Energy Efficiency of Buildings

HL Deb 17 June 1993 vol 546 cc1720-34

7.10 p.m.

Lord Ezra rose to ask Her Majesty's Government whether they are satisfied that sufficient is being done to improve the energy efficiency of buildings.

The noble Lord said: My Lords, I believe we are breaking new ground taking this Unstarred Question in the dinner hour. I should like to thank noble Lords who are participating in this debate for sacrificing that period.

I have asked this Question on the energy efficiency of buildings in the context of the Government's commitment that the UK will return its carbon dioxide emissions to 1990 levels by the year 2000. The significance of the energy consumption of buildings is that they account for half final energy usage and are therefore a major cause of carbon dioxide emissions.

It could well be asked whether the national target is sufficiently demanding. If the European Community as a whole is to stabilise emissions by the year 2000, and if countries such as Greece, Spain and Portugal are to be permitted to increase emissions in order to achieve their economic growth targets, it follows that the more affluent countries such as the United Kingdom should be aiming to reduce emissions significantly below 1990 levels. Such an example is being set by Denmark, which is seeking a reduction of 20 per cent. by the year 2000, and by Germany, which is targeting a reduction of 25 to 30 per cent. by the year 2005. Why is the UK being so modest?

The Danish target is all the more laudable in the light of the achievements already made. For example, during the 1980s, residential energy consumption in Denmark fell by 33 per cent., whereas in the UK it marginally rose. During the 1980s Denmark's CO₂, emissions per capita fell by over 12 per cent. During the same period the UK's fell by less than 4 per cent. One is bound to ask why Denmark is able to set such a significantly better reduction target starting from a far more efficient base. Clearly one of the reasons is that country's very positive commitment to improving the energy efficiency of both new and existing buildings. I should like to suggest various ways in which I believe we could act similarly in Britain.

In its report, Energy Use In Buildings and Carbon Dioxide Emissions, the Building Research Establishment identified that 44 million tonnes of carbon dioxide could be saved annually using cost-effective and technically proven methods of improving the energy efficiency of buildings. I should like to ask what is being planned to enable that target to be realised.

The United Kingdom has a legacy of almost 20 million poorly insulated homes. There is a grant scheme, as we well know, the home energy efficiency scheme, which is targeted at a minority of occupants; namely, those in receipt of social benefits. These are the people on low incomes whose homes are heated to a low standard and therefore the effect of any modest insulation measures will be largely, and quite rightly, taken up by improving their standards of warmth rather than by reducing energy consumption. This work is being spearheaded by Neighbourhood Energy Action (with which I have been connected for some years) which has already insulated over a million homes; but there are still about 6 million to go in this category.

The home energy efficiency scheme at present covers the installation of draught-stripping and loft insulation only. As walls are the biggest area of heat loss from a dwelling, one might well ask why the grants do not extend to wall insulation. By doing so this scheme would achieve further improvements in the level of comfort of occupants and a significant additional reduction in CO₂, emissions.

I should like to comment on the proposed imposition of VAT on domestic fuel. I am in favour of the use of fiscal measures to promote energy efficiency. But for VAT to have this effect, some or all of the revenue generated must be returned to householders to stimulate them to apply energy saving measures. At present, with the exception of the scheme I referred to which applies to a limited sector of the population, there is no such incentive.

The Energy Saving Trust has been set up to help bring about a better use of energy. I hope that it will be provided with adequate resources. The trust needs quickly and vigorously to tackle the generally poor energy performance in the existing housing stock. A national programme aimed at systematically improving the standards of insulation of all existing houses would bring substantial benefits. I understand that the Energy Saving Trust says that it could implement activities to generate 40,000 new jobs by the year 1997 if resources were forthcoming.

A procedure which I believe can positively help to improve the energy efficiency of buildings is energy rating. The National Energy Foundation, a charitable trust based at Milton Keynes, has produced a system called the national home energy rating (NHER) which evaluates dwellings on a 1 to 10 scale. Unfortunately, the Government have encouraged the introduction of other home energy rating schemes and indeed have recently developed the standard assessment procedure evaluation method of their own. This proliferation can only be an impediment to the general acceptance of home energy ratings and it is to be hoped that a single government supported scheme becomes established soon. That was indeed proposed in the report on energy and the environment by the European Select Committee in June 1991.

