New Clause 22 - Display energy certificates

Energy Bill [Lords] – in a Public Bill Committee at 6:15 pm on 21st June 2011.

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‘(1) The Secretary of State must within twelve months of the passing of this Act make regulations requiring all premises to which this section applies to display in a prominent place a Display Energy Certificate relating to the premises.

(2) In this section “Display Energy Certificate” has the meaning given in section 17 of the Energy Performance of Buildings (Certificates and Inspections) (England and Wales) Regulations 2007.

(3) This section applies to all non-domestic premises of a size and type to be specified in the regulations.’.—(Zac Goldsmith.)

Brought up, and read the First time.

Photo of Zac Goldsmith Zac Goldsmith Conservative, Richmond Park

I beg to move, That the clause be read a Second time.

I will try to be brief, as we do not have that much longer. The intention of new clause 22 is to make it mandatory for all commercial buildings over a certain size to have display energy certificates. It is a simple enabling clause, giving the Secretary of State the power to initiate the roll-out of display energy certificates to the commercial sector. It would require all the relevant details of the phasing of the roll-out and so on to be dealt with in secondary legislation.

The motivation for the new clause is simple. If one does not know how much energy one is using, it is hard to know how to manage it. We have no idea how buildings up and down the country are performing, so mandatory A to G ratings are the crucial first step in helping businesses understand how to reduce their energy use. Display energy certificates are currently mandatory for public sector buildings of more than 1,000 square metres, but they are not compulsory in the commercial sector. It is worth pointing out that non-domestic buildings currently account for up to 17% of the UK’s carbon emissions. The carbon plan published in March this year already includes a commitment to extend display energy certificates to commercial buildings by October 2012, but to fulfil that commitment the Bill must be used to introduce the necessary enabling legislation, which would simply give the Secretary of State the power to extend display energy certificates through regulations.

I appreciate and understand the concern about the risk of costs and burdens being imposed on businesses by an extension of display energy certificates to the  commercial sector, but if display energy certificates increase energy efficiency measures—there is mounting evidence that that is the case—the commercial sector will inevitably be making savings on their energy costs. I am pleased to say that the new clause has had the full support of, among others, the UK Green Building Council, the British Property Federation, the Association for the Conservation of Energy and, according to an e-mail I received a few minutes ago, even the CBI. From my endless discussions with the Minister, I know that he is also supportive of the principle behind the provision, and I very much hope he will support it. I look forward to hearing his remarks.

Photo of Caroline Lucas Caroline Lucas Leader of the Green Party

I want to add my strong support to the new clause. I was pleased to see, as the hon. Member for Richmond Park has said, that there has been so much support from businesses and elsewhere for the proposal. An open letter was sent to the Prime Minister, the Deputy Prime Minister and the Secretary of State for Energy and Climate Change from the British Property Federation, the chief executive of Siemens, Marks and Spencer and others. Those are leaders of the private businesses that would be affected by the legislation. They stated that they were absolutely delighted when the Government’s carbon plan committed to extend the display energy certificates to commercial buildings by October 2012. That is absolutely right. Given that non-domestic buildings are responsible for up to 17% of the UK’s carbon emissions, the anomaly whereby display energy certificates are currently mandatory for public buildings of more than 1,000 square metres, but not mandatory for private-sector ones, is hard to justify.

Some people may feel that a voluntary approach is more appropriate, but I think it is interesting to look at the terms in which private property owners and the business leaders who signed the open letter speak. They state that

“a voluntary approach to take up in the private sector will not work, because without that level playing field there is a reputational risk for those businesses that voluntarily adopt certification and achieve poor ratings.”

They go on:

“We do not believe this will provide an undue burden on businesses of any size, as evidence demonstrates that savings resulting from the application of this scheme significantly outweigh any costs, from year one. Indeed, DECs for small businesses could be automated and even provided free of charge, based on existing energy bills.”

If the Committee does not mind, I will quote one more paragraph, because it is so strong:

“We believe that primary legislation is likely to be necessary to roll-out Display Energy Certificates to the private sector. Therefore, we urge you and your co-signatories to the Carbon Plan to lend your support to the use of the Energy Bill, currently before the House of Commons, as the vehicle for the necessary enabling legislation. We are concerned that if this opportunity is not taken, the deadline set out in the Carbon Plan is unlikely to be met.”

With such forceful and eloquent support for local movement in this area, I hope that the Minister will take it seriously.

