Tom Steward, IGov Team, 5th November, 2014
Last month, EU leaders struck a deal for three targets for 2030 – one on emissions, one on renewables, and one on energy efficiency. It’s this third of these that is troubling me.
What was agreed was a non-binding 27% energy efficiency improvement compared to current 2030 projections. This is only moderately more ambitious than the UK official negotiating position, which was for no energy efficiency target at all – on the basis that specific renewables or efficiency targets risked not following the most cost optimal pathway to 2030. Prime Minister Cameron said afterwards that rejecting a binding energy efficiency target gives the UK ‘full flexibility over how we reduce our carbon… while at the same time protecting our national interest by keeping energy bills down…’
This statement is worth examining for two reasons. Firstly the emphasis on keeping bills down is an objective that is hard to argue with, particularly when over 4.5 million UK households are facing fuel poverty. However there is widespread support for the idea that the best thing that can be done to help the fuel poor is to improve the energy efficiency of their homes (see here here here & here). This is not forgetting of course the government’s own draft fuel poverty strategy which is founded on the principle of needing to improve the efficiencies of homes to tackle fuel poverty.
Of course it could be argued that it is not energy efficiency that the UK government was pushing back against here but binding targets. Which brings me to the second reason – Prime Minister Cameron claims that this arrangement gives the UK ‘flexibility’. However the issue with flexibility is that for many businesses it is synonymous with ‘uncertainty’, and ‘risk’. This is something that clearly concerned Tony Robson, CEO of Knauf Insulation – one of the world’s largest insulation manufactures when he wrote this letter to the EU Heads of State saying that this target ‘sends a strong signal to the energy efficiency industry to leave Europe and make your investments elsewhere’. He explains that in the face of dwindling investor confidence, firms like Knauf are looking to states for political commitment in order to give reassurance about the future of the market. With this is mind, we should be doing what we can to shore the ground for the industries that may be looking to invest. Given the leaky state of the UK housing stock (thermally speaking), the potential market, and so the potential for jobs and growth founded on the back of energy efficiency, are considerable.
I have been speaking recently with a number of people in the Danish Energy sector, and it is clear that Danish energy efficiency firms like Rockwool and Velux have a strong position in both the economic, and energy narratives. Skills, jobs, and growth are made off the back of an increasingly energy efficient economy, and the highly efficient nature of Danish homes suggests the domestic sector may be a part of that.
The Government appears to be aware of at least some of the potential that energy efficiency carries: ‘Investing in energy efficiency and smart technology is a cost-effective way to support growth, enhances business productivity, improve living standards and cut carbon emissions’. Which begs the question: why was there such resistance to an ambitious energy efficiency target?
Perhaps the answer is an economic one? There is of course no point in pretending that this is an entirely free lunch – costs will inevitably be incurred in getting the energy efficiency ball rolling. It was of course concerns around the burden on consumer bills that led to the changes to the Energy Company Obligation last year, and the debate about appropriate methods of funding is ongoing. (Indeed only this week the CBI added its voice to the call for energy efficiency to be treated as an infrastructure priority.) In times of austerity such as this, it is particularly essential that investments are handled carefully. However experience in Denmark shows that if handled properly, investment in energy efficiency can bring considerable economic and social benefits.
Whatever the reason (or more likely reasons) for resistance to the EU target, I fear they are forming part of a road block to developing a thriving energy efficiency sector in the UK; and so holding up progress towards a better economic and social future that we simply cannot afford to miss out on.