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Select committee inquiry

Home energy efficiency and demand reduction inquiry

Closed

Energy and Climate Change Committee · Opened 15 September 2015 · Closed 15 September 2015

9 recommendations · 17 conclusions
Inquiry on parliament.uk ↗

What the inquiry looked at

“Government Response Home energy efficiency and demand reduction: Government Response to the Committee's Fourth Report of Session 2015-16 Home energy efficiency and demand reduction: Government Response to the Committee's Fourth Report of Session 2015-16 (PDF 166KB) Energy efficiency and demand reduction is one of the most cost effective ways to cut carbon emissions, improve energy security and reduce consumer bills. However, the Government has announced the end of two key policies - Zero Carbon Homes and the Green Deal - without bringing forward any replacement schemes. The Energy Company Obligation (ECO) is also due to come to an end in March 2017. The Committee investigates what lessons can be learnt from these and previous energy efficiency schemes. The evidence received feeds into our scrutiny of energy efficiency policies over the course of this Parliament.”

The committee's words, from the inquiry page on parliament.uk ↗.

What the government said

The government responded on 11 July 2016.

Summary written by Accountability Index from the government's response.

The government's response sets out a policy framework 'based less on subsidy' and agrees with some recommendations, such as on data sharing and a transitional ECO period, while setting out different approaches on others, including a supplier obligation for fuel poverty and zero carbon homes.

  • On fuel poverty, the government cites the Hills review finding that a targeted supplier obligation was the most cost effective approach, and proposes a one year transition before a fuel poverty focused obligation "from 2018".
  • It agrees with the Committee on data, and says that, "subject to the outcome of the consultation and subject to Parliament", it intends to explore policy options using the proposed data-sharing powers.
  • On ECO, it agrees that a transitional period is important but does not believe it should wait until 2019. It intends to consult on the reformed obligation, running 2018 to 2022, in 2017.
  • On zero carbon homes, the government says its decision only ruled out 'allowable solutions' and does not rule out further increases to standards. It will not increase standards again in 2016 but "will keep them under review".

Read the government's response ↗ Read the report ↗ Report an error

How the inquiry ran

Each dot is a dated item listed on this page, from the inquiry's opening on 15 September 2015 to 11 July 2016.

