HC Deb 31 January 1983 vol 36 cc12-3
15. Mr. Rost

asked the Secretary of State for Energy what progress his Department is making in completing its study on the comparison of the cost-effectiveness of investment in new energy supplies and investment in conservation.

Mr. Gray

The study was published on 18 January and a copy has been placed in the Library of the House.

Mr. Rost

I welcome the Department's first contribution on this important subject. Does my right hon. Friend agree that the report is inconclusive because, as stated in paragraph 87, it did not examine whether investment in conservation produced a higher return to the Exchequer than investment in new capacity?

Mr. Gray

I think my hon. Friend will agree that it will take some time for the report to be considered, but it clearly shows that there is no simple trade-off between investment in energy supply and investment in energy conservation. For example, peak demand is in general reduced proportionately less than average demand by measures such as loft insulation, and it is peak demand that determines the need for supply investment. Those points will have to be carefully studied and I am sure that my hon. Friend will take the opportunity to contribute to the deliberations.

Mr. Eadie

In considering costings with regard to energy conservation, will the right hon. Gentleman assure us that he will also consider social benefits, such as helping elderly people to suffer less from the cold—that is especially relevant today, when there is a lobby from Age Concern at the House—and the employment benefits to be derived from energy conservation, as jobs are certainly badly needed in Britain today?

Mr. Gray

I join others in welcoming the hon. Gentleman back to the House. He makes a good point. Nevertheless, decisions on energy conservation investment are best made by individual consumers in the light of their own circumstances and the correct price signals. The best way to encourage optimum deployment of resources in the energy sector is to ensure that prices reflect opportunity costs to the maximum extent possible.

Mr. Hardy

Does the Minister agree that after three or four years of relying largely on price as the determinant of conservation it is time the Government recognised the employment benefits that would accrue from a more courageous investment and conservation programme? Does he agree that it is also time for investment in alternative and new forms of energy and that this year should see a marked advance in the combined heat and power programme, in which we thought the Government were interested?

Mr. Gray

The Government are certainly very interested in combined heat and power. As the hon. Gentleman knows, a study has already been carried out on this and my right hon. Friend hopes to make a statement on it before too long.