Labour’s Green Paper on Energy Efficiency

The Labour party published a Green Paper on their energy efficiency policy entitled ‘An end to cold homes’ last week. There are several key elements in it that are worthy of attention, and it is a useful starting point for what the next Government should consider as priority actions.

The headlines are:

  • Provide half a million home energy reports for householders, mainly aimed at those in fuel poverty to help them realise what the problem is and how they could solve it.
  • Offer free energy efficiency improvements for 200,000 households at risk of fuel poverty per year, with an ambition to improve all 4million homes within 15 years.
  • Set a new target for the private rental sector of a minimum EPC Band C by 2027, increasing the current target for 2018 of Band E
  • Set Energy Efficiency as a national infrastructure priority under the proposed National Infrastructure Commission
  • Streamline regulations and introduce long term strategy to support investment in energy efficiency in non-domestic buildings
  • Less related to energy efficiency policy, but important nonetheless was a commitment to review the zero carbon policy and revert to the Zero Carbon Hubs original definition of Zero being including all unregulated energy and regulated energy in the definition.

My impression of the launch was very positive. The language was reassuring, there was an acknowledgement that Government in general has failed with the Green Deal to either understand the market or to understand the best way of delivering measures to households.

The strongest evidence of this was the statement that we still have

– 4.7million uninsulated cavity walls

– 10 million lofts that could have more insulation added

– 7 million uninsulated solid walls

– 8 million homes without a thermostat

The summary of fuel poverty in the paper is sometimes startling. The poor are often housed in poor buildings, making them cold and poorer. If we as a society think that it is important to give our poorest members a home to live in, isn’t it equally important that we give them a warm home to live in so that they are not spending an above average proportion of their low income on keeping warm?

30% of people living in Band G properties are fuel poor, in total there are over 2.2million households falling in this defined category in England, and another 1 million between Wales and Scotland.

Comment: Energy companies are not the best people to deliver these measures, in one case energy companies spent £50 to pay people to find other people to receive free energy efficiency measure under the Warm Front scheme. There is no available cost data from these schemes to help decide which ones were cost effective and which ones weren’t. (The giving away of energy efficient light bulbs springs to mind). I am equally concerned that Energy companies have bought a number of external wall insulation companies to install these measures. The blind leading the blind.

Green Deal/ECO

The Green Deal has been an expensive waste of time for the companies who engaged in it. It is set to deliver 4,000 improvements out of 355,000 households assessed. That’s about a 1% rate of return. The taxpayer paid for 90% of the assessments. A very poor use of money, and if we want to tackle energy efficiency improvements in a serious way, this isn’t going to do it. The interest payments are simply too high, they have always been too high, the Government was told that they were too high, I won’t go on.

A recent survey by the CBI demonstrates that only 5 percent of businesses considered that the Governments current policy framework is effective in encouraging investment in energy efficiency.

The non-domestic Green Deal has had 63 assessment carried out so far, and no measures delivered.

Labour’s solution to this is to offer interest-free loans to households to carry out energy efficiency improvements. This will be funded out of energy efficiency levies from energy companies and backed by a Government guarantee of the Green Deal Finance Company.

All the ECO funding will be aimed at low-income households in cold homes and who are at risk of fuel poverty.

The measures will be delivered by area-based organisations instead of by the Energy Companies. Local Authorities, Housing Associations, local energy organisations and other trusted partners.

Instead of funding single energy efficiency measures as the current ECO does, the new target would aim to improve properties to Band C. This would significantly improve the property, reduce the risk of fuel poverty significantly and would mean that it would not be necessary to return to this property for a generation.

Comment: I could never understand why DECC refused to understand this point in the past, despite being told it by practically everyone in the industry. The preliminary costs of doing work are always a substantial element of the total cost of refurbishment works, so if you set out to do work on a property, you should do as much as possible while you are there, to reduce the wasted costs of returning to the same property a decade later to install another separate measure. I think that politicians should shoulder a lot of the blame for this as they are always interested in reaching as large a number of households with the smallest sum of money, to win votes and keep themselves in power. But single-measure works is just a waste of taxpayers’ money. If Labour get into power and implement these policies it will be interesting to see if this intention remains.

Private Rented Sector

The idea to raise the target for PRS properties to Band C by 2027 got some headlines as it was initially suggested that the target to achieve Band E by 2018 would be dropped. This was swiftly denied by the party and this new target is a demonstration of a long-term strategy aimed at giving landlords and the industry long term certainty of the direction of travel for policy.

Zero Carbon

The announcement that the definition of zero carbon for new homes would revert to the original definition is interesting. The definition of zero carbon has had an unfortunate history, and became a political football during the early days of the current administration. The exemption for small sites is not to be taken forward by Labour, and extensions to existing properties will have to meet full building regulations.

Comment: It makes sense to revert to the original definition of zero carbon, but given that we are where we are and we have no final policy or regulation for Allowable Solutions, then it may be wise to continue to use the current definition of zero-carbon (regulated energy only) for the next round of regulations in 2016, and then ramp up successive regulations to take account of unregulated energy.

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