While existing housing is the biggest single contributor of CO₂, and therefore the principal target for energy efficiency measures, we should not forget that the existing stock is poorly insulated because it was constructed under building regulations which have been inadequate. If we are to ensure that the housing stock of the future is energy efficient, we have to strengthen the standards to which new housing is built. The design of a house today represents a commitment to a pattern of energy use for several decades ahead. This places a grave responsibility on house builders and on those who frame building regulations.

I was pleased to see the statement by the Government on 29th March that the proposals to review Part L of the building regulations have been brought forward because of growing environmental concerns. However, the proposals for revisions to this part seem inadequate. No improvements in insulation levels to walls, roofs or floors are proposed, apart from a small correction to the manner in which these levels are calculated. The preamble to the consultative document on Part L revisions states that they will achieve the elimination of 500,000 tonnes of carbon dioxide. But many believe that that estimate is exaggerated and that the measures proposed require substantial strengthening. Would the Minister care to comment?

If press reports are to be believed, there has been a recent development which threatens even the modest CO₂, savings of the Government's proposals. Under the DTI's deregulation initiative, the task force looking at the construction industry appears to be considering the abolition of building regulations, including, one presumes, the part governing the conservation of energy. But there is no alternative to regulation if appropriate standards of energy efficiency in new buildings are to be achieved. I should be grateful for the Minister's confirmation that the press reports are inaccurate.

The requirement for higher standards of energy efficiency would be beneficial to UK business, and experience in countries such as Denmark shows what can be achieved. It could stimulate the market for UK products and create an incentive for development and innovation. This would generate export opportunities for products and manufacturing technology. For example, the German subsidiary of Pilkington has produced a sophisticated range of insulating glass as a direct result of the high standards of energy efficiency required in German buildings. If we are slow to improve the required standards of energy efficiency in UK buildings, then when these standards are ultimately introduced they are more likely to be satisfied by products produced in other countries. There are many examples of ways in which we have failed to develop new technology to meet higher standards because of our slowness in introducing those standards.

There are many benefits, therefore, which will accrue to UK business, to the national economy, to individual house occupants and to the global environment if the UK pursues a more vigorous energy conservation strategy for buildings. The techniques which can improve the energy performance of new and existing houses are proven and readily available. I hope that in his reply the Minister will indicate what further measures the Government have in mind.

7.20 p.m.

Viscount Mersey

My Lords, I am grateful to the noble Lord, Lord Ezra, for asking this Question. I speak in my capacity as the immediate past president of the Combined Heat and Power Association. The question of energy efficiency in buildings is particularly topical now that we have VAT on domestic fuel. In fact, it is nothing more than a partial implementation of the Community's carbon tax. Yet, as all noble Lords will know, the VAT is exceedingly unpopular. Noble Lords will also know that Sub-Committee B of the European Communities Committee, chaired by the noble Lord, Lord Ezra, examined the full carbon tax and rejected it, for much the same reason as the opponents of VAT on domestic fuel; namely, that it hits hardest the poor and the elderly.

However, there was one phrase in the proposed carbon tax that we did not hear in the Budget and that was the phrase "revenue neutral". If the Government collect extra taxes from carbon, they must reduce other taxes or increase other benefits. I agree with the noble Lord, Lord Ezra. I cannot see any financial objection to VAT on domestic fuel, if those who suffer are reimbursed by an increase in their pensions or some such thing.

But even that is merely financial and defeats the main purpose of a carbon tax, which is to lessen carbon dioxide emissions worldwide and avoid global warming. That, as they say, is the bottom line. That is what makes the energy efficiency of a building of such importance.

In this country our buildings are supremely inefficient. So I regard thermal insulation as of supreme importance. Conserving heat and power is much more important than any of the fancy non-fossil fuel power sources that are now in vogue: wind power, wave power, tidal power, hot rocks, fuel cells—you name it. They are exciting but they are not as important as loft insulation or double glazing. That is what I call the boring truth of energy efficiency.

