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Jim Watson

When the Climate Change Act was passed, it was rightly promoted as a world-leading piece of legislation. One reason the Act was so ambitious was the high level of cross-party support it received. It was enacted by the Labour government, under pressure to do more on climate change by opposition parties and NGOs.

Five years on, it is worth revisiting some of the criticisms that were made of the draft legislation. Most critics agreed with the principle of climate change mitigation. The political and economic context for climate change policy was more benign that it is today. Instead, they focused on some features of the draft bill that were seen as potentially ineffective.

Scrutiny of the Draft Climate Change Bill was intense following its publication in early 2007. Three Parliamentary inquiries were held: by two House of Commons select committees and an official scrutiny committee of the Commons and the Lords. During their hearings, three issues received particular attention.

First, many argued that the bill’s inclusion of a 60% emissions reduction by 2050 from 1990 levels was not enough. The climate science already showed that the UK would need to cut emissions by more than this to contribute its ‘fair share’ of a global effort to limit average temperature rises to 2°C. This target was changed soon after the bill became law, when the current target of an 80% cut was implemented.

More controversially, many NGOs and the Conservative party pressed the government to implement annual targets rather than the five yearly budgets that were adopted. Whilst it was argued that annual targets would put government under more pressure to comply, the official response that they would be too inflexible looks sensible in retrospect. There have been some big shifts in annual emissions such as the dramatic fall that followed the financial crisis in 2008. Five yearly budgets mean that such short-term changes can be accommodated whist ensuring that overall progress is in the right direction. They also allow for adjustment of policies part way through a budget period if emissions are not on track.

Second, there was extensive debate about the role of the Committee on Climate Change. Inspiration was taken from the institutional arrangements governing monetary policy. As David Cameron wrote in The Independent in October 2006, the Committee would ‘operate in a similar way to the Bank of England Monetary Policy Committee. It will have a duty to observe the evolving international science on climate change, and to review the UK’s progress towards meeting its carbon reduction obligations, reporting to Parliament every quarter’. The problem with this analogy is that there is no equivalent of interest rates in climate change policy for the Committee to review and set. No Chancellor would be happy to let such a body dictate the rate of an economy wide carbon tax. But even if this were possible, reducing UK emissions requires a wide range of complementary policies and regulations to be implemented.

There were also concerns that the Committee would not challenge the government when necessary. These concerns partly stemmed from the view of some Ministers who wanted the Committee to confine itself to providing technical advice on targets and budgets. For example, the Minister for science and innovation said that it should not ‘wax wide and lyrical about the whole range of issues, nuclear, renewables and so on’. In practice, the Committee has been relatively uninhibited in its statements – both on the overall trajectory of UK emissions, and on whether specific policies are strong enough to meet carbon budgets. This robust relationship has continued despite the transition to a more party political chair, Lord Deben.

Third, there was a lot of discussion about accountability. What would happen to the government if targets were missing or budgets exceeded? Would there be legal action or sanctions? During evidence sessions, several legal experts told Parliament that the Act would not be enforceable in the courts. The Secretary of State responsible at the time, David Miliband, countered that sanctions would be a last resort: ‘the system is designed to pre-empt the missing of a target … there is provision for banking and borrowing, so there are a number of provisions to help avoid this situation’.

The opposing views of the government and the critics have not yet been put to the test of course. UK emissions are currently well below agreed carbon budget levels. The Committee on Climate Change has stated that compliance with the second budget (2013-17) is likely. But it has also said that the government will need to do more to ensure compliance beyond that, especially if the economic recovery strengthens. Whilst the fourth carbon budget is currently under review at the behest of the Chancellor, it is unlikely that the Committee will call for significant changes of course.

Whatever happens, David Miliband was probably right. It is far more likely that potential breaches of targets or budgets would be known well in advance. If this were to happen in future, it will be essential that the strong scientific and economic arguments for decarbonisation continue to prevail. Barring any radical change to the science, the right response to any shortfall would be to review and strengthen policy action.

This article first appeared on The Guardian website.

Professor Jim Watson is Research Director at the UK Energy Research Centre.

Robert SansomBack in my grandparents’ time, baths were infrequent and showers were just another word for rain. It wasn’t until after the Great War that bathrooms became a standard feature of new homes, but even then a bath was often taken no more than once a week and then when they were only really needed.

With the role out of North Sea gas and the wide scale installation of central heating in the 70s and 80s, the supply of constant hot water facilitated a step change in our washing habits. Showers came along but were little more than rubber hoses pushed onto taps with a spray at the end.

Then purpose built showers began to be installed and daily showers are now the norm with a third of the energy we use for heating used for hot water.  The EST report “At home with water” identified that showers are now the biggest water users.

However, whereas we can expect substantial reductions in energy consumption for space heating, there does not appear to be much we can do for hot water.  Improvements in wet appliance efficiency has helped considerably but any further improvements will probably be small.

If the trend in hot water consumption continues we could be using as much energy for water heating as we do for space heating.  This could amount to 10% of total UK energy demand by 2050.  That’s 200 TWh pa!

