Local policies for DSM: the UK's home energy conservation act

*Corresponding author. Tel.: #44-20-7733-4360; fax: #44-870-1308831.

E-mail addresses: ec}[email protected] (E. Jones), [email protected] (M. Leach), [email protected] (J. Wade)

Energy Policy 28 (2000) 201}211

Local policies for DSM: the UK's home energy conservation act

Emma Jones!,*, Matthew Leach", Joanne Wade#!73 Dalberg Road, London SW2 1AL, UK

"Energy-Environment Policy Research Group, The Centre for Environmental Technology, TH Huxley School of the Environment, Earth Science andEngineering, Imperial College of Science, Technology and Medicine, 48 Prince's Gardens, London SW7 2PE, UK

#The Association for the Conservation of Energy, Westgate House, Prebend Street, London N1 8PT, UK

Received 15 September 1998

Abstract

Residential energy use accounts for approximately 28% of total primary energy use in the UK, with consumption in this sectorforecast to increase due partly to expanding numbers of households. Finding ways to reduce residential energy consumption mustform a key part of the climate change strategies of the UK and all developed countries. In 1995, an innovative piece of legislation waspassed in the UK, devolving residential energy e$ciency responsibility to local government. Under &The Home Energy ConservationAct' (HECA), local authorities are obliged to consider the energy e$ciency of private as well as public housing stock. Authorities weregiven a duty to produce a strategy for improving residential energy e$ciency in their area by 30% in the next 10}15 years. This paperdescribes the enormous variation in the quality of local authorities' strategies and discusses reasons for this variation. Based ona nationwide survey of HECA lead o$cers, it considers the opportunities and constraints facing local authorities, and what has beenachieved to-date under the Act. It also examines how HECA "ts into the UK's national energy policy and explains the roles of otherinstitutions across the public, private and voluntary sector in facilitating implementation of the Act. Finally, the paper considers howother countries can learn from the UK's HECA experience and can use the Act as a template to apply the principle of subsidiarity tothis area of environmental policy. ( 2000 Elsevier Science Ltd. All rights reserved.

Keywords: End-use e$ciency; Residential sector; Local government

1. Introduction

It is widely accepted that there is signi"cant potentialto increase uptake of cost-e!ective energy e$ciencymeasures in the residential sector (e.g. Grubb, 1990;Wade and Leach, 1997). Historically, responsibility forencouraging residential energy e$ciency in the UK hasrested with central government. Activity has largely cen-tred around grant programmes, such as the Home En-ergy E$ciency Scheme, under which grants totallingaround C75 million annually are provided to low-incomefamilies and pensioners towards the cost of insulation(NEA, 1998), and national promotional campaigns, suchas the &Energy E$ciency, it's Clever Stu!' advertisingcampaign, run by the Energy Saving Trust (EST, 1999a).

However, alongside increasing emphasis on the role ofresidential energy e$ciency improvements in meeting theUK's climate change commitments (see, for example,Environment, Transport and Regional A!airs Com-mitee, 1997), there has been a partial devolution of thisresponsibility to local government. As providers of socialhousing, and with a direct in#uence over many aspects oflocal people's lives, local authorities are considered to bewell placed to bring about changes in this sector.

In 1995, the Home Energy Conservation Act (HECA)was passed. The Act requires local authorities to considerfor the "rst time the energy e$ciency of private as well aspublic housing stock. Authorities were given a duty toproduce a strategy for the improvement of residentialenergy e$ciency in their area by 30% in the next 10}15 y(DoE, 1996a). If successful, the Act could play a majorpart in the UK's climate change strategy. It could also actas a template for devolving other environmental respons-ibility to the local arena.

It is now over three years since the Act came into forcein England and it is apparent that local authorities are

0301-4215/00/$ - see front matter ( 2000 Elsevier Science Ltd. All rights reserved.PII: S 0 3 0 1 - 4 2 1 5 ( 0 0 ) 0 0 0 0 2 - 1

responding to the Act with varied levels of commitment.Research was carried out to explore reasons for thisvariation, and to determine the most e!ective approachesto HECA, with this information subsequently dis-seminated to local authorities.

2. Residential energy consumption in the UK

2.1. The current situation

Residential energy use accounts for approximately28% of all energy demand in the UK (DTI, 1998a). Thisproportion has remained roughly constant over the past30 years, while total energy use has increased 21% since1970. Sixty seven percent of the energy used in homes isin the form of natural gas, with electricity accounting forjust 19% of the total and oil less than 10%. Eightypercent of residential energy demand is for space andwater heating, most of which is now met by natural gas(DTI, 1998b).

