Energy UK calls for tax-funded energy efficiency scheme

A trade body has proposed general taxation is used to fund a national energy efficiency programme.

Energy UK wants the government to focus the project particularly on those stuck in fuel poverty and on ensuring vulnerable customers are protected.

The suggestion is among 14 steps Energy UK says the government could take in the upcoming Budget and its long-awaited energy white paper.

They include investing in large-scale, low-carbon heating trials – covering both green gas and electrification; as well as introducing incentives to the development of large-scale energy storage, in a bid to increase flexibility across the energy system. There are also calls for “urgent clarity” on the UK’s carbon pricing mechanism post-Brexit, with the suggestion that a UK Emission Trading System (ETS) is established to align with the existing EU ETS.

One of the steps was agreed to almost as soon as the list was published, with the government agreeing that the ban on selling petrol and diesel cars should come forward to 2035.

Responding to that announcement, Energy UK’s interim chief executive, Audrey Gallacher, said: “The UK power sector has been world-leading in reducing emissions and we stand ready to work together to help transform other sectors, like transport and heating, as well as our own.

“And we look forward to the forthcoming energy white paper and Budget where we hope to see measures that will allow the necessary innovation and investment to flow – and ensure that as a country we go further and faster towards net zero.”

Energy UK’s 14 steps in full are as follows:

• Build on the success of the Contracts for Difference scheme, by allowing the lowest cost, low carbon generation – onshore wind and solar power – to compete in future auctions.
• Agree on funding models such as the Regulated Asset Base model for large-scale infrastructure like new nuclear plants, and make a clear commitment to the funding and delivery of Carbon Capture Usage and Storage (CCUS) – both of which will have an important role to play in the transition to Net Zero.
• Recognise the vital role a wide mix of generation technologies will play in maintaining a stable electricity grid in the transition to Net Zero, providing a route to market and supporting innovation to enable continued investment in these assets.
• Remove the barriers to greater flexibility across the energy system, including incentives for the development of large-scale energy storage.
• Provide urgent clarity on the UK’s carbon pricing mechanism post-2020, to enable transparency and long-term carbon price stability which delivers decarbonisation at the lowest cost to consumers. This will be best delivered by setting up a UK Emission Trading System (ETS) linked to the EU ETS from 1 Jan 2021.
• Support the completion of the smart meter rollout – a critical national infrastructure upgrade and essential for a digitised energy system.
• Invest in large-scale low carbon heating trials to find the best regional and local options for decarbonising heat, which means looking at both low carbon gas and electrification solutions.
• Bring forward the 2040 phase-out date for internal combustion vehicles to 2035 at the latest and commit to a consumer-centric and market-based approach to smart charging.
• Fund through general taxation a National Energy Efficiency Programme, with particular focus on those who remain in fuel poverty and ensuring vulnerable customers are protected.
• Restrict the sale and new tenancy of properties rated below EPC band C from 2030, while simultaneously creating a package of incentives and products (e.g. stamp duty and green mortgages) to encourage and assist compliance.
• Tighten building regulations to ensure all new properties are fit for the future; that is have a smart meter and access to EV charging infrastructure, and from 2025 be ready for a low carbon heating system or a connection to a heat network.
• Deliver the recommendations of the Energy Data Taskforce, opening up system data to continued innovation for the benefit of consumers and the UK economy.
• Recognise the need for a framework that supports cooperation between the UK and the EU on energy and climate, in line with the Political Declaration on the future relationship, to ensure the sector can deliver net-zero at lowest cost to consumers.
• Work in partnership with industry, government, unions and other industry stakeholders to deliver a just transition – that ensures vulnerable customers are protected and benefit first – and to increase diversity and inclusion within the sector.