Written Statement - Energy Efficiency Strategy

I am pleased to have published the first Energy Efficiency Strategy for Wales today.

The intention in developing this strategy is to set a clear direction for the future, and to drive further action across all sectors; households, businesses and the public sector.

Energy efficiency offers a considerable opportunity to deliver green growth, through new jobs, skills and a flourishing supply chain.  It is the most cost-effective means of meeting our commitments to reduce carbon emissions while lowering energy charges to businesses and for the public sector, and it directly addresses fuel poverty by reducing the cost of heating the homes of vulnerable people.

Within Wales we have led the way in successfully delivering a vision for energy efficiency that focuses equally on reducing energy use and carbon emissions, on job creation and on tackling poverty.

The strategy represents a cross government approach that recognises the important role that all departments have to play in making our vision a reality.

The energy market is undergoing a major transformation both within Wales and further afield, with a move to smarter, more connected energy systems, that integrate energy generation, storage and energy efficiency measures.  Being on track with these challenges will ensure that all sectors, households, businesses and our public sector use less energy and reap the benefits of energy efficiency.

Action on energy efficiency contributes strongly across Government to meeting our well-being goals, and our approach to improving energy efficiency in Wales is an early demonstration of our application of the five ways of working in the Act.

An integrated approach to improving energy efficiency means that we can deliver multiple benefits for people now and over the long-term; helping to prevent the impact of climate change through the involvement of people and through collaboration across private, public and third sector organisations.

I spent a very productive time in December at the Climate Change negotiations in Paris.  We were a key part of the UK delegation, showing our clear commitment to becoming a globally responsible Wales. The agreement reached in Paris was more ambitious than anticipated and it marks a clear turning point where all the world’s countries have formally committed to a sustainable low carbon future.  Our new energy efficiency strategy will make an important contribution to the delivery of a low-carbon Wales.
Where we own the levers, we have been breaking new ground.  The Environment (Wales) Bill will enable Wales’ resources to be managed in a more proactive, sustainable and joined-up way.  The Bill introduces statutory climate change targets and carbon budgeting: low carbon energy generation and energy efficiency will be key elements of delivering these.

The rising cost of energy has been a major concern for Welsh households and businesses in recent years. We know that the most direct action we can take to reduce peoples’ energy bills, with the powers we have, is to improve the energy efficiency of buildings.

Improving the energy efficiency of the homes of low income households is important, not just because we want to reduce household energy use and energy bills, but because living in a cold home has a negative impact on people’s health and well-being.

Cold homes can lead to increases in respiratory illnesses and the risk of heart attack and stroke, as well as contributing to excess winter deaths.

Worrying about paying energy bills can lead to increased levels of stress and mental illness.  We also know that some people will cut back on food or other essentials in order to pay their energy bills, which further impacts on their general health.  This all leads to poorer health outcomes for low income households and increases pressure on health and social care resources.

The negative impacts of fuel poverty and living in a cold home are wider than health and well-being; they can also impact on educational attainment when children lack a quiet, warm place at home to study, or have higher levels of absence due to illness.  They can increase social exclusion when people are reluctant to invite friends to their home because it is cold or damp.

As well as providing funding for our most vulnerable citizens and communities, we provide access for funding for energy efficiency in the broader domestic sector, business sector and public sector.  This new strategy helps to increase the knowledge about financing mechanisms for energy efficiency beyond pure grant funding. The strategy acknowledges that different approaches are appropriate for different groups and ensures that a range of financial support mechanisms is available to provide resilience in a changing landscape.

The public sector has a significant leadership role to play in Wales.  I am already providing support for public bodies in Wales to accelerate and de-risk energy efficiency projects. I recently announced that I have just secured an extra £1.5million from the European Investment Bank’s ELENA programme to improve the energy performance of public bodies in Wales.  We are now working up the offer that I anticipate will deliver over £30million of low risk investment in energy efficiency over the next three years.

Increasing the energy efficiency of the public sector would release resources that could be redirected into front line services. Yesterday, I, along with the Minister for Finance and Government Business, visited a great example of these savings in action. We saw how the Cardiff & Vale University Health Board have used funding from Invest to Save to install LED lighting in the new Children’s Hospital for Wales and underground tunnels within the main University Hospital of Wales. The £252, 000 loan value has created savings of £63, 000 per year with a quick project payback of just four years.

I will continue to make it my priority to set the direction for Wales and to deliver energy efficiency and the long term social, economic, environmental and cultural benefits it can bring to Wales.