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European and External Relations Committee
Remit and membership
Remit:
1. The remit of the European and External Relations Committee is to consider and
report on-
(a) proposals for European Communities legislation;
(b) the implementation of European Communities legislation;
(c) any European Communities or European Union issue;
(d) the development and implementation of the Scottish Administration's links
with countries and territories outside Scotland, the European Communities
(and their institutions) and other international organisations; and
(e) co-ordination of the international activities of the Scottish Administration.
2. The Committee may refer matters to the Parliamentary Bureau or other
committees where it considers it appropriate to do so.
3. The convener of the Committee shall not be the convener of any other
committee whose remit is, in the opinion of the Parliamentary Bureau, relevant to
that of the Committee.
4. The Parliamentary Bureau shall normally propose a person to be a member of
the Committee only if he or she is a member of another committee whose remit is,
in the opinion of the Parliamentary Bureau, relevant to that of the Committee.
(Standing Orders of the Scottish Parliament, Rule 6.8)
Membership:
Linda Fabiani (Convener)
Dennis Canavan
Bruce Crawford
Phil Gallie
Mr Charlie Gordon
John Home Robertson
Gordon Jackson
Irene Oldfather (Deputy Convener)
Mr Jim Wallace
Committee Clerking Team:
Clerk to the Committee
Jim Johnston
Assistant Clerk
Emma Berry
Gerry McInally
1
European and External Relations Committee
Response to the European Commission's Green Paper on a Sustainable,
Competitive and Secure Energy Policy
Introduction
1. The European and External Relations Committee of the Scottish Parliament
welcomes the opportunity to respond to the European Commission’s green paper
on a sustainable, competitive and secure energy policy1
.
2. The Committee agreed at its meeting on 28 March 2006 that it would
respond to the consultation and that it would hold a short inquiry to inform its
response. At its meeting on 9 May 2006, the Committee agreed the remit and
timetable for the inquiry. Given the scope of the consultation, the Committee
agreed that it would focus its response on the section of the green paper on
climate change, specifically in relation to energy efficiency.
3. The Committee launched a general call for evidence to inform its
consideration and all submissions received are available to view on the
Committee’s web pages2
. The Committee also took oral evidence at its meetings
on 23 May and 5 and 12 September 2006. A list of those organisations which
submitted written evidence and gave oral evidence is attached at Annexe A. The
Committee thanks all those individuals and organisations who took the time to
provide evidence to the Committee’s inquiry.
4. In responding to this consultation, the Committee is mindful of related
inquiries and reports by other committees of the Scottish Parliament. The
Environment and Rural Development Committee published the report on its inquiry
into Climate Change on 18 May 20053
and the Enterprise and Culture Committee
published the report on its inquiry into renewable energy on 30 June 20054
.
Issues identified during the Committee’s consideration
5. During the inquiry, the Committee identified several themes which ran
through its evidence taking and consideration—
1
http://ec.europa.eu/energy/green-paper-energy/doc/2006_03_08_gp_document_en.pdf
2
http://www.scottish.parliament.uk/business/committees/europe/index.htm
3
http://www.scottish.parliament.uk/business/committees/environment/reports-05/rar05-05-vol01-
01.htm
4
http://www.scottish.parliament.uk/business/committees/enterprise/reports-04/elr04-06-01.htm
2
• General themes and wider context to the debate;
• Energy efficiency measures in the construction of new buildings;
• Energy efficiency measures in existing buildings;
• Barriers to the installation of energy efficiency measures in buildings; and
• Responsibility for promoting energy efficiency measures.
General themes
6. It was clear from oral evidence that the recent increase in energy prices has
elevated energy efficiency measures and concerns up the political agenda and
into the public consciousness. This has created a greater incentive to save energy
and money through energy efficiency (using the same amount of energy for
greater output) and energy conservation (using less energy for the same amount
of output). As ScottishPower commented—
“(With energy price rises) .. the incentive has never been greater for people
to try to moderate their consumption of gas and electricity by using less, by
switching off their standby buttons or by investing in insulation or micro
renewables.” (5 September 2006, col ref 1987).
7. During discussions, the Committee heard that energy suppliers are expecting
that demand for energy will continue to rise in the future, particularly with the
increased consumption of high energy use digital technology. When questioned
by the Committee on whether it was likely that the demand for electricity will
continue to increase, ScottishPower confirmed that—
“Our expectation is exactly that. With new digital technology coming in, the
demand per household will increase substantially.” (5 September 2006, col
ref 1989).
8. The Committee also explored the link between the focus of its inquiry –
energy efficiency – with one of the broader goals of the proposed policy – security
of energy supply. Concerns relating to energy supply have also given increased
importance to the need for energy efficiency and conservation. The Association
for the Conservation of Energy (ACE) stated that—
“… one of the best means of addressing worries about imports is to minimise
the amount that we need to import by minimising the amount that we
consume.” (23 May 2006, col ref 1879).
9. Throughout its short inquiry, the Committee considered what measures may
be taken to mitigate the expected rise in energy consumption, given the current
conditions and under current projections.
