Energy Efficiency

Angus Brendan MacNeil Excerpts

Wednesday 30th June 2010 Commons Chamber

[The Minister of State, Department of Energy and Climate Change (Gregory Barker)]

I beg to move,

That this House has considered the matter of progress and prospects in energy efficiency.

Within the first days of taking office, the Prime Minister pledged to make this new coalition the greenest Government ever, and we are determined to deliver on that promise. Energy efficiency, the subject of today’s debate, is at the very heart of our greening programme. Better energy efficiency offers a genuine win-win, because it not only enhances the competitiveness of our economy, but is good for the environment in cutting carbon emissions. It is good for energy security in reducing our reliance on imported fossil fuels, and it is good for hard-pressed families, saving them money currently wasted heating inefficient and cold homes. Energy efficiency is not just a means to an end; it is a great thing in itself. In these times of rising bills and tight family budgets, there is one overarching simple truth: the cheapest energy we all have to pay for is the energy we do not use.

President Obama has gone even further. He recently said:

“Insulation is sexy stuff...Here’s what’s sexy about it: saving money”.

In our own way—a more modest way—we are determined to make it sexy too, because for too long, energy efficiency has been the poor relation of British energy policy. Too many politicians have talked the talk, but failed to deliver. Energy efficiency has too frequently been relegated to the fluffy optional extra end of the energy policy agenda. Energy efficiency, however, is the key benchmark of a globally competitive 21st century economy.

Yet on the key test of energy efficiency, the UK currently trails behind most of our European competitors and risks slipping even further behind. If Members pardon the pun, we lag behind Germany, Holland, Spain and Italy, to name but a few. The average British home uses more energy than a home in Sweden—a country partly within the Arctic circle. One in five of our homes still has the lowest energy-efficiency rating.

[Mr Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP)]

On the point of energy efficiency in comparison with Sweden, I understand that there is considerable use of heat pumps—both ground source and air source heat pumps—in Sweden. The previous Government gave assistance for the installation of heat pumps; will this Government continue in that vein?

[Gregory Barker]

We are very keen on heat pumps, but those pumps are not an energy-efficiency device; they are a renewable-energy device. Today, we are obviously concerned primarily about energy efficiency, but I take the hon. Gentleman’s point on board, and we are certainly keen to encourage the use of a diverse range of new renewable technologies.

[Mr MacNeil]

Using 1 kW of electricity, an air source heat pump can generate 2.5 kW of heat and a ground source heat pump can generate up to 4 kW of heat. I would argue that that is quite an efficient use of energy.

--- Later in debate ---

[Gregory Barker]

Obviously my announcement is effective today. We hope to lay the regulations before Parliament before we rise for the summer, because I am fully aware that there has been uncertainty in the market, and that is what we aim to eliminate.

[Mr MacNeil]

Usually, house construction is a great battle between insulation, as the Minister has mentioned, and ventilation. The part of the world that I come from suffers from having to have the same ventilation standards as an urban area in Kent; the rural west coast of the Outer Hebrides certainly does not need the same amount of ventilation as might perhaps be needed in Kent. However, we are stuck with that and the result—I am sure that the situation is the same in other places in the country—is that once the completion certificate is achieved and received, the house builder goes round with a tube of mastic or silicon and blocks off the vents that have been placed unnecessarily. Perhaps ventilation could be seen as part of the argument for energy efficiency, too.

[Gregory Barker]

That is a very good point. I think that my colleagues in the Department for Communities and Local Government would have direct ministerial responsibility for that point, but it is worth while, and if the hon. Gentleman would care to write to me about it I would be happy to take it up.

We will go further. We are also talking to industry about similar restrictions on other low-value gadgets and appliances. All these new measures are specifically designed to do more for the fuel-poor, because we fully recognise that fuel poverty is a growing challenge, with the number of households in fuel poverty having risen every year since 2004, to 4.6 million households in England alone in 2009. Given that legacy of rising fuel poverty, we are creating a new CERT category of those who have the greatest need, in addition to the priority group of vulnerable households, which will already account for at least 40% of the total CERT extension measures. Pensioners, people with children and the disabled will form a super-priority group on whom at least 15% of the new programme must be targeted. That means that more than £400 million will be focused over the next 18 months on the poorest and most vulnerable.