Sixty seven percent of households are now owner-occupied, with public sector stock at 20% and the re-mainder of property privately rented. The past threedecades have seen a considerable increase in the level ofinsulation installed in homes, but 77% of homes in theUK with cavity walls still do not have these walls in-sulated.

Due largely to the ongoing process of liberalisation ofthe fuel utilities, electricity prices fell by 9.5% between1990 and 1997, with gas prices falling 12% during thesame period. These reductions are despite the introduc-tion of VAT at 8% on domestic fuel bills in 1994, sub-sequently reduced to 5% in 1997, without which thereductions would have been 15.5 and 17.5%, respectively(DTI, 1998a). The proportion of income spent on fuelvaries enormously with income level. Low-income house-holds are less likely to inhabit an energy e$cient homethan higher income households and they spend more onheating as a proportion of income (up to 19% for pen-sioners on income support, compared to 4% for thehighest income quintile of all households) (O$ce forNational Statistics, 1997). It is estimated that 6.6 millionlow-income families in the UK are living in homes thatare too ine$cient for them to heat adequately. It hasbeen suggested that this results in around 30,000 extradeaths each winter (DTI, 1998a). Improving the e$ciencyof a home and thereby making it cheaper to heat hasobvious social and health bene"ts for the &fuel-poor', withreduced incidences of hypothermia and cold-related ill-ness. In addition, once minimum comfort levels arereached, improved e$ciency will lead to energy conser-vation.

The number of households has risen by 30% since1970, with average household size falling from 3.05 in-habitants to less than 2.7, and residential energy con-

sumption has correspondingly risen by 16%. This trendis expected to continue, and it is estimated that an addi-tional 4 million households will be created over the nexttwo decades (DoE, 1996b). As households become small-er, the per capita energy consumption for the same levelof most energy services increases. While increasing e$-ciency and falling household size has led to a decrease inthe amount of energy used per household, this hasnot been su$cient to counteract the increase in thenumber of households. Energy demand per person hasrisen since 1970 with increasing use of central heatingand ownership of appliances playing a large part in thischange.

Because of this forecast increase in energy use, a signi"-cant increase in energy e$ciency (and/or reduction in theCO

2intensity of sources of electricity) would be required

just to keep residential CO2

emissions static.

2.2. The potential

The 1991 English House Condition Survey found thata 30% improvement in energy e$ciency could beachieved in a 10}15 yr period with existing levels ofcapital spending, although it is recognised that in prac-tice there is a mismatch between the homes in which themajority of works are currently carried out and thosemost in need of improvement (DoE, 1996b). More re-cently, a report for the Electricity Association estimatesthat residential sector CO

2emissions could be reduced

to a level approximately 20% below that recorded for1990 if all the net negative cost potential for energye$ciency were accessed (Wade and Leach, 1997).

Energy e$ciency could thus make a major contribu-tion to e!orts to stabilise CO

2emissions. However, in the

residential sector in particular, increased energy e$cien-cy will not always lead to energy conservation. For thefuel poor sector, energy e$ciency must "rst be improvedto a level at which a comfortable heating regime can bemaintained. Only once this has been achieved will in-creases in e$ciency automatically lead to energy conser-vation.

2.3. The barriers to uptake

The existence of numerous untapped and economicopportunities for energy savings suggest that currentmarket conditions do not ensure full implementation ofthese opportunities. Consumers and other decisionmakers often do not invest in energy e$ciency, eventhough it o!ers life-cycle cost savings, because there arebarriers to uptake. Major barriers include lack of in-formation and lack of capital. Any policy which aims toincrease energy e$ciency must seek to overcome thesebarriers (Grubb, 1990).

202 E. Jones et al. / Energy Policy 28 (2000) 201}211

3. Background to HECA

In the UK, responsibility for social housing provisionrests with local authorities, who also have an indirectin#uence over private sector households through theirroles as service providers. Local authorities are thus wellplaced to help their residents overcome the barriers thatexist to investing in energy e$ciency. With this in mind,the idea of devolving responsibility for improving resi-dential energy e$ciency to local authorities was de-veloped. The Home Energy Conservation Act originatedas a Private Members Ballot Bill in 1995. Under the UKlegislative system, a Private Members Ballot is held earlyeach Parliamentary session. Most non-ministerial Mem-bers of Parliament enter this ballot, and if they are one ofthe 20 drawn they can introduce a Bill of their choice.HECA was backed by the then Member of Parliament,Diana Maddock. HECA became an Act of Parliament inJune 1995, following a two-year campaign led by theAssociation for the Conservation of Energy (ACE).

