Download 7. Clean Energy Report Appendix

London Assembly 29 January 03 Item 7 Appendix
Subject: Clean Energy
Report Number: 8
Date:
14 January 2003
Report to:
Environment Committee
Report of:
Head of Assembly Support
1
Clean Energy Motion
1.1
At the meeting of the Assembly held on 11 November, the following motion was referred
to this Committee for consideration and report:
“That this Assembly supports the domestic energy efficiency target set under the
Home Energy Conservation Act 1995 of a 30% improvement by 2011 based on 1996
levels; notes that a virtually identical target has been suggested in recent reports by
the Performance and Innovation Unit and the Energy Saving Trust; stresses the
importance of this target for reasons of reducing the emissions of greenhouse gases;
ending fuel poverty and ensuring the business certainty needed to stimulate long-term
investment by companies producing energy saving goods. The Assembly therefore
welcomes the consultation recently announced by the Treasury into ways in which
fiscal measures and policies can be used to stimulate domestic energy efficiency and so
resolves to
1. Support the Clean Dozen list of policies supported and being promoted by a
number of organisations including the Association for the Conservation of Energy,
Friends of the Earth, Greenpeace, Help the Aged, the RSPB and the British
Energy Efficiency Federation as well as Energy Efficiency Advice Centres and
urges the Treasury to support and implement those measures expeditiously.
2. Write to the Chancellor of the Exchequer informing him of the Assembly’s support
for the Clean Dozen
3. Write to local MPs asking them to support the Clean Dozen and to write to the
Chancellor of the Exchequer informing him of that support
4. Let the HECA Partnership of NGOs know of this decision.”
Proposed: Darren Johnson
Seconded: Jenny Jones
2
Background Information
2.1
To assist the Committee determine its report to the Assembly, the following background
information is attached at the Appendix to this report:
City Hall, The Queen’s Walk, London SE1 2AA
Enquiries: 020 7983 4425 minicom: 020 7983 4458 www.london.gov.uk
The Mayor’s response to the Treasury’s consultation on “Economic instruments to
improve household energy efficiency”
A paper originally supplied to the Assembly by Darren Johnson in support of his Motion.
2.2
Joanna Dawes, the GLA’s Energy Strategy Lead, will attend the meeting to answer
Members’ questions.
3
Strategy implications
3.1
Measures to promote home energy conservation are included in the Mayor’s draft Energy
Strategy.
4
Legal implications
4.1
There are no relevant legal implications.
5
Financial implications
5.1
There are no relevant financial implications
6
Recommendation
6.1
That the Committee considers the Motion and reports its views back to the Assembly.
Background Documents
None
Contact Officer
Andrew Smith
tel. 020 7983 4425
[email protected]
Page 2 of 4
Mayor’s Response to Treasury Consultation Paper Economic instruments to improve
household energy efficiency
Household Energy Efficiency
This response to the Consultation Document Economic instruments to improve household energy
efficiency is submitted on behalf of the Mayor of London. The comments are based on Mayor’s
draft Energy Strategy.
Energy efficient products
A reduced rate of VAT applies to the installation of insulation materials, draught stripping, hot
water and central heating system controls by contractors. The 5% reduced rate also applies to
the grant-funded installation of central heating systems, heating appliances, factory-insulated hot
water tanks, micro CHP and renewable energy heating systems. It does not, however, apply to
DIY installations. The 5% reduced rate of VAT should apply to modes of installation and the full
range of energy efficient and energy saving installations. The Government should also press for
a reduction of VAT on such installations to 0%. The current EU VAT directives fail to support
the objectives of EU energy policy.
Efficiency of housing stock
The Mayor’s view is that economic instruments could and should be used to encourage
householders to carry out work that leads to improvements in the energy efficiency of their
dwelling. Appropriate instruments in this case would be to allow qualifying spending to be offset
against personal tax liability. This would convey a very clear message to the ‘fuel rich’ that
improving the energy efficiency of their homes is in the public interest as well as in their own
interest.
However, many people in London are non-tax payers or only pay the very lowest rate of tax
because of their low income. For these people, the grant support of 50% which is available for
photovoltaic installations should be extended to other innovative products such as micro-CHP
and heat pumps.
It is quite true that such work is often carried out around the time of moving home. However, an
instrument targeted at home movers could give the impression that this was the only time that
they needed to think about energy efficiency was when they moved home. An ability to offset
expenditure against personal tax liability would provide a reminder every year.
The Consultation Document refers to schemes in other countries that use some form of energy
audit to assess the scope for making energy efficiency improvements in a given dwelling, and also
to a draft EU Directive which would require the regular energy auditing of buildings which has
recently been adopted by the Council of Ministers. It comments that the administrative costs for
the householder would need to be taken into account. One way of doing this would be to refund
the stamp duty paid on house purchases if the required improvements were carried out within six
months.
A barrier acknowledged in the Consultation Document is the lack of incentive in the private
rented sector for landlords or tenants to invest in energy efficiency. The Mayor’s view is that an
economic instrument that would allow landlords to offset the cost of
energy efficiency improvements against their tax liability would help to overcome this barrier.
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Training
There is a generally acknowledged shortage of skilled installers of energy efficient equipment.
The suggestion in the Consultation Document that a tax incentive might be provided for the
training of contractors to carry out work such as cavity wall insulation is strongly supported.
Page 4 of 4