3
Energy efficiency measures – construction of new buildings
10. During the evidence sessions, the Committee heard a substantial amount of
evidence that energy efficiency measures are most effective if they are integrated
in the design and construction of new buildings. ScottishPower commented—
“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” (5 September 2006, col ref
1981).
11. In discussing the construction methods used in Scandinavia, the Committee
heard that this is due to energy efficiency measures being integrated in building
design. For example, it is common practice to run the water pipes up the centre of
a house, rather than against the outside wall where they are more likely to burst
during frost (Scottish Energy Officers Network, 5 September 2006, col ref 2002).
In its supplementary evidence, the Scottish Executive stated that the elemental
approach proposed for the 2007 Scottish energy standards for new dwellings has
thermal insulation levels that appear to be close to the current Finnish equivalent
(18 September 2006).
12. The Committee also considered whether the cost of integrating energy
efficient measures into the building design and process would be greater than
retrofitting - installing efficiency measures in existing buildings. Ofgem stated
that—
“One lesson to be learned is that constructing the fabric of our buildings to a
good and appropriate standard from the outset is a much more cost-effective
way to achieve efficient buildings than retrofitting buildings” (5 September
2006, col ref 1998).
13. Friends of the Earth Scotland gave the Committee two examples of new
buildings which have a high standard of insulation integrated into the building
design. A school designed by Gaia architects which requires no heating and a
Fyne Homes Limited social housing project on the Isle of Bute where each flat
requires only one radiator (23 May 2006, col ref 1886). In written evidence,
Scottish Natural Heritage state that their new headquarters has achieved the
highest BREEAM (BRE's Environmental Assessment Method) rating of any
building in the UK since the rating was introduced. The building has a large solar
atrium to trap solar heat in winter and to provide ventilation in summer.
Energy efficiency measures – existing buildings
14. During the inquiry, the Committee considered the standards of existing
buildings in Scotland, with regards to being energy efficient, and discussed with
witnesses the issue of energy efficiency measures being installed retrospectively.
15. Many of the witnesses who gave evidence to the Committee believed that,
whilst there are building regulation standards applied to the construction of new
buildings, no similar requirements are applied to existing buildings and that there is
4
no monitoring of a building’s construction following development. Energy for
Sustainable Development commented that—
“.. 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” (5 September 2006, col ref 1984).
16. Friends of the Earth Scotland referred to research in England which suggests
that up to one third of buildings do not meet building regulation standards. Friends
of the Earth Scotland stated that it has asked the Scottish Building Standards
Agency to carry out similar research to establish the situation in Scotland (23 May
2006, col ref 1881).
17. The Committee went on to consider the issue of the installation of energy
efficiency measures in existing buildings in more detail. Much of the evidence
relating to retrofitting highlighted that, due to a combination of the colder climate
and relatively poorer building standards in some housing, the focus to date has
been on providing insulation. Scottish Gas commented that—
“Such evidence as there is indicated 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” (5 September 2006, col ref 1983).
18. The Committee heard that the majority of the work done to date in the
domestic sector has been focused on social housing and those properties within
which are easier to install such measures. Energy Saving Trust stated–
“It is always rational to pick the lower-hanging fruit first. A lot of 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” (5 September
2006, col ref 1995).
19. The Committee heard that for tenement properties – as defined in the
Tenements (Scotland) Act 2004 as buildings divided into sectors (flats), usually for
domestic purposes, and which make up one quarter of housing in Scotland – the
installation of energy efficient measures is more complex. This is because they do
not have cavities in the walls and no loft spaces and so are, therefore, difficult to
insulate; tend to be made of sandstone, which is not very energy efficient; have
poor glazing and are prone to damp (5 September 2006, col ref 1995 and 1997).
20. In addition to the building structure of tenements making retrofitting difficult,
the Committee heard that the practical and legal structure of tenement living and
multiple occupancy make it difficult to approach a solution which is integrated for
the entire tenement block. For example, the tenement will be made up of
individual dwellings with individual heating systems, making the installation of
common or shared energy efficiency measures (including a shared outlay in
capital investment) more difficult to roll out (Energy Saving Trust, 5 September
2006, col ref 1997). In saying that, the Committee is aware that the Tenements
(Scotland) Act 2004 made provisions with regard to majority voting within
tenement properties for common repairs and upkeep.
5
21. Whilst many witnesses referred to the ‘challenges’ presented by the need to
improve the energy efficiency of tenement properties, the Committee did hear that
progress is being made. Energy Action Scotland informed the Committee about
Aberdeen Heat and Power Company Ltd which will install combined heat and
power plants at the bottom of high rise blocks in Aberdeen to provide heat and
power for the entire block (5 September 2006, col ref 2004).
22. Friends of the Earth Scotland spoke highly of the Scottish Executive’s central
heating programme and Warm Deal (which aims to tackle fuel poverty) and urged
the Scottish Executive to increase the funding for the programmes. The
organisation also praised the Scottish Executive’s initiative Loan Action Scotland,
which provides interest free loans to SMEs to install energy efficient measures
which can be paid back over five years.
