Energy firms to be offered incentives to cut demand

The Trade and Industry Secretary, Alistair Darling, hinted yesterday the Government may give energy companies financial incentives to cut household electricity consumption as part of its goal of making all new homes "carbon neutral".

Initiatives to increase energy efficiency so that the economy continues to grow while energy demand falls in absolute terms, is expected to be a key theme of the energy review, due to be unveiled next month.

Among the measures being considered by ministers are "smart meters" which tell consumers not only how much they are spending on electricity and gas at any given time of the day but also the amount of carbon they emit. In the Budget, Gordon Brown announced £5m to back the introduction of smart meters.

British Gas plans to run trials with a hand-held monitor which tells householders what their consumption is even when appliances are on stand-by.

Mr Darling said: "If we are to reduce demand, we need to turn current thinking on its head and put the incentives on power companies to reduce demand."

More than half the UK's carbon emissions come from buildings but the energy industry has been critical of the lack of incentives to improve energy efficiency in the home.