Energy price crisis: Why is behaviour change for energy efficiency not on the table?
EXCLUSIVE: The Energy Transitions Commission has told edie that the UK has repeatedly missed chances to implement “no-brainer” solutions to the energy price crisis that will also reduce emissions, including ending new fossil fuel finance and communicating with the public on energy efficiency.
The UK Government’s Energy Security Strategy, published in April, was dubbed an ‘Energy Generation Strategy’ by some commentators. It included headline-grabbing new targets on offshore wind (50GW by 2030) and hydrogen generation (10GW by 2030), as well as lofty ambitions on nuclear and more support for oil and gas – in spite of the potential climate impact.
Yet reducing energy consumption in the first instance was clearly not a priority.
Energy efficiency does get its own section on the Strategy’s webpage. Yet, this seems to be in name only. The section repeats schemes and workstreams which were already announced, confirming no new funding or targets beyond those included in the October 2021 Heat and Buildings Strategy.
In any other year, this likely would not be the case, but in 2022, questions are being raised about whether the Heat and Buildings Strategy is already significantly out-of-date. It was widely regarded as underwhelming at the point of publication and was drawn up before the worst of the energy price crisis. While wholesale energy prices globally have been rising since last August, the steepest increases have happened since Russia invaded Ukraine in late February. In the UK, a record wholesale price of £8 per therm was recorded in mid-March. The typical wholesale price over the last decade has been around £1.40 per therm.
This question was the topic of discussion at the Sustainable Energy Association’s (SEA) annual reception at the Houses of Parliament. Leading the reception were Lord Best, Lord Callanan and the SEA’s chief executive Jade Lewis (pictured). Lewis stepped into the role in 2020, leading the Association’s representation of dozens of businesses across the building energy technologies and solutions sector.
Speaking with edie at the reception, Lewis reflected on the Government’s approach (or lack thereof) to energy efficiency over the past 12 months. She said: “The Heat and Buildings Strategy does state clearly that it takes a ‘fabric-first’ approach, prioritising energy efficiency. But, when you read the detail, there wasn’t much to back that up. We are lacking detail on how the Government intends to deliver energy efficiency and achieve that demand-side reduction piece.
“The Energy Security Strategy was published more recently and still lacks that piece on energy efficiency. We believe the right long-term solution to deal with the energy bill crisis, in the immediate term, is energy efficiency.”
In the coming weeks, the SEA will publish a report summarising the remaining policy gaps in heat, building and energy policy that are preventing its member organisations from rolling out there technologies, solutions, systems and advice at scale and pace across the UK.
In Lewis’s opinion, by far the most glaring gap is the absence of a national retrofit scheme following the failure of the Green Homes Grant. The Energy Security Strategy confirms that Government’s current retrofit plans will improve the energy efficiency of up to 500,000 households out of the national stock of 27.8 million. For public sector buildings, £2.5bn is on the table through to 2025. There is no support on offer for business’ buildings.
‘All options approach’
A wealth of research is emerging on the issue of improving energy security while accelerating decarbonisation. As we wait for the SEA’s report, others, including a paper from the Energy Transitions Commission (ETC), are already spelling out how energy efficiency forms a solid foundation upon which to reduce bills and emissions in the short-term while crafting long-term responses to the energy trilemma (security, climate impact, cost).
Published in late May, the ETC’s paper implores governments across Europe to “pursue all options” for boosting energy security that are compatible with long-term climate goals. Energy efficiency is named a win-win.
The Commission’s head of analysis Mike Hemsley spoke with edie shortly after the paper’s publication, stating that the UK Government has largely bypassed the quickest ways to bring down energy bills and emissions – namely building out onshore renewables and energy efficiency – while setting out timelines for nuclear and fossil fuels which he “questions are fully realistic, given the timescales involved”.
This approach stands in stark contrast to that taken by the EU, which has found it politically difficult to set out long-term ambitions for nuclear but significantly increased 2030 targets for renewable generation and energy-efficient buildings in May.
Hemsley said: “The question does come up on energy efficiency in the UK – if not now, will it ever happen, given the historical precedence of this crisis?
“There has been a lack of progress to date on efficiency. Energy prices have not risen at this rate in my lifetime – probably the last comparable period was the oil crisis of the 1970s. We’re set to see the biggest drop in living standards since 1956.”
The ETC paper calls on governments to deploy a “suite of energy efficiency solutions”, Hemsley highlights. This includes fabric-first approaches including insulation and ventilation but also covers smart technologies and simple behaviour changes.
