The head of the Climate Change Committee (CCC) says government policy must focus on efficiency and ensure electricity is cheaper than gas in a bid to “transform the economics of low-carbon heat”.
In a series of Twitter posts, CCC chief executive Chris Stark summarised the group’s reaction to the government’s Autumn Statement and outlined its analysis of what current spending targets mean for progress on key areas such as low-carbon heat and energy efficiency.
Mr Stark said the measures announced by Chancellor Jeremy Hunt last month had placed “a welcome focus” on energy efficiency to lower energy bills and reduce emissions.
Alongside windfall taxes on oil and gas producers and electricity generators, the budget included commitments to reduce energy demand via the formation of a dedicated taskforce and provide additional efficiency funding beyond 2025.
“The previous incarnation of government found it strangely hard to discuss energy waste, while mainland Europe made it a big focus during this crisis. Mistake: corrected,” Mr Stark said.
Looking longer-term, he added: “THE MOST IMPORTANT THING is to make electricity cheaper than gas for consumers.
“It should be a key objective for Treasury’s tax policies and BEIS energy market reforms. It will transform the economics of low-carbon heat.”
CCC analysis suggests this ‘rebalancing’ of policy coupled with greater energy efficiency could see the costs of heating a home using a heat pump fall from just under £700 per year, to around £450.
This contrasts with around £500 per year for a gas boiler – or higher if the costs of carbon emissions are included.
Near-term efforts need to be bolstered by long-term policy.
THE MOST IMPORTANT THING is to make electricity cheaper than gas for consumers. It should be a key objective for Treasury's tax policies and BEIS energy market reforms.
It will transform the economics of low-carbon heat. pic.twitter.com/whSBRmQlex— Chris Stark (@ChiefExecCCC) December 6, 2022
Mr Stark also welcomed the £6bn budget commitment over 2025-28, which he said should help to provide confidence to businesses, workers and training providers that there will be future markets for energy efficiency and low-carbon heat.
However, the CCC found that while the efficiency funding is in now place for the remainder of the current Parliament compares well with forecasts made in 2020, it “does not account” for the thousands of extra households who will find themselves in fuel poverty due to soaring energy costs.
Looking beyond 2025, it also finds that public funding so far appears “insufficient” to meet its Balanced Pathway for net zero by 2050.
Let’s compare our numbers with what’s been announced.
Pink bar is total investment (efficiency and heat) in our 2020 pathway.
Dotted line is the public spend we thought necessary for fuel-poor homes, social housing and public buildings.
Yellow bar is the funding now in place. pic.twitter.com/KOc7hiQEGd— Chris Stark (@ChiefExecCCC) December 6, 2022
“More public funding will likely be needed, and policies to mobilise private investment too. There are still no UK-wide policies to drive energy efficiency in the majority of homes. And we are still awaiting details on the UK government’s promised ‘heat pump market mechanism,’” Mr Stark continued.
Demand destruction
Looking at demand trends, Mr Stark said the Committee expected higher prices to have a sharp impact on energy usage.
“High energy prices destroy demand – misery for those who are already struggling. So we would expect energy demand to fall more quickly in the current context. That could/should have led to even higher ambition to shrink energy demands than we thought likely in 2020,” he said.
However, he said the group “strongly welcome” the government’s £18m public information campaign on lowering energy usage.
“It’s not nannying to provide info – we’ve found lots of areas where people want to know what to do. Government should consider expanding this to businesses (they’re consumers too),” he added.
There is “a lot going on” on efficiency, he concluded, adding that “notably different policy approaches” were now emerging in devolved administrations for Scotland, Northern Ireland and Wales – something the CCC will keep monitoring.
Mr Stark’s comments came as the Department for Education announced a £500m fund for schools to help support energy efficiency upgrades, manage bills and lower energy consumption.
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