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The 2011 Carbon Plan is out of date and requires revision, MPs on the influential Environmental Audit Committee (EAC) have concluded in their new report into progress on carbon budget.
The 2011 Carbon Plan is out of date and requires revision, MPs on the influential Environmental Audit Committee (EAC) have concluded in their new report into progress on carbon budgets, issued on 7 October. Arrangements for managing and reporting progress against the carbon budgets have not been working as intended and improvements are needed to enhance transparency, they say.
The report emphasises that in the Carbon Plan, the Government stated that "we need to complete the cost-effective 'easy wins' in the buildings sector," which "means maximising our energy efficiency efforts over the next decade". The Green Deal and Energy Company Obligation (ECO), at that time under development, were "likely to result in all practicable cavity walls and lofts having been insulated by 2020, together with up to 1.5m solid walls also being insulated".
The CCC noted in evidence in its most recent progress report that loft and cavity wall insulation rates increased in 2012 as "energy companies aimed to meet their targets in the final year of the supplier obligation schemes". However, CCC stressed there was a "significant risk around future delivery" of loft and cavity wall insulation rates given "weaker incentives" under the Green Deal and ECO. ECO has shifted the focus of energy company insulation targets on to more expensive solid wall insulation and hard-to-treat cavity walls, which could lead to large energy bill increases. The CCC was also concerned that the incentives for take-up of both schemes relied on a market-based approach to address essentially non-financial barriers.
Mark Bayley, the chief executive of the Green Deal Finance Company, confirmed this concern when revealed in an interview with the Independent on 10 October that he now only expects around 1,000 households to have energy saving measures installed under the plan in its first year. He also conceded that so far his company - which has a start-up fund of £244m to loan to households - has processed applications worth just £1.9m and signed off on only 12.
CCC secretary David Kennedy told the EAC that the CCC believed that the Government should consider fiscal incentives to improve take-up, or link building regulations to the Green Deal. The EAC recommended that "The Government should urgently review the barriers holding back take-up of the Green Deal and ECO schemes, including a survey of potential clients, in time to bring forward fiscal incentives in the Autumn Statement 2013 to bolster them before low take-up rates produce a widespread lack of confidence among both clients and the industry."
The MPs also insist that while DECC has to find staffing reductions as a result of the recent Spending Review, "the resources needed for the Green Deal and ECO review should be given priority."
Local authority role
In an important conclusion, the EAC stresses "local authorities have an important role to play in driving down emissions, particularly those from buildings, transport and waste. However, there is a significant risk of inaction because of authorities' constrained fiscal position and the Government's decision not to implement the CCC's recommendation to place a statutory duty on local authorities to produce low-carbon plans. The Government should reconsider placing a statutory duty on local authorities to produce low-carbon plans for their area and work to ensure that all local authorities are measuring and reporting on their emissions."
David Kennedy told the EAC that, although the Government had put the "foundations" in place, there "is still a lot" to do to make sure that the UK is on track to meet the carbon budgets it "was necessary for the Government to develop and implement policy measures over the next two years". The CCC's latest progress report found there was "mixed" progress in 2012. "Good progress" had been made on the amount of new wind generation capacity added, insulation of lofts and cavity walls in residential buildings, the emissions of new cars and emissions from waste"...but added that "In the commercial and industrial sectors there was "no evidence" that a "big opportunity" to improve energy efficiency was being taken."
The default assumption, the MPs say, should be that the "carbon budgets represent the minimum level of emissions reduction required by the climate change science. Climate models are not yet able to include some potentially significant feedback effects, but continue to be developed, improving our understanding"... and "The CCC should continue to keep the level of the carbon budgets under review to fully reflect the evolving climate change science, and the Government should be ready to tighten these budgets on advice from CCC."
Decarbonisation target threatened
The CCC believed that the UK was "not currently on track" to meet the third and fourth carbon budgets and "without a significant increase in the pace of emissions reduction, starting very soon, the costs and risks of moving to a low carbon economy in the 2020s and beyond will be increased". The CCC found that emissions rose by 3.5% in 2012.
The MPs say they are "dissatisfied" that the Government is not willing to set a decarbonisation target before 2016, and " in light of the evidence we have received in our inquiry, during the passage of the Energy Bill the Government should reconsider setting a decarbonisation target now for 2030, which would deliver the Committee on Climate Change's recommended limit of 50g CO2/kWh by 2050."
The EAC also recommends that the National Emissions Target Board, charged with coordinating action across government and ensuring departments are held to account for their share of emissions reductions, should convene regularly and take control of identifying the new policies and incentives needed in the next two years to get the UK on track to meet the third and fourth carbon budgets.
DECC / CCC disagreement over loft insulation
In a key passage the MPs report: "There are also differences between the CCC's indicators and the commitments made in the Carbon Plan, even when they cover similar initiatives. For example, the CCC's indicator of "insulation of all lofts and cavity walls by 2015" is more stringent than the commitment in the Carbon Plan to do this by 2020. More fundamentally, there was disagreement between the CCC and the Government's Plan on the number of lofts that require insulation-6 million and 200,000 respectively.
The CCC appeared to be counting lofts not yet insulated and those without inadequate insulation, whereas the Government was only counting the former. The Minister believed that the "challenge now is not to pretend that there are lots more easy-to-treat lofts out there ... we have done extremely well and are close to declaring victory". He saw "diminishing returns" after the "first six inches of loft insulation is installed. The CCC has commissioned work to resolve the difference in measurements and this would feed into a Cabinet Office-commissioned review of the Green Deal and ECO, due to report at the end of the year.
The Minister did not see "a huge problem" with the CCC and Government measuring progress using different indicators: it was "just a difference of emphasis". He saw the CCC's report as "guidance and a critique" and "not the only way to achieve these objectives". The Government would make its "full response" to the CCC's fifth progress report "after proper analysis" in October 2013."
The EAC inquiry explores the Government's response to its previous report and takes stock of progress against the carbon budgets, with the aim to consider how the Government should respond by 15 October - the date by which the Government must report each year - to the CCC's most recent (fifth) progress report.
- The European Commission - which adopted a Green Paper on a 2030 framework for climate and energy policies on 27 March 2013 - is consulting on the development of climate and energy targets, and intends to publish proposals at the end of 2013. In a hearing into the Green Paper in Parliament on 7 October, energy minister Michael Fallon said "While we remain committed to implementing the 2020 framework, we must take on board some important lessons from it. First, the greenhouse gas target of 20% by 2020, which was set way back in 2008, was not ambitious enough. Although the 2020 renewables target undoubtedly helped to develop new technologies and kick-start renewable development, the sector has moved on since then and member states need more flexibility to develop all low-carbon technologies. The challenges facing our economies necessitate a cost-effective approach, maintaining the competitiveness of our industries and ensuring affordable energy for our consumers."
He added that "Our response to the green paper incorporated those lessons, and we have backed a 2030 deal that is ambitious, cost-effective and flexible. It is ambitious because we have asked for 40% emissions reductions by 2030, rising to 50% in the context of a global climate deal in 2015. It is cost-effective because the target would put us on the most economical pathway to our goal of 80% to 95% reductions by 2050. It is flexible because it will allow member states to decarbonise in a way that best fits their national circumstances. That means that although we are pro-renewables, we oppose a specific, restrictive 2030 renewable energy target at an EU level, because it would increase the costs of any transition and risk limiting investment in innovation to one low-carbon area at the expense of another."