Electricity and Gas (Carbon Emissions Reduction) (Amendment) Order 2010

My Lords, the carbon emissions reduction target, known as CERT, requires the larger energy supply companies to meet household carbon emissions reduction targets. The amending order before the Committee will extend the supplier obligation policy framework to December 2012 and significantly refocus it over that period. It will act to drive investment and secure jobs in energy efficient industries, it will ensure that households and the UK more broadly save energy and money, and reduce carbon emissions. Before I turn to the detail of the order, let me remind noble Lords of the critical role I believe energy efficiency has as part of the transformation to a low carbon society. UK households spend £20 billion on energy each year, mostly on electricity and gas, and account for 30 per cent of all the energy consumed in the UK, thus directly contributing to climate change the energy used to heat our homes. Energy saving measures are therefore a win-win. They help to increase our energy security by reducing our reliance on imported fossil fuels, they provide environmental benefits by delivering carbon emissions reductions and local air quality improvements, and they support fairness by providing hard-pressed families with a simple means of saving money and protecting against cold, inefficient homes. They provide further economic benefits by creating employment opportunities in the manufacturing and service delivery of energy-efficient technology. The UK’s housing stock retains substantial opportunities to improve its thermal efficiency. That is why we are putting in place our radical and ambitious green deal, to be established through legislation in the forthcoming Energy Security and Green Economy Bill. The green deal will be a game changer. It will take a long-term approach to energy efficiency, unlocking capital investment and transforming the landscape for home energy efficiency improvements. However, it is imperative that we maintain and, where possible, quicken the pace of energy efficiency investment and activity immediately while we develop and implement the longer-term green deal. I know that there is a good deal of consensus around the importance of the issues that the order addresses, and I welcome that fact. The refocused and extended CERT will set suppliers a new, challenging carbon emissions reduction target, will focus the scheme on driving insulation measures and will help low-income households get an improved share of investments. It will act as an important bridge to the future, building momentum as we put in place the arrangements for the green deal. I turn to the specific amendments that we are making with the order. In doing so, I thank those people and bodies who responded to the public consultation process across the spectrum of interested partners, including energy suppliers, the insulation industry and local authorities as well as environmental and fuel-poverty groups. Their contributions have been crucial in forming our decisions. We will extend CERT to the end of 2012, increasing the target by 108 million lifetime tonnes of CO2 and setting a new overall target of 293 million lifetime tonnes of CO2. This increase equates to just over a 3 per cent cut in household greenhouse gas emissions in 2013. Given how far advanced suppliers are in meeting their existing targets, we will allow suppliers to start work against this new target immediately to ensure that customers’ access to energy efficiency measures is not interrupted. We will act to stamp out the mistakes of the past by introducing a complete ban on the subsidy of halogen and compact fluorescent lamps, and will focus instead on installed measures. Through this order, we will require over two-thirds of the increase in the overall target to be delivered through professionally installed loft, cavity wall and solid wall insulation. This will provide the insulation industry with confidence to invest and will ensure that all customers who want to make a real difference to their energy bills and carbon footprint have cost-effective opportunities to do so. That means help for some 3.5 million households from insulation measures. To ensure an equitable distribution of measures, and in the light of the rising blight of fuel poverty, we are creating a new obligation for those households that have the greatest need. Low-income pensioners, families with children and the disabled will form a super priority group. Further, each benefiting household will be required to receive a heating or insulation measure. That means an estimated 600,000 such measures professionally installed in the most vulnerable homes, and over £400 million focused on helping the very poorest. Additionally, we will provide vulnerable households with continued support for microgeneration measures under CERT, such as heat pumps and solar water heating. Our building block for targeting these vulnerable households is the energy rebate scheme, now aimed at a subset of pension credit claimants. We expect up to 250,000 pensioners on low income to receive a rebate worth £80, meaning up to £20 million under this scheme. These vulnerable households can go on to be targeted with supplier offers under CERT. Overall, the CERT extension will have a significant positive impact on fuel poverty, with approximately 175,000 households expected to be provided with measures that provide them with a long-term solution to fuel poverty. Many more households will receive measures that will protect them from falling into fuel poverty. In summary, the reshaping of the scheme that this order represents will help deliver a step change in insulation rollout and maximise the scheme’s contribution to environmental and social ambitions. I call on your Lordships to support this legislation in order to bring new impetus to the household energy efficiency agenda with immediate effect and ensure that we can best serve the interests of the economy and the public. I commend the order to the Committee.