ENERGY SAVING TRUST PROJECT (Hansard, 13 May 1992)

§ Lord Strathclyde

The Prime Minister has announced that, as a contribution to the international response to the threat of climate change, the United Kingdom is prepared if other countries take similar action to set itself the demanding target of returning its CO₂ emissions to 1990 levels by the year 2000. The Government are already putting action in hand to limit emissions.

The Government, British Gas, OFGAS and 11 of the Regional Electricity Companies (RECs) in England and Wales have today become partners in an important initiative to save energy and so protect the environment.

They have agreed to establish an independent Energy Saving Trust in the course of the year. The trust will develop, propose and manage programmes to promote the energy efficient use of energy. Where it is more cost effective, the trust will sub-contract the administration of these programmes to other agencies.

British Gas has agreed to finance schemes run by the trust to promote the efficient use of gas. Where approved by OFGAS, the costs of these programmes may be recovered from British Gas's tariff customers through an "E factor" added to the formula that controls British Gas's average tariff price.

The three initial pilot schemes being proposed by British Gas are intended to:

— finance improvements in the efficiency with which gas is used in low income households;

—provide incentives and advice for those replacing their heating systems so as to encourage the maximum cost-effective improvement in the efficiency with which they use gas; and

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— stimulate investment in small scale or residential applications of combined heat and power (CHP) such as schemes in the domestic and commercial sector.

It is envisaged that other schemes will be devised to complement the initial three. Since the first schemes will be pilot projects, the costs of the programme in the first year are unlikely to exceed £6 million, but the level of expenditure can be expected to rise in subsequent years as further schemes are developed and allowed by OFGAS.

We will be inviting the trust to make proposals for a pilot scheme of local energy efficiency advice centres to provide domestic and small business consumers with the information they will need to respond effectively to these schemes and to government and other programmes that promote the efficient use of energy. The pilot scheme would be designed to show whether such centres would be cost effective.

Seeboard, South Western Electricity, London Electricity, East Midlands Electricity, Southern Electric, Northern Electric, South Wales Electricity, Midlands Electricity, Manweb, Eastern Electricity and Yorkshire Electricity have all agreed in principle to finance the trust to run schemes to promote the efficient use of electricity, provided the trust can develop acceptable proposals and suitable arrangements for funding can be agreed. Possible areas could include pilot schemes intended to:

— develop the use of heat pump technology to reduce heating costs; and
— improve the level of domestic building insulation standards in homes.

The remaining public electricity supply companies in Great Britain have also shown an interest. Further detailed discussions will need to take place to establish how best the electricity industry can become involved in the trust. Professor Littlechild has published a consultation document on energy efficiency in the 10WA electricity industry, in which he seeks opinions on various options for changing the regulatory regime to provide a stronger incentive towards the more efficient use of energy. The introduction of an "E" factor is one of the options canvassed.

This initiative has the potential to make a real contribution to energy efficiency and to protecting the environment, most notably in reducing emissions of carbon dioxide (CO₂), the principal contributor to the threat of global warming.

We have also developed a number of related initiatives to improve energy efficiency and so reduce CO₂ emissions:

— my right honourable friends the Secretaries of State for the Environment and Scotland have given a commitment to start consultation this year on the strengthening and extension of building regulations. This is likely to cover further improvements in standards of energy efficiency, the strengthening and extension of energy efficiency standards to renovation and conversions (this already applies in Scotland) and the incorporation of home energy rating into the requirements of the regulations;

— the Secretaries of State for the Environment and Employment have agreed an initiative to encourage training in energy efficiency through recognition of the value of a skilled workforce holding nationally recognised qualifications. The two departments will promote the development of a body with a leading interest in the development of standards and qualifications in energy efficiency to work with industry lead bodies and others.

Taken together, these measures represent an important step in the development of the Government's policy on energy efficiency as a means of combating the threat of global warming and meeting the Government's target for limiting CO₂ emissions.