Thank you for inviting me here today to the launch of the results of the 40% House Project. This is a timely piece of work. Figures released on Monday show the UK is on course to meet its Kyoto targets. This is encouraging. But the figures also show there has been a 2.2 per cent increase in carbon dioxide emissions between 2002 and 2003. This is disappointing. It underlines the scale of the challenge we have set ourselves of delivering a 20% cut in carbon dioxide emissions by 2010.
We are currently reviewing our Climate Change Programme with a view to ensuring our 20% target will be achieved. We are looking at how existing policies are performing and the range of polices that might be in place in the future. The results of the 40% House Project will be considered as we design the revised programme . My thanks to the Tyndall Centre and the Natural Environment Research Council for funding the research, the report and this conference.
The focus of the day is houses. But it is worth reminding ourselves of the overall context. It is not for nothing that the Prime Minister has identified climate change as the greatest environmental challenge facing the world today. It is not for nothing that he has made it one of the top priorities for our G8 and EU Presidencies this year.
Climate change is a present and serious problem that needs to be tackled. And where better place to start than with our homes.
Our houses - our homes - produce around a quarter of the UK 's carbon dioxide emissions. Each year, every household in the UK creates around six tonnes of CO2.
If we are to achieve our challenging target of a 60% reduction in CO2 emissions by 2050 then it is imperative we tackle the domestic sector. The cheapest, cleanest and safest way of delivering a low carbon economy is to simply use less energy. Energy efficiency is the key.
We are committed to raising the average energy efficiency of domestic homes by 20% by 2010 compared to 2000. To do this we need to tackle both new and existing dwellings.
There has already been significant progress. Improvements in the housing stock between 1997-2001 have resulted in an annual reduction of 1.7mtC. In 2003 we raised the minimum standard for the energy performance of new buildings by 25%. And over the next few months we'll raise it by a further 25% with the introduction of a further revision to the Building Regulations and the implementation of the EU Energy Performance of Buildings Directive.
In fact, from 1 April 2005, changes to the boiler standards under the Building Regulations will effectively ensure that energy efficient condensing boilers will be installed in all new dwellings and in those dwellings where a boiler is being replaced. We believe up to around 7.6 million condensing boilers will be installed by 2010. The impact is expected to be significant - with carbon savings of up to 1.3 million tonnes of carbon per year by 2010.
Between 2010 and 2020, the Government aims to update the Building Regulations every five years or so and at each update will clearly signal what the next stage is likely to be, leading to incremental increases in the energy standards of new and refurbished buildings.
As standards rise, it is likely that buildings will need to incorporate an increasing number of cost-effective, low or zero carbon technologies including: absorption cooling; biomass/wood heating; CHP and micro-CHP; ground source heating and cooling; photovoltaic generation; and passive solar heating and shading. The Government recognises the potential of such technologies. Only last week, the Chancellor in his Budget announced a reduced rate of VAT for the installation of micro CHP. A move which I know has been warmly welcomed.
Alongside a progressive raising of the regulatory floor, the Government is working with the building industry and other stakeholders to encourage sustainability to be part of all new housing through a new flexible Code for Sustainable Buildings.
The Code will establish higher standards that go beyond the Building Regulations for energy and water efficiency, as well as waste and use of materials. The Government is developing the Code in collaboration with industry and key stakeholders and will work with local authorities and developers to ensure that a sufficient number of demonstration schemes in the Thames Gateway, and potentially elsewhere, are established. Where the Government is engaged in public private partnerships to develop sites, we will ensure that these higher standards are applied to all homes.
We aim to complete the Code by the end of 2005, in order to take action on national rollout by early 2006.
But new build is only a small part of our housing stock. The majority of the building stock already exists. To put this into context, there are around 24 million existing dwellings, with about 180,000 new units built each year while around only 20,000 per year are demolished.
It is therefore in the large stock of existing buildings where there is the greatest potential for saving energy. And it is in raising standards here where we face our greatest challenge.
To encourage investment in domestic energy efficiency, the Government has introduced a broad range of measures including regulatory and incentive based policies, grants and other economic incentives and the provision of information and advice. I'd just like to update you on a few of these.
With last week's Budget still fresh in our minds let us turn first to economic instruments. Since 1997, the Government has introduced a number of fiscal measures designed to improve energy efficiency in homes. We introduced the first ever reduced rate of VAT for professionally-installed energy-saving materials in 1998, and extended this reduced rate several times since then. We also introduced the Landlord's Energy Saving Allowance (LESA) and announced our intention to actively consider a Green Landlord Scheme both of which are designed to encourage improvements in energy efficiency in the private rented sector. Last week, the Chancellor extended the Landlord's Energy Saving Allowance Scheme to cover solid wall insulation.
A welcome development last year was the passing of the Government supported Sustainable and Secure Buildings Act 2004. This new Act will allow building regulations that help reduce carbon emissions to apply to existing buildings in more circumstances. The Government is now working with the Sustainable Development Commission to look at how we might apply our new powers to the existing housing stock.
A measure which continues to drive the promotion of energy efficiency in the household sector is the Energy Efficiency Commitment (EEC) Under the EEC, energy suppliers must meet targets for the promotion improved household energy efficiency by encouraging householders to take up energy efficiency measures.
Its first three-year phase which will complete at the end of this month has been a great success with suppliers on course to meet or exceed their targets.
The next phase of the EEC, from 2005 to 2008, will start on 1 April. It will be at broadly double the level of activity as now and we estimate that it will achieve savings of around 0.7 million tonnes of carbon a year in 2010.
Suppliers' targets will be challenging but we believe, achievable. In 2007 we will review progress to support the development of the target for the third phase 2008-2011.
Minimising energy consumption also has social benefits reducing bills helps those in fuel poverty and on low incomes. Fuel Poverty in England: The Government's Plan for Action outlines proposals for the future format of Warm Front, our key programme for tackling fuel poverty in the private sector which has already assisted over 950,000 households. In addition to offering effective central heating systems to all eligible households we will continue to offer insulation measures to all households eligible for assistance.
Analysis of the overall effects of changes in energy prices and incomes suggests that the total number of vulnerable households in fuel poverty is likely to rise by a limited amount in 2004 and 2005 - perhaps by up to 200,000 households in England . However, this should be seen in the broader context of the fact that the number of vulnerable fuel poor households in England has already more than halved from around 3 million in 1996 to an estimated 1.2 million in 2002.
Communication is key to overcoming the barriers to energy efficiency. It is crucial that we raise awareness and continue to provide targeted information. In February, we announced a new £12m package of funding over the next three years as the first part of a new climate change communications initiative to change public attitudes towards climate change. The Initiative, on which we will announce further details after April, will focus strongly on communicating at a local and regional level, which the evidence shows to be most effective.
In conclusion, what will the 40% house look like? I'll leave the design to the architects but whatever it looks like it will be designed to minimise energy consumption. It will have effective insulation and the most efficient heating or cooling systems and appliances. It will probably also make use of integrated renewables or combined heat and power, perhaps even be part of a community energy scheme or may incorporate new technologies such as micro-CHP and fuel cells.
I believe our current set of policies and measures are moving us towards such a house. We are not there yet. But with research such as that unveiled today to guide us as we develop our policies, I believe we can achieve a truly sustainable energy future.
I wish you well in what I know will be a stimulating day.