Written Response To The Economic Development Committee`S Report On Energy Efficiency

The purpose of this Written Cabinet Statement is to assist in preparation for the Oral Cabinet Statement , presenting the Welsh Assembly Government`s response to the Economic Development Committee`s report on Energy Efficiency , by Andrew Davies, Minister for Economic Development and Transport on Tuesday 30 September.

Supporting UK policy

Recommendation 1 : Support UK government’s targets for energy efficiency by promoting energy efficiency in all areas and at all levels.

Many of the actions being undertaken by the National Assembly support UK policy which is demonstrated by the work that key organisations are already undertaking in Wales.  For example, the Assembly Government’s Fuel Poverty Commitment for Wales aims to improve energy efficiency through the Assembly’s Home Energy Efficiency Scheme (HEES). This aims to reduce households classed as in fuel poverty  and, to assess the condition of social housing stock and implement a programme for repair and improvement.

Financial implications: No additional financial implications identified at this stage.


Recommendation 2 : Support the CHP strategy and encourage the UK Government to review the penalties imposed on CHP plant through NETA.

A high profile success story supporting the UK CHP strategy is the Wing Manufacture Centre for Airbus UK Limited in Broughton. Heavy investment in CHP has contributed to 50% energy reduction worth £100,000 to the company over a 12 month period and further savings are forecast.

Financial implications: No additional financial implications identified at this stage.


Recommendation 3 : Promote the schemes and support available from the Energy Saving Trust and Carbon Trust, particularly as these apply to households and firms in Wales.

Welsh Assembly Government supports the work of Carbon Trust  Wales (CTW) and Energy Savings Trust (EST) in several ways.  In the domestic sector, EST is a partner organisation in delivering our Fuel Poverty Commitment for Wales. Another scheme includes support for a national photovoltaic programme which has seen over £500,000 funding for six projects in Wales. In the non-domestic sector, Carbon Trust Wales work (this year to-date) includes the following achievements under the Action Energy banner;  42 Action Energy applications were received and approved; 45 loan schemes enquiries were received. CTW’s Low Carbon Innovation Programme has built upon the previous year’s work and there has been increase in the number and the quality of the applications received.

Financial implications: No additional financial implications identified at this stage.



Increasing devolved powers

Recommendation 4 : Develop, adopt its own ‘Green Dragon’ type of certificate for buildings that achieved a degree of sustainable performance in excess of minimum standards.  It should monitor the performance of this scheme.

The Welsh Assembly Government is engaged in a study looking at the potential for a requirement that all new social housing grant funded homes have an ECOHomes assessment (final report due before end of this year). ECOHomes is a version of The British Research Establishment Environmental Assessment Method (BREEAM) which is used for offices, industrial and commercial buildings. This provides a very simple rating system that covers energy use, transport, pollution, materials, water, land use and ecology, health and well being. This is a useful measurement of sustainability and, depending on the target rating chosen could be used to produce homes with higher energy efficiency.

Financial implications: No additional financial implications identified at this stage.


Actions by the Welsh Assembly

Recommendation 5 : Identify…a unit… responsible for co-ordinating and monitoring the promotion of energy efficiency on a Wales wide basis... .It should consider ways in which to involve young people and schools...

In response to the recommendation for a mechanism to monitor and report the promotion of energy efficiency in Wales. An Energy Conservation Action Plan is currently being drafted. This will focus attention on co-ordinating delivery and communication and, in addition, our Energy Team are working on our response to the UK Energy White Paper.

Financial implications: No additional financial implications identified at this stage.


Recommendation 6 : New Assembly building as an exemplar and a clear statement of Wales’ Wales’s commitment to sustainable development.  It should ensure that …it is an exemplar of best practice in the energy efficiency field.

