Electricity and Gas (Energy Company Obligation) Order 2012
Debate between Lord Dixon-Smith and Lord Reay
Lord Dixon-Smith
My Lords, I am very grateful to the Minister for describing together the four orders we have before us. It saves me the trouble of trying to do so, and I would probably make a mess of it. I should say—perhaps we all ought to say this when we speak on this order—that I have a house that is pretty energy-inefficient so, in a sense, it could be argued that I have an interest in the outcome of this debate, but it is not a direct interest of the sort that is normally declarable.
I have a particular interest in speaking on the first two orders on the Minister’s list—the energy company obligations order and the Green Deal (Qualifying Energy Improvements) Order. I should say that I have had a letter from the Glass and Glazing Federation that has steered my remarks. It has a particular concern, which I shall come to. To put this into context, we need to recognise that 23% of all heat lost from buildings goes out through the windows. It is perhaps much more significant that 85% of all houses have windows that are less than grade C quality, which is the medium on the quality scale where grade A is ideal and C is the medium. The reason that the glaziers have been in touch with me is that they have particular concern about double glazing and a part of the energy company obligation. Double glazing is not specifically mentioned in the list of qualifying improvements. That may just be a peccadillo. Replacement glazing and secondary glazing are mentioned. To the extent that double glazing could be replacement glazing, I presume that it is included. I have no doubt that the Minister will tell me that that is so.
Much more important is the issue raised in the Electricity and Gas (Energy Company Obligation) Order where the conditions under which the improvements can be undertaken are set out in Clauses 15, 16, 17 and 18. What has concerned the glaziers is Article 16(5), which says specifically:
“Where a qualifying action or adjoining installation is a glazing measure, a supplier must only calculate the carbon or cost saving which exceeds the saving which that measure would achieve if installed to the minimum standard required by, as applicable, Approved Document L1B”,
and so on. One wonders why glazing is mentioned specifically. Everything else on this comprehensive list, which is very welcome, is okay, but glazing is specifically mentioned. The effect of this in its past interpretation, and it may be that the department is going to place a different interpretation on it, has been that energy-efficient improvements will be counted only from the C rating up, even if a householder changes from a poor single-glazed window to an A-rated double-glazed window. In other words, this is going to hit the 86% of houses that have the lowest-grade windows because their improvement will not count until it reaches grade C, if this wording is correct and if I am correctly informed, and I am quite prepared to admit that I may well be misinformed. If that is the case, this is a significant matter for the glazing industry and indeed for the principle of what we are trying to achieve with the Green Deal. We are going to disadvantage a lot of the less well off households because that is where the vast majority of poor-quality windows will exist.
Will the Minister agree at least to look at this issue? I do not expect him to be able to say that there is an instant answer that he can give me today. In fact, today we are approving these orders because we can do no other, so there is nothing we can do about this issue, which I rather regret; it would have been nice if I had known about it three months ago. We need to think seriously about this issue. According to the Glass and Glazing Federation, it looks as if there is a bit of a chink in the order and it would be better if that did not exist.
Lord Reay
My Lords, the Green Deal seems to be a ferociously complicated and expensive bureaucratic edifice. It has the laudable objective of improving the energy efficiency of existing British homes and other buildings without requiring the taxpayer to fund it. If I understand the impact assessment correctly, the cost of the energy company obligation will be recouped by suppliers from customers’ bills generally, so that is a further cost to the consumer. As for the amount, I saw different references—a reference to a cost of £1.3 billion a year on page 187 of the impact assessment, but a reference to £540 million a year in the letter from the Minister that appears at the back of the report of the Secondary Legislation Scrutiny Committee. I do not know if the Minister might be able to comment on those figures.
The take-up of the scheme is of course unknowable. Much will depend, as the Government point out on page 131 of the impact assessment, on the trust that people learn to put into the scheme. Plenty of things could go wrong to affect or even destroy confidence and trust.
Two of the advantages of the scheme are said to be the saving of the CO2 emissions as a result of less electricity being used, and greater thermal comfort for householders through enabling them, for the same cost, to enjoy high temperatures in the homes. However, each of those objectives is achievable only at the expense of the other.
I will refer to some interesting paragraphs on page 89 on the subject of health. The impact assessment correctly points out that the scope for improving health by alleviating cold living conditions is considerable. However, it goes on to point to the growing concern that the removal of ventilation can increase the incidence of disease. It expects more attention to be focused on this subject in future.
Finally, I will ask the Minister a question on the subject of external cladding. We read recently that another government Minister had declared that he wished to promote this form of energy efficiency. Will my noble friend give an assurance that this will not be done to listed buildings? We do not want beautiful buildings and streets being vandalised into eyesores in the name of energy efficiency. Enough damage is already being done to the countryside by wind turbines, as the Minister well knows.
