out the agenda for Electricity Market Reform so far. The aim of reform is to incentivise investment in an electricity system that is sustainable, secure and affordable. This briefing concisely explains:

 

  • The Electricity Market Reform package’s proposals and rationale;
  • The crucial role the demand side can play in meeting its aim at least cost;
  • The rapidly evolving thinking about the policy mechanisms that can ‘level the playing field’ and allow the demand side to reach its full potential within Reform package
  • And thus why it is ACE and other NGOs are working hard with the Government to ensure the Energy Bill enables this (which it does not currently do)

A huge thank you goes to Tom Watson, intern at ACE in September/October this year, for preparing a briefing which translates a very complex and important subject into plain English.

Download the briefing: Electricity Market Reform and the Demand Side

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