Energy Efficiency improvements

The fiscal stimulus (which was put in place as a result of the recession), has provided an opportunity to finance low carbon measures, such as energy efficiency improvement. The UK is already committed to spending around £9 billion on energy efficiency measures over the period 2008-11.

The Budget 2009 included various further measures to support energy efficiency improvement:

• £100 million to improve insulation for 150,000 homes in the social sector through the Decent Homes programme in England;
• £100 million for the construction of new homes at higher energy efficiency standards;
• £100 million of new funding for low-cost loans for energy efficiency measures in small and medium-sized enterprises;
• £65 million of new funding for loans to install energy efficiency measures in public buildings.

The Committee’s analysis shows that the resourcing of energy efficiency can be dealt with going forward by using proposed new financing mechanisms, i.e. without further fiscal stimulus.

Vehicle scrappage scheme

The Committee analysed what the impact of the vehicle scrappage scheme announced in the 2009 Budget is likely to have on emissions. This found that a time-limited scheme can induce a short-term reduction in emissions as it brings forward sales of new and more efficient vehicles. However, these savings are small (around 1.6MtCO₂ cumulated over the lifetime of the scheme) and are potentially offset by increases in emissions in other areas (e.g. the emissions produced from the extraction, production and disposal of raw materials generated as a result of the scheme).

Scrappage is not, therefore, a useful policy in achieving deep and ongoing cuts in vehicle emissions, although it would have more positive environmental impacts if it were explicitly linked with the purchase of low-carbon vehicles. A strategy for reducing vehicle emissions should be based around more low-carbon vehicles being brought to market, and consumers purchasing these vehicles instead of conventional ones. Read more about the Committee’s proposals on transport sector decarbonisation.