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National Home Energy Conference
All Change for Climate Change
Bournemouth, 10-11 May 2005
The Pace and the Climate:
Both Are Getting Hotter
John Chesshire
The broad policy context
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Sustainable development
Post-Kyoto Protocol commitments
Liberalisation and competition
Anticipated decline in UK self sufficiency
Supply security & import dependence
Economic competitiveness & resource
productivity
• Social inclusion & fuel poverty
• New industrial/export markets, skills & jobs
• But energy efficiency not a ‘silver bullet’,
difficult supply-side choices, too
Evolving policy imperatives
• Energy policy historically supply-side driven
• Then dominated by liberalisation & privatisation
measures
• PIU Report (2002) & Energy White Paper (2003),
response to Royal Commission
• Energy efficiency now much more central in
strategic policy terms but is still a relatively
‘immature’ policy field
• Energy Efficiency & FP Action Plans, 2004
• But demand side is more than energy efficiency
Some elements of UK
energy efficiency policy
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Direct Government policies: building regs
Product policy and standards, & procurement
Energy Efficiency Commitment
Fuel poverty (social) programmes
CHP target for 2010
Climate Change Levy, but reluctance to tax
EST & Carbon Trust
Energy Efficiency Partnership & MTP
Devolved functions in ee & FP
Some policy lacunae
• Demand reduction hindered by:
– lower real energy prices until very recently
– confusion of market v. policy messages
– focus? - lower prices v. lower quantities
– cut in VAT on domestic energy to 5%
– reluctance to internalise external costs
– low price elasticity of demand in any event
– fragmented energy efficiency supply chains &
no ‘one stop’ shop for energy efficiency
– some (possibly severe) skill shortages
Energy efficiency potential
• Potential shaped by several major drivers:
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Behaviour & life styles
New & retrofit investment:
- Purchased measures
- Installed & retrofitted measures
Capital stock renovation & rotation
New technology & its diffusion
Diminishing returns to ‘barriers’ analysis!
Some conclusions
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Need policy framework for at least 2015-2020
Objective: least-cost low carbon strategy
Need wide range of measures
Integration of several Govt. departments
Widen economic instruments debate: not just
sticks (taxes) but carrots (incentives)
• One priority is analysis of energy efficiency
supply chains, to anticipate & overcome
constraints