George Osborne’s recent budget probably raised more questions than it answered around the way the new Conservative Government would deal with the thorny subject of energy efficiency.
Unlike the supply side of the industry, particularly around renewables, the energy efficiency side has suffered a perceived fragmentation in its lobbying efforts and clearly, when directly compared to the successes on the supply side, has been less effective and cohesive in getting simple messages across.
Essential demand reduction
This leaves the UK at risk of over-supplying energy which may not be needed through a horribly expensive new infrastructure. Demand reduction is absolutely essential both through eliminating wastage and improvements in efficiency.
The result of the budget was a plot for consultation on the possible simplification of a number of somewhat bureaucratic schemes which have been applied to business, against a backdrop of ESOS and a reduced Department of Energy & Climate Change.
If this consultation is anything like that on the Carbon Reduction Commitment a few years ago there will be widescale gnashing of teeth, real or otherwise, amongst the energy community! Also behold the EU’s awful consultation on its Energy Performance of Buildings Directive. Enough said…
A call for accountability and responsibility
All designed and intended for theorists with no practical or commercial experience whatsoever who, unfortunately, tend to be those who Government bureaucracies listen to. What is surely needed is direct input from those with a wealth of operational energy experience, holders of large budgets, ongoing victims of internal political battles to secure adequate funding – those who deal in responsibility and accountability and not passing the buck to others – and not politicians and/or civil servants.
The results must be engaging for CEOs and CFOs – something the current ESOS ESOS is struggling to achieve.
So, with a radical hat on, which the Tories are rumoured to possess, what are some of the key areas to explore?
What might the top ten desirables from energy professionals look like?
1. Wouldn’t it be massively effective if there were an Energy Minister dedicated solely to energy efficiency and who has experience and knowledge of the issues? (But no more civil servants.)
2. Why can’t tax revenue received through the CRC be recycled into incentives for energy efficiency? (It has been proposed recently, as has introducing tax credits for cash spent on efficiency schemes.)
3. Couldn’t part of any review mean the CRC picking up all non-domestic users of energy – surely SME’s should pick up their share of the burden?
4. Why can’t reductions in corporation tax be conditional on achieving specified levels of efficiency improvement? (Real teeth…)
5. How about all ESOS qualifiers having to have a qualified and suitably trained and registered (with a professional chartered institute and notified to the Environment Agency) Energy Manager, either full or part-time?
6. Sticking with ESOS, why not make non-investment energy saving opportunities compulsory within a given timescale and auditable? (No-one really wants the Government dictating investment items so surely part of this regulation must have teeth or it will be totally ignored.) I’d love nothing better than to check the ESOS Assessments which are submitted to form a view on how adventurous they’ve been – or do they just tick boxes? Is the EU ambitious enough in its rather lukewarm targets for the scheme? Why don’t they go much further?
7. One of the biggest issues for most Energy Managers is knowledge of whether energy efficiency schemes (technologies) will work and how they will perform. Could the cash from Enhanced Capital Allowances be used for an independent certification scheme which attests and demonstrates the level of savings which will be achieved from the multitude of widgets and systems out there? Similarly the impact of supposedly complimentary schemes – how do the various technologies work if employed together? (Case studies are fine if taken with large pinches of salt but they are often beholden to a raft of vested interests.)
8. Energy Performance Contracts, potentially key in effecting both public and private sector efficiency schemes, are still far too cautious and with far too much risk to the client (and too little to the provider). Maybe scope for a privatized reiteration of the Green Investment Bank to provide subsidized finance but also an active role in performance measurement of results?
9. Why not link Business Rates to energy efficiency levels? (Display Energy Certificates and Energy Performance Certificates may give a rough idea (thinking dodgy dentures here) but I wouldn’t want my tax based on them – a better form of comparative measurement of buildings’ energy efficiency performance needs to be found.)
10. Forgetting wider sustainable business issues for a moment someone, perhaps Amber Rudd and team, will need to put together an holistic picture of both energy supply, including the low carbon infrastructure and plant, and wider demand priorities over the longer term, ensure that all measures are clear, simple and, most importantly, have teeth in a challenging financial environment.
It’s unfortunate that the introduction of ESOS has coincided with a temporary softening of energy prices despite the best endeavours of Governments throughout the EU to raise them via a plethora of pass through elements, not least taxation.
Surely the key element of a successful case for energy efficiency investment is a sky high energy price and a quick return on investment (or enhanced life cycle benefit).
The inclination of Governments of all political shades, even the Conservatives, is to set up consultations, committees, working parties (serious misnomer!) and it’s to be hoped that energy is treated in a lean, mean and green way which it clearly deserves. There’s massive expertise within the energy sector but it has to be managed effectively to produce meaningful solutions. It was far from encouraging that the “bonfire of the quangos” failed to produce enough energy to boil a kettle.
It’s to be hoped that the new Government listen, form a view and put in place a pragmatic new Energy Act which sweeps away the dodgy dentures and provides a sensible, practical framework of measures with teeth which actually encourages stretch targets for energy efficiency which enthuse, rather than switch off, the industry and its stakeholders.
About the author
Now the MD of Intuitive Energy Solutions Ltd, a consulting company which provides strategic advice to leading energy services suppliers and end-clients, Mervyn worked for Marks & Spencer for 28 years until retiring as Head of Energy Management in September 2012. Results there were impressive with a 30% reduction in relative energy consumption in the 5 years to 2012.
Involved in the original architecture of the energy aspects of Plan A, the holistic sustainability programme launched in 2007 and extended in 2010, he was a key player in setting strategy as well as being responsible for implementing measures to achieve the stretch targets involved. He is also an author of numerous articles on energy markets and consumption & a regular and enthusiastic blogger as well as a sought-after chairperson and speaker on the energy conference circuit.