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13^th June 2007 (Source: Department for Environment, Food And Rural Affairs )

Gas and electricity companies of the future could be as much about helping customers cut their energy use and CO2 footprint as selling units of energy, Environment and Climate Change Minister Ian Pearson said today.

The government today published the Household Energy Supplier Obligation from 2011: A Call for Evidence, which outlines the potential role of energy companies in helping to boost energy efficiency in UK homes until 2020, and cutting household emissions by up to 10%. Emissions from homes account for over a quarter of the UK's total emissions.

The supplier obligation for the period after 2011 could save up to 4 million tonnes of carbon by 2020, which could equate to more than 5 million cavity wall insulations and nearly 2 million installations of microgeneration such as solar water heating.

Speaking at a Community Heroes and Energy Saving Event at City Hall, London, Mr Pearson said:

"Consumers are already seeing the benefits of our push to make gas and electricity companies improve energy efficiency in homes. It's helping people save money and do their bit to cut CO2 emissions. But we need to continue to drive down emissions, and that means increasing this effort.

"Tackling the effect of their customers' energy use on climate change must become a key part of the business of energy suppliers. The shape of energy companies in the future could be radically different from today - as their focus shifts from selling more and more energy to playing a central role in helping people cut their energy use and lead greener lives.

"We want to see a shift from selling units of energy to increasingly providing energy services, such as energy efficient lighting or solar water heating.

"Energy companies are already playing an important role in helping consumers become more energy efficient. For the future, it's clear that there must be business opportunities in selling less energy.

"I'd like to see consumers demanding these services and sharing with suppliers the incentive to reduce their household CO2 emissions. Consumers have a lot to gain from this - reducing energy demand can cut energy bills and help people do their bit for the environment."

Gas and electricity companies are already required by government to help people reduce their energy use in the home. At least 10 million households received energy efficiency measures under the first phase of the Energy Efficiency Commitment (2002-05), which increased the number of people installing loft and cavity wall insulation, low energy light bulbs and energy efficient products. The first phase of the scheme has stimulated £600m of investment in energy efficiency and delivered net benefits to householders in excess of £3 billion. Under the current phase of the scheme, where the targets have roughly doubled, 800,000 households have already received cavity wall insulation. The next phase of the commitment, that will run from 2008 - 2011, is expected to cut carbon emissions by 1.1 million tonnes and will save consumers £10 billion in energy savings.

The Energy White Paper, published in May, emphasised the government's commitment to an obligation on energy suppliers to work with customers to improve energy efficiency up to 2020 that will help deliver carbon savings of 3-4 million tonnes of carbon (11-14.6 mtCO2), helping the UK stay on course for its goal of a 60% reduction in carbon emissions by 2050. Today's publication outlines the Government's thinking so far, and invites views from all interested parties at this early stage of policy development.

One of the options being considered as part of an obligation on energy suppliers between 2011 and 2020 includes putting a cap on the overall carbon emissions - thereby setting an explicit obligation to reduce the carbon footprint of their customers year on year. Alternatively, there could be an enhanced version of the current requirements under the Energy Efficiency Commitment Framework, which requires suppliers to promote energy saving and low carbon measures in customers' homes.

Defra has today also published details and opened the application process for its £7.5m Community Energy Efficiency Fund, which is aimed at helping 300,000 of the most vulnerable pensioners and other vulnerable households feel warmer and more comfortable in their homes through a locally targeted scheme.

NOTES TO EDITORS

1. The Supplier Obligation call for evidence can be found at: http://www.defra.gov.uk/environment/climatechange/uk/household/supplier/index.htm
2. The current obligation on energy suppliers is called the Energy Efficiency Commitment (EEC). Under EEC, household energy suppliers have an obligation to promote household measures to achieve a target level of energy savings. EEC has been very successful at driving the cost-effective delivery of measures such as loft and cavity wall insulation, low energy lamps and efficient appliances. EEC phase 1 (which ran from 2002 - 2005) stimulated about £600m investment in energy efficiency and delivered net benefits to householders in excess of £3billion. EEC2 (2005-08), requires broadly double the level of activity of EEC1 and is expected to deliver 0.5 MtC annually in 2010.
3. The current consultation on EEC3 (now called the Carbon Emission Reduction Target or CERT) confirms the Government's intention to double levels of activity for the period 2008-2011. We expect CERT to deliver total savings of 1.1 MtC annually after three years, saving consumers £10Bn.
4. The Chancellor announced in his Pre-Budget Report 2006 that £7.5 million would be made available across the UK in 2007/08 to improve the effectiveness and coordination of Warm Front (WF) and Energy Efficiency Commitment (EEC) delivery, with about £6.3m of this being made available for England. The aim is to ensure 300,000 of the most vulnerable pensioners and other vulnerable households are assisted to feel warmer and more comfortable using an area based approach to provide a coordinated set of advice and measures to them.
5. In conjunction with key stakeholders Defra has established a process setting out clear criteria that will enable those working at a local level to come forward with proposals. Applicants will be invited via a competitive process to apply to the 'Community Energy Efficiency Fund'. They are asked to identify a clear set of targets to help provide a cost effective way of delivering EEC and Warm Front on a local basis, improving the experience of individual households in receiving a holistic package of support and promoting innovation in delivery and measures provided. Further information is available at: http://defra.gov.uk/environment/energy/fuelpov/energy-efficiency-assistance.htm

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