On Tuesday 17 March the Parliamentary Renewable and Sustainable Energy Group, a cross party group for UK politicians and senior industry stakeholders that exists to promote sustainable energy issues in Parliament and the wider political community, met to discuss Energy Efficiency Policy: Putting our house in order in Palace of Westminster. Chaired by Alan Whitehead MP, Dr Nick Eyre, (Senior Research Fellow at Environmental Change Institute (ECI), University of Oxford), Dr Steven Fawkes (Director, EnergyPro Ltd), Dr Joanne Wade (Director, Association for the Conservation of Energy (ACE)), Simon Roberts (Chief Executive, Centre for Sustainable Energy (CSE)) and Catrin Maby (Chief Executive, Severn Wye Energy Agency) discussed whether current Government energy efficiency policies are sufficient for achieving energy policy and wider sustainability goals.
To date, the UK has achieved remarkable advances in energy efficiency. Since the oil crisis in the early 1970s, the UK has more than doubled its GDP while overall energy consumption has fallen slightly. This two fold increase in energy efficiency has significantly reduced energy bills compared to what they would be otherwise. Energy efficiency improvements in the UK have also reduced carbon emissions by three times as much as all fuel switching (i.e. dash for gas, renewables, etc) put together.
Initially, energy efficiency improvements were the result of technological succession and progression as opposed to targeted intervention, even though some form of energy company obligation (ECO) has been around in the UK for more than 20 years. The increasingly important role of polices, especially ECO, is evident in the widespread rollout of loft and cavity wall insulation. Given the UK’s track record in improving energy efficiency one would be tempted to assume that current policies and political ambition would place the UK on a pathway to meet, if not succeed, EU energy efficiency targets (27% by 2030, Euractiv, 2015).
Current policies, however, are falling behind the ambitions of previous policies. Compared to policies predating 2012, current energy efficiency programmes are 5-7 times less effective for households. The Green Deal in particular is considered a major setback although cuts in the scale of ECO have also contributed to the watering down of energy efficiency policies in general.
The unceasing focus on generation, signified by £1.3m funding for the Electricity Demand Reduction Pilot compared to £26bn funding for Hinkley C nuclear power station (20,000 times more funding), makes the 2-3% annual improvement in energy efficiency required to achieve climate change and energy efficiency targets implausible. This also reflects the top-down nature of policies and how co-benefits of energy efficiency are generally undervalued. It was also pointed out that DECC 2050 pathways calculator including a demand-side focus result in £11bn-490bn savings over DECC’s central scenario but there are still very few people in relevant services that work on both supply and demand.
The five panellists’ views on how to move forward differed between a call for significantly scaling up investment by moving away from public sector towards an energy efficiency market over unleashing private finance in an individual, energy-user perspective with regulation capturing the multiple benefits in a just way to shifting energy supplier focus towards the reduction of customer demand as well as strengthening local supply chains to ensure that energy efficiency becomes a key element of home improvement.
One specific suggestion was for ACCRO (Average Customer Consumption Reduction Obligation) to succeed ECO. As a technologically neutral policy it would encourage time-of-use tariffs and help energy suppliers increase their interest in making policies work while reducing their customers’ energy demand by focussing on easy-to-implement technologies as opposed to solid wall insulation, which is both difficult to measure and difficult to document.
In line with this, more general points involved a call for policy to join-up supply and demand and integrate robustness towards changing business models as a result of the decline of the utility model. There also needs to be more certainty by ensuring that programmes supersede political cycles, especially for measures with payback periods exceeding the UK’s short average tenancy/ownership periods (compared to other EU countries), given the decreasing number of low-cost measures available.
The call for more joined-up thinking also referred to treating energy efficiency services like energy supply. Getting an electricity supply requires one contract with a supplier rather than separate contracts with generators, district network operators, metering companies etc. and the same needs to be made possible for energy efficiency. Advancement in sensors and measurement and verification (M&V) protocols already enable energy efficiency metering and reduce transaction costs. This may lay the foundation for a documentation process akin to that of the oil and gas industry although there is still a lack of standardisation and joined-up thinking.
To ensure that benefits are distributed in a just way, however, the emerging energy efficiency market needs to be heavily regulated like the supply market and a meaningful public debate is required to open up conversation rather than ‘selling stuff’ to customers.
Overall, there was cautious optimism regarding the technological potential for energy efficiency and the political willingness to commit more systematically to energy efficiency and joined up thinking. Otherwise the UK will lose it’s cutting-edge in energy efficiency policy, business model innovation and technological application for the foreseeable future.
Colin Nolden is a Research Fellow at SPRU – Science Policy Research Unit and a member of The Sussex Energy Group)
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