Consultation on household energy supplier scheme

Proposals on requirements for suppliers to tackle household energy use from 2011 were issued for consultation by the Environment Department (DEFRA) yesterday

The call for evidence outlines the government's thinking so far on a Household Energy Supplier Obligation, which would require suppliers to deliver energy or carbon savings among customers from 2011 to at least 2020.

The obligation would replace the Carbon Emissions Reduction Target (CERT) due to take over from the existing Energy Efficiency Commitment (EEC) in 2008.

Two options are being considered.

The more radical policy would be a cap and trade scheme. An overall outcome-based target would be set for either delivered energy or carbon emissions, which is more likely. The target would be divided among suppliers as an allocated number of allowances. Allocations could be free and based on historic emissions or energy sales, or could be auctioned, or a combination of both.

The second option would be an evolution of CERT. Suppliers would be set a carbon-saving target and would meet this by promoting energy-saving and low-carbon measures in households. Further changes are proposed to go beyond CERT.

The target period under either option could be anything from one year to nine years.

Environment Minister Ian Pearson said that "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."

The government wants to see companies shift from selling energy units to providing energy services, such as more efficient lighting or solar water heating. The climate policy is expected to deliver up to 4 million tonnes of carbon savings by 2020.

Stakeholders have until 14 September to answer a range of questions on both options as well as on the government's approach to transforming the market.

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