Official Report 285KB pdf
Agenda item 2 is evidence taking in our energy inquiry, which relates to the European Commission's green paper on a European strategy for sustainable, competitive and secure energy. Members will recall that we agreed to respond to the energy efficiency section of the green paper, with a specific focus on heating, finance, public procurement and energy efficiency trading. We agreed to conduct a short inquiry to inform our response and invited written evidence between mid-May and mid-July. The clerk has provided a summary of the responses, which is included in members' papers. We first took evidence as part of the inquiry on 23 May. This afternoon, we will hear further evidence from two panels.
I will kick off. At an earlier evidence session, we heard about smart metering, which allows the electricity or gas use of individual items to be measured, for business and domestic purposes. Do any of you have knowledge of how much use is made of the system in businesses throughout Europe? Do you know of any smart metering projects in Scotland and is there scope for rolling out the technology further here?
There is a fair bit of evidence from Europe, Canada and the United States on the benefits of smart metering, and research undertaken by the Department for Environment, Food and Rural Affairs on those studies suggests that savings on energy consumption of in the order of 5 to 15 per cent can be achieved through its installation. What is important, though, is the context in which those savings can be achieved. Without also taking into account the prevailing message to raise awareness of the importance of energy efficiency, the impact of fuel prices and any supply-demand issues in the countries in which those trials took place, all one is doing is giving more information to customers. If smart metering is put in, it is important that there is a huge awareness campaign behind it.
Has that involved capital investment on your part? Have you had assistance from Government to offset some of the cost?
The trial has been funded by Government to the tune of the best part of £10 million.
As well as smart metering, a number of other new technologies have come along recently that enable people to measure their energy usage in real time. Electrasave, for example, is a little device for the home that enables you to see how much your energy usage goes up when you use appliances and down when you switch them off. I would use the analogy of pedometers. When you measure what you are doing when you are doing it, it changes your behaviour. When you realise that you should be walking a certain number of steps a day, you tend to walk a bit more. We probably need to think collectively about ways of getting that new technology through to households, perhaps not to the usual suspects who tend to invest in such things, but to everyone. We need to disseminate new technologies such as Electrasave much more widely.
Both of you are saying that customer awareness and education programmes are an essential part of any new technology development.
We see the biggest challenge as being behavioural change, particularly in the residential market. A smart meter or a device that gives people real-time information will help with that behavioural change, but it must be part of a much bigger awareness campaign.
Smart metering is a good idea, but we must consider the economics and the cost of installing it. For example, it is relatively cheap—about £3 a customer—to have a meter reader go out to each individual house, but installing a smart meter is fairly expensive. It is a good idea to link in smart metering with other energy services so that, instead of just getting meter consumptions or gas consumptions, people get something else from it. For example, services for the elderly could be linked in, such as movement detectors and temperature sensors. We should consider that too.
You say that it costs £3 for a man to go round and that smart metering is much more expensive. How much are we talking about?
It is difficult to work it out, but if you are going to provide a service, you will have to put some form of hardware—a meter or whatever—into people's houses and then you will have to have sensors. We could be talking about running costs of up to £100 a year, depending on technology and how things move on. That is my gut feeling on the matter.
There is not just the one-off cost of installation; you are saying that there are costs of that order per year.
There could be if an energy service is also provided.
It is fair to say that there are several options under the smart metering banner, from the one that Kevin Pringle talked about, which is relatively cheap—it can be a clip-on version, which gives people real-time information with a digital display—right through to a two-way communication meter.
What is the potential for ensuring that that kind of system—whatever it may be—is installed in all new housing? How can existing housing get the benefits?
I guess that with a whole lot of new technologies, not just smart metering, you would start with new housing. David Shearer talked about energy services. Condensing boilers are coming into new builds. If we can put together high levels of energy efficiency in the house and the building fabric, we will have what looks like a healthy package. The research in Europe suggests that for such a package to be effective, it would have to be rolled out on a big scale, right across the base.
What about the commercial and industrial sectors?
Some of the large industrial customers have half-hour metering already, so they have accurate data, which we and the Carbon Trust use to shift loads and balances at peak times of the day. That information is already there for much of the business world.
My question follows on from the convener's question about what can be done about new build and retrofitting. I assume that David Shearer is the appropriate witness to ask, given that he is from the Building Research Establishment Scotland. What is the state of the nation? Where are we on standards to promote energy efficiency? I ask all panel members to say whether they believe that we as legislators are driving the standards sufficiently. Does industry tend to be content with what the Government expects it to do, or does it run ahead of that?
We do a lot of work on energy ratings for buildings, so that is a good question for me to cover, given that I know quite a lot about the subject. A standard assessment procedure rating has to be given to new-build domestic dwellings. The rating, which ranges from zero to 100, gives us an idea of how energy efficient a house is. On the domestic front, the picture for new build is good, but for existing stock, there is no requirement for a rating for a domestic property, although legislation might be in place to address that.
