Transcript EEC3
EEC3 – The Way Forward Presentation to NIA Annual Conference 12 December 2006 By Iris Rooney, Defra Summary • • • • • • Context Energy Review Role of EEC EEC3 Initial Consultation Supplier Obligation Role of Insulation Industry Context (1) • Demand for household energy services rising on average 1.5% (0.6MtC) per annum • Currently offset by improvements in energy efficiency of about 1% per annum • Energy use in household sector needs to fall by approx 1.8% to be on track for 2050 goal. • Requires action on multiple fronts - new and existing buildings, technology and behaviour Context (2): Household Carbon Emissions By fuel By end use Households were responsible for 27% of UK carbon emissions in 2004 Energy Review (1) • Addressed the 2 major long term challenges in UK energy policy: - climate change & reducing carbon emissions - secure, clean energy at affordable prices • Commitment to competitive energy market • Aim is to set right regulatory framework to enable the market to move in the right direction to meet long-term challenges Energy Review (2) – Energy Efficiency & the Household Sector • New homes - long-term goal of carbon neutral developments • Product Policy - transform markets • Improved information - better billing & In-House displays + smart metering trials • Distributed Generation - consented developments • Existing Homes - EEC3 and supplier obligation post-2011 Role of EEC (1) • EEC1 delivered 0.4MtC pa in 2010 • £600m investment in energy efficiency • For every £1 spent by suppliers, householders benefited by £9 • 50% of EEC1 and EEC2 activity targeted at Priority Group Role of EEC (2) • EEC2 already making significant contribution to increased carbon abatement targets – expected to deliver 0.62 in 2010 • At the half way point, suppliers have achieved 76% of the target • Insulation activity accounted for 88% of these savings Role of EEC (3) • Targets will be increased by 50-100% over EEC2, delivering 0.9MtC to 1.2MtC • Unlimited carry-over of activity from EEC2 to EEC3 • Use experience gained from EEC3 and money announced in Budget 2006 for smart meters trials to inform developments of post-2011 approach EEC3 Initial Consultation (1) • Successful passage of the Climate Change and Sustainable Energy Act presented new opportunities • Consider smooth transition to the 2008-11period • Inform Statutory Consultation in spring 2007 EEC3 Initial Consultation (2) – Key Themes A. Climate Change and Sustainable Energy Act B. Transition to 2008-11 C. Equity Issues D. Opportunities for trading A. Climate Change & Sustainable Energy Act • Move to carbon emission reductions target instead of the current energy efficiency target • More options for delivery of carbon savings & reduced consumption of energy from grid: - Eligibility of microgeneration measures - Eligibility of other measures affecting consumer demand Climate Change and Sustainable Energy Act (2) • Explore scope for greater innovation • Possible approach of “ring-fencing” a limited proportion of each supplier’s target that could be met by unproven measures or trials B. Transition to 2008-11 • EEC3 will be 50-100% bigger than EEC2, with unlimited carry-over • Energy suppliers encouraged to make full use of transitional arrangements to start on EEC3 work early • Possibility of setting the scores early for individual measures under EEC3 C. Equity issues • Need to consider: - impact on low-income customers - cost-effectiveness in terms of carbon and fuel poverty objectives - what is technically feasible • Implications of directing different levels of activity to the priority group Equity issues (2) • Potential for new mechanism to offer suppliers flexibility in meeting their priority group target • Need to consider any approach in the light of the need to reduce carbon emissions and the impact of priority group consumers D. Opportunities for Trading • Findings on work on trading reported – views invited • Trading of retrospective measures has been suggested, but this is constrained under EEC • Possibilities post-2011 include tradable targets defined in terms of absolute carbon or energy demand EEC3 - Next Steps • EEC3: - Summary of consultation responses in January 2006 - Continuing discussions with stakeholders - Statutory consultation in Spring 2007 Supplier obligation (1) • Early announcement in the Energy Review to give market long term certainty • SO will need to incentivise all measures if we are to achieve 60% savings by 2050 – including costeffective measures like insulation • Formidable work programme ahead to determine the shape. Defra in the lead Supplier Obligation (2) • Process will include: • Liaison throughout with key stakeholders, including the insulation industry • Short update in Energy White Paper • Call for evidence around May 2007 • Formal consultation end 2007 • Website coming soon … Insulation Industry (1) • Government needs your support to deliver its challenging carbon and fuel poverty objectives • Insulation remains a cost-effective way of achieving large-scale carbon reductions Insulation Industry (2) • You have made a major contribution to the success of EEC to date and effectively met the challenge of increasing demand • We expect insulation to play a major role in EEC3 • Look forward to the industry’s continuing constructive input to the development of EEC3 Contact Details • EEC3 Consultation can be found at <http://defraweb/corporate/consult/eec3/index.htm> • EEC3 - Iris Rooney at [email protected]