The 2003 energy White Paper promised a "step change" in energy efficiency as the main tool to deliver targets on climate change and energy security (ENDS Report 338, pp 26-32 ). However, the action plan which emerged a year later was widely seen as a damp squib (ENDS Report 352, pp 45-46 ).
The Lords report warns that the Government's approach is characterised by "inconsistency and muddle". It calls for energy policy - currently split between the Environment and Industry Departments - to be brought under a single Minister.
Likewise, it wants the Carbon Trust and Energy Saving Trust to be merged and a greater role for local authorities. This should be accompanied by an urgent review of fiscal incentives.
"At the moment, [the Government] simply doesn't have a coherent policy on energy efficiency," said Baroness Perry of Southwark, who chaired the inquiry. "There are far too many Departments, agencies and policies, often pulling in different directions."
The Lords express concern at the variety of methods used to set targets and measure progress in energy efficiency. They call on the Government to adopt a more rigorous and transparent approach, focused on absolute reductions in carbon emissions. Moreover, baselines and targets should be grounded "more firmly in reality" and not expressed in terms of departures from "hypothetical projections".
Some economists argue that improvements in energy efficiency may fail to yield the expected benefits because of a "rebound effect", in which financial savings are used to consume more energy in other applications. The Lords urge the Government "to engage with this fundamental issue".
Key points in the report include:
In its consultation on the review of the climate change programme, the Government floated "white certificate trading" - a market in units of energy saved or avoided. The Lords attack this idea robustly: "Yet another set of trading arrangements, incorporating yet another measure...is a recipe for still more confusion. What is needed is a period of policy consolidation and clarification."
The Lords call for a long-term commitment to consolidate measures under the umbrella of the EU emissions trading scheme. However, they do not explain how the 10,000 or so sites covered by climate change agreements could be grafted onto the EUETS, which covers only 1,000 or so installations in the UK.
However, the report says that energy-intensive industries "have contributed a disproportionate share to the reduction in UK carbon emissions" - echoing the evidence put forward by industry representatives (ENDS Report 362, p 40 ). It sees "a serious risk" that much of the UK's energy-intensive industry "will simply be driven overseas, contributing to a net increase in global emissions."
In contrast, the Lords say that the Government has "shied away" from addressing the "considerable potential for energy saving by the commercial sector and SMEs".
However, the Lords are "alarmed" at the poor level of enforcement of the building regulations which, they say, has been exacerbated by the introduction of competition and self-certification into the building control process.
The report calls on the Government to introduce a series of mandatory pass/fail tests for completed buildings - without which satisfactory enforcement is seen as "almost impossible".
The Government has set considerable store by the promised code for sustainable buildings. The Lords say there is "no need to reinvent the wheel", and argue that the code should build upon the existing BREEAM and EcoHomes standards.
The report says the Government has "done little" to prepare for the EU Directive on energy performance of buildings, which is due to be implemented at the start of 2006. It fears that the Government is taking a "lowest common denominator" approach, and may defer full implementation because of its failure to train adequate numbers of inspectors.
One of the main policies in the household sector is the energy efficiency commitment (EEC) on energy suppliers. However, the Lords are concerned that the methodology for calculating carbon benefits under EEC "is so lax, and so poorly supported by hard data."
The report also calls on the Office of the Deputy Prime Minister to encourage community heating as standard in all new build projects, and for the Government to extend to all parts of the public estate its commitment to procure only buildings in the top quartile of energy performance.
Both the existing labelling scheme and the proposed Directive on eco-design of energy-using products should be extended to a wider range of products, the report says.
Two key "risk areas" are identified. The growth in consumer electronics "presents a serious risk of uncontrollable rises in energy consumption" - but the Government's reliance on voluntary codes and best practice is "a piecemeal and fundamentally inadequate response". Likewise, the Government should address with urgency a projected trebling over the next 20 years of the floor area in commercial or office buildings that is air-conditioned.
However, since 2001 - when the DTI set up a working group - "the Government has dragged its feet on smart and remote metering." The Lords "deplore" the Government's resistance to a proposed EU Directive which would require more rapid development of the technology - and call for a large-scale trial of remote metering and of low-cost options for smart domestic meters.
Despite a promise of more funding in the Budget, UK spending on energy research is "still at a very low level compared to international competitors". The report calls for a progressive increase to "at least" average levels for IEA countries by 2020.