It could be argued that it is not in the interests of the utilities companies for people to use less energy, although I would not be so cynical as to suggest that, because I am aware of the work that has been done to promote energy efficiency. How do you try to disseminate best practice? Would you do more if you were being driven to do so?
It can work both ways. It is in everybody's interests to promote energy efficiency. If low-income households are using an unsustainable amount of energy that they cannot afford that does not suit the commercial interest, because we do not want to have to chase debt. It is in everyone's interests to have customers using energy at a rate that is affordable to them. We all have a wider environmental interest in energy efficiency. There is also the energy efficiency commitment, which is a legislative obligation from Westminster.
We will see how the time goes and if someone wants to pick up on Kevin Pringle's point, they can do so.
Scotland has a particular problem in that regard, which I would like to talk about.
If there is a problem in Scotland, I hope that Kevin Pringle and the other witnesses will be able to elucidate in answer to my question. The UK energy efficiency commitment has been mentioned. Is that energy efficiency commitment properly focused as far as Scotland is concerned, or could things be done better to allow for better results, given our slightly colder climate?
The energy efficiency commitment is working reasonably well in Scotland. Much of the commitment—70 to 80 per cent—is focused on insulation, which makes the market in Scotland almost crowded, because as well as the energy suppliers seeking to meet their obligations through the energy efficiency commitment there are also Scotland-specific programmes, such as the warm deal, which try to do a similar thing. That said, such evidence as there is indicates that we spend more per head on energy. Although that is largely because we have a colder climate, it also appears that we have poorer insulation standards in Scotland, so an awful lot more needs to be done.
I have a comment on the size of the energy efficiency commitment, the second phase of which runs from 2005 to 2008. To give some idea of its scale, in the UK we are looking at insulating 1.7 million cavity walls and 1.6 million lofts and installing 42 million low-energy light bulbs, 2 million energy-efficient appliances and 1.2 million condensing boilers during the three-year period. Discussions are currently taking place with DEFRA on EEC3, post 2008, and the view is that that third phase of the energy efficiency commitment will be between one and a half and two times the size of the current one. Suppliers have put substantial effort into supplier-led initiatives with the Office of Gas and Electricity Markets, and they are large-scale projects.
I ask Sheila Scott how we can measure the long-term sustainability of the kinds of commercial initiatives that Kevin Pringle and Jim Paterson have described.
The building regulations are a big issue for us. Of course, the regulations apply to new-build properties, but there should also be a robust procedure after a building is constructed. Some buildings are constructed to a good standard, but there is no follow-up on quality. There should be monitoring.
We talked about differences between Scotland and England. There is much more wind up here and it would be nice if micro wind generation were adopted in more housing in future.
The Government seems to say that it is the consumer's responsibility to sort out a variety of issues. David Shearer has mentioned micro wind generation, but I am also talking about simple stuff, such as the red dots on our televisions and standby buttons on other appliances, movement detectors and simple switches by the living room door that we can use to switch everything off when we go up to bed at night. What should consumers be responsible for and what should Government at United Kingdom and Scotland levels be responsible for? We are talking about the European Commission's green paper, so what could be done at European level? Instead of relying on consumers to usher in changes, what scope is there for legislation that would require manufacturers and housebuilders to do so? Consumers might take some time to catch up and reach the position that we need to reach if we are to sort out the climate change issues that we face.
In the context of manufacturing, Europe has a big part to play. There is no need for a standby button, for example. We can switch televisions on and off without using the standby facility, which wastes about 40 per cent of the energy of the unit. High-definition plasma television screens use between four and five times the amount of energy that a normal television uses. Much direction on manufacturing could come from Europe. If we consider the meetings that take place and the directives that come out of Europe, it is clear that Europe has an important part to play.
It helps a great deal to quantify energy savings. A person can save up to £50 per year simply by switching off the standby button. That means that £100 million could be shaved off Scotland's energy bills each year, which would be a significant saving from something as simple as switching off a button, which requires hardly any thought. Indeed, as Jim Paterson said, legislation could ensure that appliances did not have standby buttons in the first place.
Does Bruce Crawford want to ask a second question?
I want to ask about other stuff but I will let other folk in first.
David Shearer said that Scotland's older housing stock is not up to spec on insulation. However, during the past 25 years, Governments of various complexions have provided schemes for assistance with loft and cavity wall insulation and double glazing. Has all that money simply gone down the drain?
It has definitely not—it is good to insulate and to draughtproof properties. Double glazing is good, too. The installation of condensing boilers in houses should perhaps be considered next. Insulation can be harder to provide in some properties, such as sandstone tenements. A wall that is constructed with cavities can be insulated by drilling holes and pumping in the insulation material, but in sandstone properties we have to install insulation panels, which are more expensive. However, insulation is a good thing. If we can get to a stage at which a property requires little heating, it is good for everyone: it is good for the occupants and it is good for power distribution because it means that we do not have to build more power stations.