On a bigger scale, it is inefficient to have thousands of small boilers heating thousands of small houses. A large boiler for a large town uses much less fuel. District heating schemes are good friends to the environmentalist. It is fascinating to see them working. For instance, in Denmark I saw a district heating network in Aarhus. It contained a loop of pipe stretching out to a hamlet 32 kilometres away. The water went out to the hamlet at 96°C. When it came back it was still 92°C, having heated the hamlet and travelled a total of 64 kilometres. The insulation of the pipes was near perfect. I understand that there is a bigger and even better network that heats the whole of Copenhagen. Denmark seems to be a most efficient country from the heat conservation point of view and I was interested to note that the noble Lord, Lord Ezra, also featured Denmark in his remarks.

I believe that I can forecast my noble friend's reply to what I have said; namely, that the Government are indeed keen to promote combined heat and power and that they are aiming for 4 gigawatts by the millenium. I must give the schemes in Sheffield, Teesside and the City of London their due. But those are mere flea bites compared with what is 'on the continent. As might be expected, Scandinavia leads the way, but even France is well ahead of us. They have a scheme which heats nearly half of Lyons. I do not believe that we have anything on that scale. Perhaps I could ask my noble friend whether he knows of any country in the Community which has less combined heat and power per capita than we do. But I am not a one-track minded combined heat and power man. Tonight I seek to find ways to use less energy. That is the objective.

In Helsinki I was shown a table of what it costs to heat one cubic metre of air up to 20°C throughout Europe. Noble Lords might think that the farther south one goes the less it costs because the weather is warmer. Surprisingly, it costs the same in Finland, where one starts with an outdoor temperature of −20°, as it does in Milan, where one starts with an outdoor temperature of +10°. That is because the energy efficiency of the buildings decreases as the ambient temperature increases. Thus, one can draw a line from Helsinki through Copenhagen, Hamburg, Zurich, Turin and Palermo and find that the heating costs are always about the same. The one exception is this country, where London should be about as efficient as Amsterdam. But with our history of plentiful coal, oil and North Sea gas, we seem to throw energy efficiency out of the window. In fact, we are only as efficient as Tangier.

I wonder whether my noble friend on the Front Bench could improve our energy efficiency a little by answering two questions. First, are there still two scales for carrying out an energy audit on houses? There used to be two. There was a scale of 10 under the Lady Mary Archer system and also a scale of stars. That was confusing. I wonder whether the two have yet been integrated. Secondly, can my noble friend give any hope that energy insulating materials will soon be VAT zero rated or exempt?

The answer to our energy problem is not anything as exciting as a tidal barrage across the Mersey. It is foam and cavity walls, blankets in lofts and double or even triple glazing in windows. If we conserve the energy that we now produce, that is much better than having to produce more of it.

7.26 p.m.

Lord Cooke of Islandreagh

My Lords, I also am grateful to the noble Lord, Lord Ezra, for tabling this question. The energy efficiency of buildings is a subject close to my heart. That is largely because the energy efficiency of buildings has the greatest potential for reducing our total energy requirement in the UK. Approximately 46 per cent. of total UK energy use is for heating buildings generally. For domestic heating it is about 30 per cent.

Energy conservation in buildings is one of those very rare matters on which everybody wins: the house owner will recover the cost many times over the life of the building and he will be more comfortable; the construction industry will benefit from the extra work; and the nation will benefit because fuel that is not used will be there for another day or can be exported, thus improving our balance of payments. Improving the energy efficiency of buildings will reduce the demand for fossil fuels and help in the reduction of carbon dioxide emissions. It will be a plus for everyone if the Government would only think straight and set out a consistent policy for energy reduction in buildings for the future.

Back in 1983 the then Secretary of State for Energy set an objective of improving the energy efficiency of buildings by 20 per cent. in 10 to 15 years, which would save about £4 billion per annum. I believe that the target set in 1983 should have been achievable. But I very much doubt whether we have improved by more than a few percent in the past 10 years, owing to lack of determination to tackle the matter.

