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Energy Efficiency (S&T Report)

My Lords, as a member of the committee I pay tribute to the noble Baroness, Lady Perry, for her chairing of the committee and to our Clerk, Christopher Johnson, and our specialist adviser, Professor Roland Clift. The report was published last July, which is a while back, and there is much that I had forgotten that we had put into it. Therefore, I have been rereading it over the past couple of days. In doing so, I thought what a very good report it was. Across the field of energy, the report is comprehensive in all but one sense—it does not cover transport. As figure 3 on page 20—which shows the increases in the use of energy and in carbon emissions since 1970—illustrates so well, the one area that has seen exponential growth during that period has been transport. In some senses, I am rather sorry that we did not include transport, although it would have opened up a huge new area for us to look at. It is an area where we have done remarkably little to try to limit growth. In the recent Budget, the Chancellor increased the differential between the large-engine and small-engine cars, but, as so many people have pointed out, if you can afford to buy a Chelsea tractor, £45 is so little that it makes no difference at all. The big increase in transport has been aviation and it remains a scandal that aviation fuel is untaxed. Of the areas that the committee looked at, we start with the Prime Minister’s statement in 2004 that climate change is,"““the world’s greatest environmental challenge””," which is,"““so far-reaching in its impact and irreversible in its destructive powers, that it alters radically human existence””." That statement implies that, to a degree, we humans have to adapt and come to terms with the impact of climate change, but also that urgent action is needed on the part of governments to help people to adapt to and come to terms with climate change, and to mitigate its effects. Others, notably the chief scientist, have said that climate change poses a greater threat to our planet than the war on terrorism. One might, therefore, have expected that the Government would provide strong leadership in this area. Instead, as the report charts clearly, we have fragmented leadership and fragmented responsibilities. We do not even have a minister for energy who is taking the lead across the field. As the noble Baroness, Lady Perry, pointed out, responsibilities are split between the DTI, which has responsibility for the generation of electricity, and Defra, with responsibility for the environmental climate change agenda. In addition, the ODPM is responsible for building regulations and the Department for Transport is responsible for transport. On top of that there are a plethora of agencies and non-departmental public bodies dealing with this and that whose responsibilities are often unclear; whenever we try to find out what they do, they seem to have overlapping responsibilities. There was an opportunity after the last election for the Government to respond to the recommendation in our earlier report on renewables—and this report is in many senses a sequel—to establish clear departmental responsibility in that field. Again, they missed that opportunity and we observed the responsibilities of state being set up across the different ministries. For a government who came to power saying that they would give us joined-up thinking, this report illustrates just how little joined-up thinking there is in this area. A prime example of the muddle that the mixed responsibilities have brought is the failure to identify clear targets. The first chapter of our report set out the difficulties that we faced in examining the various government documents and establishing precisely what the targets were. We suggested that a clear numerator was needed, and that the impact on carbon emissions should be used as that numerator—a recommendation that has been rejected, as the noble Baroness, Lady Perry, pointed out. I was, however, interested to see that, in spite of that, the Government appeared to give us a back-handed compliment on the clarity with which we set out the position. They stated in their response:"““The Government welcomes the Committee’s accurate and clear breakdown of the various statements on carbon emissions, and how they have been derived. The Government believe that the table and figures provide an excellent guide to the carbon baseline and projections, and accurately reflect the path the Government has set itself to achieve a transition to a low carbon economy””." That is from an excellent chapter which sets out precisely what the Government are aiming to achieve, and shows how difficult it will be for them to achieve the targets that they have set themselves for 2010 and 2020. Clearly, if you set yourself targets, you must be clear about what you want to measure, and it must be easily measurable and monitorable. The report refers to a lot of measures that are necessary to promote energy efficiency. We concentrated particularly on the domestic sector, which, after transport, is the next highest cause of carbon emissions in this country. Two points are worth noting. The technologies—the ways and means of reducing residential usage—are now well established. The key issue is housing. As the report points out, we have a stock of 25 million homes in this country. We are adding to that stock at a rate of about 100,000 a year. We are hoping to increase that to about 200,000 a year, so we are minutely adding to the stock. Therefore, the issue is as much about retrofitting older buildings as about coping with the new build. Nevertheless, building standards are a key issue here. We were very disappointed—as we stated at page 53 of the report—that:"““Part L of Building Regulations will, even after the latest review, not match the best standards in Europe””." We also noted the difficulties in enforcing those building regulations. On page 55 we mention a number of examples of where enforcement has fallen down. The report refers to:"““Designs which met Government standards by including condensing boilers, but where developers cut costs by installing conventional boilers; a study by De Montford University revealed that 98 per cent of builders were failing to display energy performance certificates, required by the 2002 revision of Building Regulations; hot water cylinders in the Flagship Home in Westminster””—" which we visited—"““had only the most rudimentary, non-compliant insulating jackets; a survey conducted by BRE””—" the Building Research Establishment—"““revealed that two thirds of domestic buildings failed to reach the 2005 indicative standard for air permeability—which itself is three times less stringent than that applied in Germany””." Those examples illustrate how difficult the enforcement of building regulations is. One of the things that worries us very much indeed is the possibility that we are now proceeding, through the route of competition, to self-certification in the building control process. The problems of enforcement illustrate also the problems of the lack of skills in the construction sector, which was another issue that we flagged up. That sector is short of something like 300,000 skilled workers. I refer to the permeability of buildings. In Sweden that is a significant measure of how far buildings are meeting the regulations. The Swedes are now putting a lot of emphasis on how far buildings are leaking heat into the atmosphere. Fitting windows is part of that. If you do not have people who can fit windows competently, you will have draughty windows, which is often the case in Britain. Air-tightness standards in Sweden are considerably higher than in Britain. The whole issue of training construction workers has to be tackled. Finally, we noted the lack of incentives to builders to install energy-efficient heating systems. So far as they were concerned, that added to costs, and it was cheaper to install under-floor electrical heating rather than condensing gas boilers, for example. There is little incentive to retrofit buildings, and VAT on repairs to buildings gives very little incentive to the individual householder to move in that direction. So far as concerns the individual householder, the behavioural issue is key. We found that area fascinating due to the perverse effect noted by the noble Baroness, Lady Perry. The money saved from introducing new energy-efficient boilers was often spent on extremely energy-inefficient items. We note in the report how people invest in conservatories, only to want to heat them, which is very inefficient. The importance of persuading people to change their behaviour therefore becomes central to the whole issue, and that leads us back to the notion of leadership. One interesting feature is that the population as a whole are now very environmentally aware and anxious to see what they can do. But the difficulty is that people perceive their own contributions to tackling climate change as small when they see what others do. When they see everyone driving Chelsea tractors or leaving lights on in their houses, they feel that it is not really worth making the effort to do anything. With regard to the waste area, I am interested in the degree to which local authorities have been able to develop some community spirit. I know that my noble friend Lady Maddock will talk at much greater length about what local authorities might do. That seems to be the way forward. We need leadership from central government, but that leadership must pass the buck to local authorities. It must pull together community spirit at a local level and encourage local communities to develop the sorts of initiatives that we saw in Leicester and Woking.