Under the Act, all authorities with a responsibility forhousing provision (i.e. district, metropolitan and unitaryauthorities) became &Energy Conservation Authorities'(ECAs). The legislation required them:

f to prepare a report setting out energy conservationmeasures that the authority considers practicable,cost-e!ective and likely to result in a signi"cant im-provement in the energy e$ciency of residential ac-commodation in its areas, and;

f to publish the report and to send a copy to the Secre-tary of State for the Environment.

Guidance issued by the DoE instructed local authori-ties to aim for a 30% improvement in energy e$ciencyover 10}15 yr.

Whilst lower CO2

emissions are the primary drivingforce for HECA, and therefore energy conservation is theoverall aim, the need to reduce fuel poverty is also recog-nised and therefore an energy e$ciency target is used.

Each HECA strategy had to include the cost of carry-ing out the works identi"ed and the CO

2savings that

would result. The inclusion of information on the poten-tial savings in nitrogen oxides and sulphur oxides wasalso encouraged, as were details of the number of jobs thatwould be created, the average savings in fuel bills and infuel use which would be made, and anything else whichthe authority considered appropriate (DoE, 1996a).

The intention of HECA was to provide a focus forlocal authority activities in the energy "eld, bringingtogether housing investment programmes, environ-mental initiatives and fuel-poverty alleviation. Energyconservation authorities have responsibility for the pro-vision of social housing and as such most have experienceof residential energy e$ciency issues (although very fewhad undertaken any work to promote energy e$ciency tothe private sector prior to HECA). In addition, ECAs

have responsibility for local planning, economic develop-ment and the implementation of Local Agenda 21. Theyare therefore well placed to in#uence local culture anda!ect consumer choices. The Act is the "rst piece oflegislation to devolve energy e$ciency responsibility forthe private residential sector to local government.

In preparing their HECA report, authorities were en-couraged to consult other organisations, such as housingassociations, tenants organisations, consumer groups, lo-cal environmental groups and any others with an interestin energy/housing issues. The de"nition of energy conser-vation measures given in the Act includes: information,advice, education, promotion, making grants or loans,and carrying out works.

For any one household, increased energy e$ciency willusually result in less energy being used. However, it hasalready been explained that in fuel poor households,increased e$ciency may be taken as increased comfort. IfHECA were targeting solely the fuel poor, it is unlikelythat a dramatic reduction in energy use would beachieved (although the social bene"ts would still be con-siderable). However, HECA is directed both at the fuelrich and the fuel poor, and the Socialist Environment andResources Association (SERA) (1997) has estimated thata 30% improvement in energy e$ciency would translateto a 20% saving in energy.

While there is no provision in the Act for extra fundingto authorities to help them implement HECA, the Gov-ernment has made some money available via a competi-tive bidding process. Under the &HECAction' scheme,a total of C23 million is available between 1996 and 2001,aimed at pump-priming sustainable initiatives in a num-ber of authorities. (Further details of HECAction aregiven under &Opportunities', below.)

4. Local authority responses to HECA

As the HECA reports were submitted to the DoE (nowthe Department of Environment, Transport and the Re-gions, DETR), it became apparent that they varied enor-mously in length (from 2 to over 300 pages) and quality.Over a quarter of the reports initially failed to meet theirstatutory obligations and had to be resubmitted (DETR,1999a,b). Concerned at the apparent lack of commitmentto the Act demonstrated by several ECAs, ACE conduc-ted research to attempt to uncover reasons for the vari-ation.

4.1. Methodology

4.1.1. AssessmentsEach report was assessed by DETR, using a matrix.

However, a decision was made within the Department notto use a scoring system on the grounds that this might bede-motivating to those authorities gaining low scores.

E. Jones et al. / Energy Policy 28 (2000) 201}211 203

Fig. 1. Assessments of all HECA reports.

The assessment matrix was split into 6 categories: De-scription of the current condition of all stock; measuresconsidered; cross-tenure plans; evidence of external part-nerships and consultation; evidence of internal partner-ships and consultation; and further data collectionproposals. For each category the report was marked asbeing either highly unsatisfactory, unsatisfactory, barelysatisfactory, satisfactory, good or very good. The "rstpart of the research involved using this matrix to assigna score to each HECA report. To calculate the score, "vepoints were awarded for each category marked as &verygood', four for &good' and so on, giving a maximum scoreof 30. Fig. 1 shows how the report scores varied and howmany were &failed' and had to be resubmitted. (Some highscoring reports were failed because they did not includeat least one thing speci"cally stated by the Act as beingrequired, such as the cost of measures identi"ed.)

This score relates only to the quality of the HECAreport and not to any subsequent work undertaken toimplement the Act, but it gives an indication of thecommitment and support given to HECA by the localauthority, and provides a good comparison for howauthorities are responding to the Act.

