---

Energy Efficiency (S&T Report)

rose to move, That this House takes note of the report of the Science and Technology Committee on Energy Efficiency (2nd Report, HL Paper 21). The noble Baroness said: My Lords, as chair of the sub-committee that produced this report, I express my warmest thanks to its Members. Their expertise and companionship were equally valuable. I thank also our specialist advisers, Professor Roland Clift of the University of Surrey and Dr Jonathan Radcliffe, and our excellent Clerk, Dr Christopher Johnson. My thanks are due also to the many people who helped with our visits to the Building Research Establishment, Leicester City Council, Durham University and the Flagship House in Knightsbridge. We have a debt of gratitude also to our embassy colleagues in Sweden and Germany, and to our kind hosts there on our visits. Energy efficiency is everyone’s business, not just that of scientists and engineers. We are all consumers of energy and contributors to the carbon emissions that threaten our planet. The 2003 energy White Paper set out a strategy for reducing these emissions and, in particular, for meeting three major targets. The first was the Kyoto Protocol obligation on the UK to reduce its emissions of greenhouse gases from the 1990 level of just under 210 MtC, equivalent to an average of 183.5 MtC in the period 2008 to 2012. In 2004, emissions already stood at just under 180 MtC, so we are currently meeting our Kyoto target, although, in September 2005, Friends of the Earth claimed that the UK would in fact breach it. The second was the Government’s domestic target, which was, by 2010, to reduce carbon dioxide emissions by 20 per cent below their 1990 levels. The latest review of the climate change programme accepts that we are now unlikely to meet that target. Thirdly, it is the Government’s long-term aspiration to reduce UK emissions by 60 per cent by 2050. Whether that is attainable is anyone’s guess. This report is the committee’s second detailed examination of the major themes of the energy White Paper, following on from the 2004 inquiry chaired by the noble Lord, Lord Oxburgh, into the practicalities of renewable energy. Both the Government’s promotion of renewable, low-carbon electricity generation and their policies on reducing energy use are key to meeting the carbon targets. Both reports cast considerable doubt on the feasibility of these long-term targets and the effectiveness of the policies currently in place. The fact that the Government have now had to admit the unlikelihood that they will meet their domestic 2010 C0&2sub; target provides some justification of the committee’s scepticism. The Government’s responses to both reports have been extremely disappointing. In the words of the committee’s annual report,"““the response to a large extent simply described at length existing policies, initiatives and instruments, without appearing to grasp the strategic vision underlying our Report””." It is to be hoped that the current energy review, chaired by the Minister, Malcolm Wicks, who gave helpful evidence to our sub-committee, will provide an opportunity for this fundamental rethink. If not, the Government’s policies on energy will be doomed to failure. Our report begins with an attempt to define energy efficiency, and to understand what it can realistically achieve, more precisely than the Government have done so far. This might seem like an academic exercise, but it underpins the rest of the recommendations. Energy efficiency is fundamentally a technical measure of the proportion of energy within a fuel that is converted to a given output. In this technical sense, it says nothing about overall energy consumption or carbon emissions, so it is a big leap from this technical definition to the Government’s aim of achieving absolute reductions in the UK’s energy consumption to reduce carbon emissions, fuel poverty and so on. An example of this would be if you bought a more economical and efficient car; the energy within a fuel would be used more efficiently, but that does not mean that you would end up using less petrol—you may simply drive further, and end up using the same or more fuel. As Professor Paul Ekins, of the UK Energy Research Centre, told us,"““increased efficiency in the use of a resource leads over time to greater use of that resource and not less use of it””." This may explain why, as we say in paragraph 3.7 of our report, while most developed countries have seen improved energy efficiency in recent decades,"““there appears to be no example of a developed society that has succeeded in combining sustained reductions in energy consumption with economic growth””." This is the scale of the challenge facing the UK. The Government have no clear definition or measure of efficiency, and it is hard to avoid the conclusion that if they did—for instance, if they measured energy efficiency in terms of the absolute reduction in the consumption of delivered energy—they would be setting themselves up to fail. Despite a significant fall in industrial energy use, overall UK consumption of delivered energy continues to rise slowly but steadily. What does energy efficiency deliver? In the memorable words of one government official, quoted in paragraph 2.28, energy efficiency savings are,"““real relative savings . . . genuine reductions on what would otherwise have happened””." That sounds like a world of make-believe, of models and projections—or guesswork. Does that matter? A case in point is our statement in paragraph 2.49 that the UK had already met its Kyoto obligations before the end of the 1990s,"““largely for structural reasons and because of changes in the fuel mix””." In their response, the Government said that this was ““not the case””, and that such changes had played only a small part in a reduction,"““against a Business as Usual baseline . . . estimated at about 60 MtC””." But this is of course a reduction against an estimated ““baseline””—in other words, something totally hypothetical. On another Defra webpage a statistical release states:"““The fall in emissions in the first half of the 1990s is associated mainly with greater use of gas in electricity generation and increased use of nuclear-generated electricity. Both displaced coal use””." That is exactly the committee’s point. At every stage you have to peel back the layers of intellectual confusion—sometimes, I fear, even spin—before you get to hard facts. The committee’s clear message is that we need simplicity and strong leadership: clear definitions, clear measures, and institutions and policies shaped accordingly. It will be clear from what I have already said about our findings that we feel the country is a long way from that. The most glaring source of confusion is the division of responsibility for energy policy between two departments, the DTI and Defra. Why does one department sponsor the electricity-generating industry while the other is responsible for attempts to reduce electricity consumption? And why, when the DTI is responsible for power generation, does combined heat and power fall to Defra? The stock answer is that responsibilities have to be divided somewhere, and that mechanisms for achieving effective co-operation, such as the Sustainable Energy Policy Network, work well. This was what the noble Lord, Lord Whitty, said when he gave evidence to us as a Defra Minister before the election, but it is notable that once his ministerial shackles were off, in the debate on our report on renewables in June last year, his perspective had changed. He commented:"““we have not yet got complete cohesion in government on the matter””." He also argued passionately that:"““We ought to be absolutely clear that the prime objective of energy policy must now be a reduction in the carbon content of our energy sourcing and use””.