We could obviously just use less by not washing so much or not using so much water when we shower but I expect there might be some “consumer acceptance” issues here. So, isn’t there anything else we can do? Do we just have to accept that there is no alternative to our current regime of pouring 100 litres of hot water down the plug ‘ole every time we take a shower?  Is it really beyond human ingenuity to come up with an alternative?

Well a bit of internet research reveals that there are products out there.  It seems our Australian friends have developed showers that recycle the water (filtering it first you’ll be pleased to hear) and claim a 70% reduction in  energy and water consumption.  I also came across steam showers but I have no idea whether this saves or increases energy consumption.  What about some kind of control technology, could this help?  Why can’t I select an “Eco shower cycle” rather like I do on a washing machine for regular use and a longer cycle for occasional use.

I’m sure then are many other ideas that are far more imaginative and innovative but we just need to take this seriously.  We just need to talk about hot water.

Robert Sansom is a Researcher at Imperial College London funded by the UK Energy Research Centre.

Jim WatsonWith high energy prices all anyone can talk about this winter, Ofgem’s interim chief Andrew Wright appeared before MPs today to defend the regulator’s performance. Predictably, he was met with some hostile questions about how energy company profits have jumped 77%, and whether Ofgem is doing enough to protect consumers. While he defended Ofgem’s overall approach, he conceded that more might need to be done to rebuild public trust in the energy market.

The government and Ofgem have been discussing market reform for some time. Ofgem started its latest review of retail markets in late 2010. New measures will include simplified tariffs, implemented at the behest of the government, and measures to make switching between suppliers easier. The government has also announced an annual review of competition in the wholesale market. At least one of the Big Six energy suppliers, E.On UK, has openly welcomed such a review. The question is whether, given that some reforms are already underway, calls for more intervention are warranted. Furthermore, would they have an impact on household bills?

On balance, there are good reasons for pushing the Big Six energy suppliers to be more transparent. They should be required to provide more information to Ofgem about their trading activities and the terms of the wholesale gas supply contracts they hold. This would help to resolve a discrepancy: the Big Six companies claim that rising wholesale gas prices are pushing up bills, while Ofgem’s analysis found wholesale costs have risen by just 1.7% over the past year. One independent energy supplier, Ovo Energy, supported Ofgem’s view during a hearing of the House of Commons energy committee last month. Their managing director told the committee that “the most expensive price we’ve paid for wholesale gas in the last four years was in May 2011 and since then it’s been [less]”.

Market reform, second time lucky

Greater separation between the generation and retail businesses owned by the Big Six also merits serious attention. These companies supply significant amounts of energy to themselves, and independent electricity generators often complain that they cannot get fair prices for the power they produce. This has been an important issue for the government’s proposals designed to finance new, low carbon power stations. But it has received little attention during the reform process.

As is often the case, we have been here before. Under the power market that operated in the UK until 2001, all electricity had to be traded. Furthermore, there were rules in place that prevented the kind of vertical integration and the advantages it confers that we have now.

In hindsight, the previous regulatory regime starts to look more attractive than it once did – particularly now that there is a much greater need for new investment. The Big Six cannot deliver the amount of investment required for the UK’s low carbon transition on their own. It is therefore important to have market arrangements that actively encourage investment from independents too.

Playing the long game

Of course, market reforms can only be a partial solution to rising bills. Longer-term strategies are needed to ensure that energy policy goals can be met affordably – providing incentives to move away from fossil fuels, and improving energy efficiency.

The so-called ‘green taxes’ that are added to energy bills to pay for these policies have risen over the last few years. But they still only account for 9% of a typical household dual-fuel bill. They have not been the main cause of price increases over the past few years. And in any case, Britain still has some of the lowest household energy prices in the EU.

It is worth remembering that the purpose of these policies is to support new technologies, to provide incentives to shift away from fossil fuels and – most important in the current context – to improve the energy efficiency of our homes. Policies in the latter category have come under particular scrutiny as utilities have projected large (and in some cases inexplicable) increases in the cost of implementing the new Energy Company Obligation. Such scrutiny is welcome, but this should not detract from the important role these policies play.

Ideally, these costs should not be passed on to consumers through their energy bills. It would be more progressive to fund them from general taxation, which would reduce the burden felt by those on low incomes. Not surprisingly, the energy companies have become increasingly enthusiastic about the idea.

But there is one big risk. The UK economy is still struggling to emerge from the financial crisis and recession, and while there are signs of stronger economic growth there is a long way to go. Austerity will be with us for many years to come. If programmes to support cleaner energy or to improve energy efficiency are shifted to taxation, what will stop a future Chancellor of the Exchequer from cutting them at short notice? It would be ironic if the rows about energy bills simply led to the downgrading or the demise of policies that are designed to mitigate climate change and to reduce our exposure to high fossil fuel prices.

This article was originally published at The Conversation. Read the original article.

Jim Watson, is Research Director at the UK Energy Research Centre.