I wish to develop further the matter of building regulations, which the noble Lord, Lord Ezra, mentioned, where it is very important to get our thinking straight. There were attempts in 1985 and 1990 at upgrading Section L of the building regulations, which deals with the insulation of the fabric of buildings. The consultation period has just ended for a further attempt to upgrade them. The result of the first two upgrades has been very small. The 1990 regulations were supposed to achieve a reduction in energy use of 20 per cent. but it is now estimated that only about 6 per cent. is being achieved because of trade-offs permitted in the regulations. For instance, it is possible to omit floor insulation if double glazing is fitted. That seems particularly stupid because double glazing can be added at any time whereas floor insulation must go in when the house is built. Those trade-offs were introduced in order to placate those who objected to the improvements because they either were considered too difficult or cost too much.

The proposed new regulations are shaping up even worse. They have introduced a new concept "target 'U' value" where the under-performance of one element can be compensated by the over-performance of another. The absurdity of it is that the fabric of the building can be degraded if, for example, a condensing heating boiler is used.

For new buildings it is obviously important to ensure that the fabric of the structure is insulated to the highest practical value and that the fitting of condensing boilers or efficient refrigerators can be dealt with separately. These will change several times in the life of a house, which will be 50 years or more, so it is of fundamental importance to get the fabric right to start with. The Royal Institute of British Architects and most responsible bodies concerned with the construction industry have submitted proposals to that effect. The objectors are house building groups and others interested in house building. They say that the proposed "U" values will cost too much and will lead to problems. The department, following consultations, is tending towards trade-offs and other handicaps in relation to high fabric insulation.

The main problem arises with wall insulation, as pointed out by the noble Lord, Lord Ezra. Adding insulation to a traditional cavity wall presents technical problems. It is labour intensive, adds to the cost of building and is difficult to supervise. It is common for its performance to fall short of expectations by 20 or even 50 per cent. A variety of alternatives to cavity walls is standard practice in countries in Northern Europe, some of which have weather conditions similar to ours. If the wall problem can be overcome then "U" values of 0.35 or even 0.3 can be set for walls; 0.2 for roofs (as agreed by most authorities); and 0.25 for floors. That would result in the energy reduction in new houses approaching 50 per cent., provided that airtightness is dealt with.

I must declare an interest in insulation. My company manufactures insulation for the construction industry. But it manufactures insulation because of its interest in energy conservation, not the other way round. My family firm was part of the linen industry in Northern Ireland for 100 or 150 years. When our section of the industry faced terminal decline in about 1960 we sought an alternative activity. It was felt that to manufacture insulation would be a reasonable thing to do. It was hoped that the demand for it would rapidly increase. The difficulty of applying insulation effectively and economically to cavity walls soon became apparent. We studied construction methods in all Northern European countries, North America and Canada. Building systems do not always translate from one country to another, and a few false starts have been made. However, the firm now offers a fully developed building concept for which it has a certificate from the British Board of Agrement. This system is compatible with and uses traditional trades and skills except that bricklayers are not required. It is quick to build. Houses built in accordance with this system have an energy requirement one-third that of a similar house built to the current regulations. That is a reduction of 66 per cent. The system offers a delivered "U" value for walls of 0.27. The reason I have gone into this in detail is to show that there is no valid reason for failing to go for "U" values that will produce astonishing reductions in new houses.

As to the cost of such a system, I offer two examples. A contractor is now commencing work on the construction of houses for the Focus Housing Association in Handsworth, Birmingham, using this system. The contract was awarded on cost in competition with houses built to the current regulations. This means that the reduction of 66 per cent. in energy use will not add to the cost. The system was also used to build a classroom accommodation block for Stafford independent grammar school in 1989. That is a building of 6,000 square feet with seven classrooms to accommodate about 130 pupils. Last year the bill for heat, light and ventilation exceeded £200 per annum for the first time—at £220. I do not know what those costs are for a normal school accommodation block of that kind but certainly it can be measured in the thousands. The cost of that accommodation block was competitive. The pupils moved in 13 weeks after the commencement of site works. There are many other proven building systems that can achieve similar results, and I suggest it is time that more attention was paid to them.

