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EXECUTIVE SUMMARY
1. In April 2007, Halcrow was commissioned by the Scottish Government to undertake an independent review of the impact and effectiveness of energy efficiency and microgeneration support provided to the domestic, private and public sectors in Scotland. The principal aim of the review has been to review and assess the effectiveness of the advice and support currently being provided, and to establish whether it represents good value for money in terms of raising awareness, changing behaviours and attitudes and in achieving carbon savings.
2. The key focus of this review has been on the effectiveness of the support structure and the extent to which the programmes supported represent good value for money. The findings from this review will inform future policy in this area, providing an evidence base for the ongoing development of policy and strategy on energy efficiency and microgeneration. The methodology used to satisfy this objective has included extensive stakeholder consultation, surveys of households and organisations that have received advice and support through the funded programmes, a literature review and a desk based analysis of programme performance data. The review has been supplemented by a number of international case studies, which have highlighted areas of best practice in supporting the development of markets in energy efficiency and microgeneration.
3. The Scottish Government allocates around £10m per annum to fund major Scottish energy efficiency programmes run by the Carbon Trust ( CT) and the Energy Saving Trust ( EST). Support for the development of small scale renewables is delivered principally through the Scottish Community and Householder Renewables Initiative ( SCHRI). The Scottish Government has committed £18 million to the programme since its inception. In addition, the Scottish Government has also provided funding of £3m for Loan Action Scotland ( LAS), a revolving loan fund to provide SMEs with the capital investment for energy efficiency improvements, and allocated £24 million to the Central Energy Efficiency Fund ( CEEF), a similar scheme for the public sector.
4. The review has highlighted a number of areas where actions could be undertaken by the Scottish Government to improve the delivery of support in Scotland. However, it is also clear that the scope of actions that can be implemented by the Scottish Government is constrained by their more limited role in relation to energy policy, with substantial aspects remaining under control of the UK Government. As the Energy Efficiency Commitment ( EEC) and the Climate Change Levy ( CCL) are reserved matters, with the Scottish Government having very limited influence over these funding streams, a single agency approach for Scotland, along the lines of the Norwegian example, would be less effective as it would be unable to bring together these key sources of funding under its control. While this review does not recommend the establishment of a separate legally constituted energy agency in Scotland, the development of a virtual organisation in the form of an overarching brand and executive committee is something which could be explored further.
5. Findings from the review suggest that support delivered to the business sector, particularly SMEs, should be developed as part of a more holistic resource efficiency approach, which facilitates skills and knowledge transfer to within the private sector. In terms of ensuring value for money, it is also important that support is targeted in areas where its impact will be highest, both in terms of additionality and carbon savings.
6. Scotland's pro-rata share of EEC 3 funding would amount to around £75 million per annum, twenty-times the amount allocated by the Scottish Government for energy efficiency and microgeneration support in the domestic sector ( EST and SCHRI). However, early indications suggest that the energy supply companies are unlikely to allocate this level of funding in Scotland. The development of strategic relationships with local authorities has been central to this approach, which has been less apparent in Scotland, particularly in relation to encouraging energy efficiency within private sector housing.
7. The findings from the household survey underlined that the least likely energy efficiency measures to be implemented were cavity wall insulation and condensing boilers. Cavity wall insulation is a highly cost effective measure which can be installed with minimal disruption and lead to extensive savings in energy bills. However, our survey of households highlights that it still suffers from the negative experiences arising from poor installation and defective and toxic materials which were prevalent when it was first introduced during the 1970s and early 1980s.
8. In terms of the existence of a financial barrier hindering implementation, this was mainly cited in relation to the installation of condensing boilers. More extensive partnership working between the energy supply companies and Scottish local authorities, leveraging more EEC funding into Scotland through a market based approach, is required to promote increased uptake in Scotland.
9. In order to best target resources to communities with lower levels of energy efficiency, it is recommended that a more strategic area-based approach be considered. An area-based approach also provides greater potential to provide face-to-face energy audits to households by generating much higher economies of scale in the provision of this service. The results from the household survey suggest that individuals that had received a face-to-face energy audit were more likely to implement energy efficiency measures compared to those who received an online audit. Individuals who did not receive any audit were the least likely to implement energy efficiency measures.
10. Government investment to support the further development of the microgeneration sector in Scotland has involved both direct subsidies of various microgeneration technologies as well as the provision of advice and guidance. A high number of consultees identified a lack of specialist impartial microgeneration advice available for households and businesses as one of the most important gaps in the current provision of support for energy efficiency and microgeneration. It was reported that the available advice is very general and may not always consider the particular situation of the household/business to determine the suitability of technologies. This specialist advice should also involve help with the decision-making and planning process in order to choose the right technology. Therefore, it is important that the future funding of microgeneration ensures that sufficient resources are allocated to ensuring the delivery of high quality advice and guidance in relation to developing the sector in Scotland.
11. The most cost effective programmes in terms of carbon savings are those which operate at a UK level: the CT auditing services and the EST consumer marketing. These two programmes also constitute the most significant sources of carbon reduction, 45% and 25% respectively, of the total lifetime carbon displacement by all the programmes presented in this review. Both programmes benefit from extensive economies of scale by being part of UK wide initiatives, whereby the fixed costs relating to these services are spread more extensively across the UK.
12. The auditing services provided by the Carbon Trust perform favourably in terms of cost effectiveness compared to the programmes targeted at smaller companies through the Business Advisor Network and the Business Environment Partnership. These programmes do not benefit from the economies of scale from being a UK wide programme, and focus on smaller companies where the potential carbon savings per company will be lower.
13. The findings from the review highlight that stimulating the market through a reduction in informational barriers (through the provision of information and advice) or through the provision of interest-free loans, are generally more cost effective for the Government than the provision of direct subsidies. In terms of resource acquisition of energy efficiency measures through the provision of direct subsidies, programmes which focus on improving the insulation envelope of buildings are more cost effective (in terms of carbon displacement) when compared to programmes focused on heating and microgeneration systems.
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