Source · Select Committees · Public Accounts Committee
Recommendation 6
6
Accepted
Write to Committee setting out demand assumptions for energy efficiency and consumer behaviour policies.
Conclusion
We are not yet clear what the Department’s plans are in respect of energy efficiency and consumer behaviour. The Department acknowledges that improving energy efficiency and changing consumer behaviour are key to meeting net zero. However, recent energy bills support schemes have prioritised reducing costs to consumers over encouraging reduced demand for energy. In the 2022 Autumn Statement, the Chancellor announced new funding of £6 billion from 2025 to 2028 to improve energy efficiency for households, businesses and the public sector. The Chancellor announced that an Energy Efficiency Taskforce would be charged with improving energy efficiency in the UK by reducing energy consumption from buildings and industry by 15% by 2030 compared to 2021 levels. In March 2023, government announced a further £1.4 billion to support energy efficiency, including for low- income households. However, government’s track record in implementing energy efficiency schemes is patchy at best. In December 2021 we reported that such schemes were often fragmented, and that stop-start policy was an obstacle to long- term progress towards government’s energy efficiency ambitions. It is not clear what energy efficiency and consumer behaviour assumptions the Department used when modelling pathways to a decarbonised power sector. In February 2022 we reported that government often over-estimates consumer buy-in to its policies, including those aimed at reducing emissions. Recommendation 6: Alongside its Treasury Minute response to this report, the Department should write to the Committee setting out the demand assumptions it has used in its modelling and how this reflects policies and plans to promote energy efficiency and influence consumer behaviour. 8 Decarbonising the power sector 1 Government’s plans to decarbonise the power sector
Government Response Summary
The government states it has already modelled two scenarios (Net Zero Higher and Lower) and that full details of its modelling, assumptions, and how policies reflect energy efficiency and consumer behaviour are set out in the technical annex to the Net Zero Strategy and the Carbon Budget Delivery Plan.
Government Response
Accepted
HM Government
Accepted
The government agrees with the Committee’s recommendation. Recommendation implemented The department has modelled two potential scenarios to help estimate future power sector demands: the Net Zero Higher1 scenario, which explores the impact of using widespread electrification to support transport, heating, and industry decarbonisation; and the Net Zero Lower scenario, which explores the impact of using low-carbon hydrogen more extensively. Both scenarios take account of the underlying socioeconomic drivers of energy demand (such as GDP and population growth) and are consistent with the department’s Carbon Budgets and for achieving net zero emissions by 2050. Full details of the modelling and assumptions are in the technical annex to the Net Zero Strategy. Through its range of sectoral models, the department then ensures it takes account of the policies and proposals required to achieve its net zero goals. While the policy mix in each scenario will depend on the net zero pathway taken, consumer choices and energy efficiency measures will play a significant role in achieving carbon savings. For instance, the high electrification scenario assumes high adoption of electric heat pumps and electric vehicles, while energy efficiency measures (such as insulation and more efficient appliances) reduce energy demand. The government’s policies aim to take into account consumer preferences and to follow natural replacement cycles, whilst supporting the infrastructure needed to make such transitions, and incentivising behavioural change. Full details are set out in the government's Carbon Budget Delivery Plan. 1 The ‘Net Zero Higher’ electricity demand scenario is similar to the ‘High Electrification’ scenario presented in the Net Zero Strategy. The ‘Net Zero Lower’ scenario corresponds to the NZS’ ‘High Resource’ scenario.