Household Energy Efficiency Action for a Low Carbon Society

Since 1999 there has been an eight percent increase in the levels of carbon dioxide emitted from homes, business and road transport. In order for Government to deliver its target of reducing carbon dioxide (CO2) emissions by 20 per cent by 2010 more needs to be done across all sectors.

The Energy Saving Trust therefore welcomes the release of the findings of the jointly sponsored Defra and HM Treasury Energy Efficiency Innovation Review (EEIR). The EEIR, which will feed into the wider review of Climate Change Programme (CCP) expected around the turn of the year, addresses the energy end-use sectors with the exception of transport and energy services. The scope for local and regional delivery is also being addressed separately as part of the review of the CCP.

Household energy efficiency measures require Government action, as well as the support of all stakeholders, through a strong and coherent policy framework that results in real action by all market participants and particularly people living in the UK.

Without the awareness, support and action of UK consumers the country will struggle to deliver its ambitious climate change goals. In our view a 'low carbon economy' can only be built by a 'low carbon society'.

Energy efficiency in the home is a growth area. Since 1970 improvements in UK homes has resulted in the doubling of energy efficiency with consumers benefiting by saving £10 billion whilst reducing carbon emissions by 28 MtC per annum. This is three times the savings from the whole UK nuclear industry and is almost as much as the emissions of all the UK's coal power stations put together. We believe that Government and the Devolved Administrations need to set an ongoing target for continuing this rate of improvement in home energy efficiency by at least two per cent annually. 

The Energy Saving Trust welcomes the publication of the Report on the Household Sector to Government containing the work of an independent project review team under the oversight of a steering group comprising representatives from Defra, HM Treasury, Energy Saving Trust and Carbon Trust. This is underpinned by three independent reports from leading energy consultants, which will be released in due course. We believe that effective implementation of the following policy recommendations of the project review team will help make up the projected shortfall needed to achieve Government's 20 per cent goal, providing this includes innovative support programmes to underpin suppliers' obligations as recommended.

The key actions to deliver the recommendations of the project review team

• Support innovative suppliers' schemes that seek to address the identified market failures under EEC
• Work with suppliers and the Energy Saving Trust to develop support programmes to underpin increased supplier obligations (e.g. to test impact of accreditation and closing of the cost-perception gap)
• Explore the potential for white certificate trading to deliver additional carbon savings and signal possible supplier cap and trade after 2011
• Undertake additional work to confirm potential of consumption feedback, then implement most cost effective solution
• Continue to strengthen building regulations and implement the Code for Sustainable Building whilst evaluating options for the introduction of a builder's obligation and measures recommended by the Government's review of energy efficiency in existing dwellings
• Fully integrate energy efficiency into the Low Carbon Buildings programme
• Consider the case for further support for energy efficiency RD&D through CSR07
• Work with the Commission and other EU MS to accelerate up-rating of product policy
• Implement endorsement standard / labelling for key consumer electronics and initiate retailer code of practice discussions
• Examine options for regulation of private landlords
• Defra to work with relevant Other Government Departments to ensure appropriate action is taken on enforcement of building regulations and product standards / labelling
• Integrate the recommendations with those identified in the report 'Appraisal of the Scope for Further CO2 Emissions Reductions from Local and Regional Activity', commissioned as part of the Climate Change Programme Review

It is clear that significant cost-effective savings can still be achieved from energy saving measures in the household sector. The Enviros² report identifies almost 7MtC³ of cost effective emission reduction potential that could be achieved by 2010 and about 9MtC by 2020. The Oxera⁴ report endorses these findings and demonstrates that there is further headroom to increase the contribution from the household sector beyond the 5MtC originally targeted in the 2003 Energy White Paper.

Energy Saving Trust's agenda for change - making it simple, easier and cheaper for households to take action

The report also reflects proposals made by the Energy Saving Trust's 'agenda for change - making it simple, easier and cheaper for households to take action', which was launched earlier this year (for a copy of the report go to www.est.org.uk/aboutest/news/agenda/).  This proposed a framework and practical actions that Government could take to help people combat climate change and reduce their personal environmental impact:

1. Support organisations that deliver change at a local level.
2. Use the tax system to encourage people to take action.
3. Help businesses to 'green' consumers.
4. Outlaw climate damaging products.

We are pleased that the recommendations of the EEIR in general reinforce our agenda for change proposals and that the Enviros work has confirmed 'that there is value in targeting policy measures specifically at the measures most affected by hidden and missing costs.  These measures would include (a) mandatory standards (b) fiscal measures - eg tax or subsidies, (c) information and awareness campaigns'.

As part of the support programmes recommended in the report, the Energy Saving Trust strongly advocates greater use of fiscal incentives. Recent research by the Energy Saving Trust has shown that fiscal measures could make a significant contribution to delivering the household portion of the Government's climate change targets. 

Based on detailed policy analysis, we recommend the introduction of:

• Centrally funded Council Tax rebates for owner-occupiers of existing properties that install energy efficiency measures and have already proved to be effective and/or
• Stamp Duty Land Tax incentives for owner-occupiers of existing properties that install energy efficiency measures upon moving house. This would complement the planned Home Information Packs.   

For new build homes we recommend the introduction of:

• Stamp Duty Land Tax rebates for the first sale of homes built to high energy performance standards (e.g. the proposed Code for Sustainable Building).
• If introduced the Barker proposed planning gain supplement should reward developers who build to high energy performance standards, such as the proposed Code for Sustainable Building.

Based on recent research we believe that Council Tax rebates would be the most effective measure. We also advocate more effective use of taxation policies to support the most energy efficient appliances and to penalise the most inefficient ones.

The Energy Saving Trust firmly believes that energy efficiency must remain the priority focus for the UK in meeting both its climate change and wider energy policy objectives. As stated in the 2003 Energy White Paper 'The cheapest, cleanest and safest way of addressing our energy policy objectives is to use less energy. The financial benefits of doing so are clear.' Indeed with higher energy prices the benefits of energy efficiency are now even greater for all UK citizens and the wider economy. UK householders could potentially save a total of £72bn and make cumulative emission reductions of 750MtC by 2020 through implementing energy efficiency measures now.

We call upon Government to implement the recommendations from the EEIR project review team, including our proposals for fiscal measures as part of wider support programmes. Although the Energy Saving Trust can show people how to make a difference, the maximum impact will come only with the whole hearted commitment of Government through its leadership and a combination of information programmes, regulation, taxation and spending policies. With the implementation of these combined recommendations, Government will demonstrate its real commitment to tackling climate change and to meeting its -20% CO2 target by 2010, whilst further raising the profile of sustainable energy with UK citizens.

Further reading

 Energy Efficiency Innovation Review Summary Report

  Summary Report on the Household Sector by the EEIR project review team 

  Carbon Trust's UK Climate Change Programme; potential evolution for businesses and public sector

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1. CO2 projections are currently being revised in the context of the review of the Climate Change Programme

2. Review and development of carbon dioxide abatement curves for available technologies as part of the EEIR.

3. At discount rate of 15%

4. Policies for energy efficiency policies in the UK household sector