Monthly Archives: November 2012

Energy and Climate Questions to the Mayor

November 2012: This month the Mayor has been asked questions in relation to: the way the supplier obligation support for energy efficiency works and its shortfalls in terms of London;  promotion of anaerobic digestion plants through the London Plan;  how the GLA’s asset strategy can promote the low carbon economy; compensating for unavoidable carbon emissions during the Olympic Games; the Mayor’s view on the EU Emissions Trading Scheme (EUETS) and the international response to aviation being included in the EUETS.

Previous questions to the Mayor can be found here.

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‘ New Energy Efficiency Scheme could add over £94 to energy bills’

27 November 2012: Energy sector trade body Energy UK has published research undertaken by NERA on what they believe are errors in the Government’s assumptions of the cost per household of the new Energy Company Obligation (ECO). The report’s findings suggest that:

  • DECC estimated that the ECO would cost energy suppliers £1,300 million per year (about £53 per customer per annum). ..Our analysis suggests that correcting unreliable assumptions in DECC’s modelling would raise the estimated cost of the programme to around £1,700 million per annum (ca. £69 per customer per annum).
  • In addition, there may be a problem with DECC’s reliance on a “stated preference” study, a form of customer research which is known to suffer from a bias in the case of environmental programmes (i.e. the “warm glow” of appearing to favour good works leads people to state that they will pay more for environmental programmes than they will pay in reality). DECC has not published the study, so it is difficult to quantify precisely the impact of any bias inherent in the answers. A simple and transparent sensitivity is to assume that respondents might have ignored the “hassle costs” that an ECO project would impose on them. Adjusting DECC’s model of customer preferences by a comparable amount raises the cost of the programme further still, to around £2,350 million per annum (ca. £94 per customer perannum), but the final cost could be much higher.

Download the report here – The Costs of the Energy Company Obligation.

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    The impact on the fuel poor of the reduction in fuel poverty budgets in England

    27  November 2012: Association of Conservation of Energy and Energy Bill Revolution campaign report setting out how the Government has significantly reduced the financial support it gives the fuel poor. The key findings of the research are as follows:

    • Firstly, we find that the total budget likely to be reaching the fuel poor in England falls from £1.191 billion in 2009 to £879 million in 2013. This is a reduction of 26%.
    • Secondly, we find that of the total budget reaching the fuel poor, the energy efficiency budget in England declines from £376 million in 2009 to £209 million in 2013, a reduction of 44%.
    • Thirdly, we estimate that of this total energy efficiency budget reaching the fuel poor, the number of households in England receiving energy efficiency measures declines from 150,000 households – already just 3.8% of fuel poor households – to 100,000 households, an even smaller 2.6% of households projected by DECC to be fuel poor in 2013. This is a reduction of 33% from a base that was already too low. One of the main reasons for this decline is the elimination of the Warm Front programme in 2013.
    • Fourthly, we find that although the programmes are slightly better targeted in 2013, the proportion of fuel poor households in England actually receiving support from the total budget increases from only 31% to 33%.

    The report can be downloaded here.

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    The Mayor states national energy policy “in chaos”

    November 2012: Further to his points made on fuel poverty and energy efficiency at last week’s Mayoral Question Time session, the Mayor also made some forthright statements on the current state of the UK’s energy policy (see page 44 of session transcript here ).

    ” I happen to think that the energy  policy of this country is in chaos at the moment and we need to sort it out.

    “…prices are going up but supply is increasingly insecure.”

    “It is pretty obvious to everybody that the current strategy is incoherent.

    “We seem to  be going for more and more wind farms which are not actually doing the job.”

    The Mayor stated that such concerns led to the convening of his first ‘electricity summit’ earlier this month and to the formation of  a ‘High-level Working Group with the energy industry to examine infrastructure and investment issues in relation to London’s current and future energy needs. The group’s work will begin in January 2013.
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    Has the Mayor ‘shown enough political leadership to tackle fuel poverty in London’?