I hope that the Minister will direct his department to look more positively and constructively at the setting of high standards. I suggest that the standards that I mentioned earlier should be included in new building regulations and that the construction industry should be given two or three years' notice of that intention so that it has time to develop suitable methods to meet the standard without additional cost. We should then be moving towards substantial energy conservation in new buildings.

I support the view of the noble Lord, Lord Ezra, that the new regulations should require an energy rating certificate, such as the National Energy Foundation Certificate with minor modifications. I believe that that is a more suitable and relevant method of assessing buildings than the one presently proposed by the Government. Something must be done about the existing building stock because generally the waste is absurdly high. I applaud the Energy Saving Trust concept. I also believe that it must move more quickly and be funded one way or another so that its work can achieve much greater momentum in a short time and improve energy use in existing buildings.

I hope that the Minister will be able to encourage us today by concurring that new regulations will be looked at more positively.

7.38 p.m.

Lord Graham of Edmonton

My Lords, we are grateful to the noble Lord, Lord Ezra, for his initiative. It is not unique; it is regular and consistent. The House is indebted to the noble Lord who not only is uniquely qualified to speak on these matters but who also enjoys a high reputation outside the House. In raising this matter he is attempting to nudge and remind the Government, not that major steps have to be taken, but that the issue has to be kept constantly in focus.

All three previous speakers stressed that we are looking at a package of measures; not a single measure, cut, grant or initiative. What I believe we are learning, and the record will show, is that this Chamber is not short on suggestions. I know that the Minister will very fairly tell us a great deal about what is being done. What we want to encourage him and his colleague to do is to look at examples in other countries.

The issue of the sheer waste of energy literally going up the chimney needs to be recognised and blanched at. We ought to find a better way of getting the maximum use out of the energy that we burn. The Labour Party would want a national programme of energy efficiency work, with the linked objectives certainly of reducing carbon dioxide emissions and generating substantial amounts of long-term employment. Not too much was made of this—it is not directly appropriate—but in the present national economic climate and crisis, where we are trying to reduce £50 billion of debt, one of the factors that the Minister and his colleagues should look at, whenever they have the opportunity of examining these matters, is how many jobs can be created or how many jobs can be saved. We think that the highest priority in this economic recovery should be to save jobs—permanent jobs—to reduce the number of households which are unable to afford to heat their homes adequately and to achieve reductions in national energy demand—with environmental benefit and less reliance on imported coal, electricity and opencasting.

I want to make three positive proposals for the Minister and his colleagues to consider. First, there should be a scheme to provide a variety of packages of insulation and efficiency work at no extra cost to households, with a small subsequent premium being added in return to those households' unit energy costs. We suggest that this can be organised and funded by the regional electricity companies and British Gas. There could be worse ways of encouraging these bodies, which have made large profits since they have been privatised, than using some of them—not necessarily losing any of them—to provide the seed corn for encouraging better efficiency. It would be at no capital cost to the householder but it would be recouped in one way or another at a later date.

Secondly, we propose a change in the regulatory regime for the energy utilities, so that a direct incentive is built into their pricing mechanisms to promote energy efficiency. And thirdly, we propose a change to building regulations—a point that has been referred to by more than one speaker —to improve standards of insulation and thermal efficiency coupled with an energy audit to be carried out when major refurbishment takes place.

We believe that the work which could be achieved under the first of these initiatives, backed up by the others, could provide better standards of warmth and energy use for more than half a million homes a year, and could, for example, generate 50,000 permanent jobs. It could also remove more than 1 million tonnes of carbon dioxide output a year, rising cumulatively. After a 10-year programme, emissions totalling 55 million tonnes would have been prevented. There would be no additional cost to the taxpayer.

The Minister and his colleagues may look at these statistics with scepticism. I am certainly not able wholly to defend them in detail but this is what I have been told could be achieved if the Minister and his colleagues looked at the matter.