4.1.2. SurveyThe research then involved a postal survey of HECA

lead o$cers in England. This was designed to identifyexplanatory variables for the report quality. HECA leado$cers in 243 of the 358 English ECAs (68%) returnedtheir questionnaires in the required time. The reports ofthose authorities that returned questionnaires had thesame average &score' as the average for all 358 authorities,indicating that there is no relationship between question-naire return-rate and report &score'. Therefore, it wasassumed the returned questionnaires provided a repre-sentative sample.

Due to the inherently subjective nature of the ques-tionnaire responses, it was decided to focus on identify-ing key factors in report quality, by testing the datafor signi"cant correlations, rather than attempting toproduce an explanatory model through regressionanalysis.

For essentially continuous variables (e.g. population),the data were tested for signi"cant correlations. Fordiscrete variables (i.e. where the data can assume any ofvarious speci"ed values, e.g. Yes/No), the mean assess-ment score for di!erent categories were compared andtested for signi"cance at a 95% con"dence interval. (Forexample, it was found that there is a signi"cant di!erencein report assessments between authorities that had a resi-dential energy e$ciency strategy prior to HECA andthose that did not.) It must be stressed that in no casedoes evidence for a signi"cant di!erence in means provethat the relationship is causal. It merely lends support tothe idea that there may be a relationship.

The con"dence interval test can only be conductedwhen the range of values approaches a &normal' distribu-tion pattern. This cannot be veri"ed with very smallnumbers, so it was decided to include only those catego-ries with 5% or more of the total respondents, i.e. a min-imum of 12.

Results of the survey highlighted the opportunities andconstraints that face ECAs in implementing HECA.These are described in the following section. A moredetailed description of the survey results can be found inJones and Wade (1997).

4.2. Opportunities for local authorities to ewect change

In addition to the opportunities already identi"ed forlocal authorities (in terms of their provision of socialhousing and their in#uence over members of public), theresearch identi"ed an additional opportunity to be thepotential for ECAs to work in partnership with otherorganisations. It is generally accepted that local authoritiesdo not have the resources to successfully implement HECAon their own. However, by forming partnerships withprivate sector organisations, voluntary groups and otherpublic sector bodies, signi"cant progress can be achieved.

4.2.1. Partnership; with external organisationsThe research found that 82% of respondents stated that

they had met with at least some external organisations,and this group scored signi"cantly higher in their average


Fig. 2. Organisations consulted in preparing a HECA strategy. Has } Housing Associations (Registered Social Landlords), HEES Installers } HomeEnergy E$ciency Scheme installers, PESs } Public Electricity Suppliers, EEAC } Energy E$ciency Advice Centre, EAGA } Energy Action GrantsAssociation (responsible for administering HEES), NEA } National Energy Action, BG } British Gas, NHS } National Health Service Trusts, Other} includes schools, banks, building societies, charities

Table 1ECA partners and energy e$ciency initiatives!

Partner Type of scheme Barrier overcome

Manufacturers/installers Bulk discount schemes Financial (by lowering the purchaseprice)

Credit unions/banks Revolving low interest loans for the purchase of energye$cient materials

Financial (by providing the capitalfor purchasing the goods)

Health authorities Training programmes for health care workers todisseminate energy advice and information on grantsto their fuel poor patients

Information

Schools Energy e$ciency education programmes for schoolchildren

Information

Energy E$ciency Advice Centre Advice programmes InformationUtilities Free provision of low energy lightbulbs as incentive to

purchase materials (provided under the utility funded&Standards of Performance' scheme)

Financial

!(EST, 1999b)

report assessments than those who had not met with anyother organisations (17.4 out of 30 versus 14.8). Fig. 2 showswhich organisations have been most commonly consulted.

The success of such partnerships can be demonstratedby the HECAction awards. In the "rst four years of thescheme, over C16 million was granted to 58% of the UK'sECAs. In the "rst year of implementation alone, theseschemes generated an additional C60 million of invest-ment from the private sector through the partnershipsthey developed (EST, 1999b). Table 1 indicates the kindsof organisations that have been involved in HECA imple-mentation and the barriers to energy e$ciency invest-ment that the schemes overcome.

However, it is evident from the research that manyauthorities have not explored all the options for liaison,whether through lack of time, motivation or imagination.

4.2.2. Partnership: public sectorThe research also investigated to what extent authori-

ties have developed a partnership approach internally.Lead o$cers are based in a number of di!erent depart-

ments, including housing, environmental health andenergy, but o$cers from other departments can havea useful input into implementation, including socialservices and public relations. In particular, Local Agenda21 o$cers may be best placed to advise on how to use theenvironmental bene"ts of reduced energy use to encour-age people to conserve energy.

