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Our response to HMRC’s consultation on reduced rate of VAT for Energy Saving Materials

ACE has submitted its response to HMRC’s consultation on proposed changes to the reduced rate of VAT for the installation of energy saving materials in compliance with a recent decision by the European Court. In the summer of 2012, ACE took the lead in convening a broad coalition of interested organisations who were concerned about the implications of the Reasoned Opinion sent by the European Commission to the UK Government to the effect that its 5% reduced rate of VAT on energy saving materials went beyond the scope of the 2006 European VAT Directive. Over subsequent years we have led the coalition in:

  • encouraging the UK Government to respond robustly to the Commission in defence of its reduced rate;
  • providing the Government with a detailed report setting out the reasons we believed that the UK’s reduced rate did in fact form part of a social policy;
  • liaising closely with officials both before and after the CJEU judgment, setting out our view that the UK Government should use the vires in both Category 10 and Category 10(a) of Annex III of the VAT Directive to retain as much as possible of the reduced rate.

Notwithstanding a few concerns, we broadly welcome the Government’s proposals.

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energy auditing,energy management,energy reporting,Non-Domestic

HMT

Our response to HMT and DECC’s consultation on reforming the business energy efficiency tax landscape

ACE has submitted its response to HM Treasury and DECC’s consultation on reforming the business energy efficiency tax landscape. We agree there is scope to simplify the landscape, but stress that in doing so, there is real emphasis on reporting publicly with board approval and ensure that cost-effective energy efficiency recommendations are acted upon.

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Our response to Energy & Climate Change Committee’s inquiry into low carbon network infrastructure

The Energy and Climate Change Committee is investigating what changes are required from today’s electricity infrastructure to build a low carbon, flexible and fair network.

The terms of reference of the Inquiry recognised that for the transition to a low carbon electricity network to occur in a cost-effective way, all elements of our energy infrastructure, including those on the demand side of the meter, will need to be addressed.

We focused on one of the questions defined in the call for evidence: How can we ensure that a low carbon network is designed and operated fairly and in a way that helps to minimise consumer bills?

Read ACE’s submission here.

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Display Energy Certificates,Energy Performance Certificates,European Energy Performance of Buildings Directive,Zero Carbon Homes

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Our response to the European Commission’s consultation on the Energy Performance of Buildings Directive

This consultation forms part of the evaluation of the Energy Performance of Buildings Directive. Under the terms of the Directive, the Commission is required to carry out this evaluation by 1 January 2017, with assistance from a Committee of Member States’ representatives. The evaluation should reflect the experience gained and progress made since the adoption of the Directive. If necessary, the Commission should make proposals on the basis of the evaluation.

The evaluation also follows on from the Energy Efficiency Communication of July 2014, which indicated that additional measures to be introduced to improve energy efficiency would need to primarily address the energy efficiency of buildings and products if progress is to be made by 2030. The Energy Performance of Buildings Directive is the main legislative instrument in force at EU level covering the energy efficiency of buildings.

With a primary focus the UK energy efficiency market, our response to the consultation highlights: the uncertainty following the abandonment of the zero carbon trajectory; the missed opportunities with respect to driving higher rates of renovation; the low level of compliance with EPBD’s provisions and the virtual absence of enforcement; the question marks hanging over Display Energy Certificates; the need to make EPC data more widely accessible; and the need to plug skills and capacity shortages in the energy services and energy auditing sectors.

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Our response to APPG for the private-rented sector’s inquiry into energy efficiency in private-rented housing

The All-Party Parliamentary Group for the private-rented sector launched an inquiry into energy efficiency in private-rented housing. Along with Friends of the Earth and Citizens Advice, ACE led a widely supported civil society campaign in 2010/2011, which led to the 2011 Energy Act placing a duty on the Secretary of State to introduce a minimum energy efficiency standard for private rented housing from April 2018 at the latest. We were also a member of the DECC advisory working group which met throughout 2013 to advise Ministers on the detail of the regulations that would be needed to bring the minimum standard into force.

The group’s inquiry follows the government’s decision not to renew the landlord energy savings allowance in the March budget. This had originally been introduced to encourage landlords to improve the energy efficiency of the properties they let but was dropped because of low take up.