Can the Minister confirm that investment in energy efficiency has declined in the United Kingdom by 28 per cent. over the past two years? We believe that the Government should be launching a nation-wide programme to achieve better use of our energy. Although I am sure that the Minister will tell us of a small range of things being done, they do not add up in our eyes to what is required.

The Minister knows that the present position is bleak. Local authority expenditure under housing investment programme authorisations on improved insulation was £210 million in 1991–92 (cut from £280 million in 1989–90) on council housing stock; and £30 million in 1991–92 on grants for non-council dwellings. If the Minister denies that those statistics are correct he has to justify to the House how reducing the amount of money, funnelled through one source or another, to encourage councils to insulate their houses is improving the situation.

The Green House programme, to assist local authorities specifically for energy efficiency work, was £45 million in 1992–93 but was cut to only £5 million in 1993–94. Then there is the Home Energy Efficiency Scheme, which was mentioned by more than one speaker. It began in 1991 and offers insulation work to low income households, at reduced costs but requiring a client contribution. Thirty-five million pounds has been allocated in 1992–93 and the amount is set to remain the same in cash terms for the current year. How does that encourage the better use of energy?

The Energy Savings Trust has recently been established, with the former Cabinet Member, the noble Lord, Lord Moore of Lower Marsh, as its chairman, with the participation of British Gas and most of the regional electricity companies, and with a remit to promote energy saving. Its budget for the first year is only £6 million. Now £6 million in the billions of pounds that are at stake in wasting or saving energy is nothing short of a disgrace.

Some noble Lords have told us what other countries are doing. I am certain that the Minister will tell us that there are equally interesting examples in this country. I am told that Japan provides free energy audits for small companies, tax concessions on investment in energy-saving equipment and low interest loans from the Housing Finance Corporation to help pay for insulation and imposes a legal requirement on companies to employ qualified engineers as energy managers.

In Holland, the utilities are authorised to raise a levy of up to 2 per cent. on the price of gas and electricity in order to finance grants for the installation of high-efficiency boilers, insulation and low-energy light bulbs. In Wisconsin, in the United States, a similar provision exists for a 3 per cent. levy. Many of the states in the US have weatherisation programmes, and the US utilities are regulated according to a rate of return basis, such as we have suggested, which deliberately encourages energy efficiency promotion. In Germany, mandatory provision comes into force next year for the inclusion of low-emissivity glass in all new buildings; similar provisions already exist in Sweden. I hope that the Minister, while not being able to deny those initiatives, will encourage me to believe that there are equally good and sound initiatives being taken by his department.

We do not have to go abroad to see innovations in this field. Leicester City Council has filled the cavity walls in nearly 13,000 council houses, achieving cost savings of more than 50 per cent. because of economies of scale. It is also conducting an energy survey of all its housing stock, and has an imaginative scheme for selling low-energy light bulbs to tenants at cost price.

Glasgow City Council has a central energy conservation budget, and an automatic policy of improving insulation when refurbishing properties or tackling damp problems. By the city working together with community-based business Heatwise, 70,000 homes have been draught-proofed and insulated. Newcastle—I am proud to say, my own home town —has worked up a project, together with the European Commission, British Gas, Northern Electric and British Coal, aimed at reductions of CO₂, emissions and any energy consumption in the city by the year 2000.

We debate this powerful and emotive topic against the background that around 7 million families in Britain cannot afford to pay for the warmth they need and that 3 million homes suffer from condensation and mould growth. Helping to reduce energy bills and promote greater warmth is of prime importance to any anti-poverty strategy. We believe that the needs of low-income households should be central to the work carried out under the scheme we propose. The noble Lord, Lord Ezra, has, more than anyone else, given the Minister an opportunity to remind us of what is being done. He has been reminded of what we believe can be done. I look forward with the noble Lord, Lord Ezra, and others to what he has to tell the House.

7.50 p.m.

The Parliamentary Under-Secretary of State, Department of the Environment (Lord Strathclyde)

My Lords, I am delighted that this is a debate which is taking place at this far more charitable time of the evening than is normal for Unstarred Questions. I believe that that has helped the quality of the debate. I very much enjoyed the speeches to which I have listened.