Fig. 3 shows which departments are involved in HECAimplementation. The survey revealed that approximately10% of authorities had not involved any other depart-ments in HECA, while 50% stated that two-to-threedepartments were involved. Only 10% stated that "ve orsix di!erent departments were involved. Again, thosewith four or more departments involved on averagescored signi"cantly higher than those with only one de-partment involved (18 out of 30 versus 14.8).

Similarly, authorities can liaise with each other, toshare experiences and best practice and to investigateways of working together. More than 10% of respon-dents had not liaised with any other local authorityregarding HECA, while the majority had liaised with


Fig. 3. Departments involved in HECA. LA21 } Local Agenda 21

Fig. 4. Number of sta! to assist lead o$cer with HECA implementation.

between 1 and 10. Again, the analysis showed that thoseliaising with more than 10 other authorities producedsigni"cantly better reports than those liaising with none.

4.3. Constraints facing local authorities in ewectingchange

4.3.1. Lack of resourcesHECA comes at a time when local government in the

UK faces many challenges, not least ongoing "nancialshortages (LGMB, 1993). Fig. 4 shows how many sta!there are to assist the lead o$cer with HECA implemen-tation. A substantial number have no one to assist them.

Just 4% of respondents in the survey felt they haveenough resources to deliver their HECA strategy. Theserespondents may be able to di!erentiate between theresources the authority needs to commit in terms of sta!time and investment in its own properties (which mayrun to several thousand pounds) and the total investmentrequired which is likely to be several million, but whichshould come primarily from homeowners being encour-aged to fund their own investments. Of the 342 respon-dents who stated they do not have enough resources,

Fig. 5 shows that the majority (81%) stated they need"nance, with 58% stating that more sta! are required.

4.3.2. Lack of experienceFig. 6 shows how many authorities had residential

energy e$ciency programmes in place prior to HECA.While many had a strategy for their public sector stock,only a minority had included the private sector in this.Several had no energy e$ciency programme at all. Mostprogrammes had been introduced in the last 5 years(see Fig. 7). Those with a strategy covering both sectorsscored signi"cantly higher than those without a strategy.Many o$cers given responsibility for HECA implemen-tation had no experience of energy e$ciency. Half thelead o$cers in the survey were either environmentalhealth o$cers or housing o$cers, and for many of theseHECA may be their "rst experience of energy issues.

4.3.3. Lack of member supportSupport from chief o$cers and councillors seems to be

crucial to the success of HECA in any one ECA. Only45% of respondents stated the Act had the supportof their elected members. Member support can assist


Fig. 5. What resources are lacking.

Fig. 6. Existence of domestic energy e$ciency programme prior toHECA.

Fig. 7. Length of time programme had been in place.

projects in a number of ways, by helping to secure theproject's funding and by mobilising support within theirrespective political parties at the local level. Members canalso publicise the initiative in speeches (LGMB, 1993).Average assessment in authorities where elected mem-bers have been actively involved are signi"cantly higherthan those where there has been no active involvement(18.1 versus 16.2). Similarly, only 62% felt that their localauthority has demonstrated a corporate commitment toHECA (with several commenting that this commitmenthad not been backed by "nances). Report assessments ofauthorities with corporate commitment are signi"cantlyhigher than those without corporate commitment (aver-age score of 18 versus 15.7).

4.3.4. Lack of powerIn addition to the above, some respondents com-

mented that they lack certain powers that would assistthem to implement HECA. For example, it is illegal forECAs to grant loans to individuals (and thus to helpthem overcome the "nancial barrier to investment), al-though this can be arranged through a third party (suchas a credit union).

4.4. HECA - achievements to date

Authorities have a duty to submit a brief progressreport to DETR annually, detailing their achievements inimplementing HECA. The "rst progress reports were

received by DETR towards the end of 1997 and annuallythereafter. The 1999 report to Paliament by the Secretaryof State for the Environment, Transport and the Regionsstated that by March 1998, stated that evidence fromthese reports pointed to an improvement of around 2%over the two years of the Act. The report states that: &&TheGovernment is concerned that progress at this rate isinsu$cient if local authorities are to achieve the potentialimprovements identi"ed'' (DETR, 1999a p. 3).

However, through the &HECAction' programme, ad-ministered by the Energy Saving Trust, signi"cant pro-gress has been achieved by particular ECAs. HECActionschemes to promote residential energy e$ciency are nowunderway in 58% of local authorities. As explainedabove, these schemes have been particularly successful indeveloping partnerships and generating private sectorinvestment.