    November 2012: This was the question asked of the Mayor at last week’s Question Time session with the London Assembly in City Hall. The transcript of the discussion has just been posted on the GLA’s website – the fuel poverty section runs from pages 43-46. The Mayor responded with the following points:

    • On recent increases in energy prices the Mayor stated that “We have repeatedly had the energy companies in .  What they are getting away with at the moment is the claim that they are obliged to spend so much on renewables and energy efficiency of one kind or another and their claim is that that is pushing up the cost of providing energy. Whether or not that is true is very, very hard for me to evaluate.”
    • The Mayor has brought up London’s specific energy issues directly with DECC –  “I have been in touch with Greg Barker who is responsible for this and my Office has been in touch with the Department repeatedly for a long time.”
    • That we are committed to expanding our policy of retrofitting.  I do not pledge that we can do that in all homes and in many cases the housing stock in London does not make it easy for us to do this but we are going ahead, as I say, with a programme that I think not only offers the opportunity for home owners to cut their bills but also offers massive scope for employment. I think it is a shame that successive Governments have not taken this up more vigorously.”
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    The DECC-Local Government MoU

    November 2012: A recent Parliamentary Question has provided an update, of sorts, on the DECC-Local Government MoU. Firstly – a quick re-cap. On 9 March 2011 Chris Huhne, the former Secretary of State for Energy and Climate Change, signed a “ground-breaking Memorandum of Understanding (MOU) designed to recognise the pivotal role local councils have in tackling climate change.See the full news release issued at the time here. The MoU itself can be downloaded here.

    The MoU set out how DECC and the Local Government (LG) Group would work together to help and encourage all councils to take firm action to:

    • reduce the carbon emissions from their own estate and operations
    • reduce carbon emissions from homes, businesses and transport infrastructure, creating more, appropriate renewable energy generation, using council influence and powers; and
    • participate in national carbon reduction initiatives at the local level, particularly the roll out of the Green Deal, smart metering and renewable energy deployment.

    The MoU was to be underpinned by a number of actions including a management board on which DECC and the LG Group will be represented and an action plan that would take forward specific actions outlined in the LG Group ‘offer’ to DECC.

    Though there has been some movement in DECC’s relationship with local government this year, specifically the publication of revised HECA guidance, and the commissioning of the Committee on Climate Change to provide guidance for local authorities (also see here) on reducing carbon emissions, there has been next to no mention of the MoU. It was therefore useful that Shadow Energy Minister Luciana Berger MP recently raised the issue of progress on some  specific actions raised in the MoU:

    Luciana Berger: To ask the Secretary of State for Energy and Climate Change (1) with reference to his Department’s Memorandum of Understanding with the Local Government Group, what steps his Department is taking to ensure that its policy-making process takes account of the role of local councils in achieving or developing policy; [126591]
    (2) when his Department plans to publish a review of the Memorandum of Understanding between his Department and the Local Government Group; [126592]
    (3) whether he has met senior political representatives from the Local Government Group of the Local Government Association to review the Memorandum of Understanding, the Annual Report and council action on climate change set out in the Memorandum of Understanding between his Department and the Local Government Group; [126593]
    (4) which senior civil servants from his Department have been assigned to work with the Local Government Association on steps to ensure that the milestones in Annex A of the Memorandum of Understanding between his Department and the Local Government Group are met; [126596]
    (5) what meetings his Department has facilitated between the Local Government Group and other Government departments as set out in the Memorandum of Understanding between his Department and the Local Government Group. [126597]

    Gregory Barker: My officials and I hold discussions with the Local Government Association (LGA) on a range of policy issues of mutual interest, including on the memorandum of understanding (MoU).
    To my knowledge, the Department has not facilitated meetings between the LGA and other Government Departments.
    I am currently discussing with the LGA the report of progress against the MoU. This work is led in DECC by officials from the Energy Efficiency Deployment Office.