Announcing the inquiry, the group’s chairman, Oliver Colvile, member of parliament for Plymouth Sutton and Devonport said: “With the winter months just around the corner, improving the energy efficiency of rented housing is a crucial issue.

“The group’s inquiry will look to develop new ideas that will support landlords to meet their new target; save tenants money on their bills and help improve standards. I would encourage all those with an interest to submit their suggestions.”

Read ACE’s response to the inquiry.

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Our response to Energy & Climate Change Committee’s inquiry into investor confidence in the UK energy sector

The Energy & Climate Change Committee is investigating the factors that contribute to investor confidence in the energy sector and wants to build an understanding of how DECC’s policy making process might impact on investor decisions.

DECC estimates that £110 billion investment is needed in our electricity infrastructure over the next decade. Stakeholders’ concerns that policy uncertainty was weakening the case for investment have led the Committee to prioritise the issue of investor confidence – without it, we hamper our ability to meet climate, energy security and affordability objectives. Energy efficiency and demand reduction is the cheapest contributor to these objectives, and this is what we highlight in our written response to the inquiry.

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Our response to Energy & Climate Change Committee’s inquiry into home energy efficiency and demand reduction

The Energy & Climate Change Committee says that energy efficiency and demand reduction is one of the most cost effective ways to cut carbon emissions, improve energy security and reduce consumer bills. It adds that the Government has announced the end of two key policies – Zero Carbon Homes and the Green Deal – without bringing forward any replacement schemes – and that the Energy Company Obligation is also due to come to an end in March 2017.

The Committee is investigating what lessons can be learnt from these and previous energy efficiency schemes.  The evidence received will feed into its scrutiny of energy efficiency policies over the course of this Parliament.

ACE has submitted its written evidence, highlighting the successes of past programmes, the weaknesses of recent schemes and lessons that can be learned from them, including lessons from the US and elsewhere in Europe.

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Our response to Environmental Audit Committee inquiry into Government’s approach to sustainable development

The Environmental Audit Committee says that promoting sustainable development – which for the purposes of this inquiry includes protecting the environment, supporting the low carbon economy and improving wellbeing – could be worth billions of pounds to the UK economy. In 2013, the low carbon economy generated over £120 billion in turnover. The 2015-20 period will be crucial for ensuring the Government continues to promote sustainable development, with many key policies coming to an end and due for renewal or replacement.

The Committee is exploring what impact the new Government’s fiscal and legislative agenda will have on sustainable development. It is looking to establish themes for its work during the Parliament and measures against which the Government’s success can be judged. The evidence received for this inquiry will feed into the Committees work over the course of this Parliament.

ACE’s evidence, submitted to the Committee, focuses on the role energy efficiency does, can and should play within the wider sustainable development agenda:

  • Increasing energy efficiency is a key prerequisite for meeting the country’s carbon emissions reduction and fuel poverty alleviation targets and will at the same time deliver increased business productivity, public sector efficiency improvements, and a comfortable and healthy indoor environment that promotes wellbeing for all;
  • Current government policy on energy efficiency is inadequate, and will not result in carbon targets or fuel poverty targets being met;
  • Over the course of this Parliament, the Government must put in place a clear and coherent framework of targets, incentives and regulations that require and support investment in cost-effective energy efficiency improvements;
  • Government should be encouraged to better monitor and report on the effectiveness of its policies, including through the collection and use of improved data on building energy efficiency.

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DECC,energy and climate change committee

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Priorities for the Energy and Climate Change Committee: ACE submission to the ECC Inquiry on priorities for holding Government to account

The Energy and Climate Change Committee is holding an inquiry to gather views on what areas of DECC’s policies will require particular scrutiny in the coming years.  Responses to the consultation will help to inform the Committee’s work programme.  Here are ACE’s answers to the two specific question posed.

Which DECC policy areas do you think require particular scrutiny over the next five years?

The balance of affordability, energy security and sustainability is often most effectively addressed by a focus on using less energy.  Work by the Association for the Conservation of Energy, and others, using DECC’s 2050 Calculator (http://2050-calculator-tool.decc.gov.uk/#/calculator/ace-example) demonstrates how an increased focus on demand side actions can reduce the cost of meeting climate change aims.  And, clearly, using less energy results in lower costs for energy consumers.