All the HECAction schemes involve a range of publicand private sector partners, including banks and buildingsocieties, housing association and private sector land-lords, manufacturers, retailers and installers of energye$ciency measures, utilities and schools. Many of theschemes include negotiated agreements with suppliers too!er bulk purchase discounts on energy e$ciencymeasures to local residents. The suppliers bene"t fromlocal authority endorsement and promotion and the resi-dents bene"t from cheaper products. Some authoritieshave set up revolving loan funds, o!ering low or nointerest loans to enable lower income customers to a!ordenergy e$ciency investments.

Some HECAction schemes have involved the develop-ment of new community-based businesses, designed too!er quality training for the development of new skills ininstalling energy e$ciency measures and providingenergy advice. The authorities setting up these newbusinesses are endeavouring to ensure a long-termemployment market for the skills developed by thetrainees. Partnerships with local housing associations arekey to achieving this.

The HECAction programme has helped a large num-ber of local authorities to set up schemes which will playa fundamental part in implementing their home energyconservation strategies. However, there remain manyauthorities that have not yet gained access to funding.


5. Facilitating HECA implementation

Few if any ECAs are likely to meet the target of a 30%improvement in energy e$ciency unless further action tosupport the Act is taken. There are many other UKpolicy initiatives designed to improve residential energye$ciency, and in order to increase the chances of HECA'ssuccess this policy framework must be strengthened andmade more coherent.

5.1. Current UK residential energy ezciency policy

5.1.1. UKMuch of the work to promote residential sector energy

e$ciency is conducted by the Energy Saving Trust (EST).The EST was established in 1992 to promote and manageenergy e$ciency schemes for the domestic and smallbusiness sectors. In addition to running the HECActionprogramme, the EST is also responsible for a network ofEnergy E$ciency Advice Centres, the running of cash-back programmes to stimulate markets for a range ofenergy e$ciency measures and the &Energy E$ciency'marketing campaign.

When the EST was "rst set up, the Government wasrelying on the energy industry regulators to raise thefunding required for the Trust from gas and electricityconsumers, rather than raising it from taxation. How-ever, the two utility regulators had di!ering views on thelegalities of such a levy. Claire Spottiswoode, DirectorGeneral at the O$ce of Gas Regulation (Ofgas) felt that,as an unelected body, Ofgas was not entitled to introducewhat she saw as an extra tax on energy bills, and conse-quently refused to approve funds on the scale required,which has limited the EST's activities (Owen, 1997). Con-versely, Stephen Littlechild of the O$ce of ElectricityRegulation approved the levy-based standards of perfor-mance (SoP) scheme, which the EST also runs. UnderSoP, the public electricity suppliers raise a levy of C1 percustomer per annum (1994}2000) to spend on electricitysaving schemes, such as the installation of cavity wallinsulation in electrically heated homes (EST, 1999a).From 2000, the SoP levy will be increased to C1.20 percustomers and will be extended to gas (Ofgem, 1999).

VAT was introduced at 8% on residential fuel in April1994 as part of the Climate Change Programme, withplans to increase it to 17.5% (UK Government, 1997).However, the regressive nature of the indirect tax led togrowing resistance to the second increase and in Decem-ber 1994, the Government agreed to keep it at 8%. Thenew Labour government reduced VAT on residential fuelto 5% in the June 1997 budget.

For low-income households, the Home Energy E$-ciency Scheme (HEES) provides an increased chance ofa!ordable warmth via publicly funded investment inenergy e$ciency measures. Whilst this is primarily de-signed to reduce fuel poverty, it also reduces energy use.

Between 1991, when the scheme began, and 1997, aboutC350 million was spent on 2 million households, resultingin an average annual saving of C45 per household anda total energy saving (up to 1995) of approximately300 gWh (UK Government, 1997). The New HEES pro-gramme, to be launched in April 2000, has an increasedbudget (with an extra C150 million between 2000 and2002) and will o!er increased grants to vulnerable house-holds (DETR, 1999b).

Building Regulations ensure that new buildings haveat least a minimum level of thermal integrity. Regulationshave been tightened in recent years, most recently in July1995, when an energy performance rating system (theStandard Assessment Procedure * SAP) was introduc-ed, with new homes initially required to achieve a ratingof at least 80 out of 100 (UK Government, 1996).

Information for housing professionals on energy e$-ciency measures is provided by the Government's BestPractice Programme. In addition, through this pro-gramme the Housing Corporation is involved in settingrealistic energy e$ciency targets for Housing Associ-ations.

5.1.2. International inyuencesIn addition to the framework convention on climate

change, the UK is also bound at the international levelby EU legislation, which takes preference over nationallaws. Energy labelling directives have made energy labelsmandatory on cold appliances (from January 1995), onwashing machines and tumble dryers (from January1996) and on washer}dryers from January 1998. FromJanuary 1999, energy labels were also mandatory ondishwashers. These labels provide information to theconsumer on energy use and running cost and thus aimto encourage the purchase of more e$cient modules(Boardman et al., 1997).