There was massive investment in refurbishment of tenements in Glasgow over the period that I mentioned. Are you suggesting that the advantages of that refurbishment were not taken account of?
Filling cavities with insulation by blowing mineral fibre into them is a good thing because it improves walls' thermal performance and makes the house a lot cosier. Quite a lot of research has been carried out on the effects on dampness of introducing insulation into cavities.
What were the results of the tests?
In the 1970s, many properties were filled with foam insulation, which caused a lot of problems because it was put in with no quality checks. However, the industry has been cleaned up. Nowadays, if somebody gets an approved installer to install cavity fill insulation, they will give a 30-year guarantee and an organisation called the Home Energy Conservation Association provides a certificate. That is a good thing. A lot of research has been carried out on dampness problems. In some cases, cavity wall insulation can improve dampness in housing. If a house is not properly heated in the first place, less energy is needed if cavity fill insulation is put in.
Microgeneration in new build has been mentioned, but many people are considering attaching microgeneration systems to older properties. What problems have they come across with planning applications and local authority concerns?
It is still early days for microgeneration. Not an awful lot of properties have it, and there are planning issues, depending on where one lives. There are no two ways about that, but there are fewer planning issues with some of the renewables systems that householders can install—such as solar thermal systems—because they blend in with the cladding. Time will tell, but at this stage we are not putting in lots of microgeneration systems. We must examine the planning side and make it easier for such technology to be installed.
Colleagues have been talking about insulation and microgeneration, which is all good stuff that will, I hope, make some progress.
There are two points there. One answers Phil Gallie's question about whether we have wasted the past 25 years. If we plot energy consumption against the growth in gross domestic product over that period, we see that the energy efficiency commitment programme has been hugely successful in reducing consumption.
Has it reduced consumption or the increase in consumption?
It has reduced the increase in consumption—
Ah. There is a difference.
The programme has held down consumption versus GDP. Customers are becoming more aware. All suppliers in the UK offer free energy efficiency advice lines, uptake of which has come on over the past 12 months. There is much more activity, with customers phoning up and asking for advice. Like Scottish Gas, we are promoting that service on bills, on the internet and so on. There is much more awareness among our customer base.
I wish to quantify that. I mentioned energy savers reports earlier. I do not have the breakdown for Scotland, but I think that 9 million households in Britain were written to. At the moment, the returns are running at about 800,000—that is the number of people who have filled out the reports. If we all consider surveys in which we have been involved, that represents a very high rate of return—and it relates to just one company. Nearly a million households have signed up under the initiative, which shows that there is a huge demand and that people really want to find out what they can do and are determined to do it.
What I am driving at is that conditions have never been better for encouraging people to moderate their use of energy. We should take advantage of that, for environmental reasons and everything else. Notwithstanding the commercial pressure to moderate demand and the incentives for insulation and all the rest of it, am I right in saying that demand for electricity and gas is still increasing?
It is. I believe that the Executive's own energy survey showed that energy consumption has increased, certainly compared with 1990. I suppose that you could say that we are into a slightly different era now, compared with the 1990s, just because the price situation has changed so dramatically over the past couple of years. Prices have gone up in the recent past, but there were significantly fewer schemes or initiatives around in the 1990s and in the first few years of this century, so I would go back in any case to the idea that now is the time—[Interruption.]
I am afraid that I will have to suspend the meeting. I understand that the instructions are to stay where we are during a fire alert.
Meeting suspended.
On resuming—
I reconvene the meeting. I am reliably informed by our official reporters that the last thing that Mr Pringle said was, "now is the time". It was obviously a profound thought, so if you can remember what it is the time for, please carry on.
If you look across the energy companies, you will find that there are more energy efficiency initiatives than there have been in the past. It is hoped that that will help to guide changes now and into the future.
Well done.
It is difficult when one is interrupted like that. Well done. You might expect me to say this as the MSP who represents Cockenzie, Torness and lots of windmills, but there is a perception that all this energy efficiency is going to lead to a reduction in the demand for energy. As long as we have a growing population and a growing economy, is not it more likely that the demand for electricity will continue to increase?
Our expectation is exactly that. With new digital technology coming in, the demand per household will increase substantially. Digital televisions and other digital devices take more energy, so we expect demand going forward to grow.
As a small addendum to that question, if that projection is correct—obviously Scottish Power takes it as fact—how do we stop or change the situation? What steps should we take with regard to the fiscal or legislative regime in order to make a difference in that respect?
As I pointed out, the steps that have been taken by appliance manufacturers in respect of white goods such as fridges, washing machines and freezers have worked. However, there is no such labelling for brown goods, which would be a key move.