23. In the Scottish Executive’s supplementary evidence, the Deputy First Minister
provided the example of Fife Council’s partner-wide Energy Strategy which covers
both the council services and wider community and operates community heating
schemes with projects under development to generate electricity from landfill gas.
The scheme also includes a Housing Energy Management Service which provides
all Fife residents with advice on energy efficiency, grant availability and renewable
technologies. The Deputy First Minister also gave further information on the
Central Energy Efficiency Fund which was announced in 2004 and provided £20m
to implement energy efficiency measures across the public sector in Scotland to
reduce carbon emissions. A formal interim evaluation of the local authority part of
the scheme is currently being undertaken and will be published after being
reported to the Scottish Executive in November 2006 (18 September 2006).
24. Scottish Gas gave the Committee details of a scheme which British Gas
delivers for local authorities in England. The scheme, which offers up to £100
discount on council tax plus the annual saving of £145, is provided to
householders who install cavity wall insulation. The Committee heard, however,
that the scheme cannot be used in Scotland because legislation disallows financial
incentives to be introduced within the council tax system. Scottish Gas
commented—
“We have climatic issues in Scotland, and we also appear to have relatively
poorer standards of insulation, yet practical and quite simple schemes are
being held back because of a legal loophole” (5 September 2006, col ref
1983-84)
25. During evidence, the Committee explored with Scottish Executive officials
whether the Scottish Executive was considering adopting a similar system in
Scotland. Officials stated that the Scottish Executive is currently undertaking a
review of local government finance but that “the issue you raise is on a list of
measures for consideration, but only after there has been more progress with the
review of local government finance” (12 September 2006, col ref 2033). The
Committee agreed that it would write to the Scottish Executive to confirm that it will
give consideration to this issue following the review of local government finance.
26. The Committee also heard that the current review of building regulations
being undertaken by the Scottish Building Standards Agency rules out the
6
development of micro renewable energy sources and that this “is a major missed
opportunity” (Friends of the Earth Scotland, 5 September 2006, col ref 1881).
Barriers to the wider use of energy efficiency measures
27. During its inquiry, the Committee considered the barriers which exist to the
installation of energy efficiency measures and how they could be overcome.
Witnesses suggested that a lack of interest and the potential high cost of
installation are the main reasons why measures are not installed. In written
evidence, Fred Dinning stated that—
“Many studies have focused on the failure of the economics to drive energy
efficiency gains. The conclusions are that some of these barriers relate to
lack of knowledge, some due to lack of management time, some due to lack
of capital to make the up-front investment and some simply on apathy”.
28. There was a general view that for building developers, energy efficiency
measures integrated into the design did not attract potential buyers and their extra
cost prevented developers including them as standard. It was agreed by many
witnesses that developers will construct according to the minimum standard but
anything beyond that will dilute their profit margin and are, therefore, unlikely to be
included voluntarily. Friends of the Earth Scotland summed up witnesses views
on the issue—
“In theory, our building regulations set a minimum standard for how to build
homes. In reality, however, builders are unlikely to go above building
standards because doing so puts them at a competitive disadvantage. For
that reason, we really need to aim high on building regulations” (23 May
2006, col ref 1886).
29. In relation to the rental sector (both for housing and business use), witnesses
argued that the lack of return on capital investment to improve the energy
efficiency on a building acted as a similar barrier to the installation of energy
efficiency measures for tenants.
30. Witnesses suggested, however, that the rationale behind many consumers’
reluctance to make an initial capital outlay for energy efficient measures does not
take into account the long term savings in relation to energy costs that such
measures can be expected to achieve—
“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” (Energy Saving Trust, 5 September 2006, col ref
2002).
31. In addition, the recent rise in energy prices might increase consumers’
awareness of, and demand for, such measures to improve the standard of their
accommodation.
7
Role for European Union in promoting energy efficiency measures
32. Throughout this inquiry, the Committee gave much thought to where the onus
on responsibility for being aware of energy efficiency issues rests – whether with
legislators or with consumers. The Committee heard evidence that there is an
important role for Europe in setting standards for energy efficiency. Given the
impact of new technology in further increasing electricity use and the globalisation
of the market place, the Carbon Trust commented that—
“Electricity is a big part of the equation and its use is growing. The IT
revolution plays a part in that. The EU perhaps has a part to play because
the products are sold on global markets. Global manufacturers will take note
only when big market blocs produce specifications for how energy efficient
pieces of kit must be. The use of electricity in IT equipment is an important
issue” (23 May 2006, col ref 1883).
33. Many witnesses pointed to the success of the White Goods Directive in
showing the potential role of the EU in this area. The directive, which established
the energy efficiency labelling of white goods, has been very successful in
providing consumers with the information to make educated choices when
purchasing such goods. It has also assisted in bringing about behavioural change
by putting energy efficiency concerns on the public agenda.
34. The Committee also heard, however, that in order for such regulations to
remain effective, the statutory requirements must remain at the forefront at
technology. Ofgem commented—
“Standards on appliances need to keep pace with the market. … 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” (5 September 2006, col
ref 2000).