The report recommended that the new Assembly building should be an exemplar of best practice in energy efficiency and a statement of Wales commitment to sustainable development.  The current building design meets criteria for BREEAM standard of “excellent” in regard to best practise in environmental design and management. In addition the building:

• Makes use of natural ventilation and passive systems to heat and cool the building
  
•  Has Central Cooling System is an Earth Heat Exchanger system which:
  - Provides a cooling system with highest efficiency possible
  - Employs environmentally friendly technology
  - Has a long life expectancy
•  Has a Central Heating System consisting of a Wood Fired Boiler System which:
  - Provides a heating system which has the highest efficiency possible
  - Employs environmentally friendly technology
  - Uses wood as a fuel source which is effectively carbon neutral
  - Has zero CO2 emissions
  - Uses wood chips or wood pellets, both of which are available locally
  
•  Makes use of thermal mass (concrete) to passively heat and cool the building
  
• Should provide running cost savings of 30-50%
  
  Financial implications:  No additional financial implications

Recommendation 7 : Deploy additional resources, for example Objective 1 funds,  to support local energy efficiency initiatives including the installation of solar panels.


The Welsh Assembly Government is contributing towards the Solar Water In Social Housing (SWISH) projects to fund bids from Registered Social Landlords. The SWISH project will help develop a sustainable model for implementing solar water heating within the social housing sector (both new build and existing housing).

It also suggests that greater use is made of Objective 1 funding. The European Structural Fund Programmes have a common environmental strategy that includes opportunities to promote energy efficiency. An example is the requirement for buildings to achieve high standards of environmental performance in the Sites and Premises Measures in Objective 1.

Projects awarded European funding from the Programmes aim to achieve improvements in the environmental performance of businesses including greater energy efficiency include:

• The Arena Network’s ‘Environmental Innovation and Competitiveness’ project (Objective 1 grant value: £1.5 million). This project aims to encourage business to improve their environmental performance. The cornerstone of this programme is the recently established Green Dragon branding for businesses to work towards by incrementally improving their environmental performance. This new standard will allow all businesses to gain recognition for their environmental achievements and derive benefits from improved environmental management and the associated marketing advantages that will accrue from this new hallmark. 
  
  
•  Low Carbon Partnership. (Objective 1 grant value: £1.5 million). This is a joint project between Carbon Trust Wales and the Welsh Development Agency which aims to make Welsh businesses in the Objective 1 area more competitive by delivering energy cost savings of £27.5m and reducing carbon dioxide emissions by 286,000 tonnes over a ten-year period. This will be achieved by providing energy efficiency advice to 1,000 SMEs, performing a detailed energy audit of 400 and installing energy efficient, low carbon equipment for 200 of these businesses. 
  
  
•  Renewable energy projects bidding to the programmes are
     encouraged to develop energy efficiency opportunities within their
      projects when appropriate.  An example is:
  
  
  
• Awel Aman Tawe windfarm project which received Objective 1 grant value £94,000 which funded a feasibility study. The study concerns a community-led wind farm project and it aims to undertake research on the most beneficial way of developing a community-led wind farm and energy efficiency project in the Upper Amman/Swansea Valley area.  The project also plans to benefit the local community by improving the insulation of domestic properties.

It must be pointed out that use of Objective 1 funds to support local energy efficiency initiatives including the installation of solar panels can only do so for projects where there is a direct economic regeneration benefit.

Financial implications: No additional financial implications identified at this stage.


Recommendation 8 : Use procurement policy to support and promote energy efficiency products and ensure that all purchases are based on a life-cycle cost assessment

The Welsh Assembly Government through its Welsh Procurement Initiative Team is leading the way by adopting a joined-up approach to public procurement in Wales.  The initiative places an emphasis upon improving the value for money obtained. The promotion of energy efficiency products will be integral to the initiative. The Assembly Construction Forum is currently constituted as a means of co-ordinating the construction procurement best practice guidance produced by Assembly Divisions and Assembly Sponsored Public Bodies (ASPB), including the WDA and Welsh Health Estates. Welsh Health Estates is currently reviewing procurement guidance and technical standards for the Welsh Health Estate, with regard to Assembly Government policy and central government guidance. This is a part of the review of the Capital Investment Manual and Estate Code within the development of a National Estates Strategy Framework.

Financial implications: Additional financial implications are difficult to estimate at this stage but it has to be recognised that moving to a whole life cost approach means that there will be higher initial expenditure but that these will be offset against future savings in running costs i.e. revenue costs.