5.1.3. The issue of liberalisationThe residential energy market in the UK completed

liberalisation in mid-1999. This has already led to pricereductions for many consumers, and may be reducingconsumer interest in energy e$ciency. Initial competitionbetween suppliers has centred around unit prices(Houghton et al., 1997), but as prices converge, the DTIenvisages that alternative forms of service will developincluding energy e$ciency services (DTI, 1996).

5.2. Policies to facilitate HECA implementation

The government is committed to a 20% CO2

reduc-tion between 1990 and 2010 and is relying on energye$ciency to make signi"cant emission reductions in theresidential sector. It is very unlikely that existing policieswill achieve the reduction required. Initial progress onHECA implementation has shown that there are manyopportunities open to ECAs to e!ect change in this areas.


If key constraints were removed, their ability to realisethe potential would be signi"cantly increased.

The research found that a lack of resources is thebiggest constraint facing ECAs. With the government'scommitment to not increasing public spending, it is veryunlikely that ECAs will see signi"cant budget increases.However, it has been shown that HECAction has donemuch to stimulate programmes at the local level and hasbeen especially successful in attracting signi"cant privatesector "nance using relatively small amounts of publicsector money. If the programme were to be continued,with funding at 2 or 3 times its present level, it couldstimulate much of the investment required.

Other constraints, such as a lack of experience ofenergy issues by the implementing o$cer, and a lack ofmember support, relate largely to the relatively low levelof priority that HECA is a!orded in ECAs. The prioritygiven to energy e$ciency issues at local governmentlevels is dictated largely by central government activities.When central government is seen to be taking the issue ofenergy e$ciency seriously, with a comprehensive policyin place, then local government is likely to follow suit.There are many other actions that central governmentcould take that would both facilitate improvement ofresidential energy e$ciency and demonstrate a corporatecommitment to the issue. These include tightening build-ing regulations and placing a duty on utility regulators toraise a levy from the utilities that would fund an ex-panded EST programme. Details on these proposals canbe found in, e.g., Wade and Leach (1997).

6. HECA as a template for other sectors

HECA has demonstrated that local authorities, withthe right support, can be e!ective in initiating environ-mental change. The unique and in#uential position theyhave in the local community provides a strong case forextending their role beyond residential energy use toother environmental issues. A few possible areas areexamined below.

6.1. Commercial energy use

The HECA model could be applied to the service aswell as the residential sector. The service sector accountsfor 13% of UK energy consumption and use is continual-ly rising, with increased use of IT and more widespreaduse of air conditioning (DTI, 1998b). The barriers toimplementation are largely the same as the residentialsector (i.e. "nancial and information), although there areadditional barriers that are unique to this sector, such asthe fact that energy costs generally form a very lowproportion of total overheads (DETR, 1997). In addition,in multi-tenanted buildings, energy charges are fre-quently incorporated into the rental package, removing

the incentive for "rms to reduce energy use. However,with experience of promoting energy e$ciency in theresidential sector, ECAs would be well placed to put theirexpertise into practice in the small and medium enter-prise (SME) commercial sector as well.

6.2. Trazc reduction

The Road Tra$c Reduction Act, passed in 1997, wasbased largely on the HECA model. The Act obliges localauthorities to set targets to reduce tra$c or its rate ofgrowth unless they put forward reasons for not doing so.Their plans for achieving the targets form the basisof annual bids for funding to the Department ofEnvironment, Transport and the Regions (StationeryO$ce, 1997).

6.3. Waste

The Waste Minimisation Act, passed in 1998, whichenables any waste collection or disposal authority inBritain to &do, or arrange for the doing of, anything whichin its opinion is necessary or expedient for the purpose ofminimising the quantities of controlled waste2 gener-ated in its area'. Its signi"cance lies in the fact that localauthorities currently have powers to deal with waste onlyafter it has been produced (Stationery O$ce, 1998).

6.4. ESCOs

Liberalisation brings with it the opportunity for lowerfuel bills, as supply companies compete for market share.While this may help to alleviate fuel poverty, it often hasnegative environmental implications. In fact, it is uncer-tain whether liberalisation will help to alleviate fuel pov-erty, because there is evidence that fuel companies&cherry-pick' their new customers, and practice discrimi-natory pricing, o!ering the biggest discounts to thoseusing the most fuel and paying by direct debit.

A study investigating the impact of liberalisation of thegas market in the South East of England uncovered clearevidence of discrimination regarding tari!s linked toparticular payment methods. Under British Gas (the soleresidential piped gas supplier in the UK pre-liberalisa-tion), the di!erential between direct debit and pre-payment tari!s was just under 14%. The study found theaverage di!erence with new suppliers to be 26%, and ashigh as 41%. Most new suppliers are actively discourag-ing lower income customers from changing supplier(Houghton et al., 1997).

