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Energy Consumption

Volume 456: debated on Thursday 1 February 2007

8. What incentives he plans for energy companies to encourage them to help their customers reduce energy consumption in their homes. (117818)

The Government launched the energy efficiency commitment in 2002. It obliges gas and electricity suppliers to promote household energy efficiency, and is a key driver of reduction in energy consumption in homes. We doubled suppliers' targets after the first phase of the commitment, and they will rise by another 50 per cent. to 100 per cent. from 2008. We will maintain a supplier obligation in some form until at least 2020.

When I look at my electricity bill I see that for the first 197 units I pay about 15p a unit, and for the remainder I pay about 9p a unit. The initial amount of electricity that I use is the most expensive, and the more I use the cheaper it becomes. The standing charge has the same effect. Is that not completely the wrong incentive? Low energy use is being penalised by the tariff structure, while high energy use is being encouraged. Will my hon. Friend take up the matter with the energy companies? If we can encourage low energy use through the billing structure, we can also help to reduce fuel poverty.

My hon. Friend makes a good point. The Government are keen to encourage better billing and better information, and we need to look at tariffs as well.

My hon. Friend, who is a long-standing campaigner on these issues, will know that in the 2005 energy efficiency innovation review we mentioned the possibility of considering, after phase 3 of the energy efficiency commitment, setting a target for the reduction of absolute energy demand. We think that that is a model well worth exploring, and we shall be discussing it over the next few years to establish whether it would be feasible after 2011.

Does the Minister agree that the present cost of installing solar panels or wind turbines is prohibitive for many householders who are unlikely to see a payback on their investment? Has he made any representations recently to the Treasury, which today introduced a new air passenger duty without the authority of the House—a so-called green tax, but with no green benefits?

Will my hon. Friend consider encouraging commercial energy supplies to provide packages of energy measures, including both energy efficiency measures and the installation of local energy systems, as recommended in the excellent Trade and Industry report published last week? Will he take account of the barriers to the installation of such systems to which the report refers?

My hon. Friend is right to mention the Select Committee’s impressive report. We shall want to give full consideration to the views expressed in it.

I have great sympathy with what my hon. Friend has said about energy packages. We need to see developments in that regard, and we also need to see more work involving energy service companies. In his pre-Budget report, the Chancellor announced that there would be more work of that kind. I think that decentralised energy systems offer significant additional potential for a reduction in both energy bills and carbon dioxide emissions, and the Government are keen to achieve both.

The average January temperature in Sweden is 7° below ours in the UK, but carbon emissions from Swedish homes are just 5 per cent. of their total whereas they are 27 per cent. of ours. Given that three quarters of the homes that we will be living in in 2050 have already been built, does the Minister accept that we need to be far more ambitious in addressing the energy efficiency of the existing housing stock than we have been so far, and how does he intend to ensure that a holistic approach is taken where the entire home, including the boiler, the windows and underfloor insulation, is tackled, rather than one that simply cherry-picks cavity wall insulation or loft insulation, as appears to be the case under the energy efficiency commitment—

It is true that at present under the energy efficiency commitment priority has been given to cavity and loft insulation. Those are the least-cost solutions. However, it is also right to point out that cavity wall and loft insulation are among the best steps that can be taken to improve the thermal efficiency of people’s homes. As the energy efficiency commitment develops further, and as we consider some of the suggestions of my hon. Friend the Member for Waveney (Mr. Blizzard), we will need to look at adopting additional energy packages and microgeneration measures in addition to standard energy efficiency commitment tools. All such measures are being actively considered as part of the EEC—energy efficiency commitment—consultation for phase 3.

Has the Minister seen the film on climate change produced by former Vice-President Al Gore? As he considers new proposals for the next phase of the energy efficiency commitment, would it not be a superb idea to send a DVD of the film to every household in the country, and could he discuss that with some of our energy suppliers?

I do not know whether it would be appropriate to send a DVD to every household, but that is an excellent and compelling film and it is available on DVD at a reasonable price. There might, however, be a case for sending a DVD of it to every secondary school; I think we should consider doing that. I want to point out the impact that the energy efficiency commitment is already having. About 10 million homes in Britain—6 million of them on low incomes—have already benefited from the energy efficiency commitment. As we are doubling the EEC and are looking to double it again, more homes will become more energy efficient. That is a good thing, and it will help us to achieve our carbon targets.

Given the Secretary of State’s sorry admission yesterday that the Government will not meet their manifesto commitments on greenhouse gas reductions given in 1997, 2001 and 2005, is it not perverse that they have now set their face against empowering local authorities to do better by setting higher domestic energy efficiency standards both in the weak draft planning guidance on climate change and by killing the Local Planning Authorities (Energy and Energy Efficiency) Bill in this House last Friday? Was that destructive and unambitious approach—

The hon. Gentleman is simply wrong. We are on target in respect of reducing greenhouse gas emissions; in fact, we are on target to achieve a 23 per cent. to 25 per cent. reduction in greenhouse gas emissions compared with 1990 levels. That is double the commitment that we had under Kyoto. We are one of the very few countries in the world—if not the only one—that is on track to achieve that. We will be able to achieve that because of the measures that have been taken, including the climate change levy, the climate change agreements and the whole climate change programme review, most of which were opposed by the Opposition.