  1. Oral evidence 5 sessions
  2. Report 12 Mar 2016
  3. Government response 11 Jul 2016
  4. Correspondence 2 letters

What it recommended 9 recommendations · 17 conclusions

1We recognise that, through the Energy Company Obligation, large energy suppliers have delivered well over...
Concluded (the committee's words)
We recognise that, through the Energy Company Obligation, large energy suppliers have delivered well over one and a half million energy efficiency measures over the past years, as well as significant bill savings for consumers. However, we have heard that targets are much lower and less ambitious than under the previous supplier obligations: the Carbon Emissions Reduction Target and the Community Energy Saving Programme. There has been a disappointing decline in energy efficiency installation rates. This is seriously concerning, especially given that there are a huge number of homes left to benefit from insulation and other measures.
2The Green Deal is widely regarded to have been a failure.
Concluded (the committee's words)
The Green Deal is widely regarded to have been a failure. It fell unacceptably short of original ambitions and it is clear that the scheme has not driven any significant demand for energy efficiency measures in the ‘able-to-pay’ sector. The problems preventing Green Deal from large scale take-up were well documented by our predecessors. Disappointingly, they were not addressed. The failure of the Green Deal has been further exacerbated by the unhelpful and competitive interplay between the scheme and the Energy Company Obligation.
3Policy changes, under both the previous and current Government, have led to a degree of...
Concluded (the committee's words)
Policy changes, under both the previous and current Government, have led to a degree of uncertainty within the energy efficiency market. This has led to a complex and confusing landscape for consumers to navigate. This lack of stability has also been detrimental to the supply chain, which has suffered job losses.
4The importance of tackling fuel poverty cannot be overstated.
Concluded (the committee's words)
The importance of tackling fuel poverty cannot be overstated. However, we have serious concerns that the Government’s decision to use the new supplier obligation to do so may be misguided. The evidence we have received clearly indicates that this is the wrong approach. A scheme which places some of the costs of its delivery on the very households it is designed to help is inherently regressive. Commercial energy suppliers are not best placed to deliver fuel poverty action. Moreover, access to and sharing of individual household data is currently not possible and would probably require primary legislation.
5We recommend that DECC reconsiders its decision to use a supplier obligation to tackle fuel...
Recommended (the committee's words)
We recommend that DECC reconsiders its decision to use a supplier obligation to tackle fuel poverty. As a consequence the Government must re-evaluate what the best approach is to tackle fuel poverty. In order to do this, the Department must first publish the evidence which was used to determine that a supplier obligation is, in its own words, the “best mechanism” for tackling fuel poverty. This evidence must be open to public scrutiny.
6DECC should consult on alternative approaches to tackling the serious and urgent problem of fuel...
Concluded (the committee's words)
DECC should consult on alternative approaches to tackling the serious and urgent problem of fuel poverty. DECC must give particular attention throughout this consultation to addressing how to tackle fuel poverty for those living in rural fuel poor homes.
7Accurate, accessible data on property characteristics, energy use and income are the key to tackling...
Recommended (the committee's words)
Accurate, accessible data on property characteristics, energy use and income are the key to tackling fuel poverty. Such data would also help drive a more targeted approach to delivering energy efficiency measures through various policies. We recommend that the Department assess what legislative changes would be needed to improve wide-scale access to- and sharing of data. DECC must provide us with details on what specific changes would need to be made to establish a comprehensive national database to support the delivery of energy efficiency measures. In its response, the Department should set out a timetable for these changes.
8The impending transition period between the Energy Company Obligation and the new supplier obligation must...
Concluded (the committee's words)
The impending transition period between the Energy Company Obligation and the new supplier obligation must not repeat the mistakes of the badly handled transition from the Community Emissions Reduction Target and the Community Energy Saving Programme to the Energy Company Obligation, which had unintended consequences for industry and the supply chain.
9In the light of industry concerns regarding a carefully managed transition period, and our earlier...
Recommended (the committee's words)
In the light of industry concerns regarding a carefully managed transition period, and our earlier recommendation that DECC reconsiders its decision to use a supplier obligation to tackle fuel poverty, we recommend the following: i) ECO, in its current form, should be extended until March 2018 in order to provide stability to the supply chain while a new supplier obligation is developed. ii) A transition period should be established between the end of the Energy Company Obligation and the new supplier obligation—this should run from April 2018 to March 2019 as a minimum—with the new obligation commencing no earlier than April 2019; iii) The Department must immediately launch a consultation on the design of the new supplier obligation to be introduced in 2019.
10It is crucial that the Department renews its efforts to drive demand for energy efficiency...
Concluded (the committee's words)
It is crucial that the Department renews its efforts to drive demand for energy efficiency for the ‘able-to-pay’ in this Parliament. It is disappointing that DECC is not prioritising addressing this issue, especially after the failure and subsequent ending of the Green Deal and given that the shortcomings of this scheme have been known for a long time. We set out below the action we believe the Department must now take to encourage and drive demand for energy efficiency in ‘able-to-pay’ households.
11The establishment of the infrastructure behind pay-as-you-save based lending is an important legacy of the...
Recommended (the committee's words)
The establishment of the infrastructure behind pay-as-you-save based lending is an important legacy of the Green Deal. This infrastructure could play an important role in facilitating future energy efficiency measures in the ‘able-to-pay’ market. We recommend that the Government carries out an assessment of the value of reinstating a pay-as-you-save mechanism based on the GDFC infrastructure.
12DECC must specifically detail what assistance and tools will be available to landlords, some of...
Concluded (the committee's words)
DECC must specifically detail what assistance and tools will be available to landlords, some of whom will have to make considerable and costly improvements to their properties in order to comply with the minimum energy efficiency standards (MEES) to be introduced in April 2018.
13We welcome the fact that the Department is looking into using varied stamp duty and...
Recommended (the committee's words)
We welcome the fact that the Department is looking into using varied stamp duty and council tax rates as levers to incentivise households to undertake energy efficiency improvements. We urge the Department to work with the Treasury to develop straightforward policy options and publish an impact assessment of these options. Complex policies must not get in the way of delivering energy efficiency objectives. The Government must ensure that support mechanisms are in place to ensure that vulnerable households and fuel-poor consumers are not negatively impacted from the introduction of such incentives.
14There are multiple benefits to improving home energy efficiency.
Concluded (the committee's words)
