UK’s energy efficiency policy ‘not fully coherent’ –the difficulties of making complex policy mixes work

A recent commentary piece in Ends report (UK’s energy efficiency plan ‘not fully coherent’, by Paul Hatchwell, 7th May) is critical of DECC’s National Energy Efficiency Action Plan (NEAP). In the article Hatchwell  refers to an assessment by the EU-wide Coalition for Energy Savings which concluded that the ‘UK’s plans were considered “assessable”, but classed as “not fully coherent and/or several measures and claimed savings questionable”.  As project leader on a Centre on Innovation and Energy Demand project on the ‘Policy synergies and trade offs for low energy innovation’ I find this article interesting as it highlights the difficulties of making complex policy mixes work.

NEAPs are required by the European Commission for member states to report on actions undertaken to deliver on the EU’s commitment to increase energy efficiency by 20% by 2020. Hatchwell points out that two thirds of the envisaged energy savings in the UK’s national plan are assumed to come from the domestic sector while the target for industry and commerce are ‘surprisingly modest relative to opportunities. There is an almost negligible contribution from the energy-intensive transport sector.’ The plan lists 19 policy instruments which are meant to deliver the promised energy savings. Instruments include tightening building regulations, the Energy Company Obligation, the Carbon Reduction Commitment Energy Efficiency Scheme affecting large commercial and public sector energy use, the Green Deal’s domestic energy efficiency loans, and the smart meter roll-out.

For me this article raises at least three different issues which we are currently grappling with in a Centre on Innovation and Energy Demand-funded project: ‘Policy synergies and trade offs for low energy innovation’

1. How coherent is the current UK policy mix?

How to encourage energy efficiency is a crucial challenge in meeting energy and climate change targets and it is clear to most experts that a variety of instruments will be needed to achieve the EU’s and UK’s policy ambitions. However this poses certain challenges concerning how different policy instruments work together as a coherent policy mix. For me this would include both the issue of relative coverage of different sectors (e.g. heating versus electricity versus transport; domestic versus non-domestic buildings; freight versus personal transport; etc) and identifying potential gaps as well as considering the interactions of different policy instruments which can either be synergistic or there might be trade-offs. Just adding up the intended savings from a number of existing and new policy instruments therefore does not do justice to the complexity of this task.

 2. How can the emergence and change of policy mixes be explained?

In my view the second question cannot be answered simply by pointing to cheapest energy efficiency opportunities a la McKinsey cost curves. The development of policies often follows its own (political) logic and rhythm with different Departments or Agencies responsible for different instruments and we can therefore very rarely expect there to be a stable, coherent and well thought-through policy mix. This is an important field analysts need to shed light on to be able to provide useful commentary about which adjustments to existing policy mixes might be sensible and politically feasible. Secondly, issues such as which sectors are targeted with what kinds of instruments are, at the end of the day, political choices about who pays which need open political debate rather than relying primarily on expert’s assessment of cheapest cost opportunities.

3. What impacts do these policy mixes have on target groups?

Time and time again it has been shown that apparently cost effective opportunities for energy efficiency solutions are not taken up by actors in the real world for a variety of reasons. For me this really raises a challenge for assessing the likely impact such complex policy mixes have on desired target groups. It is an empirical challenge to try to better understand which policy instruments are considered important by target groups and how these incentives influence their decisions.

While the on-going project initially focussed on mapping policy instruments potentially influencing the emergence and diffusion of low energy innovations in the heating, transport and electricity sectors (partly answering question 1), the next step in the research is to look a bit more closely at energy efficiency policies aimed at buildings trying to answer questions 2 and 3. As part of the  research process  we are hoping to engage with a variety of stakeholders involved in UK energy efficiency policy formulation and implementation to better understand the current policy mix and to think constructively about ways in which it can be improved and what some of the trade-offs (if any) might be. We would be very happy to hear from anyone who is interested in contributing to this.

Dr Florian Kern is Co-Director Sussex Energy Group at SPRU-Science and Technology Policy Research and is leading a project for the Centre on Innovation and Energy Demand on : ‘Policy synergies and trade offs for low energy innovation.’

 

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