Baroness Verma's speech on energy efficiency to the Elmhurst Energy Conference

Baroness Verma

In February 2013 the Prime Minister launched the UK’s Energy Efficiency Strategy.

The Energy Efficiency Strategy represented a step change. It was the first strategy of its type by any UK Government.

It identified that energy efficiency is in everyone’s interest.

  • It can help businesses become more competitive
  • It can help reduce energy bills
  • It can make our homes more comfortable
  • And can drive down greenhouse gas emissions.

It affects us in our homes and at work. And in combating climate change, it helps us make a global impact.

The title of today’s conference – An Energy Efficient Society – is a succinct articulation of our collective ambition.

Energy efficiency belongs at the very heart of our society.

I am delighted to talk today about our collective ambition, what this means in practice, and how we can achieve it together.

Energy efficiency essential for growth

How can we work together to create an energy efficient society?

First, by realising that energy efficiency belongs at the heart of thriving economy. By cutting down on waste, businesses can increase their productivity, boost their profitability and improve their competitiveness.

In 2011/12 the UK energy efficiency sector was worth over £18 billion, and employed more than 100 thousand people.

In the wider low carbon and environmental goods and services sector, the UK is now sixth largest player in the global low carbon and environment goods and services market.

That’s on a par with financial services.

Energy efficiency at the heart of government

Energy efficiency takes pride of place at the centre of this Government’s policy framework.

That’s why we have been working to design policies that will incentivise energy efficiency in households, industry, the public sector, and across our society.

We are committed to ensuring that Britain uses only the energy it needs.

We are making significant progress towards our collective ambition.

Energy consumption has fallen in 8 of the last 9 years.

But we want to go further.

Since the publication of the Energy Efficiency Strategy significant progress has been made.

We are improving the energy efficiency of 1 million homes by the end of this Parliament.

That’s a challenge but we are on track to achieve it.

By the end of June 910,000 measures were installed in around 754,000 homes through ECO, Cashback and Green Deal.

Since January 2013 the Green Deal has been helping households on their energy efficiency journey.

The Green Deal gives advice on improving the energy efficiency of their homes’, provides access to accredited installers and helps households to pay for the improvements. By July 2014 over 300 thousand Green Deal Assessments had been carried out

And only this summer the Government announced a series of new incentives under the scheme.

The Green Deal Home Improvement Fund will enable people in England and Wales wanting to make energy saving improvements to their home. By claiming back up to £7600 to offset the cost of having work done.

Applications of nearly £120m had been received when the schemed closed in July

We’ve also set up the Green Deal Communities Scheme, which will help local authorities spread the word about Green Deal street by street.

And train installers to help boost local skills and strengthen the supply chain.

We’ve quadrupled the Green Deal Communities funding to £88 million. This will help deliver 32,000 Green Deal measures and 21,000 Green Deal plans.

And we want to do more. We have extended the Energy Company Obligation to 2017.

ECO will continue to support vulnerable customers and drive energy efficiency installations in the least efficient buildings.

We’re committed to building on the success of the scheme, and improving it further, such as introducing a new solid wall minimum threshold which will take effect from next year.

But we’re not just making homes and buildings more efficient.

We’re helping to make them self-generating through schemes like the Renewable Heat Incentive.

The RHI incentivises people to install renewable heating systems, helping them to…

…have warmer homes… …lower their energy bills… …and reduce their emissions.

Through these policies, households have increasing access to unrivalled energy management technologies, from renewable heat to insulation.

Energy efficiency in UK industry

Our policy framework does not just focus on households. UK industry is key to creating an energy efficient society.

We are committed to designing and refining policies that are incentivising industry to exploit its energy efficiency potential.

By working together we can reduce the impact of rising prices.

The EU Emissions Trading System (EU ETS) will help make our industry become more efficient and more competitive.

The EU ETS aims to reduce emissions through financial incentives.

By capping and putting a price on greenhouse gas emissions from energy-intensive industries we are giving industry a strong incentive to reduce their emissions and invest in energy efficiency.

The CRC Energy Efficiency Scheme (CRC) is also driving change across UK industry.

By requiring participants to report on their energy usage and purchase allowances based on their reported emissions, it encourages better energy management.

It covers about 2000 large private and public sector energy users representing a huge 10% of UK emissions.

And Climate Change Agreements (CCAs) with eligible energy intensive industries will provide significant discounts worth up to £300m a year on the Climate Change Levy in return for meeting energy efficiency targets.

The CCA scheme covered around 9000 facilities at the start of the scheme in 2013/14.

We are also reaching out to business, working together to set a clear direction for decarbonisation and provide certainty for business.

We are working with industry and academia to develop long-term decarbonisation roadmaps for the eight most heat intensive sectors.

By spring 2015 we hope to have illustrative emissions reduction pathways for the period 2020 to 2050 for sectors including iron and steel, food and drink and chemicals.

These pathways will be developed in partnership with industry, because we understand that our challenge to decarbonise is a shared one, and overcoming this challenge can only be achieved together.

Energy efficiency in the public sector

We aren’t just asking households and business to act, we expect the public sector to drive forward energy efficiency as well.

The Salix scheme provides interest free loans to fund the capital cost of energy efficiency retrofit work in the public sector.

