Speech

Energy Bill Second Reading: The Rt Hon Chris Huhne MP - 10 May 2011

This speech was published under the 2010 to 2015 Conservative and Liberal Democrat coalition government

Check against delivery I beg to move that the Bill be now read a second time. Mr Speaker, over the past year, energy policy has been in the…

Check against delivery

I beg to move that the Bill be now read a second time.

Mr Speaker, over the past year, energy policy has been in the spotlight.

From the Gulf of Mexico to Fukushima, no-one can doubt the importance of our energy choices.

And for the first time, scientists have linked greenhouse gas emissions to an increased risk of major floods.

Faced with a difficult financial situation, the Government’s objectives are clear.

We must secure affordable energy supplies for the future; and we must avoid dangerous climate change.

Neither will be easy. The gap between our energy demand and our energy supply is growing. We are increasingly dependent on imported energy. We still rely heavily on unclean and unsustainable fossil fuels.

By law, we must cut our emissions by 80% by 2050. We must get 15% of our energy from renewable sources by 2020.

Our energy infrastructure is ageing. Our old polluting power stations are shutting down.

Building the next generation of power plants will take time and money. If we are to cut our carbon emissions and keep the lights on, we must act now.

And the cheapest way of closing the gap between supply and demand is to reduce the amount of energy use.

Mr Speaker, the Energy Bill contains provisions to boost our energy security, encourage low-carbon technologies, and improve energy efficiency.

It places a new obligation on energy companies to reduce carbon emissions and support vulnerable consumers.

And it delivers a key Coalition commitment: the Green Deal. A self-financing building improvement scheme to bring our properties into the 21st century.

Green Deal

Mr Speaker, the UK has some of the oldest and least efficient buildings in Europe. Every day, across the country, our homes and businesses leak heat - and waste energy.

A quarter of the UK’s carbon emissions come from energy used in the home. Billions of pounds spent on domestic heating disappear up the chimney. Businesses are wasting money. Our outdated building stock is costing us the earth.

Not anymore. Under the Green Deal, energy saving packages worth thousands of pounds will be installed in millions of homes and businesses, right across the country.

There has never been anything quite like it.

It is the most comprehensive energy saving plan in the world.

Green Deal measures will be provided by trusted businesses, installed by accredited professionals, and backed up with a watertight legal framework.

Customers will pay nothing up front; businesses will do that for them. Once the property has been refitted, Green Deal providers will get their money back from the expected savings on energy bills over the lifetime of the measures.

This is the big change: payments can be made not just by you, but by the beneficiaries once you move out and move on.

At the heart of the Green Deal is a ‘golden rule’: for typical households, expected savings will offset costs.

Each month, a Green Deal home will save energy while providing the same level of comfort. Money from likely energy savings will pay off the costs of the work.

This is not a personal loan. Let me repeat: once a property has had the Green Deal, payment will stay on the energy bill at that address - even if the occupants move out.

When you move into a Green Deal home, you inherit the energy savings that pay for the work.

Everyone has a part to play. This is about government helping businesses and households come together to deliver energy savings on a national scale.

Through this legislation, we are creating a whole new market in energy saving.

Just as the law establishing joint-stock companies unleashed big investments, so this law will set the legal framework for a new green growth industry.

Benefits

Millions of homes - and millions of businesses - could benefit from the Green Deal in the next decade. We expect households will be able to install measures worth up to £10,000.

This is a massive undertaking. And it can make a real difference. Heating is the second biggest driver of energy demand in Britain.

And British Gas pilots show that householders who put in energy efficiency measures can cut their gas consumption - and their bills - by up to 44%.

That is a significant saving. But so far, energy efficiency has passed under the radar.

We estimate that between £2-3 billion worth of energy is wasted every year because our homes are poorly insulated and inefficiently run.

That is £2-3 billion of gas and oil imports that currently make us more vulnerable to the vagaries of global oil and gas markets.

Under the Green Deal, households could save up to £400 a year once the measures have been paid off. That will flow through to their spending power, boosting living standards for all.

Yet many have never even considered making their homes more efficient. They do not know what better energy efficiency could do for their them.

New Green Deal assessments will set out, clearly and consistently, just how homes and businesses can save energy.

A new approach

Mr Speaker, the Green Deal is a new way of doing energy efficiency.
No more picking off the easy bits, with a little insulation here and a low-energy lightbulb there.

No more relying on regulation alone to change behaviour.

No more top-down schemes imposed using public money.

Instead, we are creating a new, dynamic market in energy efficiency: shifting from small scale improvements to deep retrofits on a national scale.

This dynamic market will bring jobs across the length and breadth of the country; real growth, reaching into the most deprived areas, with no regional bias.

The potential benefits are huge - with opportunities for skilled and unskilled labour alike, up and down the supply chain. The number of people employed in insulation alone could soar from 27,000 to 100,000 by 2015.

Mr Speaker, the Green Deal will save energy, and help us hit our carbon emissions targets. It also gives us a chance to get people thinking about how they can reduce their own energy consumption.

Millions of homes and businesses could benefit from the Green Deal. Like any new product, building consumer trust will be critical to success. We want people to know that the Green Deal isn’t just a smart choice - it’s a safe choice.