--- Later in debate ---

[Gregory Barker]

It has never been the intention for the green deal to encompass, in its purest form, microgeneration, for which there is the separate support mechanism of feed-in tariffs. We will look closely at those tariffs to ensure that they are appropriate. We want to drive a far greater sense of ambition around microgeneration than was anticipated in the Energy Act 2010, which was passed in the previous Parliament. We are keen and ambitious for microgeneration, but I do not want it to be confused with the green deal, which is about energy efficiency, so it will not be included in that. However, we hope that providers that insulate homes under the financing of the green deal will, as I have outlined, take that opportunity to offer packages for appropriate microgeneration that also might not require any up-front payment because they are supported by a feed-in tariff.

It is important to stress the priority of energy efficiency over microgeneration, because there is no real point in adding microgeneration systems to energy-inefficient homes, but there is a great deal of sense in adding them at the same time as increasing energy efficiency. Of course, that would also require a smart meter. I hope that this package of measures will be available under the green deal umbrella, but the green deal financing we have been discussing and the £6,500 are for energy-efficiency measures. There is nothing magic about the £6,500 figure, but we had to come up with a figure and there has to be a cut-off point. We reached the figure with the help of BRE, but we might consider increasing it when proposed legislation comes before the House if that proves sensible. However, £6,500 is what we are committed to now. We hope that the game-changing nature of the new deal, the involvement of new players and the creation of new markets and financing tools will create a host of opportunities as well as driving real behaviour change.

[Mr MacNeil]

I am listening quite closely to what the Minister says about insulation, carbon footprints and new financing. Is he saying that when it comes to the householder paying, they will not be facing any higher than average bills in any particular year than they would have faced had they not entered the green deal? It is quite important that people fully understand. Is the Minister saying that bills should go down and that householders should not experience any greater costs than they had prior to entering the green deal?

[Gregory Barker]

That is what I am saying, with the caveat that there are two big variables, the first of which is behaviour change. If someone decides, in their newly insulated home, to turn up the dial and hoover in the nude, that will affect the energy bill. Likewise, if there is a spike in oil prices or a surge in gas or electricity prices, that will affect bills. On an equalised basis, assuming there is no major behaviour change, the assumption in the model we are working on will be that the financing costs will always be less than the overall costs of installation.

Our ambition goes way beyond just household energy efficiency. Households, businesses, industry and the public sector all need to pull together to achieve the change that we need. For businesses, energy efficiency can make sense provided that they are not constrained by unnecessary bureaucracy. The green deal will apply to businesses too, and especially to small and medium-sized enterprises. It has the potential to help many companies improve not only their green credentials but their bank balances and their overall competitiveness.

I want our reforms to take energy efficiency away from the corporate social responsibility managers and plant it firmly on the desk of Britain’s finance controllers. Pioneers in this area are already demonstrating that energy efficiency makes real sense for business. To pick just one example, Marks and Spencer made a saving of £50 million last year alone through energy-efficiency measures. It is just one of thousands of progressive British businesses that realise that energy efficiency has a direct impact on profitability.

Marks and Spencer launched Plan A in January 2007, in which it set out 100 commitments to achieve in five years and the aim of improving fuel efficiency by more than 20%. Critical to Plan A has been genuine and consistent leadership from the very top of the organisation. Providing leadership from Government Departments is a responsibility that we cannot shirk, and that is why the new Prime Minister has committed the coalition to cutting emissions from central Government Departments by 10% in just 12 months. I am pleased to inform the House that work is well under way, but the 10% cut in Whitehall is just the starting point. We are engaged in a major, long-term drive to reduce emissions and save energy costs right across the wider public sector, which alone accounts for 3% of total UK carbon emissions.

The public can watch our progress: all Government Departments are now committed to publishing their energy use online and in real time. Seventeen Departments will publish energy consumption data for their headquarters buildings by the end of July, following the first meeting of the new cross-departmental energy committee. However, I am pleased to say that the Department of Energy and Climate Change, the Home Office and the Ministry of Justice have already made their energy-use information available online and in real time. We have also asked the private sector to join Ministers in this cross-cutting group, so that we can hold Departments to account and ensure that we learn the very best practice from business. This Government are determined to get our house in shape in short order, and we are already delivering clearer leadership, greater transparency and real change.