Although progress was made in 2012 on domestic energy efficiency and wind generation capacity, the report states that there are significant risks to sustainaing progress in areas such as insulation and renewables investment.

In addition, the report noted that greenhouse gas emissions across the economy increased by 3.5% last year, mainly due to the cold winter and a switch from gas to coal in power generation.

The CCC noted that after taking these temporary effects into account, emissions would have fallen by 1% – 1.5%. However, annual emission reductions of 3% are required to meet the third and fourth carbon budget.

The CCC said it was therefore essential the Government demonstrates its support for decarbonisation – a 2030 target having been narrowly defeated earlier this month.

CCC chief executive David Kennedy said: “Although the first carbon budget has been comfortably achieved and the second budget is likely to be achieved, this is largely due to the impact of the economic downturn.

“There remains a very significant challenge delivering the 3% annual emissions reduction required to meet the third and fourth carbon budgets, particularly as the economy returns to growth.

“Government action is required over the next two years to develop and implement new policies. A failure to do this would raise the costs and risks associated with moving to a low-carbon economy.”

The report called for stronger incentives for uptake of insulation under the Government’s flagship energy retrofit scheme, the Green Deal.

The UK Green Building Council (UKGBC) supported the CCC’s calls, which come the day before a highly anticipated release of official take up statistics on the scheme.

UKGBC director of policy and communications John Alker said: “Energy efficiency in our homes and buildings is by far the best opportunity to both hit carbon targets and boost green growth. But sadly it’s an open goal we are missing at the moment.”

Another challenge the report focused on was in industry where it stated there was limited evidence of energy efficiency improvement in 2012.

According to the CCC, there is significant untapped potential in this area which must be addressed to reduce costs and emissions. To this end, developing industrial Carbon Capture & Storage (CCS) compatible with deployment in the 2020s is necessary.

The manufacturer association EEF supported the report’s strong focus on CCS, claiming that because many energy intensive sectors have only one or two investment cycles until 2050, it is crucial industrial CCS is deployable to coincide with them.

EEF head of climate and environment policy, Gareth Stace added that financial constraints were one reason the sector was not fulfilling its potential.

“Access to finance can act as a break on progressing projects and we hope the Green Investment Bank ensures that some of the money available to non-domestic energy efficiency does actually reach manufacturers and unlock investments,” he said.

The report also said the slow progress of constructing offshore wind projects suggests that investments are being delayed until implementing arrangements for the Electricity Market Reform are finalised.

This sentiment was echoed by the CBI’s director for business environment policy Rhian Kelly, who said: “It’s good to see progress being made, but there’s no room for complacency if we are to make the move to a low-carbon economy.

“We need to step up our game on energy efficiency so businesses and households can manage their bills in the future, but this seems to have got lost in the fog of energy policy.

“The report shows just how urgently we need to get the Energy Bill on the statute books and see details of the Electricity Market Reform package.”

Conor McGlone

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