There are multiple benefits to improving home energy efficiency. However, these benefits have not been clearly communicated to households, which is a principal reason behind the failure of previous schemes to drive demand. We welcome that the Department recognises that making home energy efficiency improvements is not simply driven by financial incentives.
15DECC should bring together health services, charities, housing developers, supply chain representatives, industry groups and...
Concluded (the committee's words)
DECC should bring together health services, charities, housing developers, supply chain representatives, industry groups and consumers to form a group to consult with and determine the most effective way to communicate the benefits of energy efficiency to ‘able-to-pay’ households. The Department should also commission, and publish, research to help it understand behaviour change in energy efficiency and demand reduction. This will help to identify how to use the right message at the right points of intervention. We also recommend that the Department works with industry to develop and publicise ‘roadmaps’ which set out and make clear what steps individual households can take to improve their energy efficiency.
16Locally-led and area-based approaches have the potential to greatly improve the delivery of energy efficiency...
Concluded (the committee's words)
Locally-led and area-based approaches have the potential to greatly improve the delivery of energy efficiency policies if these are well planned and sufficiently resourced.
17We recommend that the Department develops a national framework to facilitate and support locally-led delivery...
Recommended (the committee's words)
We recommend that the Department develops a national framework to facilitate and support locally-led delivery of energy efficiency. Within this framework, the Government should set out good practise and a guide to different ways in which local authorities can work in partnership with other key players (charities, health services, energy suppliers and other relevant organisations) to deliver energy efficiency measures. Examples of good practice include HEEPS in Scotland and the use of ‘warm zones’.
18We recommended in our recent report on ‘Investor confidence in the UK energy sector’ that...
Concluded (the committee's words)
We recommended in our recent report on ‘Investor confidence in the UK energy sector’ that the National Infrastructure Commission must consider the infrastructure requirements of meeting the UK’s carbon budgets and long-term legally binding carbon reduction targets. Energy efficiency will be a crucial part of the mix. The Government and the National Infrastructure Commission should assess the potential benefits of designating energy efficiency as a national infrastructure priority.
19The establishment of an ‘inter-ministerial group on clean growth’ to drive cross- departmental collaboration on...
Concluded (the committee's words)
The establishment of an ‘inter-ministerial group on clean growth’ to drive cross- departmental collaboration on issues relating to the carbon budgets and de- carbonisation is a positive step by the Government. However, it is unclear to us how the Government’s current position to supress information on the group’s membership and the frequency and timing of its meetings protects the integrity of the policy making process. It is unclear whether energy efficiency is discussed within this group.
20We recommend that the Inter-Ministerial Group on Clean Growth is re-cast as a formal Cabinet...
Recommended (the committee's words)
We recommend that the Inter-Ministerial Group on Clean Growth is re-cast as a formal Cabinet Committee. Its membership must be published. We recommend that the Secretary of State for Energy and Climate Change is Chair and that it should include representatives from the Department of Health, Department of Communities and Local Government, Department of Work and Pensions, Department for Business, Innovation and Skills, Department for Transport, Department of Environment, Food & Rural Affairs and the Treasury.
21Alongside this, we recommend that the Government sets up an Implementation Taskforce for energy efficiency.
Recommended (the committee's words)
Alongside this, we recommend that the Government sets up an Implementation Taskforce for energy efficiency. We recommend that representatives from the same Departments outlined above are members of this Taskforce, which should also be chaired by the Secretary of State for Energy and Climate Change. The terms of reference for the Taskforce should be: Driving energy efficiency across the UK as part of a wider strategy to tackling the energy trilemma. The Taskforce should publically report, on an annual basis, the Government’s progress towards achieving a step-change in driving energy efficiency across the UK.
22Zero carbon homes was an ambitious policy which was a positive step towards ensuring that...
Recommended (the committee's words)
Zero carbon homes was an ambitious policy which was a positive step towards ensuring that all new homes are energy efficient. Whilst we recognise the Government’s desire to stimulate housebuilding, the unexpected decision to end the policy was disappointing to many businesses that were ready to deliver the Government’s original objectives. The decision damaged confidence in the low carbon economy and will lock in the requirement for future wide-scale energy efficiency measures and costly retrofits. We recommend that the Government reinstates the zero carbon homes policy or sets out a similar policy that will ensure that new homes generate no net carbon emissions.
23Improving energy efficiency in homes provides major benefits.
Concluded (the committee's words)
Improving energy efficiency in homes provides major benefits. It helps households to reduce their energy bills, it contributes towards a reduction of carbon emissions and, by reducing demand, also contributes towards energy security. Improving energy efficiency of homes can play a significant role in helping the country tackle the energy trilemma. Moreover, it provides valuable benefits to individual consumers, such as improved well-being, increased comfort and homes that are nicer to live in. Driving demand for energy efficiency measures should therefore be one of Government’s top priorities. Addressing the issue should be seen not as a cost today, but as an investment for the future.
24There is no ‘silver bullet’ to improving home energy efficiency.
Concluded (the committee's words)
There is no ‘silver bullet’ to improving home energy efficiency. A combination of regulations, subsidy programmes, obligations, targeted grants and long-term structural incentives must all be used in a concerted effort. The Government needs to understand that different approaches are required for different households, from the vulnerable fuel-poor, to the private-rented sector, to those who can afford to improve the energy efficiency of their homes. It is also important that the Government recognises that it is individual households who ultimately interact with these different policies, and any future approach must consider the importance of a smooth and rewarding journey for consumers seeking to improve the energy efficiency of their homes.
25It is crucial that the Government establishes a long-term framework for energy efficiency by taking...
Concluded (the committee's words)
It is crucial that the Government establishes a long-term framework for energy efficiency by taking the following actions: • Re-introduce a range of options and incentives for ‘able-to-pay’ households; • Reconsider using the new supplier obligation to tackle fuel poverty; • Empower local authorities to deliver energy efficiency programmes and; • Ensure new homes won’t require future costly retrofits by reinstating the zero carbon homes policy.
26A key part of this approach is to consider the real potential to drive targeted...
Concluded (the committee's words)
A key part of this approach is to consider the real potential to drive targeted energy efficiency by facilitating the release of and widening access to valuable data on property characteristics, energy use and income. The Department must also recognise the need to be flexible enough to respond to, and maximise the potential of, disruptive technologies such as smart meters. Success in driving energy efficiency will only be achieved if its importance is recognised throughout Government and a genuinely cross-departmental approach is adopted.

Evidence

Oral evidence sessions 5

Correspondence 2 letters