A gap remains in the level of investment required to reduce energy bills. While a large amount of money has rightly been spent on energy bill relief, the measures announced by the Treasury today do not reflect the holistic planning needed to improve the energy system and buildings that could more sustainably help the public and lead to reduced running costs through electrified heat and transport. In BEAMA’s Supply Chain for Net Zero report, modelling identified the opportunities to cut the costs of meeting Net Zero and interim Carbon Budgets by acting faster now. Despite Government launching a Net Zero Review, a Heat in Buildings Strategy, and with an ongoing Net Zero Review, it is disappointing that the statement does not reflect more joined up thinking for the next few years to set the conditions to seize these benefits.
Energy Efficiency
While additional funds on energy efficiency funding will always be welcome, given the need for mass market deployment of buildings energy performance upgrades, no additional funding until 2025 does not suggest that the Government is switching its focus from temporary energy bills support to more sustainable methods of helping building users. If we installed lower cost energy efficiency measures such as heating controls today, these would already begin to pay back by the time the extra funding announced by the Chancellor today kicks in. The wholescale transformation that industry is hoping to deliver does not seem likely to be triggered by Government setting appropriate market conditions or direct investment in building upgrades over the next couple of years. And the funds announced for 2025 are barely an increase on the money promised for this Parliament. While ongoing support for energy bills is necessary at the moment, if this is not supplemented by a more widespread improvement in energy efficiency, those in the worst performing buildings will continue to pay relatively higher bills in the years to come.
Generation
A tax on electricity generation profits set at a higher level than those for oil and gas producers raises questions about progress to decarbonising the power grid. Further analysis will need to be done in this area, but it could be considered that implementing this measure over the next five years is taking the place of a more holistic set of market reforms, for example those included within the proposed Energy Bill. Ending up with this limited solution following a Net Zero Strategy, draft Energy Bill and ongoing Net Zero Review seems at best partial and at worst counterproductive. We urge policymakers to remember that the CCC projects running costs from electrified heat and transport will be higher than the investment costs, so Government’s priority should be enacting policies that move us quickly towards a clean and efficient energy system for the benefit of all.
Electric vehicles
We are pleased that the Govt has signalled that it accepts the urgency and importance of road transport electrification, for example by its continued support for Project Rapid. In that context, the proposed gradual increase in excise duty on EVs could be, if implemented responsibly, a manageable, sustainable and fair way for the EV sector to transition to business as usual, reflecting the maturing of the market.
With or without an excise duty exemption, EVs will continue to be popular, desirable, and undersupplied to the UK market. Therefore it is essential that the ZEV mandate be made to work effectively to support price parity or better between EVs and ICE vehicles - total cost of ownership and sticker price - and to make it easier for consumers to switch to cleaner, more sustainable transport solutions.
For further information please contact simon.harpin@beama.org.uk.