ECAs di!er from energy suppliers in that they have aninterest in the social welfare of residents, as well as havinga duty to increase energy e$ciency. By forming localenergy service companies (ESCOs), ECAs could ensurethat liberalisation both alleviates fuel poverty and en-courages energy conservation. By bulk buying from


suppliers, ECAs can sell on at relatively low prices with-out discriminating between customers. In addition, theycan o!er to sell energy e$ciency measures, such as loftinsulation, cavity wall insulation, etc., via energy bills.Under the EST's ESCOs programme, a number ofschemes are being piloted.

As well as protecting vulnerable customers, adoptingan ESCO approach can give LAs a direct route intoencouraging energy e$ciency in private households, andwould thus assist them in their implementation of HECA.

It remains to be seen whether energy e$ciency can bea viable business opportunity for energy suppliers. Owen(1997) suggests that this will depend largely on the inge-nuity of the suppliers in terms of packaging and market-ing and whether customers see such services as valuable.She points out that the EST could play an important rolein helping to stimulate this transformation. If, however,this does not prove to be the case, then there will need tobe an obligation on suppliers to meet de"ned environ-mental and social goals.

7. HECA as a template for international action

HECA applies only to the UK. In the global context,all signatories to the climate change convention need to"nd ways to curb residential energy use. While nationalinitiatives can have a major impact on energy use, thesuccess of HECAction schemes has shown that the bestresults are achieved by programmes that are designed tosuit the local environment and are implemented at thelocal scale. Due to the direct involvement of local govern-ment with the lives of its inhabitants, most people havea much closer relationship with their branch of localgovernment (in whatever manifestation) than with cen-tral government, making them more responsive to localinitiatives. Internationally, there is a growing recognitionof the role that local authorities can play in environ-mental protection. This is largely as a result of Agenda 21(drawn up at the United Nations Conference on Environ-ment and Development in Rio, 1992). Chapter 28 of theAgenda calls on local authorities to play their role ineducating, mobilising and responding to the public topromote sustainable development (UNCED, 1993).

There is scope for HECA to be introduced throughoutEurope via the EU. It takes the concept of subsidiarity,which is at the heart of the EC's 5th EnvironmentalAction Plan to its logical conclusion. The concept wasintroduced because it was recognised that decisions bestmade at the national level should not be made at theinternational, or EC level. The same can be said ofdecisions best made at the local level. Currently, the onlyother country to have adopted a similar approach toenergy e$ciency is Italy, where a 1991 law placed a re-quirement on Municipal and Regional Governments todevelop their own energy plans with an emphasis on

renewables and improved energy e$ciency. However, thelaw has not been well implemented, largely due to anabsence of the necessary administrative and politicalcontrols (Becalli et al., 1997).

The HECAction competitive funding programmecould also be replicated in other countries. As has al-ready been demonstrated, the programme has provedvery successful in stimulating partnerships between thepublic and private sectors, and in levering signi"cantamounts of private sector funding. Such e$cient use ofpublic funds is likely to be attractive to most govern-ments.

8. Conclusions

HECA could make a major contribution to the UK'scommitment to reducing CO

2emissions. However, at the

time of writing, the Act's success has been limited. Whilesome authorities have risen to the challenge set byHECA, and have implemented innovative schemes toencourage householders to invest in energy e$ciencymeasures, others are e!ectively ignoring the Act.

It is clear that authorities need further assistance tohelp them meet the targets set by HECA. In particular,they need strong supporting policies, set at the centrallevel, that will encourage the changes that are required,including increased funding for support to local authori-ties, via schemes such as HECAction.

The HECA formula could also be applied to residen-tial energy e$ciency in other countries. A comparableapproach has been taken in Italy, and the concept ofencouraging partnership and private sector leveragewould be attractive to most governments.

A similar model could be applied to other sectors, bothin terms of energy e$ciency (e.g. the commercial sector)and in other areas. The same approach has already beentaken in the Road Tra$c Reduction Act.

This type of legislation has tremendous potential, butto achieve that potential it must be recognised thatHECA should form not the core of the UK's energye$ciency policy, but just a part, supported by a range ofcentral measures that encourage change. In this way,local authorities will truly be equipped with the righttools to e!ect signi"cant, permanent change in the homesof the UK. Meanwhile, other countries should be able tolearn from the UK's experience of devolving some re-sponsibility for residential energy e$ciency to the localarena and thus harnessing an e!ective medium for help-ing to achieve CO

2reduction targets.

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Documents

Local policies for DSM: the UK's home energy conservation act