A number of points have been made with regard to the government's policies and programmes to promote energy efficiency in buildings, but, before I respond to these, the House may find it helpful if I first describe the context within which the government's policies are set.

Although energy efficiency has been promoted for a number of years as a cost effective way of reducing energy costs in business, in the public sector and in the home, more recently the associated environmental benefits have become of increasing relevance and importance.

This environmental linkage was, of course, given clear focus by the Prime Minister's signing at the Earth Summit last year of the Climate Change Convention. When ratified, this will commit us to prepare and implement a national strategy for limiting our emissions of greenhouse gases, and to aim to return our emissions of carbon dioxide to 1990 levels by the year 2000. This entails finding reductions of 10 million tonnes of carbon by the end of the decade. It is a challenging target. We have already made considerable progress towards developing our national strategy to achieve it. I am of course aware of the aspirational targets set by some countries such as Denmark and Germany.

I say to the noble Lord, Lord Ezra, that I believe that the United Kingdom has performed well in recent years, with the Energy Efficiency Office programmes alone achieving annual savings of over £500 million. The United Kingdom GDP has increased by over 20 per cent. since 1979, while energy use is virtually unchanged, which is another indication of improved energy efficiency.

The most widely used indicator for comparing international performance is energy intensity—the ratio of energy used to GDP. That of course is not a perfect measure, but OECD figures show that our energy ratio has reduced by almost 25 per cent. since 1979. That is a better performance over this period than most of our major competitors, including Japan, the USA and Germany. Between 1982 and 1988 the UK's average ratio improved at twice the European Community average.

However, the focus should be on achieving co-ordinated worldwide action through ratification and implementation of the convention. The target for the year 2000 is only the first step. We will be playing a positive role in international discussions on what further commitments should be agreed under the convention going beyond 2000.

Meanwhile, the Government are conducting an extensive consultation exercise on the shape and balance of our national programme. Last December we published a discussion document on CO₂ emissions which set out the options and opportunities for action by individuals, business and the public sector to help meet our national target, and invited views and commitments to action. This was followed by a series of workshops in March. The results of these consultations will be fed into the development of the national programme later this year.

The Government hold the widely-shared view that energy efficiency is one of the quickest and most cost-effective ways of reducing carbon dioxide and other emissions, although there are certain barriers to the natural operation of the energy and associated services market which result in a less than optimal take-up of potential cost-effective energy efficiency improvements.

It is for these reasons that we have been widening and strengthening the range of instruments available to encourage the take-up of such improvements, and increasing the resources for implementing them. Thus the budget of my department's energy efficiency office has increased by 75 per cent. in two years and now stands at some £70 million; and the energy saving trust, set up by the Department of the Environment, the Scottish Office and the private sector, in the shape of the gas and electricity utilities, has launched its first two schemes, with others under development. That is the sign of the very real commitment from the privatised utilities requested by the noble Lord, Lord Graham of Edmonton.

The Energy Efficiency Office has identified three main barriers to the efficient working of the market. These are: a lack of knowledge and information; the low priority given to investment in energy efficiency; and market distortions such as the lack of correlation between energy prices and environmental costs. To be effective, therefore, energy efficiency programmes must address one or more of these market barriers.

Bearing this in mind, perhaps I may now turn to issues raised by noble Lords during the course of the debate. The noble Lord, Lord Ezra, referred to the 44 million tonnes of carbon dioxide savings identified in a Building Research Establishment report. The report made clear that this figure referred only to potential technically achievable savings; potential cost-effective savings would amount to some 29 million tonnes, though the report pointed out that some of these savings would be taken in the form of increased comfort.

The largest proportion of the identified potential savings could come from wall insulation. The Government have been working with the cavity wall insulation industry through a number of programmes to increase the take-up of wall insulation, and further work in this area is planned.

The noble Lord, Lord Ezra, then asked whether grants under the Home Energy Efficiency Scheme (HEES) could be extended to cavity wall insulation. At present we prefer to concentrate on the basic insulation measures of loft, tank and pipe insulation and draught-proofing. As the scheme is cash limited, the adoption of a higher cost measure would reduce the overall number of homes which could be treated. There are therefore no plans at present to widen the scope of the scheme.