The aim of the scheme is to remove the upfront capital barrier to energy efficiency investment.

Salix claims that for every £1 invested in a project, £4 is saved on energy bills over the lifetime of that project.

Since 2004 Salix has invested just over £300m in English energy efficiency projects, supporting 12,080 individual projects.

But we’re committed to doing more.

We recently committed to providing a further £76m over the next three years to build on the Salix scheme in England.

Together with Local Partnerships, we’re also funding the England-wide rollout of RE:FIT to the public sector.

RE:FIT was pioneered by the Greater London Authority to deliver energy efficiency improvements to the public sector estate, through a simplified procurement framework.

According to Local Partnerships, this roll-out has helped to deliver over £15 million of energy efficiency retrofit to date.

And there’s more retrofit to come – there are another 300 buildings currently in the pipeline.

We are also providing grant funding to Local Partnerships to help them develop a toolkit to help local authorities develop business cases for high efficiency street lighting retrofits

This will help to drive the uptake of technologies such as LED lighting. And bring energy efficiency to our streets.

Changing behaviour

We also understand to improve energy efficiency, we must encourage behaviour change.

By helping to change behaviour, energy efficiency can be truly transformational.

The Smart Meters Programme is bringing the digital revolution to energy.

The Government’s vision is for every home and small business in Great Britain to have smart electricity and gas meters by the end of 2020.

Through an in-home display or using a laptop or smart phone, people will be able to track their energy usage in near real time.

They will be able to see what in their homes is making up their energy costs and experiment with behaviour and lifestyle changes to bring bills down.

The changes that smart meters have the potential to unlock could be profound…

Changes that could be felt in industry as well as in the home.

Changes that could help keep energy suppliers on their toes and drive better customer service.

We’re also working closely with the European Commission to influence EU-wide rules for improving the environmental performance of domestic and commercial products.

Although some of products regulated – such as lighting, TVs and washing machines – may appear small, the energy savings from this policy are significant.

By 2020, products policy is expected to save £850m, and reduce carbon emissions by 7MtCO2e.

That’s equivalent to about 2/3 the output of Hinckley Point C nuclear power station.

But here we understand that regulation can only go so far – restricting the sale of the most wasteful products.

But people still need a choice and manufacturers still need to compete for business.

So how do we help people take the next step and actively choose the most energy saving product – whose running costs will save them money over the life of the product?

We understand that placing the right information in the hands of consumers can really make a difference.

My department’s recent trial with John Lewis has shown that lifetime cost labelling of electrical products has the potential to change behaviour.

John Lewis intend to continue this work, rolling out labelling across their stores and to other appliances, adapting their model for online shopping as well as store bought point of sale.

They also intend to provide annual running cost information rather than just lifetime costs.

The EU is heading towards a new labelling directive and this kind of work will shape their conclusions on how to be clearer to people on energy ratings.

So Government’s approach to regulation is changing, reflecting a deeper understand of how to create enduring changes in people’s behaviour.

This will help to create a truly energy efficient society.

What’s new - ESOS and private rented sector

Attitudes are changing.

And, of course, this is not just in Government.

Already many businesses in the UK are committed to energy efficiency.

But we know there is still significant untapped energy efficiency potential in the UK economy.

In June we introduced the Energy Savings Opportunity Scheme – ESOS.

Under ESOS, large companies in the UK will be required to undertake regular energy audits of their buildings, transport fleet and industrial processes.

ESOS will help large organisations identify savings they can make on energy bills.

The scheme is expected to benefit the UK by £1.6 billion.

The vast majority of this will be felt directly by business through lower bills.

ESOS is an excellent example of Government doing extensive outreach, listening to business and other stakeholders, and delivering a policy that is beneficial to everybody.

But we need to continue working together.

Elmhurst Energy and others must help to spread the good word on ESOS – we need you need to act as “ESOS advocates”.

And energy consultants –many of you who are here today – must use ESOS to encourage companies to take up energy efficiency recommendations.

Together we can ensure that ESOS is an outstanding success.

And that the UK realises its huge energy efficiency potential.

But that’s not all we’re doing.

We also intend to bring forward regulations intended to improve energy efficiency in the Private Rented Sector.

This Government intends to introduce minimum energy performance standards for rented properties that will drive take-up of appropriate, cost-effective improvement measures for the very least energy efficient rented buildings.

We have just finished a consultation process on measures to achieve this and we are currently reviewing the evidence and views that we received.

Inefficient commercial properties needlessly waste energy.

This is not only bad for the environment, but a drain on UK businesses

I know many people here have contributed to our consultation process.

Your expertise and knowledge is immensely valuable.

Together we can set a new standard for our rented property that will help us meet our climate commitments and make UK businesses more competitive.

Conclusion

Energy efficiency belongs at the very heart of society.

It is crucial to a thriving economy …key to improving the competitiveness of UK industry… …essential to making our homes more comfortable… …and our bills more affordable.

An energy efficient society is an ambitious aim. The Government is committed to achieving this. But to make our policies a success we will need your continued support

So I offer my thanks to Elmhurst Energy for organising this event I challenge you to help us maximise the potential of our new energy efficiency policies.

Thank you very much for inviting me to speak to you today.

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