Recommendation 9 : Promote the use CHP in all public sector buildings and… encourage the provision of appropriate training and expertise 10  use its resources and influence to ensure that all public buildings… have the highest possible standards of energy efficiency…

The Welsh Assembly Government, with the Energy Saving Trust and Carbon Trust, is promoting the £50m  UK wide Community Energy Programme. This is a two year UK government funded programme which offers information, advice and grant scheme funding to support the installation of new schemes and refurbishment or expansion of existing community heating schemes including CHP. Grants are provided to support project development, feasibility studies etc and capital support for construction.  To date four grants for feasibility work have been successful but no Welsh applications have reached the capital grant stage. A recent application for a biomass fuelled community heating scheme for the village of Llanwddyn, Powys (19 dwellings) is currently under consideration and has widespread support.

Financial implications: No additional financial implications identified at this stage.


Recommendation 10 :  Use its resources and influence to ensure that all public buildings… have the highest possible standards of energy efficiency…

A joint project between Gwent NHS trust and CTW has reached first stage of completion. The pilot study, with the aim of producing a generic set of energy saving initiatives that can be applied to NHS properties throughout Wales, is complete. The final report will lead to a bespoke energy strategy for the NHS in Wales. The strategy will support a range of delivery mechanisms to build on the work started in Gwent NHS Trust.

Financial implications: No additional financial implications identified at this stage.


Recommendation 11 :  Provide additional incentives and financial support to encourage all householders…to improve the insulation of their properties

The Energy Efficiency Commitment (EEC) places an onus on energy companies to assist householders with a range of energy efficiency measures. Higher income households are currently encouraged to take up energy efficiency grants for loft, cavity insulation, boiler controls and low energy lights. Encouraging take up amongst the ‘Fuel Rich’ remains a challenge and something the UK government has recognised in the Energy White Paper and the work flowing from it. The Treasury is consultating on the use of fiscal measures to encourage greater uptake.
The Welsh assembly Government is currently formulating an Energy Conservation Action Plan which aims to encourage the practical application of energy conservation measures.

Financial implications: No additional financial implications identified at this stage.


Recommendation 12 : Work with Authorities… to raise profile of HECA…

 Local authorities (LA) have a statutory responsibility to encourage energy conservation in the domestic sector under the Home Energy Conservation Act (HECA).  Support for LA HECA activities by the Assembly government has included:

• standardised reporting software, all reports prepared on a common basis
•  Ministerial support for HECA conferences
• Building Research Establishment Conservation Support Unit (BRECSU) published detailed strategic guidance – Good Practice Guide 250 – for local authorities in Wales on energy efficiency in housing
  
• 25% of HEES budget available for social landlords to help improve the energy efficiency of their stock

To date they have achieved a 4% improvement against a 30% 10 year target (this is the halfway stage). A policy agreement with local authorities was seen as the best opportunity to improve this situation and in February 2003 the Minister for Social Justice and Regeneration agreed with the leader of the WLGA that the practicality of establishing a policy agreement covering energy efficiency should be investigated. In addition, earlier this month the WLGA launched a consultation on guidance for local authorities developing energy polices across their domestic and non domestic building stock.

In order to help raise the profile of energy efficiency the Assembly Government with the Energy Saving Trust (EST) and Welsh Local Government Association (WLGA) have established a post within the WLGA tasked with raising corporate awareness of the issue.

Financial implications: There are no additional financial implications identifiable although current funding for WLGA post terminates March 2004.  If it were concluded that further work/support is warranted (perhaps in relation to the soon to be launched WLGA energy policy guidance for LAs) there may be a need to extend the contract at a cost of £50k.


Recommendation 13 : Ensure that ELWa and other bodies recognise the economic opportunities that this sector presents and consider it a priority. This should include…providing the training required to support energy efficient initiatives, particularly for construction.

An example of this is the Bridgend Local Authority housing stock transfer training employment pilot. The Council has just transferred 6500 houses  to a Registered Social Landlord ( Valleys to Coast Housing Ltd) and £70 million is to be invested in upgrading the housing stock over the next five years.  Training opportunities are being set up to facilitate the up-skilling of local people which will include energy efficiency practices.  

Financial implications: No additional financial implications identified at this stage.