New Clause 31 - Promotion of reductions in carbon emissions: gas transporters and suppliers
Climate Change and Sustainable Energy Bill
6:15 pm
Malcolm Wicks (Minister for energy, Department of Trade and Industry; Croydon North, Labour)
The aim of the new clauses is to provide more flexibility to energy suppliers in the ways in which they can meet their obligations under the Electricity Act 1989 and the Gas Act 1986. Under existing legislation, electricity and gas suppliers are required to achieve targets for the promotion of improvements in energy efficiency. The 2004 energy efficiency obligation order provides for the improvements to be achieved for domestic consumers in Great Britain. The obligation is commonly known as the energy efficiency commitment or, in the trade, as the EEC. It is open to suppliers how they meet their targets by, for example, encouraging and assisting household consumers to take up measures such as cavity wall insulation and energy-efficient lighting and appliances.
The EEC has proved to be a successful instrument and is a key contributor to the reduction of carbon emissions under the climate change programme in the household sector. Energy suppliers convincingly met their targets for the first phase of the EEC from April 2002 to March 2005. By carrying forward activity, they started work early on the current phase of the EEC from April 2005 to March 2008, which requires broadly double the level of activity.
We are thinking ahead to the third phase of the obligations on suppliers, which will run from April 2008 to March 2011. Throughout 2006, we will engage in discussions with a wide range of stakeholders to feed into the development of proposals that will be set out in a statutory consultation in spring 2007. The target for the new obligations and the framework for the scheme, which is administered by Ofgem, will be set by order towards the end of 2007. Although the targets placed on suppliers are achievable, we recognise that they present a challenge to them. As a result, we would like the opportunity to provide suppliers with as much flexibility as possible in the range of measures that they can employ to meet their targets.
The new clauses would enable the Secretary of State to require suppliers to achieve a carbon emissions reduction target. That is defined as a target for the promotion of measures for improving energy efficiency and, if provided by order, certain other measures—for increasing the amount of electricity generated or heat produced by microgeneration; any other measures specified in the order for increasing the amount of electricity generated or heat produced using low-emission sources or technologies; and measures for reducing the consumption of energy.
The current energy efficiency target on suppliers is often expressed in terms of carbon emission reductions and, thus, the new approach would provide a more effective way in which to join up measures in respect of carbon abatement objectives. We propose to consult stakeholders before making provision for the carbon emissions reduction target to include the promotion of measures that are additional to the promotion of energy efficiency improvements. However, the new clause would provide additional flexibility to energy suppliers and support a more joined-up approach to carbon abatement in the household sector.