35. This need to maintain pace with the market is increasingly relevant with the
rise of high energy use digital technology, commonly known as brown goods, and
witnesses were clear that the regulatory framework should be updated to take
account of the high energy use digital technology. ScottishPower commented
that—
“.. the steps that have been taken by appliance manufacturers in respect of
white goods … have worked. However, there is no such labelling for brown
goods, which would be a key move” (5 September 2006, col ref 1989).
36. There is a role for legislators in setting the wider statutory environment to
overcome these barriers. This could be through developing an awareness
campaign to inform and encourage greater demand from consumers for energy
efficient goods. This might arguably be more successful if carried out at European
level. On the basis of evidence heard by the Committee, there may also be a role
for introducing more stringent building regulations which would oblige developers
to incorporate energy efficient design and measures in buildings.
8
37. The Committee also considered energy efficiency trading schemes during its
inquiry, both for trading carbon credits through the EU Emissions Trading Scheme
and kilowatt hours through the proposed White Certificates Scheme. Concerns
were expressed in relation to the scale of such schemes, as the Carbon Trust was
concerned that many commercial participants in Scotland are not in a position to
trade with comparators in Europe. The Carbon Trust was also concerned that the
emissions cap has been placed too high to enable any meaningful trading of
credits and debits—
“We are concerned about whether a level playing field exists throughout
Europe and whether the emission caps are in place that will create a demand
for carbon credits. … You need to have meaningful caps to create a market
to create demand for carbon credits” (23 May 2006, col ref 1891).
38. When considering the proposed White Certificates Scheme, the Committee
heard evidence from ScottishPower and Scottish Gas that the proposal has been
overtaken by the current focus on reducing carbon emissions and that—
“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 (Energy Efficiency Commitment)” (Scottish Gas, 5 September
2006, col ref 1993).
39. In written evidence, the Energy Saving Trust referred to some research
funded by Defra which suggested that a full white certificate scheme would not be
appropriate at a GB level, and given the limited experience of such schemes
across Europe, we would advocate that the Commission should be facilitating the
sharing of best practice in this activity across Member States rather than seeking
to introduce an EU-wide scheme at this stage.
Role for consumers in adopting energy efficiency measures
40. Many witnesses stated that responsibility for being energy aware also rests
with consumers, not just legislators, but that this responsibility must be dependent
on consumers being given accurate and relevant information in order to make
informed choices. Witnesses argued that these informed choices have to be
based on knowledge about energy use of different products (informed, for
example, through the energy labelling on goods) and how consumers can
purchase more efficient goods. It is hoped that such information will encourage
behavioural change and a greater demand for products and goods which
incorporate energy efficient measures. Energy Action Scotland believe—
“We will never reduce consumption unless we give people clear information
about their consumption and the steps that they can take to reduce it” (5
September 2006, col ref 1999).
41. During its inquiry, the Committee also heard some examples of products that
can potentially be used to provide such information to consumers. The Committee
considered smart metering which measures the energy used by individual items,
although witnesses differed in their views of its cost effectiveness as the
9
Committee was informed that some options are more expensive to install and
operate than others. Scottish Gas gave the example of Electrasave, a devise
which measures the differences in energy use when appliances are switched on
and off (5 September 2006, col ref 1980). The Committee also discussed the
possibility of using thermal imaging to provide a tangible picture of the energy
inefficiency of some buildings.
Conclusion
42. The European and External Relations Committee submits this response to
the European Commission and asks that it considers the issues raised during its
inquiry when considering energy efficiency measures as part of the overall
development of a sustainable, competitive and secure energy policy at European
level.
Scottish parliament
Annexe A
1
Inquiry into the European Commission’s Green Paper on a Sustainable,
Competitive and Secure Energy Policy
Written evidence
Professor Fred Dinning
Dr Dave Reay, School of Geosciences, University of Edinburgh
Energy Efficiency Partnership
Council for Aluminium in Building
Scottish Natural Heritage
Energy Saving Trust
Ofgem
Friends of the Earth Scotland and Association for the Conservation of Energy
Highland Council
Oral evidence and associated written evidence
23 May 2006
Oral evidence
Andrew Warren, Association for the Conservation of Energy
Chas Booth, Friends of the Earth Scotland
John Stocks, Carbon Trust
Written evidence
Association for the Conservation of Energy and Friends of the Earth Scotland (joint
statement)
Carbon Trust
5 September 2006
Oral evidence
Kevin Pringle, Scottish Gas
Jim Paterson, ScottishPower
Shelia Scott, Energy for Sustainable Development
David Shearer, Building Research Establishment Scotland
Charles Hargreaves, Ofgem
Norman Kerr, Energy Action Scotland
Mike Thornton, Energy Saving Trust
Ron Hill, Scottish Energy Officers Network
Written evidence
Energy Action Trust
ScottishPower
12 September 2006
Oral evidence
Jane Morgan, Head of Energy and Telecommunications Division, Scottish
Executive
Annexe A
2
Trudy Nicolson, Head of Energy Efficiency Unit, Scottish Executive
Written evidence
Scottish Executive
Supplementary written evidence
Supplementary written evidence has been received by the following organisations
and can be obtained in hard copy from the Clerks.
