HomeGreening the economyWhy the UK needs a binding energy efficiency target

Why the UK needs a binding energy efficiency target

This post is by Green Alliance policy assistant Elise Attal 

Energy efficiency is a no brainer. As a recent report from E3G showed, it is the most rational and straightforward thing do from both an economic and environmental perspective. It should be the government’s first priority.

Missing the target increases costs to consumers
The energy efficiency directive currently proposed by the European Commission offers a real opportunity to meet the third, often neglected EU 2020 target: cutting energy consumption by 20 per cent. Unlike the renewables and carbon targets, this target is non-binding and perhaps as a result, we’re likely to miss it by a very wide margin, increasing energy costs for consumers. On 5 March the European Parliament called for national energy efficiency targets based on effort sharing, in effect making the target binding. The UK government is currently rejecting this proposal. But it should embrace it.

The energy efficiency target has become caught up in a wider political debate about regulation. Improving energy efficiency may require illiberal changes to individual consumption habits: the knee jerk reaction by No 10 to the sensible suggestion that building improvements should trigger mandatory, cost effective energy efficiency upgrades, a policy which has attracted zero complaints since it was established in 2005 in Conservative-held Uttlesford, shows how worried politicians are by even the most uncontroversial, common sense regulation.

It’s cheap and achievable
There is a similar fear about the introduction of legal energy saving obligations for businesses and energy companies, which are seen as an unwelcome distortion to the market. These offend the government’s creed of markets with minimal state intervention, making dirigiste policies hard to sell, doubly so when they are dictated by an intrusive and often despised European Union. The irony is that the efficiency directive is simply trying to force companies and people to act in the economically rational way that market models predict they should.

Binding targets work. Those in the renewable energy directive or the Climate Change Act have proven to be effective because they provide a clear national trajectory to check against progress. In these cases, targets have been a clear driver for action.

A binding efficiency target supports another target that the government is trying to strengthen: the 2020 CO2 reduction target. A binding efficiency target will reinforce some of the government’s key green policies like the Green Deal or Carbon Reduction Commitment, which need clearer objectives and high ambition levels to kick off. A binding efficiency target even helps the government win over the anti-wind sceptics: it would cut the amount of renewable energy needed to meet our 2020 renewables targets by nearly three per cent.

All the economic modelling of efficiency suggests that it’s cheap and achievable. Efficiency supports both our national and international climate and energy policies. It’s time for Ed Davey to ditch the government’s fear of regulation and force everyone to do what, according to economic logic, we actually want to do anyway: deliver a strong efficiency directive, and real energy savings at a low cost for taxpayers.

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Green Alliance is a charity and independent think tank focused on ambitious leadership and increased political support for environmental solutions in the UK. This blog provides space for commentary and analysis around environmental politics and policy issues as they affect the UK. The views of external contributors do not necessarily represent those of Green Alliance.