Pushing and pulling behaviour change levers
“Some solutions require no installations, such as changing the boiler flow temperature. This is not even being recommended [in the UK or EU], despite the fact that it could reduce annual gas use for heating the average home by 6%,” Hemsley tells edie. Another easy change is lowering home thermostats by 1-2C, which the International Energy Agency (IEA) estimates could displace 7% of Russia’s gas imports to Europe.
There are some more drastic behaviour changes which could be taken by members of the public. The IEA’s ten-point plan for cutting oil use encourages remote working, car-sharing and car-free days to limit fuel consumption by private vehicles.
The IEA is holding a global conference on energy efficiency in Denmark this week, where nations or cities may well agree to implement its ten-point plan. But it has not yet proven popular in practice.
“I think there can be a general reluctance for policymakers to be seen as telling others how to live their lives,” Hemsley says. “The UK certainly falls into that category – particularly as the Government has been telling the public how to live our lives for more than two years.”
That said, the energy price crisis has now perhaps reached a point where something has to give in terms of policy involvement in behaviour change – for economic, environmental and social reasons.
The Confederation of British Industry’s director-general Tony Danker today (7 June) stated: “I know that demand measures – like asking people to turn down their thermostat – goes against every libertarian instinct of the Prime Minister and others in his Cabinet. But I think they’re wrong. Energy waste is like food waste. It has no justification, it is not good for anyone.
“There’s nothing libertarian about asking people to wait decades for Government to fix supply.“
Danker added: “To be on track to achieve our targets, the UK needs to invest around £5.2bn every year to 2035 in making homes more energy-efficient…That sounds expensive, but higher energy bills and resulting inflation just cost the Chancellor £22bn’s worth of support in the Spring; £15bn in May; and we haven’t reached October yet. Do we want a new normal of energy efficiency or a new normal of billion-pound bailouts every quarter?”
Adjusting boilers and thermostats now is all well and good – and trials of more drastic measures on transport may well begin in the coming weeks in mainland Europe.
In the longer term, as more clean electricity comes online and as heat and transport electrification continues, both the ETC’s Hemsley and the SEA’s Lewis highlight the importance of ensuring that the general public wants new clean technologies and feels confident using them.
Speaking of the Association’s work on heat pumps in social housing, Lewis recounts: “I was surprised at how much reticence there still is. Many tenants who are being given these things feel they’re having it pushed onto them and are concerned about the behaviour changes they’ll have to make to operate these systems, and the costs of operating them.
“There’s not a UK-wide awareness campaign on heat pumps, or low-carbon home technologies more generally – customers that can pay don’t understand why they would go and do this.”
The 2022 Spring Statement saw the zero-rating of VAT for insulation and low-carbon heating for homes. But it has been predicted that this will only incentivize action from high-income households that were already considering installation, with upfront technology costs still too high for most despite a recorded growth in interest.
Lewis notes that, even for these ‘able to pay’ households, concerns persist around things like lifetime running costs; health and safety; a lack of access to a centralized body dealing with consumer advice and protections; and a lack of workers trained in retrofit (said by the Government to have been the fatal wound for the £2bn Green Homes Grant). These concerns have been documented by MPs. They hamper product and service providers who can spring into action with supply.
It may be some time before these concerns are allayed, with Boris Johnson clinging to his post after 41% of his own MPs voted that they have no confidence in his leadership on Monday night (6 June).
While ‘Partygate’ was the catalyst for the vote, letters of resignation tenured by Johnson’s staff, and statements made by MPs on Twitter, indicate that there was already much fodder on the fire. Jesse Norman MP has accused Johnson of running a Government without a “sense of mission” – with “a large majority, but no long-term plan… in a range of policy areas”.
As the CBI’s Danker emphasised in his speech today, one of these policy areas is energy efficiency, despite a £9.2bn pledge in the Conservative Party’s 2019 manifesto. Danker said: “Let’s learn lessons from where previous policies like the Green Homes Grant have failed, and get a plan in place. We can get started really fast.”
Like the SEA, the CBI is campaigning for an extension of the ECO scheme with an additional £1bn of support annually, from a mix of government funding and customer contributions from the ‘able-to-pay’. This could help support the ever-growing cohort of homes at risk of energy poverty with bills and energy efficiency. The Confederation wants the extension confirmed before Parliament’s summer recess begins on 21 July, so watch this space.
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