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Heat and Energy Saving Strategy

ACE have submitted a written response to the DECC Heat and Energy Saving Strategy consultation.

In summary, ACE welcomes the Government ambition to reduce emissions from households by a third between 2006 and 2020 when including the savings delivered through CERT and CESP. This accurately reflects the scale of the task before us and the importance of deep cuts in emissions from the domestic sector if both the 80% by 2050 target and carbon budgets are to be met. This target of a one third reduction needs to be enshrined in legislation to ensure it is achieved.

The proposals within this consultation document are not sufficient to deliver these savings when taking into account the loose language in which they are dressed. Our most pressing concern is the aim to ‘offer’ 7 million whole house packages, which ‘offers’ nothing but uncertainty. At least 7 million whole house packages must be delivered for the domestic sector to reach the one third reduction in emissions and stay on course for the target of achieving a whole house package in every home by 2030.

In order to ensure the delivery of the 7 million whole house packages, ACE proposes the retention of an amended Supplier Obligation. Instead of achieving a carbon saving score, each energy supplier will have an obligation to deliver (not ‘offer’) their share of these 7 million whole house packages, by 2020. These whole house packages would have to be consistent with the definition given on page 22, with the average SAP rating of targeted homes before installation being below or equal to the average SAP rating of the UK housing stock. We envisage that suppliers would utilise the ‘pay as you save’ financing mechanism to deliver the packages, though they would have flexibility to explore other options such as grants.

Suppliers (or other bodies) must deliver these 7 million whole house packages at an even rate across all years to 2020. It is not acceptable for installation rates to increase from 400,000 in 2015 to 1.8 million in 2020; not only does such a steep trajectory almost rule out any activity pre-2015 (see Annex 1), it will result in a drop-off in activity from the energy efficiency industry at the end of CERT, going from 1.86 million insulation installations in 2012 (without the Government increasing the CERT target) to an estimated 150,000 whole house packages if a HES mechanism begins in 2013. Industry will then need to scale back up again with a ridiculous 450% increase in activity over five years between 2015 and 2020. Without ‘flattening’ these installation rates, how does Government intend to meet the 2015 target of having all cavities and lofts filled? Will they introduce a CERT-type scheme to guarantee a certain delivery level?

ACE are disappointed at the assumption that the ‘pay as you save’ (PAYS) idea – whilst a very useful financing mechanism – will deliver action without additional carrots and sticks. The mechanism on its own does not overcome the general apathy of householders and the perceived ‘hassle factor’ of the installations. Complementary policies will be required to entice/drive householders to use PAYS: revenue neutral stamp duty rebates for householders who implement EPC recommendations within 6 months of occupancy (and increases in stamp duty for those that don’t); council tax rebates for those who similarly implement the EPC recommendations; a long-term timetable of regulation that would in future prevent the most inefficient homes being sold or rented before improvements were made, other than in exceptional circumstances. Such measures require introduction now, not consideration as part of a 2012 review.

Click here for the full response

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