Following a Carbon Connect roundtable on energy efficiency with Dr Alan Whitehead MP, DECC, UK Energy Research Centre and our members, we launched a position paper setting out nine recommendations to help Government meet its energy efficiency mission. Topics covered include Electricity Market Reform, energy efficiency audits, voluntary commitments and industrial sector decarbonisation roadmaps. The paper was launched at our Summer Reception, held in Parliament on the 8th July 2013.
The views expressed here are those of Carbon Connect and do not necessarily represent the views of its individual members or organisations that took part in the roundtable.
The Energy Efficiency Mission
The Coalition Government has a mission to seize the energy efficiency opportunity, accelerating the deployment of twenty-first century energy saving measures through:
connecting energy efficiency knowledge and technologies to finance seeking strong returns
supporting energy efficiency innovation
harnessing the power of improved energy use information, driving its availability and disclosure
encouraging collective action to act on this new and better information
Overarching Barriers
Four overarching barriers and market failures that lead to energy efficiency being undervalued, were identified in the Strategy:
1. Embryonic Markets – although markets exist, they are underdeveloped in the UK compared to other countries such as the US. The scarcity of both supplier and customer expertise, and ultimately demand, constrains the market for financial products to support energy efficiency investments which means that transaction costs are often high.
2. Information availability and assurance – information needs to be clear and specific and underpinned by a standardised monitoring and verification process that will instil trust in that information amongst decision-makers and investors. The absence of this information and assurance regime means that energy efficiency investments are not prioritised.
3. Misaligned financial incentives – this is particularly problematic in the commercial sector where contractual arrangements between landlords and tenants, or for facilities management, can inhibit investment. For many users, energy accounts for a small and easily ignored proportion of their cost base, but in aggregate the opportunity for reducing strain on the energy system is significant.
4. Behavioural barriers - Energy efficiency changes can involve significant hassle costs, which increases the costs of the investment. For example, disruption caused by building works or disruption to production lines. Energy efficiency improvements may not be seen as strategic for a company and therefore not prioritised.
Recommendations
Recommendations cover the following areas:
Electricity Market Reform
Products Policy and Labelling
Consumer Attitudes
Energy Efficiency Audits
In-use Factors
Voluntary Commitments
Decarbonisation Roadmaps
Quotations
“There is no silver bullet to achieve lasting energy efficiency. Our Strategy provides a framework to guide continued work in promoting opportunities and persisting in eradicating the barriers to energy efficiency, whether misaligned incentives or information failures.”
David Purdy – Head of Energy Efficiency Deployment Office, DECC
“The Energy and Climate Change Select Committee has taken a great interest in the whole question of demand side reduction and energy efficiency. Demand side reduction has featured increasingly in the Energy Bill as it has progressed through Parliament.”
Dr Alan Whitehead MP
“I liked the quote from Stephen Chu [the US Secretary of Energy] saying that ‘energy efficiency is not just low-hanging fruit; it is fruit that is lying on the ground’. But I was tempted to think that someone had glued that fruit to the ground.”
Professor Jim Watson, UKERC
“Energy audits in the UK have not historically been robust enough. Implementing requirements for energy audits under the EU Energy Efficiency Directive is a great opportunity to elevate auditing standards.”
Steve Barker, Siemens