I want to be sure about what you are saying. Are you saying that, given the current conditions and under current projections, consumption is likely to increase but that certain mitigation measures can be taken?
Yes.
Thank you. I just wanted to get that on the record.
Does that tie in with the theory that although energy efficiency is all very well, it does not actually help to conserve energy, but instead simply makes people's homes warmer and improves industry outputs?
No. As Kevin Pringle said, 80 per cent of the energy efficiency commitment is focused on insulation, which is not dependent on behavioural changes in the household. Cavity wall insulation has been very successful—indeed, it can last and provide benefits for, say, 25 years. However, because the majority of UK houses are heated by gas, the focus has been on controlling the gas dimension.
So the challenge is just as much about energy conservation as it is about energy efficiency.
Yes.
Given your comments on increasing demand, it is clear that a fundamental element in the European energy green paper is the security of energy supplies. There are questions in that respect about gas and oil. I realise that there has been a move towards renewables, but if we are losing out with other natural resources, how will we ensure that we have sufficient resources to meet increasing demand?
The point is that we need investment in infrastructure and supply, no matter whether we are talking about pipelines—
What do you mean by "infrastructure"?
I mean, for example, the use of interconnectors to get gas from Belgium, the securing of liquefied natural gas contracts to bring gas from overseas and so on. The global resource is huge. However, the problem is that the UK has tipped over into becoming a net gas importer. In the past, when we were entirely self-sufficient, the lack of such an infrastructure and such contracts did not really matter. It is beginning to matter now. Some of the bottlenecks and obstacles that we have encountered in securing supplies have been a significant element in price increases over the past 18 months to two years. However, we hope to be in a position to overcome some of those transitional problems this winter and beyond.
There can certainly be investment, but after what happened in Ukraine and other places this year, it is clear that political differences, for example, can pose risks to the security of the sources of supply.
It would be wrong to give you a detailed answer to that question. I can say that, in the UK, Scottish Power and other companies have invested a lot in that. However, as far as the supply and demand profile is concerned, it all depends on the period that you are looking at. I am not in a position just now to give you any exact figures, but I am more than happy to come back to you on that matter.
I would love a reply from Scottish Power on that point in the not-too-distant future.
You have really laid yourself on the line, there. You have to give a full and detailed response to Mr Gallie.
Thanks very much.
You may recall that, two years ago, in my former position, I launched a public sector energy efficiency scheme that distributed £20 million among local authorities, health boards and Scottish Water. The aim was for them to invest that money and then to reinvest any savings that were made in further energy efficiency measures. Any surplus could be put into front-line services. Have any of you noticed any activity on the part of local authorities, health boards and Scottish Water to use the generous funding that they were given?
That has definitely been the case in local authorities that are responsible for social housing. We partner many of those local authorities. Energy Saving Trust research that was carried out not that long ago for local authorities' building stock suggests that local authorities are still looking for help in identifying routes of funding and how best they can prepare business cases for that funding and whatnot. The EST research suggests that there is still a bit of work to be done to help local authorities to decide how best they could spend that money.
The initiative that Jim Wallace is talking about would have been carried out under the enterprise brief.
Yes.
Is there any confusion over which department of the Executive has responsibility for energy efficiency and conservation? Do those who have to work with the various schemes feel that there is some person or department to whom they have responsibility and from whom they can get help?
I do not know the ins and outs of who is who, but there is a department in Glasgow that we have dealt with for the fund. There is a central energy efficiency fund that I have heard of, although I am not quite sure whether it is the same scheme—I think it is.
There is a bit of confusion, depending on what aspect of energy policy is being considered. Energy policy can sit in communities—particularly in respect of fuel poverty and the fuel poverty forum—or it can sit in the environment brief. The council tax rebate scheme that I mentioned comes properly within the enterprise remit, apparently, and the Minister for Enterprise and Lifelong Learning is the person to meet to discuss that. The matter really sits across departments.
There is a bit of confusion, but there are great examples of us all working together. There are fabulous examples of our working with local authorities, in which they have taken central funding and we have contributed our energy efficiency commitment funding. That has happened in Aberdeen and Lanarkshire. When we can pull all the pieces together, we can really make it work. There is a bit of confusion, however, around the warm deal—the warm front in England—the central heating programme, the EEC and other funding. There is work to be done to co-ordinate it all a wee bit better and to pull it all together to make sure we are not missing a trick.
We have talked mainly about domestic properties. Work by the Carbon Trust has shown that in the business sector there are barriers to the uptake of energy efficiencies, such as the high initial investment costs and lack of interest. Is any work on-going to try to overcome those barriers? Can they be overcome?
We work closely with the Carbon Trust to overcome some of the barriers, which are often economic ones that relate to the required capital investment. The Trades Union Congress has made a statement today about basic commonsense measures such as switching off lights and not leaving computers on standby at night. Those matters should still be very much in people's minds. However, the biggest barrier is the capital investment that is required to get a return.