Energy Saving Trust - ‘The rise of the machines – A review of energy using
produces in the home from the 1970s to today’
ScottishPower – ‘Our Energy Challenge – Securing clean, affordable energy for
the long term’
Scottish Executive response to the UK energy review
Sustainable Development Commission –response to review of the UK Climate
Change Programme

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Scottish parliament

  • 1. European and External Relations Committee Remit and membership Remit: 1. The remit of the European and External Relations Committee is to consider and report on- (a) proposals for European Communities legislation; (b) the implementation of European Communities legislation; (c) any European Communities or European Union issue; (d) the development and implementation of the Scottish Administration's links with countries and territories outside Scotland, the European Communities (and their institutions) and other international organisations; and (e) co-ordination of the international activities of the Scottish Administration. 2. The Committee may refer matters to the Parliamentary Bureau or other committees where it considers it appropriate to do so. 3. The convener of the Committee shall not be the convener of any other committee whose remit is, in the opinion of the Parliamentary Bureau, relevant to that of the Committee. 4. The Parliamentary Bureau shall normally propose a person to be a member of the Committee only if he or she is a member of another committee whose remit is, in the opinion of the Parliamentary Bureau, relevant to that of the Committee. (Standing Orders of the Scottish Parliament, Rule 6.8) Membership: Linda Fabiani (Convener) Dennis Canavan Bruce Crawford
  • 2. Phil Gallie Mr Charlie Gordon John Home Robertson Gordon Jackson Irene Oldfather (Deputy Convener) Mr Jim Wallace Committee Clerking Team: Clerk to the Committee Jim Johnston Assistant Clerk Emma Berry Gerry McInally
  • 3. 1 European and External Relations Committee Response to the European Commission's Green Paper on a Sustainable, Competitive and Secure Energy Policy Introduction 1. The European and External Relations Committee of the Scottish Parliament welcomes the opportunity to respond to the European Commission’s green paper on a sustainable, competitive and secure energy policy1 . 2. The Committee agreed at its meeting on 28 March 2006 that it would respond to the consultation and that it would hold a short inquiry to inform its response. At its meeting on 9 May 2006, the Committee agreed the remit and timetable for the inquiry. Given the scope of the consultation, the Committee agreed that it would focus its response on the section of the green paper on climate change, specifically in relation to energy efficiency. 3. The Committee launched a general call for evidence to inform its consideration and all submissions received are available to view on the Committee’s web pages2 . The Committee also took oral evidence at its meetings on 23 May and 5 and 12 September 2006. A list of those organisations which submitted written evidence and gave oral evidence is attached at Annexe A. The Committee thanks all those individuals and organisations who took the time to provide evidence to the Committee’s inquiry. 4. In responding to this consultation, the Committee is mindful of related inquiries and reports by other committees of the Scottish Parliament. The Environment and Rural Development Committee published the report on its inquiry into Climate Change on 18 May 20053 and the Enterprise and Culture Committee published the report on its inquiry into renewable energy on 30 June 20054 . Issues identified during the Committee’s consideration 5. During the inquiry, the Committee identified several themes which ran through its evidence taking and consideration— 1 http://ec.europa.eu/energy/green-paper-energy/doc/2006_03_08_gp_document_en.pdf 2 http://www.scottish.parliament.uk/business/committees/europe/index.htm 3 http://www.scottish.parliament.uk/business/committees/environment/reports-05/rar05-05-vol01- 01.htm 4 http://www.scottish.parliament.uk/business/committees/enterprise/reports-04/elr04-06-01.htm
  • 4. 2 • General themes and wider context to the debate; • Energy efficiency measures in the construction of new buildings; • Energy efficiency measures in existing buildings; • Barriers to the installation of energy efficiency measures in buildings; and • Responsibility for promoting energy efficiency measures. General themes 6. It was clear from oral evidence that the recent increase in energy prices has elevated energy efficiency measures and concerns up the political agenda and into the public consciousness. This has created a greater incentive to save energy and money through energy efficiency (using the same amount of energy for greater output) and energy conservation (using less energy for the same amount of output). As ScottishPower commented— “(With energy price rises) .. the incentive has never been greater for people to try to moderate their consumption of gas and electricity by using less, by switching off their standby buttons or by investing in insulation or micro renewables.” (5 September 2006, col ref 1987). 7. During discussions, the Committee heard that energy suppliers are expecting that demand for energy will continue to rise in the future, particularly with the increased consumption of high energy use digital technology. When questioned by the Committee on whether it was likely that the demand for electricity will continue to increase, ScottishPower confirmed that— “Our expectation is exactly that. With new digital technology coming in, the demand per household will increase substantially.” (5 September 2006, col ref 1989). 8. The Committee also explored the link between the focus of its inquiry – energy efficiency – with one of the broader goals of the proposed policy – security of energy supply. Concerns relating to energy supply have also given increased importance to the need for energy efficiency and conservation. The Association for the Conservation of Energy (ACE) stated that— “… one of the best means of addressing worries about imports is to minimise the amount that we need to import by minimising the amount that we consume.” (23 May 2006, col ref 1879). 9. Throughout its short inquiry, the Committee considered what measures may be taken to mitigate the expected rise in energy consumption, given the current conditions and under current projections.
