Hillman's Musings:

Disincentives for energy saving

Mayer Hillman

Another column for Social Inventions journal from Dr Hillman, based on his research. He is Senior Fellow Emeritus, Policy Studies Institute.

In spite of the effort invested in lowering fuel consumption in the last two decades, the total amount used to provide heating, hot water, and light and power in the home has continued to rise. Yet, although most energy conservation and energy efficiency measures pay for themselves within a few years in terms of smaller fuel bills, their rate of take-up falls far short of what could be wished as a response to a policy on conserving fossil fuels for future generations and the ecological imperative of dramatically curbing greenhouse gas emissions.

How has this come about? How is it that we pay so little attention to easy ways of saving fuel - and money? In terms of public awareness, it is clear that householders have poor information on the cost-effectiveness of the various measures, on how to go about installing them, and on how to pay for them without being 'ripped off'. Most people do not even have an approximate idea of what it costs to heat their homes on a typical day in winter, to have an oven on for an hour, or to keep a refrigerator running for 24 hours, as they do of the costs of paying for a train journey, a visit to the cinema, or the Sunday joint.

A major explanation for this is that the utilities, especially now that they have been privatised, have little incentive to promote economy in consumption. Central heating specialists do not usually advise their clients that, over time, it is cheaper to heavily insulate their houses which will then lead to needing a smaller boiler system, than to instal a system to match the requirements of a home in poor thermal condition.

In addition, public perception has been biased because firms whose products or services are relatively expensive can better afford the high costs of advertising - double-glazing being a case in point - even though the relatively inexpensive conservation measures, such as draughtproofing, are much more cost-effective.

People are also not so attracted to invest in conservation as it is difficult for them to link their fuel consumption patterns with the costs incurred. Meters are generally located in awkward positions, such as at the back of broom cupboards, out of sight, out of mind. They are not easy to read, and the accumulated total of units shown includes all previous consumption and is recorded in a way that is hard to relate to the housekeeping budget. The bill rendered quarterly (effectively in arrears in contrast to payment through a slot meter) is another disincentive: by the time the one for the winter season is received, any encouragement it might have provided for draughtproofing window and door openings or to shut off the radiator in the spare room has largely been lost in the May sunshine. Both gas and electricity utilities use a standing charge to cover the fixed costs of servicing and billing, and a unit cost to cover generating and supplying the fuel used. This means that the unit price decreases as consumers use more energy, again discouraging action on lowering consumption.

Charges do not relate to the actual costs of supply which would then enable customers to recognise when it is sensible to invest more in energy saving measures and perhaps to switch to alternative sources of energy, thereby relieving the utilities of the need to instal new capacity: whilst a unit of electricity provided in peak hours is far more expensive to supply than a unit at other times, householders, other than that small minority who heat their homes by electric night storage heaters, are not given any signal to adjust their pattern of demand to reflect this.

Perhaps the biggest disincentive to energy saving in the home can be seen in the property market. Building societies have taken little interest in promoting energy conservation. Details of the thermal efficiency of a house or of likely fuel bills are rarely provided in the particulars prepared by estate agents. Yet it is common practice to set down the local community or property tax - usually a much smaller amount than the fuel bills - that will have to be paid for the property up for sale.

'It is almost as if some malign intelligence was conspiring to ensure that we unnecessarily use up vast amounts of fossil fuels'

It is almost as if some malign intelligence, with considerable and subtle ingenuity and imagination, was conspiring to ensure that we unnecessarily use up vast amounts of fossil fuels. That is not to suggest that there is some conspiracy to thwart the success of policy on energy conservation and on reducing greenhouse gas emissions. But, given that the outcome is not dissimilar to one in which that malign intelligence was intent on thwarting the public interest in terms of this generation's obligations regarding stewardship of the planet and its resources, should we not be demanding an explanation from those with responsibility for this area of public affairs - politicians and civil servants alike? And if their response is not forthcoming or is unsatisfactory, should they be considered serious candidates for an 'Anti-Social Inventions Award'?

Dr. Hillman, Senior Fellow Emeritlus, Policy Studies Institute, 100 Park Village East, London NW1 3SR (tel 071 378 2171; fax 071 388 0914).