1. Heat and Energy Saving 02 March 2009 John Russell john.russell@decc.gsi.gov.uk

2. Policy Objectives Help people to reduce energy bills over the long term Mitigating Climate Change Secure and Diverse Energy Supplies Maximising Economic Opportunities

3. There are three components to the policy challenge 3 Households Communities Large Scale Heat & CHP 70% of the 2050 housing stock is already built. To meet our target of an 80% cut we will need ensure emissions from households are approaching zero Continued pressure on fuel bills for all households with particular effects on the poorest: need both to deliver carbon budgets and tackle fuel poverty Current policies (EEC/CERT) have delivered much but need for a step change in provision of energy saving and heating measures People may be more motivated to act in concert with their friends and neighbours. Some local authorities have shown that co-ordinated local action is effective; and some measures, such as district heating, need to be installed at community level We have a clear policy framework to drive energy efficiency in large businesses – EU ETS, Climate Change Agreements, Carbon Reduction Commitment. For SMEs our information base is very limited – we hope to use the energy savings consultation to build our understanding

4. Households 4 What is the challenge? By 2050 we need to have reduced carbon emissions from households to a minimal level. On the way to this, we could aim to have completed all of the cost-effective heat and insulation measures by 2030 By 2015 we should have completed all of the loft and cavity wall insulation that is practicable What will be needed to deliver this? Different houses will need different measures to help them save energy and reduce their bills Newer houses require simple insulation (cavity wall and loft) and then the offer of renewable heating technology – such as solar panels to heat their water - as well as smart meters Older houses (especially the c35% built before WWII) will need more radical insulation changes as well as renewable heat or access to low carbon heat such as connection to heat networks Energy inefficient house Energy efficient house with renewables/low carbon heating

5. Consultation vision 5 All homes received whole house treatment by 2030 with 7 million offered by 2020 –Comprehensive co-ordinated advice service which considers the options for whole house including insulation, heating and micro generation. –New financial support for substantial heat and energy saving improvements with payments linked to house rather than person and costs offset by energy bill savings. –Consideration of whether a new delivery model is needed to allow more coordinated approach to rolling out improvements house-by-house and street-by-street. –Consideration of whether ambitious targets require more direction through regulation in the future.

6. Financial savings –comprehensive insulation can save £430 per year –Solar water heating can save £130-£300 per year Carbon Savings –Up to 44 MtCO2 in 2020 –Equivalent to 30% reduction in emissions from households compared to 2006 Economic benefits –34,000 jobs installing and maintaining whole house packages Demand reduction –Gas demand could fall by 12% by 2020 The benefits

7. Our policies will have to consider bills and carbon emissions – and these impacts are related 7 Impact on bills Improving homes reduces bills for those households But the cost of installing measures increases prices for those who do not take action Impact on emissions Energy efficiency and heat are essential to meeting carbon budgets These are linked: Trade-off between prioritising efficient carbon cuts or achieving a particular distribution of benefits

8. Opportunities for construction industry Major retrofit programme will involve substantial building work e.g solid wall insulation. New financial support to encourage householder action. Need to up-skill trades to carry out energy saving and heating improvement at same time as other work. Need to build capacity overall to meet greater challenge and work with any new delivery models.

9. Next steps 9 Heat and Energy Savings Strategy consultation –closes on 8 May 2009. Download from DECC website. Targeted consumer and stakeholder engagement programme Household sector, SMEs; Public Estate; Industry and Local Government Final policy package later this year – taking account of EU Renewable Energy Target; Carbon Budgets and UK emissions reduction targets