  • 5. 3 Energy efficiency measures – construction of new buildings 10. During the evidence sessions, the Committee heard a substantial amount of evidence that energy efficiency measures are most effective if they are integrated in the design and construction of new buildings. ScottishPower commented— “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” (5 September 2006, col ref 1981). 11. In discussing the construction methods used in Scandinavia, the Committee heard that this is due to energy efficiency measures being integrated in building design. For example, it is common practice to run the water pipes up the centre of a house, rather than against the outside wall where they are more likely to burst during frost (Scottish Energy Officers Network, 5 September 2006, col ref 2002). In its supplementary evidence, the Scottish Executive stated that the elemental approach proposed for the 2007 Scottish energy standards for new dwellings has thermal insulation levels that appear to be close to the current Finnish equivalent (18 September 2006). 12. The Committee also considered whether the cost of integrating energy efficient measures into the building design and process would be greater than retrofitting - installing efficiency measures in existing buildings. Ofgem stated that— “One lesson to be learned is that constructing the fabric of our buildings to a good and appropriate standard from the outset is a much more cost-effective way to achieve efficient buildings than retrofitting buildings” (5 September 2006, col ref 1998). 13. Friends of the Earth Scotland gave the Committee two examples of new buildings which have a high standard of insulation integrated into the building design. A school designed by Gaia architects which requires no heating and a Fyne Homes Limited social housing project on the Isle of Bute where each flat requires only one radiator (23 May 2006, col ref 1886). In written evidence, Scottish Natural Heritage state that their new headquarters has achieved the highest BREEAM (BRE's Environmental Assessment Method) rating of any building in the UK since the rating was introduced. The building has a large solar atrium to trap solar heat in winter and to provide ventilation in summer. Energy efficiency measures – existing buildings 14. During the inquiry, the Committee considered the standards of existing buildings in Scotland, with regards to being energy efficient, and discussed with witnesses the issue of energy efficiency measures being installed retrospectively. 15. Many of the witnesses who gave evidence to the Committee believed that, whilst there are building regulation standards applied to the construction of new buildings, no similar requirements are applied to existing buildings and that there is
  • 6. 4 no monitoring of a building’s construction following development. Energy for Sustainable Development commented that— “.. 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” (5 September 2006, col ref 1984). 16. Friends of the Earth Scotland referred to research in England which suggests that up to one third of buildings do not meet building regulation standards. Friends of the Earth Scotland stated that it has asked the Scottish Building Standards Agency to carry out similar research to establish the situation in Scotland (23 May 2006, col ref 1881). 17. The Committee went on to consider the issue of the installation of energy efficiency measures in existing buildings in more detail. Much of the evidence relating to retrofitting highlighted that, due to a combination of the colder climate and relatively poorer building standards in some housing, the focus to date has been on providing insulation. Scottish Gas commented that— “Such evidence as there is indicated 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” (5 September 2006, col ref 1983). 18. The Committee heard that the majority of the work done to date in the domestic sector has been focused on social housing and those properties within which are easier to install such measures. Energy Saving Trust stated– “It is always rational to pick the lower-hanging fruit first. A lot of 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” (5 September 2006, col ref 1995). 19. The Committee heard that for tenement properties – as defined in the Tenements (Scotland) Act 2004 as buildings divided into sectors (flats), usually for domestic purposes, and which make up one quarter of housing in Scotland – the installation of energy efficient measures is more complex. This is because they do not have cavities in the walls and no loft spaces and so are, therefore, difficult to insulate; tend to be made of sandstone, which is not very energy efficient; have poor glazing and are prone to damp (5 September 2006, col ref 1995 and 1997). 20. In addition to the building structure of tenements making retrofitting difficult, the Committee heard that the practical and legal structure of tenement living and multiple occupancy make it difficult to approach a solution which is integrated for the entire tenement block. For example, the tenement will be made up of individual dwellings with individual heating systems, making the installation of common or shared energy efficiency measures (including a shared outlay in capital investment) more difficult to roll out (Energy Saving Trust, 5 September 2006, col ref 1997). In saying that, the Committee is aware that the Tenements (Scotland) Act 2004 made provisions with regard to majority voting within tenement properties for common repairs and upkeep.
