'Energy efficiency is sexy': Lord Callanan insists UK is no 'laggard' on energy efficiency

Energy minister defends UK’s record on energy efficiency, as he sits down with BusinessGreen at major meet of energy ministers in Denmark

A government minister has hit back at mounting criticism that the government is not doing enough to help reduce energy consumption as part of its drive to tackle climate change and bolster UK energy security, arguing the country is making efficiency progress in enhancing energy across the economic.

In an interview yesterday with BusinessGreen On the sides of the IEA’s energy efficiency conference in Denmark, UK Energy, Business, and Corporate Responsibility Minister Lord Callanan said he believed the UK was doing more to advance the energy efficiency agenda than some countries with an impressive reputation for delivering energy saving measures.

Reflecting on high-level discussions underway between more than 30 energy ministers attending the conference, he said: “It has been quite interesting to discover that even some of the Scandinavian countries that have a better reputation than the UK – we’re actually doing more than they are in many respects, in terms of advancing the agenda,” he said. “It is not the case the UK is the laggard of the pack.”

It is an assessment that would be hotly contested by some British campaigners, who have long decried the UK’s energy efficiency policy as weak and underpowered, arguing the government’s historic reticence to invest more in insulation, heat pumps, and other measures that can reduce the energy consumption of the UK’s notoriously draughty homes is exacerbating the cost-of-living crisis, and undermining the drive to enhance energy security and decarbonise the economy.

The British Energy Security Strategy, published last month in the wake of Russia’s attack on Ukraine, focused largely on ramping up the UK’s domestic energy supplies, but included few demand-side measures that could curb energy bills in the short-term. And just this week, the executive director of the UK’s largest business group, the CBI, called on the government to make an “all out national effort” on energy efficiency a top priority, noting that investments that reduce energy consumption in homes promise to permanently Reduce household energy bills, whilst reducing the significant carbon footprint of the UK’s buildings.

Callanan spoke BusinessGreen on the same day that IEA executive director Dr Fatih Birol again appealed to governments to ramp up policies, incentives, and educational campaigns that could reduce household and business energy consumption, warning that certain in Europe could face gas ration effort this winter without a concerted effort to reduce demand for fuel from transport, homes, power and industry.

While Callanan conceded that there was potential for the UK to go further with its energy efficiency efforts, he insisted the UK’s policies were ambitious, pointing to the Boiler Upgrade Scheme, Social Housing Decarbonisation Fund, and Local Authority Delivery Scheme as examples of the government’s agenda . He also pointed to the Chancellor’s recent move to remove VAT from purchases on products that save energy at home, such as heat pumps. “I understand people saying we should do more, and I’d like to do more, but we are doing a lot already,” he said.

Callahan also said he was working with officials to enhance public understanding of the various energy efficiency initiatives enacted by the government. “It is something that I’m looking at with officials,” he revealed. “If you asked anybody in the UK and asked most MPs, they probably wouldn’t know how much money we are actually spending. By all means call for more spending, but we are spending £6.6bn pounds in direct Exchequer funding, plus a billion pounds a year of ECO funding precisely on energy efficiency measures.

“Those are large sums of money. There is a lot of work behind the scenes as we’re building up the supply chains. Of course, it would be nice to do more, but there are limited funds available, and we are doing a lot.”

Critics would argue that there seems to be funds aplenty pouring into other measures for tackling the cost-of-living crisis, most of which are far less effective at reducing bills for consumers in the long-term. A report published this week by E3G calculated the UK government has spent £37bn this year on measures to support struggling households will high bills. But it concluded that the net result had been to “stand still on soaring costs of living, without meaningful investment in solutions which could permanently reduce bills”.

Moreover, the government has been severely criticizing for its decision to provide fresh tax relief for oil and gas companies investing in new exploration in the North Sea as part of its policy package to address the cost-of-living crisis. Experts have pointed out that boosting domestic oil and gas production by giving energy firms a 91p tax saving for every £1 they invest in oil and gas extraction will do nothing to reduce citizens’ and businesses’ exposure to soaring international oil and gas prices. Analysis published last week by environmental think tank E3G calculated the anticipated lost taxpayer revenue from the tax break for energy firms could have been used to fund better insulation in around two million UK homes.

But Callanan said incentivising fresh oil and gas exploration in the North Sea would reduce the UK’s need to import fossil fuels from other countries. “Gas is a transition fuel,” he said. “If we are to have gas as a transition fuel, I make no apologies for saying it should be gas from the UK rather than from Qatar, Saudi Arabia or even worse from Russia.”

“We need supplies of UK gas for the next 10 to 15 years at least,” he added.

However, climate and energy experts have pointed out that any fields approved in the near-term program could take decades to come online, with recently analysis claiming that new oil and gas fields take an average of 28 years to come on stream after initial licensing. They have also pointed out that as much as half of gas and oil produced in the UK is exported to other markets by private companies.

Moreover, the UK’s new incentives seems to directly contravene the IEA’s warning that no new oil and gas fields should come online if the world is to move onto a decarbonisation pathway aligned with the 1.5C of warming recommended by climate scientists.

In an interview with BusinessGreen this morning, Dr Birol doubled down on this advice, urging governments scrambling to rapidly ramp up domestic energy supplies in the wake of Russia’s attack of Ukraine to purchase renewable power and fossil fuels from existing oil and gas fields.

“We can address this crisis with some short-term solutions,” he said. “Namely, getting more oil and gas from existing fields, and making more use of the shale oil and gas, because they are easy to come on to market”.

He that warned new oil and gas exploration was a “risky business” because oil projects green lit today would come to market in the 2040s, when it was unclear whether there would be a need for increasing oil demand.

“So for this reason, I believe there is an urgent need to look at how we can reduce the demand at home and there are very proven energy policies and energy efficiency policies which could bring demand down,” Birol said. “I hope that all the countries, including the UK, will look at these options carefully, and take some legally binding measures. This can range from the transportation sector to households, to the industrial sector.”

Lord Callanan conceded that the best response to high gas prices was to be found in efforts to reduce gas use and prioritise energy efficiency. “Whether you’re really evangelical about the fight against climate change, whether you’re a climate change sceptic, it doesn’t matter,” he said. “Anybody could agree that energy efficiency is a good thing, using less energy is a good thing. Ultimately, the best response to high gas prices is to use less of the stuff and everybody wants their bills to be low.”

However, he conceded that the energy efficiency agenda still had something of an image problem. “It is not maybe as sexy or as exciting as constructing new power stations, but it can often be more cost effective,” he said.

“I think energy efficiency is sexy,” he added.

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