—[Official Report, 23/5/05; col. 1797.]" That is exactly the point made in our report, which sadly was rejected by the Government. On 29 March the committee took evidence from the DTI Energy Minister, Mr Malcolm Wicks. On departmental co-ordination he commented:"““Defra stands right behind me on these issues, and I have the bruises to prove it!””." He was at pains to point out that it was a joke, but many a true word is spoken in jest. The confusion of responsibilities is repeated at every stage lower down the scale in the proliferation of agencies, networks and incentives in the field. We have grave concerns about that. To take one example, which we highlighted in our short follow-up report, we recommended the example of the Swedish local investment programme, a simple scheme that offered grants towards innovative local projects designed to fulfil a range of environmental and social objectives. It was highly effective in stimulating innovation, achieving reductions in emissions at a cost of around £10 per tonne of carbon—significantly less than the current cost of carbon offsetting schemes. The Government, however, did not accept our recommendation that they should follow the Swedish model, stating:"““The UK Government funds a number of delivery programmes which deliver the same climate and energy outcomes as the Swedish model, however the key policy areas (energy efficiency, energy supply, renewable energy and transport) are delivered by different Government departments, therefore responsibility for these programmes is also distributed across these departments””." We find that reply disappointing in the extreme. We comment in our follow-up report:"““The fact that responsibility for delivering related policy areas is divided among different Government departments does not, in our view, justify the Government in resigning themselves to fragmented and confusing policy delivery””." What are our recommendations for the way forward? We need greater clarity at the top, clear and measurable targets, simpler lines of responsibility and more effective policy delivery. The report is full of constructive suggestions, and we hope the Government will be willing to listen to some of them. At paragraph 5.33, for instance, we recommend that earmarked funding be made available to finance innovative, energy-based school projects, such as the small wind turbine installed at the Eyres Monsell Primary School in Leicester. Children there were able to monitor the output via computers in the main entrance, and were impressively well informed about the turbine’s performance. If we are to encourage a new generation of responsible energy users, we need more of this. The government response totally misses our point that that was about educating children. We also looked at economic incentives. There is no doubt that price is an effective incentive. The fact that, following recent rises in oil and gas prices, renewable power and microgeneration have become so fashionable and widely reported is no coincidence. But at the moment, the more electricity you consume the less per unit it costs you. In other words, there is a perverse incentive to use more power, not less. We recommended that the Government look at tried-and-tested alternatives, such as the ““lifeline tariff”” model. You get an initial tranche of energy at low unit cost, sufficient to meet basic needs, and the power that you consume in excess of that increases progressively in price. That deals with the problem of the elderly lady living alone in her council flat and paying the maximum price for the small amount of energy that she uses, whereas the young man with all his electronic toys is actually paying less, the more electronic toys he acquires and uses. The Government rejected that recommendation as well, stating that they were opposed to,"““direct interventions in the market””." That is rather surprising, coming from the Government who devised the renewables obligation, the energy efficiency commitment and a host of other initiatives that directly intervene in energy markets. What about building standards? We expressed alarm over the extent to which the higher energy efficiency standards contained in new building regulations were actually being enforced. The government response concedes that there is a problem, but once again offers no concrete assurances that the problem will be addressed, for example, through increasing the resources available to local authority building control sections, or increasing the training of building inspectors. Instead, the government response tells us that the widespread non-compliance with the 2002 changes to building regulations in fact,"““revealed that less than 5 per cent””" of the expected reductions in carbon emissions have been lost. I have tabled a series of Questions for Written Answer in an attempt to get to the bottom of where this 5 per cent figure came from. The most recent Question asks whether the Government now accept that it is inaccurate. In case officials are uncertain of the answer that they should give, I can tell them that the answer is ““yes””. The official line is that the figure is taken from a 2004 report by the Building Research Establishment, but I have an e-mail from one of the authors of that report, saying:"““We have looked into this and do not know how this figure has been derived. It does not seem to be a figure taken directly from our report””." Again, we need clarity, simplicity, and a willingness to see things through. This is not an issue on which we can afford either complacency or procrastination. There are measures that could and should be taken. We hope that the current energy review will deliver effective action. I look forward to the debate and the rest of our time together with much interest. I beg to move. Moved, That this House takes note of the report of the Science and Technology Committee on Energy Efficiency (2nd Report, HL Paper 21).—(Baroness Perry of Southwark.)