Heat and Energy-Saving Strategy consultation response

Summerleaze (Forever Fuels' parent company) today submitted a response to the Department for Energy and Climate-Change's (DECC's) consultation on a Heat and Energy-Saving (HES) Strategy. The response is available for download from our Downloads page.

The key points that we were trying to emphasise were:

• Renewable heat and energy-efficiency can be best encouraged by reversing the current policy of trying to make household fossil-fired energy as cheap as possible, thus creating a sufficient price-incentive to justify investment in the most appropriate carbon-minimizing technologies for the location.
• Ideally, this should be achieved by replacing the many ineffective and partial mechanisms implemented to date with a carbon or fossil-fuel tax, imposed at point of production or import into the country, and applied equally regardless of source, consumer, technology or any other factor.
• The Government should move away from its "supplier-led approach", which gives undue influence to the Vertically-Integrated Large Energy (VILE) companies, and makes it hard for the smaller, independent companies, who usually do most of the innovating and development of immature markets, to compete on an equal footing with the VILE companies.
• There is a limited role for government in informing, educating and enabling the general public, but these are secondary issues compared to the provision of an adequate incentive to try to reduce the use of fossil-fuels. The market will provide much of this information if there is sufficient demand for it.
• State-endorsed schemes to finance investments in these technologies by borrowing against a property amount to government encouragement of mortgage-equity withdrawal in conditions when such an approach has rarely been less appropriate. The market will provide finance naturally (once it has stabilized), if incentives are sufficient to justify investment.
• Carbon tax is preferable to a Feed-In Tariff (FIT) Renewable Heat Incentive (RHI), but if a RHI is introduced, the Government should try to avoid targeting/banding it as far as possible, in order to encourage the most economic solutions. If the Government is determined to target the RHI according to the size of projects, "front-loading" the mechanism, by providing a higher level of support per MWh for an initial number of MWh, falling back to a lower level of support per MWh thereafter, would be a better, less distortionary way of achieving this than banding by arbitrary capacity limits.
• The use of grants, and particularly the oligopolistic Low-Carbon Buildings Programme (LCBP) Phase 2, to bridge the funding gap between now and the introduction of a RHI is unfortunate. Grants should be avoided other than in a few narrow circumstances. They are almost always counter-productive. They should only be used as a last resort if no other option is feasible.
• Cap-and-trade would be an even worse option for incentivizing renewable heat than would a Feed-In Tariff.
• Regulation of the heat market should be avoided as far as possible, and certainly not based on the advice of yet another unaccountable, unrepresentative, ill-informed, biased, advisory quango, such as the proposed Heat Markets Forum. People should have freedom to contract their heat supplies on the basis of any terms they choose, including long-term contracts, so long as they are not mis-sold or coerced. Regulation to impose the government's ideas of what is reasonable for suppliers to charge consumers will deter the necessary investment.