    A further PQ on another MoU action elicited a similar disappointing response:

    Luciana Berger: To ask the Secretary of State for Energy and Climate Change (1) who sits on his Department’s Devolved, Sub-National Reform and Local Carbon Accountability Project Board; [126594]
    (2) how many times his Department’s Devolved, Sub-National Reform and Local Carbon Accountability Project Board has met since March 2011. [126595]

    Gregory Barker: The Devolved, Sub-National Reform and Local Carbon Accountability Project Board membership comprised officials from DECC, the Department of Communities and Local Government, HM Treasury, Department of Business, Innovation and Skills and the Local Government Association.
    There have been no meetings of the board since March 2011.

    A final (to date) attempt by Ms Berger to find out how DECC was working with local government on energy issues didn’t help either.

    A speech by Ed Davey to the LGA earlier this year highlighted the importance of local authorities stating “the more I do the job, it’s clearer that national government can’t deliver on its energy and climate change policy without local government.” It’s hence a great shame that this unique relationship on energy and climate issues between central and local government has been all but abandoned.

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    DECC to support Mayor’s RE:FIT programme

    November 2012:  Amongst the various proposals set out in the Government recently published energy efficiency strategy is one relating to the Mayor’s energy efficiency retrofit programme targeted at public sector buildings, RE:FIT, with DECC announcing that the Department will be:

    34.  …funding the initial rollout of the RE:FIT programme nation-wide to public sector organisations and will work with Local Partnerships and the Government Procurement Service to establish this support. The Greater London Authority has pioneered the Mayor of London’s award winning programme to deliver the energy efficiency improvement of the public sector estate. This is achieved through a simplified ESCO procurement framework and the provision of a RE:FIT Programme Delivery Unit team to provide technical support to projects.

    35.  The RE:FIT concept was initially piloted in 42 public sector buildings across London.These projects retrofitted energy savings measures to approximately 146,000m2 of building space, delivering over 7,000 tonnes reduction in carbon emissions and an average 28% reduction in energy consumption identified.The total spend was £7 million with a simple payback period of 7 years. Since the success of this pilot over 100 buildings have now successfully undergone retrofits and over 50 organisations, including Local Authorities, NHS Trusts, and Universities, have committed to using RE:FIT and the project pipeline contains in excess of 300 further properties. A new RE:FIT Framework has recently been tendered which further develops the approach and enables a wide range of financing options to be used.

    Further information on the Mayor’s RE:FIT programme can be found here. No further information on the national rollout of RE:FIT appears to be available as yet.

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    DECC Community Energy Strategy Update

    November 2012: DECC’s recently released Energy Efficiency Strategy includes the following update on its work to develop the first ever Community Energy Strategy for the UK:

    “DECC is working with stakeholder groups to develop a Community Energy Strategy that will support activity with communities across the Department. This strategy will inform how the Department works with community groups and local organisations across all aspects of buying, saving and generating energy, and make sure our community schemes are fit for purpose. The DECC Community Energy Strategy is to be developed over the coming months, and will be available for use from Summer 2013.

    DECC established a Community Energy Contact Group (CECG) earlier this year to help develop the Community Energy Strategy. Minutes of the Group’s October meeting have just been posted online by DECC – and provide some interesting detail on current discussions between the Group and DECC including – under item 5 – the CECG’s views on what are – from ‘Energy for London’s perspective – some sensible ‘must haves’ for the forthcoming strategy. The minutes can be accessed here.

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    Boroughs pushing forward decentralised energy

    November 2012: In addition to a supporting 25 decentralised energy projects in the capital, London boroughs are also working on some innovative projects to support the uptake of district heating.

    Two recent projects worth mentioning are Newham’s work on establishing special planning guidance – a Local Development Order (LDO) to help streamline the process for a proposed new heat network running ” predominately along public highway from Beckton to Royal Docks, Canning Town and Custom House, West Ham and Stratford, including a short length of the Greenway between Manor Road and Stratford High Street.” Further information on the LDO project is on Newham’s website here; in a report to the council here; and in a Newham Council meeting paper here.

    Southwark council have also been working on developing a contract with the SELCHP waste to energy plant to offtake heat from the plant which will be supplied to a number of estates (further information on this project in an earlier post here). Details of the contract can be viewed in council papers here.