Photo of Luciana Berger Luciana Berger Shadow Minister (Energy and Climate Change)

Since the 2002 energy performance of buildings directive was introduced into UK law in 2007, there has been clear evidence that display energy certificates have driven substantial year-on-year improvements in energy ratings and reductions in energy costs in the public sector. This has happened because they are a strong reputational driver to improve energy performance and because of the financial incentive that  comes from lower energy bills. We have heard about the breadth of support for such measures not just from green groups but from business, and I was delighted to hear that the CBI has come out in support of this too.

The energy savings and carbon reductions that could result are huge. Non-domestic buildings account for 17% of UK carbon emissions. In its report, “Building the Future Today”, the Carbon Trust reported that the carbon footprint of the country’s 1.8 million non-domestic buildings could be reduced by 35% by 2020 compared with 2005 levels, with a net benefit of £4 billion to £5 billion delivered to the UK economy through energy savings.

We are supportive of the measure because we believe it feeds into the wider debate about carbon reporting for business, something for which outside organisations such as the Aldersgate Group have been pressing. In Opposition, both coalition partners were pushing for mandatory carbon reporting as well as supporting display energy certificates, so it would be a big surprise if they did not support the measures today.

Photo of Gregory Barker Gregory Barker The Minister of State, Department of Energy and Climate Change

I pay tribute to my hon. Friend the Member for Richmond Park for driving the issue on to the agenda. It will be an important step forward in the energy efficiency of our public buildings, and I am indeed sympathetic to the proposal. Display energy certificates show how efficiently a building is being used, its actual energy use, its carbon emissions and its operational ratings. As the hon. Member for Brighton, Pavilion said, they are currently required in large buildings of more than 1,000 square meters that are occupied by a public authority or frequently visited by the public. The new clause seeks powers to enable regulations to extend the requirement for DECs to commercial buildings.

I recognise that DECs provide a very valuable tool to enable building occupiers to save money in carbon. In addition, they create a reputational incentive for action by businesses, because they broadcast the energy efficiency rating and energy usage of their buildings not only to their own employees, or the inhabitants of their buildings, but to customers and wider stakeholders. The certificates provide a consistent and robust way of collecting data on the energy use of buildings. If they are aligned with other policies, they have the potential to reduce the regulatory burden on business.

I, too, have been impressed by the strong appetite for extending DECs in the commercial sector from a wide range of industry leaders representing a large proportion of the sector, including, as has been said, the British Property Federation, British Land, Land Securities, Hammerson, Siemens, and Marks and Spencer. As a result of that, we have put in a lot of effort behind the scenes to take the thrust of my hon. Friend’s proposal on board. The wheels of Government have been turning. There is certainly strong support for the proposal in my Department, but we must get the drafting right and go through various clearances. We are making good progress with that process. I had hoped that we would be in a position to declare victory at this point in our proceedings; we are not quite there yet, but I am optimistic that I will be able to return with good news about progress on Report.

Photo of Luciana Berger Luciana Berger Shadow Minister (Energy and Climate Change)

Which Departments support the amendment and which do not?  

Photo of Gregory Barker Gregory Barker The Minister of State, Department of Energy and Climate Change

We are not anticipating any roadblocks, but, as the hon. Member for Ogmore will tell the hon. Lady, there is a governmental process to go through. We came to the proposal a little later than we should have done in DECC, and we are trying to get through the process as quickly as possible. Potential issues with drafting must be considered, but on the whole, I hope to return with more positive news on Report.

Photo of Luciana Berger Luciana Berger Shadow Minister (Energy and Climate Change)

Will the Minister kindly clarify whether he will introduce a new amendment or just give us news at the next stage?

Photo of Gregory Barker Gregory Barker The Minister of State, Department of Energy and Climate Change

I hope to come back with some good news on Report. I might appear to tease a little—that is probably because I am trying to do so. I hope that there will be genuine progress, but obviously I cannot commit now, because if I did so, I would have already made a commitment, which I hope to do on Report. I hope that is clear. On that basis, I should be grateful if my hon. Friend the Member for Richmond Park would consider withdrawing his new clause, knowing that there is a head of steam behind it.

Photo of Zac Goldsmith Zac Goldsmith Conservative, Richmond Park

I thank the Minister for his comments. I know that he is absolutely behind the proposal. I have zero doubt that, by Report, he will be in a position to support it in a different form, but more or less in its entirety. On that basis, I beg to ask leave to withdraw the clause.

Hon. Members:

No.

Question put, That the clause be read a Second time.

The Committee divided: Ayes 7, Noes 11.

Division number 14 Decision Time — New Clause 22 - Display energy certificates

Aye: 7 MPs

No: 11 MPs

Ayes: A-Z by last name

Nos: A-Z by last name

Question accordingly negatived.

Sitting suspended for a Division in the House.

On resuming—