Energy Institute: Policymakers must prioritise ‘poor child’ energy efficiency

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Energy efficiency should be prioritised and supported by government, according to a comprehensive survey of Energy Institute (EI) members. Yet it remains the “poor child” of energy policy, according to Institute vice president and former National Grid CEO, Steve Holliday.

Policymakers should also listen carefully to industry, “those who understand how policies will be delivered on the ground” when addressing the energy efficiency void, said Professor Jim Skea, EI president. The Institute polls members every year to form a snapshot of energy challenges (see the data here).

Asked what measures the UK should prioritise in the shift towards a low carbon economy, 64% of respondents answered ‘supporting energy efficiency’. This was around double the level of respondents (34%) that answered ‘support for nuclear energy’.

Holliday lauded the success of government policies in decarbonising the power sector and incentivising renewables. That same approach should now be applied to energy efficiency.

“Now is the time to readjust,” he said. “We need a better, more consistent set of policies for energy efficiency. Whichever box you want to focus on – security, emissions, affordability – energy efficiency ticks it. Energy efficiency is probably the easiest [element] to do well, but there is not enough policy work being done.”

Outlining the report’s key findings, EI members also want the vast majority of EU energy laws “lifted and shifted into UK legislation,” said Holliday, “although opinion is divided on the EU ETS and State Aid.”

Perhaps related to the State Aid question, EI members, while generally positive about the outcomes delivered by Energy Market Reform (EMR), were less convinced about the success of the capacity market.

Post-Brexit, it may be that State Aid is no longer a consideration, creating an opportunity to refine support for specific generation technologies. However, stability in the transition period is critical, according to Skea.

“Stable, long-term policy comes up every year as key message [from members],” he said. “But the Brexit vote, bringing with it increased uncertainties around energy policy, brings that into sharp focus. Members told us they want a smooth transition of energy and climate change policies as we move through the Brexit target.”

In the long-term, some 77% of those polled think the UK will miss the 5th Carbon budget target, and Skea called on government to “urgently” release the long-waited Clean Growth Plan.

In the short-term, most respondents (72%) believe the UK faces “moderate” electricity price rises in 2017 driven by renewables and network costs. A significant minority (44%) expect gas prices to rise by up to 5%, with supplier costs “seen to have a significantly greater impact than in previous years” due to commodity prices and Sterling fluctuations.

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