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Climate policy that cuts costs: International policy comparison (Energy Saving Trust, Green Alliance)

1. Outline

The Climate Change Committee (CCC) commissioned Energy Saving Trust and Green Alliance to carry out research and analysis on policies introduced in other countries in response to the energy crisis that aim to both cut costs and reduce emissions. This report draws on these international examples to produce key lessons for UK policymaking, highlighting areas where policy has the potential to reduce emissions, cut household or business costs and improve energy security at home.

2. Key messages

The energy crisis that followed Russia’s invasion of Ukraine has shown that decarbonisation can be a valuable tool for addressing both costs and energy security. The UK has been strongly affected by the energy crisis due to its dependence on natural gas for heating, electricity generation and industry. Alongside measures that solely target the level of energy bills, the Government has introduced some policies to address both emissions and costs, such as the Great British Insulation Scheme and the £2 bus fare pilot. However, gaps remain and ‘win-win’ opportunities are being missed.

International policies can provide useful lessons in how best to bridge these gaps. Drawing on 12 policy case studies and considering national differences in cultural, political, regulatory and market arrangements produced the following insights:

  • Home energy. England needs a comprehensive home energy retrofit scheme. Long-term funding to provide certainty for consumers and supply chains is a key success factor. Integration of support for heat pump installation and energy efficiency measures and whole building support that includes incentives for upgrading blocks of flats are also important aspects for the policy design.
  • Public engagement and green choices. There is a need for a UK Government public engagement campaign that focuses on reducing energy demand. This should be aimed at both businesses and households and its effectiveness would be strengthened by combining informing ‘quick win’ bill-saving measures with programmes supporting longer-term actions.
  • Business energy. The Government should produce a comprehensive and coherent strategy on business energy that covers a wide range of businesses from SMEs to energy intensive industries. Policy can help to embed energy and carbon management into decision making and there are gains to be made through making businesses aware of energy saving opportunities and, in some cases, requiring them to act on these.
  • Low-income households. UK policy should place more focus on providing access to low-carbon technologies for low-income households. To avoid low-income groups being locked out of the cost savings that low-carbon technologies will increasingly provide, the Government should consider targeted support for the take-up of key technologies such as EVs.