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Our response to BEIS’s consultation on ECO: Help to Heat

The Energy Company Obligation (ECO) is a programme to deliver energy efficiency measures in homes across Great Britain in order to reduce carbon emissions and improve the ability of low income and vulnerable consumers to heat their homes to comfortable levels. ECO was launched in January 2013 and is currently in its second obligation period (ECO2), which is due to end on 31 March 2017. The Government’s Spending Review 2015 announced plans for a supplier obligation to run for 5 years from April 2017 at an estimated level of £640 million per year. This consultation is on the shape of a transitional year from April 2017 to March 2018, paving the way for a subsequent 4-year scheme

While the overall size of the supplier obligation from 2017 is too small, many of the changes proposed appear sensible. However, under the proposals, there will be significant under-delivery to households during the transition year. This is due to the progress made to date under ECO2, the potential for over-delivery and carryover of excess work into the transition year, and the fact that proposed deemed scores are approximately one third lower than the evidence from RdSAP assessments under ECO2. We therefore strongly recommend that the extended CERO target is increased from 3MtCO2 to at least 4.1MtCO2, and the HHCRO target from £1.84bn to at least £2.08bn. This would comfortably keep the transition year’s delivery costs within its notional spending limits, and make sure BEIS and ECO’s stakeholders deliver what is possible with the (too modest) budget limits established by the last Comprehensive Spending Review.

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Our response to the National Infrastructure Commission’s consultation on National Infrastructure Assessment

In its plan to establish the National Infrastructure Commission, the government set out a responsibility for the Commission to analyse the UK’s long-term economic infrastructure needs, outline a strategic vision over a 30-year time horizon and set out recommendations for how identified needs should begin to be met, through the publication of a National Infrastructure Assessment once a parliament. The Commission has consulted on the Assessment.

In our response, we provide evidence to support our strongly-held view that energy efficiency should be included firmly within the remit of the National Infrastructure Commission as part of a whole energy system approach to meeting the UK’s demand for energy services in a cost-effective way whilst meeting our climate change targets.

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Our response to Public Accounts Committee Inquiry into Household Energy Efficiency Schemes

In 2013, the Department of Energy and Climate Change (DECC) launched two complementary schemes—the Green Deal and Energy Company Obligation (ECO)—to improve the energy efficiency of the UK’s housing stock. ECO obligates energy suppliers to install efficiency measures, such as loft or wall insulation, with the cost passed on to energy bill payers.

Through the Green Deal, homeowners funded installations by taking out loans, which they repaid through their energy bills. The Department of Energy and Climate Change made the decision in July 2015 to not invest further public funds in Green Deal loans.

The National Audit Office (NAO) examined what the schemes have achieved, and at what cost, the design and implementation of the schemes and whether DECC is learning lessons to feed into future energy efficiency schemes. The Public Accounts Committee have followed this up with an inquiry, to which we have provided a concise response.

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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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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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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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