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    25 heat network projects being supported in London

    November 2012: A recent speech by Ed Davey, Secretary of State at DECC on the department’s emerging policy around heat energy highlighted how the efficient use of heat is being promoted in the capital through its promotion of district heating. Mr Davey stated:

    “London contains an example of the potential. The Greater London Authority is supporting 25 heat network projects. These have the capacity to leverage over £230 million of investment.”

    A recent Mayoral question provides a little more detail on where these schemes are:

    “The Decentralised Energy Project Delivery Unit is currently supporting the development of 25 decentralised projects. The following lists the activities with the boroughs:
    Projects at procurement: Brent and Camden;
    • Projects at post-feasibility: Croydon, Enfield, Haringey, Waltham Forest and Westminster;
    • Projects at feasibility: Southwark, Islington, Hammersmith and Fulham, Newham, Sutton;
    • Projects at pre-feasibility/energy master planning: Hillingdon, Ealing, and Westminster.”

    Further information on Brent’s South Kilburn DE project can be found here.
    Details of the innovative scheme being supported by Camden in Gospel Oak can be found here (and recent October newsletter here), which is using heat from a Combined Heat and Power (CHP) plant situated in the Royal Free Hospital, to provide low carbon affordable heat to nearby residents.
    Other information can be found in the various borough heat map reports posted on

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    London and the Carbon Saving Community Obligation

    November 2012: Government introduced a new affordable warmth element share to the £1.3bn a year Energy Company Obligation (ECO) earlier this year. The Carbon Saving Company Obligation (CSCo)  is designed to target insulation measures in low-income communities defined using the bottom 15% of Lower Super Output Areas (LSOA) from the Index of Multiple Deprivation. A wider range of energy saving measures will be eligible for funding under the CSCo, including cavity wall, loft and solid wall insulation. Additionally, in contrast to the bulk of the ECO funds, the CSCo will be open to applications from social housing providers.

    Government have set the level of the CSCo at 20% of the overall Carbon Saving Obligation element of the ECO, representing around £190m per year. DECC have stated that London has proportionally a higher number of these low income areas and hence should – in theory – fare better under the CSCo element of ECO than other regions.

    A full list of LSOA qualifying for the CSCo is available in the a July 2012 DECC guidance document available here. The  data provided by DECC is not in the most usable format  so it’s helpful that the Centre for Sustainable Energy (CSE) has produced an Excel version of the LSOA data – download here. The CSE dataset also adds ward name, ward code and region to the original DECC dataset – to give the data extra value. The CSE dataset show that London LSOA make up 815 out of the total 5159 areas selected  – just under 16 per cent. Hence, this should mean that if energy suppliers deliver their Carbon Saving Communities Obligation to the same ratio as the number of low income areas identified through the LSOA data, £30m of insulation (ie 16% of £190m) should be directed to some of the poorest homes in London, free of charge, every year, from 2013.

    Grant funding will be also directed to low income households through other elements of the ECO (the affordable warmth and carbon saving obligations) but in contrast to the CSCo this will be directed to i. the non-social housing sector and will also be predominantly directed to ii. harder to treat housing through the installation of Solid Wall Insulation (SWI).

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    Construction of Dagenham AD plant begins

    23 November 2012: A news article announcing that construction of central London’s first anaerobic digestion (AD) plant is underway.  The plant will generate approximately 1.4MW of electricity, sufficient to power approximately 2,000 homes and is based in the Dagenham Dock Sustainable Industries Park. The developer, the TEG Group, state that completion is planned for the first quarter of 2014. The scheme was recently awarded funding from the Mayor’s London Waste and Recycling Board (LWaRB) – a press note for that funding can be viewed here. Two other London AD schemes are currently being considered for support by LWaRB. Development of AD plant has been going slower than anticipated (the Mayor had initially hoped that two schemes would in fact be under construction by May 2012) an issue picked up in a recent article by London Assembly Green Party member Jenny Jones.

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