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Energy Efficiency (S&T Report)

My Lords, I apologise to the House for the switch in the list of speakers. I also apologise to the Front Benches if I have to leave before the end of the debate. I do not do so lightly, but I have another engagement that I cannot get out of. I am grateful to the Minister in that regard. I thank the noble Baroness, Lady Perry of Southwark, for her excellent chairmanship. It was a pleasure and a privilege to be a member of her committee. I also take the opportunity to thank our Clerk, Dr Christopher Johnson, and our specialist adviser, Roland Clift, for their unstinting support and advice. I want briefly to address two areas where I think that the Government’s response requires further clarification. Those areas are documented in our report in chapter 8, entitled ““Developing markets for heat””, and in chapter 11, entitled ““The longer term: Research””. I know that if the noble Lord, Lord Wade of Chorlton, had been here to speak today, he, as president of the Combined Heat and Power Association, would have had more to say than I shall. From the evidence that we heard, from the reports on the visits to parts of Europe and from what I had seen, I was much impressed at how markets for heat had been developed in countries such as Sweden and Denmark, to mention but two from my previous visits. As our report states, demand for low-grade heat—that is, energy delivered at temperatures between ambient and the boiling point of water—for space and water heating represents a major proportion of the United Kingdom’s energy demand. Domestic and water heating alone comprise around a quarter of total UK energy use. The development of effective markets for such low-grade heat could thus deliver significant carbon savings. While I accept that not all these potential benefits are explicitly to do with energy efficiency, they are closely linked. Government energy policy has hitherto consistently overlooked heat, concentrating instead on electricity, industrial process and transport. One example is the lack of any attempt to collect and use the large quantities of heat produced by power stations, and the energy lost via cooling towers. The absence of markets for heat has been identified by the Royal Commission on Environmental Pollution as one of the principal reasons why bioenergy has not delivered in the United Kingdom as it has elsewhere in Europe. There is also resistance from other sectors, particularly the building industry, in construction and development. There is an inherent conservatism in the building industry. Representatives of the House Builders Federation, for instance, told us that they could see no advantage in community heating for individual customers, citing the potential for losing energy through distribution ducting as one of the disadvantages. That is quite contrary to what the committee saw in Sweden, particularly in Gothenburg, where it was stated that the heat loss from ducting was of the order of 7 to 8 per cent from the entire 700-kilometre network. The conservatism of the construction industry is compounded by a lack of leadership from central government, and the Government’s response documented that to a degree. I hope the Minister will take the opportunity to rectify that today, however, and no doubt correct me in my assertion. He may even announce robust, forward-thinking policy initiatives to encourage the building industry and others to develop markets for heat. As we said in the report, the most important and practical barrier to a community scheme is the initial capital cost. To overcome this and other barriers requires positive action to promote a market for heat. The Government have an important role to play. Again, as we stated, there is a clear need for a few larger-scale developments which can be promoted as demonstrations of the value and potential scope of heat provision. The proposed development of new housing in south-east England, with its high density, offers an extraordinary opportunity to develop community heating, but requires government action to make it happen. I hope the Minister will comment. I briefly turn to longer-term research. The Government’s stated long-term goal is to reduce emissions to around 65 metric tonnes of carbon per year by 2050, from today’s carbon emissions of around 150 metric tonnes. An achievement on such a scale would require a well resourced and co-ordinated programme of research and development. Again, the government response and the evidence in our report is not reassuring. Again, however, I have no doubt that the Minister will emphatically reassure us today. Certainly, the written and oral evidence we received from Research Councils UK and other witnesses failed to provide a clear picture of the level of funding and co-ordination of the UK research effort. For instance, direct government funding was channelled though no fewer than five departments. Even the level of funding from the Government, stated as £10 million, is in conflict with the data we received from IEA, according to which the level of UK funding in energy conservation and R&D in 2002–03 was zero. I acknowledge that, during the course of our inquiry, the Government announced an increase in funding to £70 million by 2007–08, from the science budget of energy R&D. This is welcome, but increased funding will be effective only if there is a strong research base in place. As Professor Skea emphasised in his evidence, in order to increase training capacity and gradually begin to develop courses, there is a need to raise funding as this capacity in people increases, particularly in the field of energy conservation. The Government need to signal a long-term commitment to this.