Energy savings begin at home, DTI says

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The Independent Online

Greater energy efficiency for households and transport will be promoted in the Government's long-awaited Energy Review, which will be launched tomorrow. The initiative will propose grants for the "fuel poor" - poorer households - to insulate their homes and cut down on carbon emissions.

The consultation with business and the public will last three months and focus on five main areas: nuclear power; renewable forms of energy such as wind; energy efficiency; reducing carbon emissions; and fuel poverty.

Prime Minister Tony Blair has said that he wants a decision on the main question - whether to build more nuclear stations to replace old reactors and coal-fired plants - by the summer.

The review comes after the chief executive of Anglo-Dutch oil giant Shell, Jeroen van der Veer, admitted it would be another 20 to 30 years before renewable forms of energy became "really big business".

One chief executive of a UK company, which is developing renewable such energy projects as wind and landfill gas, argued that there was little incentive for large oil companies to develop renewable projects more quickly. He said that because the scale of the projects is tiny compared to the majors' core oil and gas businesses, renewables were not a priority.

For example, BP's Alternative Energy division generated $400m (£226m) of revenue in 2004 out of total annual revenues of $200bn. In contrast, "it's hard for smaller companies to raise funds to develop renewable technologies," he added.

Energy analyst Nigel Hawkins said Shell realised that long-term investment in renewables could provide an alternative source of revenue if profits from selling oil fell in the future.

However, he added: "Oil companies also realise the PR value of emphasising their environmental credentials."

A spokesman for BP said it would be "some years to come" before its Alternative Energy division played a key role in its business. "We do not pretend that the investment is material at this stage."

Last week, the price of carbon increased by almost a fifth to €27 (£18.50) per ton to move close to its record high of €29 per ton.

Higher gas prices following cold weather in Europe and concerns over supply from Russia have encouraged power stations to switch to coal.

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