I have saved the best question for last. In our previous evidence session, the issue of a white certificates scheme was raised. I ask someone to give a quick explanation of how that would work, because I keep reading about the idea, but I find it difficult to get my head round it. I hope that that is the case for a lot of people—not just me. Can we have an encapsulation of how the scheme would work? Does the idea have a future?
Briefly, the scheme would be a trading environment in energy efficiency using kilowatt hours saved. On whether the idea has a future, it may be that it has already been overtaken, particularly in this country, where the energy efficiency commitment in its third form—which will come in from 2008—will be much more focused on reducing carbon emissions. Others will argue for their position, but we want a scheme in this country that is focused on that end objective. Trading in carbon reduction is a better and more relevant mechanism than trading in energy efficiency, given that the objective is to cut carbon emissions. The idea is useful and interesting, but we are moving beyond it with EEC3.
That is interesting, but I still do not know how such a scheme would work.
Research on the matter is being done in Europe, and the Department for Environment, Food and Rural Affairs is considering the idea, which is basically for a trading scheme through which people can trade debits and credits; if someone is in credit because of their energy account, they can trade that with someone who has liabilities. At present, we agree with DEFRA, which has considered the idea and has ruled it out of EEC3, which will run from 2008 to 2011. Such a scheme could have advantages in that it might bring in more players, such as local authorities, but there is concern about the cost of administering it. DEFRA has ruled out the idea for EEC3, but it might be used beyond that, post 2011.
Phil Gallie wants to ask a question—he is going to explain it all.
I am not going to explain it—I simply want to pick up on a point that Kevin Pringle and Jim Paterson made. In effect, Kevin said that the idea is past its sell-by date and Jim's comment was that the idea is too bureaucratic to consider. My concern is that we are considering a European Commission green paper that the Commission is intent on pushing. We need people in this committee and in other places to ensure that the Commission does not get away with introducing more European bureaucracy, which at the end of the day will serve no one. Is that a fair comment?
Although it is early days, we cannot from the research that we have done see too many advantages in such a scheme.
I am sure that the committee will record that in its report.
For once, I will let Mr Gallie have the last word. I thank the witnesses for their attendance, which was much appreciated.
Meeting suspended.
On resuming—
I welcome our second panel of witnesses. They are Charles Hargreaves from Ofgem; Norman Kerr from Energy Action Scotland; Mike Thornton from the Energy Saving Trust; and Ron Hill from the Scottish energy officers network.
I asked the previous panel about the state of the nation with regard to energy efficiency in our housing stock and stock of commercial and industrial premises. Will the witnesses give the committee more information about that? In particular, how does Scotland compare with other European Union countries?
First, I will say something about Scotland's housing stock. I think that I am right in saying that Scotland is in a unique position in Europe with respect to its tenemental dwellings, which present several challenges if we want to improve energy efficiency past a certain point. Certain problems are built into the housing stock over and above the general problem that retrofitting old stock is challenging in any case. The older stock in Scotland is particularly difficult to deal with.
Given such difficulties, which we can all probably identify immediately, are there tricks that we are missing? Are there levers that we could pull that we have not pulled?
A couple of years ago, the Energy Saving Trust in Scotland ran a small programme with Scottish Executive funding that involved consideration of different approaches to the tenemental problem in particular. The problem is not that nothing can be done but that integrated and innovative solutions are needed. Most tenements do not have cavities, for example, and most tenemental dwellings—except for the dwelling at the top—do not have a loft. Basic insulation issues are therefore quite difficult to deal with. However, there is good practice, some of which was demonstrated in the programme that we ran, and things can be progressed as a result of that, so I would not describe the situation as daunting; rather, I would describe it as challenging.
I take your point. I am encouraged to hear that there is good practice, notwithstanding the difficulties. How well known is such good practice and how well is it being disseminated and replicated elsewhere?
It is always rational to pick the lower-hanging fruit first. A lot of the effort has been directed outside the tenement stock, where there are cavities to fill and lofts to insulate. That is entirely rational and cost effective. The issue will come more into focus as we run out of low-hanging fruit but still have a lot of carbon to save and fuel poverty to address.
Mike Thornton raised a number of interesting points. You asked about the state of the nation. I can talk only about the domestic stock. David Shearer talked about housing being assessed on a scale of zero to 100. In the national home energy rating system, we use a scale of zero to 10—zero is the worst and 10 is the best. We have set the target for Scottish housing to achieve a rating of 5 as the Scottish quality standard by 2015. That is not an aspirational standard. The average throughout Scotland's housing stock just now is somewhere in the region of 5.4, so we have already reached the target that we set ourselves. The difficulty is that we still have to do a lot more on the difficult houses, which have a rating of 2 or 3.
It seems that most energy savings have been in social housing. How do we encourage the private rented sector to meet the standards too?
