There were numerous blows delivered during the Autumn Statement and Spending Review earlier this week, but the energy efficiency sector suffered significantly. Planning and Building Control Today examines what the cuts mean for the sector…
Is it just me or does it seem as if the government has overlooked energy efficiency lately? With barely a mention in the government’s Autumn Statement and Comprehensive Spending Review it certainly does feel as if the sector has been tossed aside.
Since the Conservatives took over as a majority government, losing their Liberal Democrat colleagues, there have been some significant blows for the sector. The end of subsidies for solar and wind energy, as well as the scrapping of the government’s flagship efficiency programme Green Deal over the summer was shocking and concerning. It was already starting to look as if the Conservative administration had forgotten their pledge to be the greenest government on record before the Autumn Statement took place, but now it seems as if they are simply paying lip-service to the industry.
The Spending Review was watched by a sector that has suffered recently to see what assurances would be given of the government’s commitment to energy efficiency, but it left many feeling even more disillusioned. So, what came out of it?
The Department of Energy and Climate Change took a significant hit during the budget, losing 22 per cent of its day-to-day funding. It is expected the department will save around £220m by 2019-20 by cutting back office and corporate services, as well as reducing the cost of contracts for decommissioning power plants.
With talks in Paris on tackling global climate change set to take place next week the energy budget was somewhat disappointing. In particular the decisions taken regarding energy efficiency programmes for the home were a major source of frustration.
The EU on the whole has been working to reduce the emissions of buildings, which are reportedly responsible for 40 per cent of energy consumption and produce 36 per cent of all CO2 emissions. Improving building efficiency can reduce the carbon footprint of each nation and go some way to meeting international climate change targets.
Energy efficiency schemes have suffered considerably due to austerity, leading the sector to question whether the government is in fact committed to lowing its carbon footprint.
Public sector buildings
There has been significant criticism in the past about the inefficiency of buildings, in particular public sector buildings. Improving the efficiency of both public sector and domestic properties is vital to reduce carbon output.
Earlier this month, the Scottish administration came under fire for failing to use renewable heat energy sources in public buildings. Councils were told their efforts were “underwhelming” by a leading industry body. Scottish Renewables made the assertion after gaining figures that revealed only 322 out of 24,806 public buildings used renewable heat sources.
One positive element to come out of the budget was the revelation the government will provide £295m over the next five years to improve the energy efficiency of public sector buildings such as schools and hospitals.
Renewable Heat Incentive
The Chancellor George Osborne revealed the budget for the Renewable Heat Incentive (RHI) would increase to £1.15bn per year by 2020-21. While on the surface this sounds wonderful and those with an interest in the sector were rubbing their hands with glee all is not as it seems.
Forecasts from the Office for Budget Responsibility (OBR) had put this figure at £690m more than the one given by the government.
Additionally, a new spending cap will be implemented on the scheme’s annual budget. Once the total is reached Energy Secretary Amber Rudd can close the scheme to new applicants.
While it is obviously good news the scheme has not been axed, which had been a real fear for the industry, the reduction in funding is troubling and will make it more difficult for the country to meet renewable energy targets for 2020.
However, the government said the programme will continue to ensure the nation makes progress towards its climate goals while delivering value for money by saving almost £700m by 2020-21.
Energy Companies Obligation
The Energy Companies Obligation (ECO) is set to end in March 2017. The scheme, which requires energy providers to roll out efficiency measures in households, will be replaced by a new programme in April 2017. Osborne said the scheme would improve the efficiency of up to 200,000 homes per year. This would shave around £300 off energy bills.
While this scheme has yet to be named, the Chancellor said it would run for five years and would receive an annual budget of £640m. It will also be cheaper to run than ECO and will reportedly save households around £30 per year from 2017.
However, as with the RHI, this deal is not as good as what was previously promised. The £640m a year budget is lower than the £800m currently spent on upgrades via ECO.
Industry Reaction
The UK Green Building Council has campaigned tirelessly to ensure the government recognises energy efficiency as a national infrastructure priority. The organisation expressed disappointment at the Chancellor’s decision to cut existing funding and for failing to recognise the sector as a national infrastructure priority.
Chief executive Julie Hirigoyen said: “The Chancellor was keen to emphasise the Government’s green credentials ahead of Paris, but they are going backwards on one of the most cost-effective opportunities – improving the energy efficiency of our existing housing stock.
“The cuts to ECO and RHI will see more jobs lost in the industry and vulnerable households will continue to be trapped by unaffordable energy bills.
“Upgrading the UK’s draughty homes is a key infrastructure challenge which can reduce pressures on our energy system, bring down consumer bills and ease the burden of cold homes on NHS budgets.
“The chancellor repeatedly talks about productivity, but here he is just discouraging investment and destroying a market.”
Greenpeace’s policy director Doug Parr said: “One of the ways George Osborne said he intends to cut fuel bills is by slashing the Energy Efficiency Fund. This is nonsensical as this fund actually helps people to cut their bills and keep warm by draft proofing and insulating their homes.”
However, Energy Secretary Amber Rudd was keen to highlight the positives of the budget, stating: “My priority is to deliver secure, affordable, clean energy supplies that hardworking families and businesses across the country can rely on, now and in the future.
“As we transition to a low-carbon economy as cost effectively as possible, finding new sources of energy that are cheap, reliable and clean is essential, which is why we are boosting our spending on innovation and backing the industries of the future.
“We will continue taking action to keep consumer bills down. We will also double our spending on renewable heat and electricity over the next five years as we invest in new infrastructure fit for the 21st century to ensure our long-term energy security.”
The impact of the Spending Review on the sector will undoubtedly come to the forefront in the coming months as the fallout is felt. However, the measures put forward by the government have left little to celebrate about.