Energy Bill [HL]
Debate between Lord Dixon-Smith and Lord Reay
Lord Reay
I strongly oppose these amendments. At Second Reading, I declared that I was against introducing local carbon budgets into the Bill, although unfortunately I was not able to be present in Committee when the issue was debated on amendments brought forward by the noble Lord, Lord Judd, the noble Baroness, Lady Smith of Basildon, and my noble friend Lord Deben. The ultimate purpose of these amendments is, as the noble Lord, Lord Judd, has explained, to oblige local authorities to do more to see that carbon emissions are reduced in their areas and, in effect, to coerce them into making a greater contribution towards achieving the Government’s renewable energy targets. However, in Committee, it was represented as being an opportunity rather than an obligation for local authorities, and one that they were longing to be given—“unanimously” at one point, said the noble Baroness, Lady Smith of Basildon. I refer to col. GC 231 of Hansard of 26 January 2011.
No doubt there are keen protagonists of the Government’s renewable energy policy in positions of authority in local government who would welcome such an imposition. However, it surely stretches incredulity to refer to a general—let alone a unanimous—call from local authorities to be given such an obligation. Indeed, if local authorities reflect, as they might be expected to, the wishes of their electorates, I would anticipate a very minor interest in the subject; and, from some who are aware of some of the likely effects of introducing carbon budgets, a most violent opposition.
Legally established local carbon budgets would be likely to have the same sort of effect as regional renewable energy targets have had, and still have today, although they are due to be abolished under the Localism Bill. These have had one most malign effect: they are used by developers, some local authorities and also some planning inspectors to justify the most abominable decisions to permit gigantic wind farms in entirely inappropriate rural locations. It is developers, anxious to drink deep at the well of subsidies before the well dries up—as it has started to do throughout Europe—who would latch on to local carbon budgets and use them as another weapon in their hands in their tireless and far too successful efforts to use the financial advantage that subsidies give them to buy their way to victory in our planning system, as they appeal against every decision that goes against them and so triumph over the wishes of anguished but financially outbid local communities.
I appreciate that behind this amendment, and indeed behind this Bill as a whole, lies a belief that we must strive to meet carbon emission reduction targets for which we have assumed legal obligations. This is not the occasion to argue in detail for alternatives to that policy. However, I believe the cost that we have assumed for the purpose of meeting those targets is far too high and that we should be looking for ways to reduce the cost rather than meet the targets.
One of the greatest of those costs is of course that to the poor electricity consumer, whose bills are programmed to ratchet up each year into the indefinite future to pay for the ever-rising renewable energy subsidies. The current cost, according to Ofgem, is around £1.5 billion a year but is due to rise to some £5 billion or £6 billion by 2020—a miserable prospect for all those in fuel poverty, whose plight has been vividly described by others in this debate such as my noble friend Lady Maddock and the noble Baroness, Lady Smith of Basildon. Another of those costs is the destruction of our beautiful landscapes, which are famous and loved throughout the world, which our planning system has, to date, largely preserved and which the present Government seem so nonchalantly to ignore. Because the acceptance of these amendments would confirm how little we care about that threat, I hope that my noble friend the Minister will reject both of these amendments.
Lord Dixon-Smith
My Lords, if Essex man dare to stand up against Essex girl—I admire the noble Baroness for overcoming her present difficulties—I am afraid that I am going to oppose this amendment. The real problem with local carbon budgets is that local authorities, which presumably would have to administer them, have no power to influence so much of what goes on in their own areas.
The noble Baroness who proposed this amendment comes from a very urban area of Essex but I come from a rather more rural area. Not the least of the problems that would have to be included in local carbon budgets is that of what you do about agriculture. There is nothing we can do about this but agriculture is one of the highest carbon emitters in the country, so that is a difficulty. We have no control over our population’s motoring habits or the way people organise their lives, such as where they do their shopping. I have a lot of friends who go to do theirs 10 miles away, not because it is difficult—nowadays, it is very easy—but because it is cheaper for them to do so. There are so many factors that cross local authority boundaries, which mean that the local authorities would have no power to control what is actually going on in their districts.
You could, of course, get around all those factors by raising a huge number of exceptions so that you would not consider this, that or the other factor. However, once that starts to be done it destroys the whole purpose of the exercise. While the principle of controlling emissions in all ways is good, it seems to me that the principle that you can begin to administer that locally is simply erroneous because the powers do not exist to make that possible. I am sorry to quarrel with my noble Essex friend, if I may call her that, but I am afraid that we have to face that brutal reality. I hope that we will not inflict this duty onto local authorities. They have enough difficulties with the problems that they already face. Adding this burden onto them, which they could not fulfil anyway, seems not to be a reasonable thing to do.