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Incentives for carbon reduction: are the storm clouds gathering?December 2015

Written by David Bleicher, Publications and Training Manager, BSRIA

2008 was a year of optimism for energy efficiency incentives in the UK. It was the year the Climate Change Act made it a legal requirement for greenhouse gas emissions to be reduced, by 2050, to a fifth of what they were in 1990. The Act also included carbon budgets for five-year periods. It was in 2008 that the rules on Energy Performance Certificates, Display Energy Certificates and Air Conditioning Inspections fully came into force, although plans for these had been in development for some years. This was also the year that an ambitious plan was launched to require new homes to be zero carbon by 2016.

Within a few days of becoming Prime Minister in 2010, David Cameron pledged that his coalition would be the
“greenest government ever”. One of the flagship policies of the coalition was the Green Deal. The concept was that loans for energy efficiency improvements would be paid off through energy bills. Take up was slow, so slow in fact that the scheme was scrapped in July 2015. Could it be that the Green Deal was overly complex, few people understood it, and those that did weren’t comfortable with taking out loans that would be passed on to future owners of their properties? Could it be that the Green Deal was designed from the outset to fail?

Feed-in Tariffs were introduced before the 2010 election, and these initially created a big boost for solar electricity, but then in 2011 the tariffs for solar photovoltaics were cut in half. In July 2015 Amber Rudd, the secretary of state for energy and climate change, announced a review that could result in Feed-in Tariffs being abolished altogether.

Another energy efficiency incentive that may get ditched is Display Energy Certificates (DECs). These display a comparison of the building’s actual energy consumption against a benchmark, and are currently required to be displayed in public buildings such as libraries and hospitals. They are required to be renewed every year, using the past year’s energy data. A consultation ran in 2015 and, although the results haven’t been published yet, there’s a danger that DECs will be abolished and replaced with the minimum allowable under European legislation. This would be Energy Performance Certificates (providing a theoretical energy rating rather than actual energy use), renewed only every 10 years.

Buried in a July 2015 policy paper (Fixing the foundations: Creating a more prosperous nation) were a few words about scrapping the zero carbon homes policy. This wasn’t a surprise. When Part L of the Building Regulations was updated in 2013, the reduction in CO2 targets for new homes was a mere 6% – hardly a step-change on the glidepath to zero carbon. And, despite work done by the Zero Carbon Hub and other organisations, Government never actually explained what was actually meant by the term zero carbon.

But it’s not all bad. Some measures introduced in the past few years are still in place. To mention just a few of these: Enhanced Capital Allowances are basically a tax break that can make it more cost-effective for some organisations to purchase certain energy efficient equipment. The CRC Energy Efficiency Scheme is an emissions cap-and-trade scheme for larger energy users, mirroring the European Emission Trading Scheme which applies to the largest factories and power stations. The Renewables Obligation requires electricity suppliers to source increasing proportions of their power from renewable sources.

There’s also a new one on the horizon: Minimum Energy Efficiency Standards (MEES) formerly known as Minimum Energy Performance Standards (MEPS). Legislation introduced in March 2015 requires that, from 2018, private landlords won’t be able to rent out properties that have an EPC rating below E, unless energy efficiency improvements are made. Also, from 2016, tenants will be able to demand that their landlords make energy efficiency improvements.

World leaders are starting to take notice of climate change. In June 2015, G7 nations pledged to phase out
fossil fuels by the end of the century. Angela Merkel and Barack Obama have both taken climate-reducing steps. After decades of failed talks, the UN Climate Change Conference in Paris, later this year, presents a chance for a binding, universal agreement, with immediate targets. Let’s hope the UK will help to make this happen, and follow through with long-range carbon reduction measures. The world needs to tackle climate change, and everyone in the UK building industry has a part to play including building owners, designers, installers, energy assessors, and manufacturers of low-carbon technologies. In order to make this happen, they need some level of surety that policies and incentives will stay in place in the long term.

Justification for the cuts is to seemingly protect consumers and that renewables should be strong enough now to survive without subsidies. While DECC’s figures do suggest that money will be saved, such as the £40m-£100m from the cutting of solar subsidies, is this worth the sort of future we could be committing ourselves to? In the long-term do the cuts truly protect consumers?

Former secretary of state for energy and climate change, Ed Davey’s argument that ‘changes are based on ideology, not on evidence’ could ring true. If the Government continues to scrap schemes designed to meet the EU 2020 targets as well as the agreement to cut emissions by 80% by 2050 they run the risk of losing momentum and instead adding to Europe’s already inefficient building stock. The money saved will in all likelihood be spent to correct the problem as it worsens in the future leading to potentially consumers being in a worst situation than currently exists.


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