There is a view that most has been done in social housing because of the concentration of social housing, which means that it is easy to see a big local authority or housing association doing something. However, all the energy suppliers' energy commitment targets relate to the able-to-pays, who tend to be householders in the private rented sector. Back in 1999, the Scottish Executive set as part of the warm deal a 30 to 40 per cent target for the private and private rented sector. There is lots of work going on in that sector. That is not to say that we have cracked it yet, because a big process of education is needed. If someone is renting a house and hopes to be there for only three or four years, they have little incentive to make a big investment in the energy efficiency of the house, given that they will never see the benefit of it.
If we are serious about these things, should we not be putting the onus on landlords rather than tenants in private rented houses?
Perhaps Ron Hill will want to come in. A lot of landlords are doing work. Communities Scotland is trying to work with private landlords. A number of local authorities have private landlord registration schemes and there is also the Tenements (Scotland) Act 2004.
It is important not to paint too bleak a picture. A lot of good work has been done by Scottish local authorities, both in the domestic sector and in council corporate properties. Many councils now employ dedicated HECA—Home Energy Conservation Act 1995—officers and/or dedicated energy managers for their corporate stock. Councils have to report biannually on their HECA targets. My own council has achieved its HECA target three years early. Good work is being done.
Mr Kerr, I will pick up on your point about tenement buildings. It is interesting to hear the figures that you have given. There is a certain perception about this: one of the witnesses said that tenements do not have lofts, but they do have room above room above room, which in effect act as a series of insulation layers. What are the real problems with tenement buildings? How can we cure the problem of the tenements?
If we consider the construction of tenement walls and the materials that they are traditionally made out of—red or blond sandstone—those are not particularly energy efficient materials. The majority of heat loss from tenements is through the walls. Simply because a tenement has a thick wall, that does not mean that it absorbs energy or that it is energy efficient.
In a tenement, there tend to be individual dwellings with individual heating systems. The good-practice initiatives that I described earlier covered a couple of tenements in Govan. As part of a refurbishment, one single heating system was installed for a double block of tenements. We can achieve fairly significant economies of scale in energy usage, not to mention the capital investment, as a result of such installations.
I will call Phil Gallie before I bring Charles Hargreaves in.
My question is on a totally different issue.
In that case, we will wait until Charles Hargreaves makes his point.
The starting point of this part of the discussion was the European dimension, and I thought that it would be useful to draw out some of the points that have been made in that respect. In relation to the work that Ofgem does, there is considerable interest among European partners in how the energy efficiency commitment works, which we have tried to explain. Through working with European colleagues, it has come across to me that the building regulations and standards that have been in place in other member states have been much more stringent than those in Britain in particular.
I will bring Irene Oldfather in because she has a question on that point and then I will come back to Phil Gallie because he said his next question was about something different.
That was actually my second point.
Are you two going to fight about who gets to go next then?
I will give way to Irene Oldfather.
I hope that you are duly grateful, Irene.
I am very grateful. I let Phil Gallie have the last word with the previous panel of witnesses.
Without looking at it from a political viewpoint, I think that the European Union and member states certainly need to address the matter. We can increase the legislation or do any number of other things, but there is no system in place in Scotland for the Scottish Executive to record energy consumption or any steps that are taken to reduce it. If the EU directs us to reduce our consumption, expenditure and emissions, that is all good and well, but how do we measure it and who will measure it?
That is interesting. Energy Action Scotland's written submission is clear that the directive
We need to consider the spirit of the legislation. We have talked a lot about saving carbon but, if we stopped the man or woman in the street and asked them to identify a tonne of carbon, we would be hard pushed to get an answer that would satisfy us. As far as Energy Action Scotland understands it, the spirit of the European legislation was to give people more information about their building's energy consumption, which has to translate into pounds, shillings and pence.
Do we need more joined-up thinking and policy, so that overarching directives relate to implementation on the ground?
We absolutely do.
I reinforce what Norman Kerr said. There is a strong and vital role for Europe in setting standards, as the white goods directive demonstrates. That partly derives from the structure of the market, because many companies that must implement the standards do not function in just the Scottish market or even just the UK market. Many people think that brown goods are an obvious further area for standard setting on a European scale.
Standards on appliances need to keep pace with the market. As Norman Kerr said, we are buying larger white appliances. Some 60 or 70 per cent of the market is A-rated, but fridges are much bigger, so they are using much more energy. There is a similar issue to do with standby switches on brown goods. Appliances are coming on to the market so quickly that European legislators are finding it difficult to keep pace. If we are keen to reduce emissions from such appliances it is important that the legislation and regulations that govern energy consumption keep pace with development.
Energy Action Scotland suggested in its submission that a European energy regulator is required, which sounds like a good idea.
It must be something that someone else thought up, then.