A clear priority for the Committee over the next five years should therefore be to scrutinise the extent to which all elements of energy infrastructure, including those on the demand side of the meter, are treated fairly in the policy decision-making process, and that investment in the demand side of the system is adequately supported by Government policy.

What should be the Committee’s scrutiny priorities over the next twelve months?

Many of DECC’s previous policies to support energy efficiency (for example, support for the Green Deal Finance Company and the scheduled timetable to zero carbon new buildings) have already been withdrawn.  Energy efficiency investments supported through the Energy Company Obligation will largely be delivered by the end of 2015, with no further obligation currently scheduled until April 2017.  And Treasury is currently reviewing the main planks of energy efficiency policy for non-domestic buildings.

The need for early action is therefore particularly acute in relation to energy efficiency policy: investor confidence in this sector is very low despite an energy sector-wide view that investment in energy efficiency has to increase significantly (https://www.energyinst.org/information-centre/energy-barometer) and this has the potential to compromise future delivery of carbon emissions and fuel poverty targets.  Ensuring that action on energy efficiency policy is taken soon, and taken effectively, should therefore be a priority for the Committee.

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DCLG,Display Energy Certificates,Eric Pickles,Public Buildings

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Our response to CLG consultation on Display Energy Certificates (DECs)

ACE has responded to CLG’s consultation on ‘Display Energy Certificates: current regime and how it could be streamlined and improved‘. You can read our response here, and a summary of our response below.

When Display Energy Certificates (DECs) were first introduced, it was because CLG themselves identified that they were a) more appropriate for display in public buildings than Energy Performance Certificates (EPCs) and b) more cost-beneficial.

There is evidence referred to in the consultation itself, that DECs drive energy savings. There is also clear evidence from abroad, that regular operational ratings (of the kind contained in DECs) drive significant energy savings in the buildings in which they are used and displayed.

To remove schools and universities from the DEC regime totally contradicts the spirit of the recast Energy Performance of Buildings directive. Its intention is for DECs to apply to all buildings occupied by public authorities and also all buildings frequently visited by the public (the directive cites “shops and shopping centres, supermarkets, restaurants, theatres, banks and hotels” as examples). Schools and universities fall into both these categories, and the directive’s implication that they have to be included could not be clearer. Many more buildings should have been included as well, which is why the Government had intended in 2011 to extend DECs to the types of commercial buildings listed above.

The public sector should lead by example. The recast Energy Performance of Buildings directive states that “the public sector […] should lead the way in the field of energy performance of buildings” and “should set an example by showing that environmental and energy considerations are being taken into account and therefore those buildings should be subject to energy certification on a regular basis”. To remove or scale back the DEC regime would fly in the face of these requirements.

Recent analysis by University College London shows that 8,500 buildings with continual DECs over three years and larger than 1,000m2 achieved 3% annual energy savings in 2011 compared to 2009. In our estimation, this is roughly equivalent to £18m savings. If all 42,000 large buildings with DECs achieved the same saving, the total would be £89m. The total cost of the DECs regime is £7.8m, one eleventh of these savings. It is likely that DECs were a significant factor in starting these buildings on their energy management journey, which may well not have occurred in their absence. For every £1 saving on the DECs regime that CLG could achieve by abolishing it, the Department is putting at risk up to £11 of savings already achieved, and countless additional savings which an effective DECs regime would continue to drive. Furthermore, the savings calculated exclude the value of carbon savings achieved, employment and other spill-over benefits.

What CLG is proposing is to abolish (or severely truncate) a DEC regime which is proven to drive energy savings in public buildings and therefore make savings to the public purse. Far from freeing up resources for frontline services, abolishing DECs would at best reduce any energy cost savings being achieved and at worst enable the public sector to hide their wastefulness from the taxpayer and encourage profligacy. At a time of increasing pressure on public budgets and the need for more transparency to better account for public spending, the proposals to abolish or truncate a DEC regime which demonstrably saves far more money than it costs to run is plain stupidity.

The regime can be streamlined and improved, and a proper engagement and consultation exercise should be undertaken to find the best ways of doing so. As it stands, the current consultation, which has not even deigned to assess the benefits of the regime alongside its costs, is meaningless.

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