That’s why the Bill also ensures consumers will be protected.

The Green Deal will be delivered by partnerships across the country. Trusted high street brands and local businesses will provide the advice, the installation and the financing of the Green Deal measures.

We will make sure high quality, standardised advice is given - so that each customer can clearly see where and how the Green Deal will work for them.

We will ensure that those installing Green Deal measures must meet robust standards. We will guard against mis-selling.
And we will make sure that the right information is on hand at the point of sale.

Competition will keep suppliers keen: if a customer does not like the quote from one Green Deal provider, they will be able to get another.

Energy Company Obligation

Mr Speaker, the Bill will also introduce a new Energy Company Obligation. This will replace the Carbon Emissions Reduction Target (CERT) and the Community Energy Savings Programme (CESP). They have not unlocked carbon savings fast enough.

The new Obligation will be more ambitious. Energy companies will be expected to pay to support hard to treat properties - like those with solid walls - where insulation costs can be higher, and the payback period longer, than the typical home.

ECO payments from energy companies will be bundled with Green Deal finance and delivered together. It is a way of making sure the Green Deal is available to all.

And it will help the most vulnerable people - those in the coldest homes - get the heating improvements they need to keep warm and stay healthy.

Cold homes cost lives. By targeting support more closely, we can reach more people, more effectively.

So we will focus our resources where they can do the most good.

That means finding practical solutions to identify households who need the most support.

Mr Speaker, we are determined to get to grips with the causes of fuel poverty - not just the symptoms.

But the tools at our disposal are not up to the job.

That is why I have asked Professor John Hills to conduct an independent review of the fuel poverty target and definition - so we can understand the problem, and what we can do to fix it.

The review will produce an interim report in the Autumn, and a final report early in 2012.

For too long, a sizeable minority of tenants have suffered from higher bills and colder homes. Privately rented houses are more likely to have the lowest energy efficiency rating than those owned outright.

Landlords don’t want to invest, because tenants benefit. Tenants don’t want to invest, because they will move on.

By linking the Green Deal measures to the property, not the tenant, the Bill bridges this divide. With the Green Deal, everybody wins: landlords will face no upfront costs; tenants will keep warm for less.

Mr Speaker, I welcome many of the positive responses we have had from landlords to the prospect of the Green Deal.

But some individuals and organisations feel we are not committed to securing improvements to the least energy efficient properties in the Private Rented Sector. Many tenants suffer appalling conditions without the power to agree improvements with their landlord.

The debate has been lively, and we have listened.

That is why I am pleased to announce we will be changing the current provisions to make clear that we will regulate.

This is significant step: and a marker of our intent.

From 2016, any tenant or their representatives asking for their landlord’s consent to make reasonable energy efficiency improvements cannot be refused.

And from 2018 the rental of the very worst performing properties - those rated F&G - will be banned through a minimum energy efficiency standard.

We will of course seek to work with landlords well in advance to support their take-up of Green Deal. The precise form of these regulations will be subject to the usual scrutiny processes.

Councils

We also remain committed to ensuring that all councils play a role in delivering the Green Deal.

The recent Memorandum of Understanding between DECC and the Local Government Group recognises the enthusiasm councils have for delivering the Green Deal.

Gas security

Mr Speaker, alongside the Green Deal provisions, the Bill also contains measures to enhance energy security.

These include legislative changes to reduce the likelihood, duration and extent of gas supply disruption - and protect consumers from very high wholesale prices.

These new powers would sharpen the commercial incentives for energy companies to meet their contractual supply obligation during a Gas Supply Emergency.

Special Administration Regime

The Bill also introduces a Special Administration Regime for gas and electricity suppliers, which will help maintain market stability - and protect consumers.

The Regime will ensure that if a large supplier becomes insolvent, customers will be supplied with gas and electricity as cost effectively as possible - until the company is rescued, sold, or its customers transferred to other suppliers.

Third-party access to oil and gas infrastructure

The Bill also includes an updated regime for Third Party Access to oil and gas infrastructure.

Timely access to infrastructure on fair terms will be increasingly critical over the next decade.
The discoveries now being made in the North Sea are typically smaller than those in the past, and need to make use of existing infrastructure where possible.
The measures in this Bill will help us secure the full economic benefits of our North Sea oil and gas resources.

Conclusion

Mr Speaker, the Bill before us brings energy efficiency to homes and businesses across the country. It boosts the security of our energy supply, protects consumers, and supports green technology.

In setting up the Green Deal, it places us at the very forefront of the low-carbon drive: with an innovative, dynamic market delivering energy efficiency at scale - with no extra cost to the public purse.

Together with our reform of the electricity market, which will open up our energy portfolio and deliver the next generation of low-carbon electricity, it represents a signal step towards a cleaner, greener future for the UK.

In the scale of its ambition, this Bill is a statement of intent. It will help cut our carbon emissions, reduce our dependence on imported energy - and protect the most vulnerable in society.

Mr Speaker, the Green Deal is our flagship policy.

This is the legislation that provides for it; and this is the Government that will deliver it.

I commend this Bill to the House.