If I understand the matter correctly, there is a need for a level playing field and a transparent and open approach—albeit one that operates in a market setting. The difficulties last winter highlighted the issue and companies in my constituency certainly thought that such an approach would have been useful.
Phil Gallie is itching to ask another question.
I want to pick up on Ofgem's comments about the building regulations and on the comments about common standards throughout Europe. Energy standards must suit the climate of the country, so what is needed in Spain will of course be different from what is needed in Scandinavia. We can learn good things from Scandinavia as well as from other countries. Are our building standards—for new build in particular—up to scratch? If we were to raise those standards substantially, by what kind of ratio would costs be increased? At the moment, the cost of houses for first-time buyers is astronomical. How much would it add to their bill to go for Scandinavian standards?
I do not see that adopting such standards would add significantly to the bill for new-build properties. It is always more difficult to do it in retrofit, as we constantly strive to do, but there are a number of issues in terms of building regulations. If we raise the building standards, it becomes a matter of routine, and I would not expect that simply adding another six inches of insulation would make a great difference to the purchase cost of a brand new house for a first-time buyer. Retrofit is more difficult, but that takes us into areas such as public education.
You referred to the thickness of insulation, but are the Scandinavian standards for energy control just to do with the thickness of insulation?
No, those standards are to do with the entire design. I used the thickness of the insulation only as one example. In Scandinavia, it is common practice to run the water pipes up the centre of the house. Where else in the world with a climate like ours would a plumber put the pipes against the outside wall, where they are going to burst at the first sign of frost? There are design issues to take into consideration.
I can see that Mike Thornton is dying to comment.
I would like to pick up on the spirit of the original question. There is obviously a capital cost for increasing the energy efficiency of a house, but there is also a saving and we would normally expect the lifetime cost balance to be positive. To put it crudely, either first-time buyers will pay out a certain amount of money as a mortgage for capital, or they will pay it out for fuel. It is the same pound in either case. As fuel bills rise, that argument becomes more cogent.
It is simple. Nobody asks, "How much does it cost me to live in this house?" They ask, "Can I afford the mortgage?", but they do not look at the running costs. Energy efficiency does not sell buildings. Showing somebody your ground-source heat pump is not particularly sexy, but showing them your fabulous, top-of-the-range kitchen, your jacuzzi or whatever else the modern builder is selling houses on is what sells houses—not energy efficiency. It is a question of educating not only the public but building companies.
It is good to hear about the hard reality from Norrie Kerr. Could you give us some other examples of how public procurement might be improved? Local government and Government agencies are involved in buying vast amounts of construction materials and fabrics, but I wonder how well energy efficiency is being promoted through the procurement agenda. Do the public-private partnership contracts that local authorities draw up get in the way of, or help with, procurement for low-energy processes?
I am sure that Ron Hill will want to answer; I may follow him.
I do not think that the energy card is a big issue in PPP contracts. My council is involved in a PPP project for 22 schools and, at that level, great consideration is definitely not given to energy efficiency. In the PPP structure, plans will be made to build a new school or to modernise or refurbish an old school and the situation will depend on the part of the PPP contract that specifies who pays the bill—the local council or the contractor. If the local council pays, it can spend central energy efficiency fund funding—that is what the CEEF is for. I heard earlier the question whether that is being spent; all 32 councils are spending their CEEF funding and a huge number of projects are proceeding.
Will you give examples of best practice in local authorities on low-energy procurement? We want to understand that and spread such practice.
The procurement situation varies. Generally, procurement concerns everything that the public sector buys. Many councils have procurement strategies in place, which mean that they may buy energy efficient computer equipment or recycled photocopier paper, for example. That is one level of procurement. Another level involves the procurement of energy for local authorities' use. Many local authorities subscribe to green electricity tariffs. In my council—North Lanarkshire Council—100 per cent of the electricity is green. More and more councils are getting into green tariffs.
That fascinates me. How does a local authority know that the source of its electricity from the grid is green?
Perhaps Ofgem could answer that better.
I am baffled as to how it is possible to know the source.
You are on the spot, Charles.
It is a good question. When a party enters into a contract for electricity, the contract is for the electrons that pass down the wire. Whoever a local authority buys its electricity from must ensure that the source of that electricity is green. The difficulty is that if the electricity comes from a wind turbine, for example, there is no way of guaranteeing that the electrons from that wind turbine will go to a particular consumer. That is physically impossible to do.
Of course it is, so that bit is meaningless.
It is not meaningless—
I understand that.
A commercial agreement is established to ensure that a proportion of the electricity comes from a renewable source; otherwise, it would come from a coal-fired, gas-fired or nuclear power station.
"Meaningless" was the wrong word, but it is impossible for the supplier to provide proof.
It is not impossible to provide proof. If someone buys green electricity from a properly accredited supplier, that supplier must put that amount of electricity into the system. The consumer does not take out the same electrons, but the supplier must supply the required amount of electricity.
