Climate Change

The hon. Lady anticipates the next section of my speech. Adding microgeneration means that energy savings can be even greater than those that can be achieved through a move to much higher thermal insulation standards in new build. Genuinely carbon-neutral homes are now attainable, but however ambitious we are with new building standards, the truth is—as the hon. Lady rightly reminds us—that three quarters of the homes in which we will be living in 2050 have already been built. We need a far more ambitious set of plans to tackle our existing housing stock than the Government’s Warm Front scheme and the energy efficiency commitment. At the current rate of progress, it will take 125 years to upgrade the housing stock, and even then it will be only to modest cherry-picking standards involving, for instance, cavity wall and loft insulation. We need to offer packages that can improve the sealing of windows, doors and chimneys, clad walls either inside or outside in solid-walled properties, and install under-floor insulation and efficient boilers—even, soon, combined-heat-and-power boilers. We need those packages to be testable, so that householders know they will get the energy savings that they have been promised. If those conditions are met—the Royal Institute of British Architects and the National Home Improvement Council are interested in helping to ensure that they are—hundreds of thousands of householders will jump at the chance to cut their energy bills. The obvious way to finance such packages is through an energy mortgage attached to the property that is repaid on the same bill as that of the utility company. It is likely that about one fifth of the cost of such improvements would need to be met by the energy company to ensure that the energy mortgage could be repaid from the savings in energy made by the householder. That is why we also suggest reshaping the energy efficiency commitment. The energy efficiency commitment is currently simply a levy on consumers to pay for energy efficiency improvements. It would make sense instead to encourage energy companies to find the most effective ways of curbing energy use by changing their incentives. They currently make more profit by selling more energy. If they were subject to a ““cap and trade”” scheme, such as the European Union emissions trading scheme—and, to give the Government credit, similar to a measure envisaged in an enabling clause of the draft Climate Change Bill—they could collectively have a declining sales target, and they would maximise their profits by selling even less and selling on their allocations under the scheme. If they sold more than their reducing allocations, they would have to buy that in the market. Therefore, an incentive would be established.