However, the future of the scheme will be considered in some detail after the completion of a review which is expected to start in the autumn. There are various ways in which the scheme might be developed, but it would not be profitable to speculate on these in advance of the review.

The noble Lord also suggested that the revenue generated by imposing value added tax upon domestic fuel could be used to stimulate energy efficiency improvements. The Government already fund a substantial programme of energy efficiency improvements for low-income households through the HEES. This provides an average grant of £150 for basic insulation measures. Thus, in addition to social benefits, the scheme provides considerable energy and carbon dioxide savings, the latter amounting to a potential annual saving of 0.7 tonnes of CO₂, per household.

In addition, local authorities have substantial investment programmes to improve the energy efficiency of their housing stock, and are spending some £350 million on such measures this year.

Turning to the subject of home energy labels, raised by the noble Lord, Lord Ezra, and my noble friend Lord Mersey, the Government do not have the power to compel either of the existing labelling organisations to drop its own approach, although they have developed the standard assessment procedure to enable the two types of label to be compared. By promoting labels which incorporate the standard assessment procedure, and by proposing that it be incorporated in the building regulations, we hope to encourage a move towards a single system so that there is no confusion and greater acceptance by the consumer.

While on the subject of the building regulations, the noble Lord, Lord Ezra, suggested that the proposed improvements to the regulations do not go far enough. In fact, the new provisions represent a significant improvement on the existing provisions. The aim of the revision is to reduce CO₂, emissions from buildings by incorporating cost-effective improvements in a way which does not introduce unacceptable technical risks and which maintains some flexibility for designers.

The noble Lord, Lord Cooke of Islandreagh, spoke most knowledgeably on that subject. The Government have recently consulted on a revision of the thermal efficiency provisions of the building regulations. We estimate that the proposed provisions will improve energy performance in the space and water heating of an average new dwelling by 25 per cent. to 35 per cent. compared with current provisions and save around 0.25 million tonnes of carbon a year by the year 2000. We are considering carefully our response to the consultation exercise.

Some consultees think the measures go too far; others, that they do not go far enough. Our job in government is to listen carefully to all representations in the context of the consultation exercise. However, I can reassure all noble Lords that there are no present plans to abolish Part L of the building regulations.

My noble friend Lord Mersey talked about the "fleabites" that were our policy on combined heat and power. I understand why he should think that because, compared with other countries in the European Community, we have a low incidence of CHP. The House will know that the Government have a target to double the present installed capacity of CHP to 4,000 megawatts by the year 2000, a target that we are very confident that we can meet. It would result in the reduction of UK CO₂, emissions equivalent to between 3 million and 3.5 million tonnes of carbon per year. Last year I was delighted to attend with my noble friend Lord Mersey a presentation on a novel CHP scheme by Citigen for the Corporation of London. The scheme, which is currently being installed, will provide 30 megawatts in its initial stage and is the only one in Europe also to provide chilled water for air conditioning.

The noble Lord, Lord Graham, made an interesting and useful speech on energy efficiency. He referred to a number of things that we are doing already and asked whether we could do more. We have a national scheme to promote energy efficiency. The campaign, "Helping the Earth Begins at Home", has been hugely successful. The advertising campaign has been seen by millions of people and we are gradually seeing an increase in the amount of investment in energy efficient products.

It is important to recognise that government programmes and initiatives to promote improvements in the energy efficiency of buildings are carefully designed to meet specific purposes; all the programmes have objectives and targets against which progress can be measured, and the programmes and their objectives are regularly reviewed. Ultimately, however, improving energy efficiency in buildings depends on organisations and individuals taking actions which are essentially in their own interest. The debate has highlighted a number of important aspects of this subject, and I congratulate noble Lords, and particularly the noble Lord, Lord Ezra, on the useful contributions they have made.

Viscount Goschen

My Lords, I beg to move that the House do now adjourn during pleasure until 8.10 p.m.

Moved accordingly, and, on Question, Motion agreed to.

[The Sitting was suspended from 8.1 to 8.10 p.m.]