That is the explanation.
In that sense, the arrangement is meaningful, because the more demand for green electricity, the more green electricity will be generated.
That helps me to understand the process. What about other good examples from procurement? We have heard that green trading might not reduce consumption. What about reducing consumption and introducing good practice through procurement to do that?
Are you asking about local authority stock?
I do not mind where the good practice comes from. Can we learn from good practice out there in the rest of Europe or other parts of the world?
Local authorities will conform to the building standards, which is where the standards have a positive effect. The review of the building standards that will be undertaken soon will likely say that every boiler that is fitted from next April must be A+ rated, so local authorities will do that. At present, local authorities fit equipment that is good value in the market and which conforms to the current building standards.
I want to return to the theme of green electricity, which intrigues me. The low rainfall during the summer meant that some hydro schemes were offline and, on a day such as today, there will not be much power coming from wind generators. Under those circumstances, would green consumers simply be cut off?
I certainly hope not. That has not happened in my council or in any other council of which I am aware. I take the point, though.
It is a good job that we have nuclear power stations.
No comment.
As long as the weather is not too warm and we have to shut them down.
That has never happened in the UK.
That does not happen in the UK, with power stations by the coast.
It may well happen, with global warming.
Can we stop this spat, please?
I have been involved in that issue a lot recently. The best figures that we can get show that the public sector in Scotland procures about £150 million-worth of electricity and gas per annum. For any one or all of those authorities, a number of considerations must be taken into account in considering energy procurement. If the Scottish Executive took over public procurement, we would be looking for the best prices. Currently, there are several consortia in Scottish local government—the biggest involves 12 councils and the smallest has three—which aim to obtain the best price for fuel. However, we will only ever get the best price if our energy management and emissions data are as good as possible. With electricity or gas, the power supplier must go to the generator and say, for example, "Ron Hill wants 2MW of electricity this year." The supplier must then pay for 2MW, but if I buy only 1MW, everything is screwed up. A whole load of work must be done to secure good-quality data in Scottish local authorities before that will be a useful tool.
What about using energy efficiency as an indicator in any public sector purchasing regime?
That already informs strategies. As I said, many local authorities now have sustainable procurement strategies.
I am sorry to interrupt, but is that a voluntary approach on the part of the local authorities?
Yes. Local authorities will, I hope, look to buy the most energy efficient equipment possible.
Richard Lochhead is with us today and has expressed a wish to ask some questions in this section.
Thank you for the opportunity to make a contribution at this stage in the proceedings, convener.
I am afraid that I cannot comment on the measurement aspect. On new solutions, I go back to what was said earlier about the energy efficiency commitment, which requires the electricity and gas suppliers to meet an energy saving target in domestic properties. They have complete freedom over the type of technologies that they employ in meeting their targets, and some have been proactive in developing new technologies to meet their energy saving targets. Some have started to think about promoting ground-source heat pumps, which Norman Kerr mentioned earlier.
The phrase that I used was "new solutions", not new technologies. We are talking about thousands of homes in each constituency in rural Scotland. We need new measures to tackle the issue, as new technologies will, I presume, take a long time to develop.
The suppliers will mix the new technologies. When you say "new solutions", what are you getting at?
I am referring to measures to help people who face rising oil costs in older houses in rural Scotland.
I can comment only on what I have mentioned so far—on what the suppliers are doing for that type of consumer. Some are promoting new technologies to reduce fuel bills.
Richard Lochhead raises a number of points. You must understand that the domestic oil supply industry is not regulated. The gas and electricity markets are heavily regulated by Ofgem, which does a lot of work with the suppliers. There is no such regulation of oil supply: basically, people take their chances. If there are two or three suppliers of oil in an area, there will be competition over the price that they will charge for a litre of oil. Where there is no competition, the vendor will simply charge what they think that they will get away with. It is important to understand that.
I am sorry to interrupt, but before Mike Thornton comes in, I have a quick question for clarification. When you mentioned the regulation of gas, were you also talking about the likes of Calor gas, propane gas and so on?
No.
So those parts of the gas industry are in the same position as the oil industry, and many rural houses still have to use tank gas and so on.
Yes. Moreover, as I said to Phil Gallie, over the past 25 years, we have gone for the easy hits. We have done a lot of things with cavity walls, lofts and gas central heating in houses. However, we have not done a lot about rural fuel poverty.
Richard Lochhead has certainly highlighted a future fuel poverty issue. Earlier, I said that tenements were an issue in Scotland; obviously, another major issue is fuel poverty, particularly in rural off-gas housing. I believe that I introduced the dreaded phrase "low-hanging fruit" into the discussion, but Norman Kerr is right to say that, as far as rural areas are concerned, the nation has not yet addressed what might be described as higher-hanging fruit.
Thank you very much.
Previous
Structural Funds 2007-13 InquiryNext
Petition