  • 7. 5 21. Whilst many witnesses referred to the ‘challenges’ presented by the need to improve the energy efficiency of tenement properties, the Committee did hear that progress is being made. Energy Action Scotland informed the Committee about Aberdeen Heat and Power Company Ltd which will install combined heat and power plants at the bottom of high rise blocks in Aberdeen to provide heat and power for the entire block (5 September 2006, col ref 2004). 22. Friends of the Earth Scotland spoke highly of the Scottish Executive’s central heating programme and Warm Deal (which aims to tackle fuel poverty) and urged the Scottish Executive to increase the funding for the programmes. The organisation also praised the Scottish Executive’s initiative Loan Action Scotland, which provides interest free loans to SMEs to install energy efficient measures which can be paid back over five years. 23. In the Scottish Executive’s supplementary evidence, the Deputy First Minister provided the example of Fife Council’s partner-wide Energy Strategy which covers both the council services and wider community and operates community heating schemes with projects under development to generate electricity from landfill gas. The scheme also includes a Housing Energy Management Service which provides all Fife residents with advice on energy efficiency, grant availability and renewable technologies. The Deputy First Minister also gave further information on the Central Energy Efficiency Fund which was announced in 2004 and provided £20m to implement energy efficiency measures across the public sector in Scotland to reduce carbon emissions. A formal interim evaluation of the local authority part of the scheme is currently being undertaken and will be published after being reported to the Scottish Executive in November 2006 (18 September 2006). 24. Scottish Gas gave the Committee details of a scheme which British Gas delivers for local authorities in England. The scheme, which offers up to £100 discount on council tax plus the annual saving of £145, is provided to householders who install cavity wall insulation. The Committee heard, however, that the scheme cannot be used in Scotland because legislation disallows financial incentives to be introduced within the council tax system. Scottish Gas commented— “We have climatic issues in Scotland, and we also appear to have relatively poorer standards of insulation, yet practical and quite simple schemes are being held back because of a legal loophole” (5 September 2006, col ref 1983-84) 25. During evidence, the Committee explored with Scottish Executive officials whether the Scottish Executive was considering adopting a similar system in Scotland. Officials stated that the Scottish Executive is currently undertaking a review of local government finance but that “the issue you raise is on a list of measures for consideration, but only after there has been more progress with the review of local government finance” (12 September 2006, col ref 2033). The Committee agreed that it would write to the Scottish Executive to confirm that it will give consideration to this issue following the review of local government finance. 26. The Committee also heard that the current review of building regulations being undertaken by the Scottish Building Standards Agency rules out the
  • 8. 6 development of micro renewable energy sources and that this “is a major missed opportunity” (Friends of the Earth Scotland, 5 September 2006, col ref 1881). Barriers to the wider use of energy efficiency measures 27. During its inquiry, the Committee considered the barriers which exist to the installation of energy efficiency measures and how they could be overcome. Witnesses suggested that a lack of interest and the potential high cost of installation are the main reasons why measures are not installed. In written evidence, Fred Dinning stated that— “Many studies have focused on the failure of the economics to drive energy efficiency gains. The conclusions are that some of these barriers relate to lack of knowledge, some due to lack of management time, some due to lack of capital to make the up-front investment and some simply on apathy”. 28. There was a general view that for building developers, energy efficiency measures integrated into the design did not attract potential buyers and their extra cost prevented developers including them as standard. It was agreed by many witnesses that developers will construct according to the minimum standard but anything beyond that will dilute their profit margin and are, therefore, unlikely to be included voluntarily. Friends of the Earth Scotland summed up witnesses views on the issue— “In theory, our building regulations set a minimum standard for how to build homes. In reality, however, builders are unlikely to go above building standards because doing so puts them at a competitive disadvantage. For that reason, we really need to aim high on building regulations” (23 May 2006, col ref 1886). 29. In relation to the rental sector (both for housing and business use), witnesses argued that the lack of return on capital investment to improve the energy efficiency on a building acted as a similar barrier to the installation of energy efficiency measures for tenants. 30. Witnesses suggested, however, that the rationale behind many consumers’ reluctance to make an initial capital outlay for energy efficient measures does not take into account the long term savings in relation to energy costs that such measures can be expected to achieve— “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” (Energy Saving Trust, 5 September 2006, col ref 2002). 31. In addition, the recent rise in energy prices might increase consumers’ awareness of, and demand for, such measures to improve the standard of their accommodation.
  • 9. 7 Role for European Union in promoting energy efficiency measures 32. Throughout this inquiry, the Committee gave much thought to where the onus on responsibility for being aware of energy efficiency issues rests – whether with legislators or with consumers. The Committee heard evidence that there is an important role for Europe in setting standards for energy efficiency. Given the impact of new technology in further increasing electricity use and the globalisation of the market place, the Carbon Trust commented that— “Electricity is a big part of the equation and its use is growing. The IT revolution plays a part in that. The EU perhaps has a part to play because the products are sold on global markets. Global manufacturers will take note only when big market blocs produce specifications for how energy efficient pieces of kit must be. The use of electricity in IT equipment is an important issue” (23 May 2006, col ref 1883). 33. Many witnesses pointed to the success of the White Goods Directive in showing the potential role of the EU in this area. The directive, which established the energy efficiency labelling of white goods, has been very successful in providing consumers with the information to make educated choices when purchasing such goods. It has also assisted in bringing about behavioural change by putting energy efficiency concerns on the public agenda. 34. The Committee also heard, however, that in order for such regulations to remain effective, the statutory requirements must remain at the forefront at technology. Ofgem commented— “Standards on appliances need to keep pace with the market. … 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” (5 September 2006, col ref 2000). 35. This need to maintain pace with the market is increasingly relevant with the rise of high energy use digital technology, commonly known as brown goods, and witnesses were clear that the regulatory framework should be updated to take account of the high energy use digital technology. ScottishPower commented that— “.. the steps that have been taken by appliance manufacturers in respect of white goods … have worked. However, there is no such labelling for brown goods, which would be a key move” (5 September 2006, col ref 1989). 36. There is a role for legislators in setting the wider statutory environment to overcome these barriers. This could be through developing an awareness campaign to inform and encourage greater demand from consumers for energy efficient goods. This might arguably be more successful if carried out at European level. On the basis of evidence heard by the Committee, there may also be a role for introducing more stringent building regulations which would oblige developers to incorporate energy efficient design and measures in buildings.
