Select Committee on Trade and Industry Appendices to the Minutes of Evidence


APPENDIX 6

Memorandum by National Energy Action (NEA)

INTRODUCTION

  National Energy Action (NEA) welcomes the opportunity to submit evidence to the Trade and Industry Committee's inquiry into security of energy supply. As the leading national charity involved in campaigning to eradicate fuel poverty, with more than 20 years' experience of delivering programmes to assist people living in cold, damp homes, we are acutely aware of the significance of developments in energy policy for our own aims and objectives.

RECENT PROGRESS

  More recently we have been much encouraged by the evidence that these aims and objectives are shared by Government. The imminent publication, following consultation, of a Fuel Poverty Strategy for the UK is the most significant landmark in establishing that everyone has a right to live in a home which can be kept warm at an affordable cost. NEA has also endorsed the UK policy on sustainable development and particularly its acknowledgement that this must embrace "a better quality of life for everyone, now and for generations to come". Accordingly we believe that eradicating fuel poverty must be the first priority of UK energy policy. Action to protect the wider environment and to maintain security of supply into the future can be achieved without eroding this first principle.

FUTURE DEVELOPMENTS

  To date, success in reducing the numbers of low-income households in fuel poverty has largely been achieved through reductions in fuel prices and as a consequence of policies to promote employment or improve the tax and benefits system.

  Whilst these developments are welcome it would be unwise to rely on them in the longer term. Recent increases in gas prices indicate that a strategy which places undue confidence in the capacity of markets to continue to deliver price reductions is unsustainable in the medium to long term.

  Measures which have the effect of increasing household income are similarly problematic. They will rapidly be offset by increases in fuel prices and, of themselves, do nothing to eliminate the inefficient use of energy which lies at the heart of both protection of low-income households and the wider environment.

ENERGY EFFICIENCY

  Consequently NEA believes that reducing the demand for energy by improving the condition of the housing stock should be a key feature of UK energy policy for the foreseeable future. At present we are not persuaded that the suite of policies adopted by the Government is sufficiently well balanced. For example the £200 winter fuel payment made to all pensioner households required expenditure of some £1.7 billion in 2000-01. By contrast the sums allocated to energy efficiency improvement programmes are modest. Warm Front (HEES) and energy supplier (EEC) schemes jointly spend around £300 million per year. Even supposing that one-third of the £2 billion spent annually by local authorities on housing improvements is accounted for by energy efficiency measures, it is evident that total expenditure falls far short of the sums dispensed via a single untargeted measure to benefit the pensioner population.

  It should also be noted that the financial savings to individual householders as a consequence of installing a comprehensive package of energy efficiency improvements can be well in excess of the value of the £200 winter fuel payment and of any savings available by switching energy suppliers. Estimated savings from Warm Front (HEES) grants range from £300-£1,000 per year.

  Furthermore, these savings are achievable by focusing on simple and cost-effective improvements. NEA concurs with the Energy Saving Trust's estimate that a 20 per cent improvement in energy efficiency in domestic dwellings by 2010 can be accomplished using currently available and relatively inexpensive technologies. The theoretical potential is acknowledged to be considerably higher.

A NATIONAL ENERGY EFFICIENCY PROGRAMME

  A significant part of the challenge of eradicating fuel poverty lies in identifying the households affected, informing them of the financial assistance available and persuading them of the benefits of improving energy efficiency. A similar marketing challenge applies in the case of programmes which target middle and higher income households. NEA doubts whether current efforts to inform and educate the public show a sufficient sense of urgency but there are also reservations about the extent to which householders are confused, rather than enthused, by the range of different schemes available, each with its own qualifying criteria, specification of measures and marketing message. Even those with a professional interest in informing and advising consumers have indicated that keeping up to date with the different offers available is an immensely difficult task.

  Against this background NEA has consistently argued for a single national energy efficiency programme. This could replicate the process by which the Clean Air Act helped to eliminate pollution from coal-burning open fires or the way in which conversion from town gas to natural gas was achieved. The model being adopted by some of the newly established Warm Zones, in which a door-to-door service identifies the improvements required and the means of financing them, has much to commend it.

NEW AND RENEWABLE TECHNOLOGY

  However NEA is also aware that current energy efficiency programmes share, for understandable reasons, a focus on conventional heating and insulation improvements which are easiest and cheapest to install. They do not cater fully for the needs of fuel-poor households living in older properties or those of non-conventional construction. Extending schemes to allow for exterior cladding or internal lining of solid walls, for example, will be necessary to maximise both social and environmental benefits.

  In some circumstances NEA acknowledges that the development of renewable energy technologies also has the capacity to eliminate fuel poverty. This is particularly true in rural areas, especially where access to gas, currently the most economic fuel for space and water heating, continues to be ruled out by the combination of topography and economics. NEA is currently developing proposals for pilot schemes which will test the efficacy of both individual dwelling-based approaches and community-based solutions. There is potential for CHP (wood fuelled where appropriate) and both wind and hydro power generation for local communities. For individual dwellings wood fuelled central heating, solar thermal water and space heating and the use of ground source heat pumps are options to be investigated. In all cases theses approaches will be combined with insulation measures for optimum effect. The benefits of solar photovoltaics and, where gas is available, domestic CHP are also currently being evaluated in extensive trials and should also be supported as potential solutions to fuel poverty which have the added advantage of reducing CO2 emissions.

  Any policy which seeks to exploit the potential of these new technologies will clearly need to take account of legal, regulatory and market barriers to their implementation. The way in which New Electricity Trading Arrangements inhibit development of CHP and windpower is an example of how current policy fails to take a long-term perspective on security of supply.

CONCLUSION

  Finally, implementing an energy policy for the UK will require effective co-ordination of activity between several Government Departments (notably DEFRA, DTI and DTLR, but also recognition that the Department of Health and the Department of Work and Pensions have legitimate roles in programmes to counter fuel poverty). This will be more easily accomplished if it is made clear which Department has lead responsibility for energy policy. Certainly it is not currently evident where primary responsibility for delivering the Government's commitments on fuel poverty lies.


 
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Prepared 27 August 2002