  • 10. 8 37. The Committee also considered energy efficiency trading schemes during its inquiry, both for trading carbon credits through the EU Emissions Trading Scheme and kilowatt hours through the proposed White Certificates Scheme. Concerns were expressed in relation to the scale of such schemes, as the Carbon Trust was concerned that many commercial participants in Scotland are not in a position to trade with comparators in Europe. The Carbon Trust was also concerned that the emissions cap has been placed too high to enable any meaningful trading of credits and debits— “We are concerned about whether a level playing field exists throughout Europe and whether the emission caps are in place that will create a demand for carbon credits. … You need to have meaningful caps to create a market to create demand for carbon credits” (23 May 2006, col ref 1891). 38. When considering the proposed White Certificates Scheme, the Committee heard evidence from ScottishPower and Scottish Gas that the proposal has been overtaken by the current focus on reducing carbon emissions and that— “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 (Energy Efficiency Commitment)” (Scottish Gas, 5 September 2006, col ref 1993). 39. In written evidence, the Energy Saving Trust referred to some research funded by Defra which suggested that a full white certificate scheme would not be appropriate at a GB level, and given the limited experience of such schemes across Europe, we would advocate that the Commission should be facilitating the sharing of best practice in this activity across Member States rather than seeking to introduce an EU-wide scheme at this stage. Role for consumers in adopting energy efficiency measures 40. Many witnesses stated that responsibility for being energy aware also rests with consumers, not just legislators, but that this responsibility must be dependent on consumers being given accurate and relevant information in order to make informed choices. Witnesses argued that these informed choices have to be based on knowledge about energy use of different products (informed, for example, through the energy labelling on goods) and how consumers can purchase more efficient goods. It is hoped that such information will encourage behavioural change and a greater demand for products and goods which incorporate energy efficient measures. Energy Action Scotland believe— “We will never reduce consumption unless we give people clear information about their consumption and the steps that they can take to reduce it” (5 September 2006, col ref 1999). 41. During its inquiry, the Committee also heard some examples of products that can potentially be used to provide such information to consumers. The Committee considered smart metering which measures the energy used by individual items, although witnesses differed in their views of its cost effectiveness as the
  • 11. 9 Committee was informed that some options are more expensive to install and operate than others. Scottish Gas gave the example of Electrasave, a devise which measures the differences in energy use when appliances are switched on and off (5 September 2006, col ref 1980). The Committee also discussed the possibility of using thermal imaging to provide a tangible picture of the energy inefficiency of some buildings. Conclusion 42. The European and External Relations Committee submits this response to the European Commission and asks that it considers the issues raised during its inquiry when considering energy efficiency measures as part of the overall development of a sustainable, competitive and secure energy policy at European level.
  • 13. Annexe A 1 Inquiry into the European Commission’s Green Paper on a Sustainable, Competitive and Secure Energy Policy Written evidence Professor Fred Dinning Dr Dave Reay, School of Geosciences, University of Edinburgh Energy Efficiency Partnership Council for Aluminium in Building Scottish Natural Heritage Energy Saving Trust Ofgem Friends of the Earth Scotland and Association for the Conservation of Energy Highland Council Oral evidence and associated written evidence 23 May 2006 Oral evidence Andrew Warren, Association for the Conservation of Energy Chas Booth, Friends of the Earth Scotland John Stocks, Carbon Trust Written evidence Association for the Conservation of Energy and Friends of the Earth Scotland (joint statement) Carbon Trust 5 September 2006 Oral evidence Kevin Pringle, Scottish Gas Jim Paterson, ScottishPower Shelia Scott, Energy for Sustainable Development David Shearer, Building Research Establishment Scotland Charles Hargreaves, Ofgem Norman Kerr, Energy Action Scotland Mike Thornton, Energy Saving Trust Ron Hill, Scottish Energy Officers Network Written evidence Energy Action Trust ScottishPower 12 September 2006 Oral evidence Jane Morgan, Head of Energy and Telecommunications Division, Scottish Executive
  • 14. Annexe A 2 Trudy Nicolson, Head of Energy Efficiency Unit, Scottish Executive Written evidence Scottish Executive Supplementary written evidence Supplementary written evidence has been received by the following organisations and can be obtained in hard copy from the Clerks. Energy Saving Trust - ‘The rise of the machines – A review of energy using produces in the home from the 1970s to today’ ScottishPower – ‘Our Energy Challenge – Securing clean, affordable energy for the long term’ Scottish Executive response to the UK energy review Sustainable Development Commission –response to review of the UK Climate Change Programme