Jun 11 - Independent on Sunday, The

Energy group E.ON is leading calls for the Government to give tax breaks to people who have installed insulation and double glazing in their homes.

With the Government's Energy Review to be published next month, E.ON is suggesting that energy-efficient households qualify for a lower council tax band.

Alistair Darling, the new Secretary of State for Trade and Industry, said in his first major speech on energy last week that companies needed to realise that they could make money by encouraging greater energy efficiency - for example, by installing cavity wall installation.

"Today companies have the incentive to sell as much [power] as they can and our inefficiency unintentionally creates more demand for energy," he said. "If we're going to reduce demand, we need to turn current thinking on its head and put the incentives on the power companies to reduce demand."

But Paul Golby, chief executive of E.ON UK, said that consumers also needed to have incentives to use less energy and so reduce the UK's contribution to global warming.

"We're looking for the Government to provide greater incentives to householders across the country to install energy-efficiency measures such as loft and cavity wall insulation," he told The Independent on Sunday. "I'm sure that if consumers discovered that they could get money back on their council tax or even drop a valuation band, it would have a greater effect in encouraging energy efficiency."

Around a quarter of the UK's carbon emissions come from the energy used in households. It is estimated that around 10 million homes - or 40 per cent of the total - waste energy through bad insulation.

Much of the media attention on the Energy Review has focused on whether it will result in the construction of more nuclear power stations.

But while the review is expected to agree that old nuclear reactors need to be replaced, analysts also expect a strong emphasis on energy-efficiency measures.

Last week, as part of a new policy launch, the Liberal Democrats said the party would introduce higher taxes for bigger polluters, such as drivers of 4x4s.

A scheme already exists that gives limited council tax rebates to those who insulate their homes. Launched by British Gas earlier this year, customers receive a one-off rebate of up to pounds 100 if they spend pounds 250 on insulation. Around 6,000 households have signed up so far.

A DTI spokesman said: "The Energy Review has an open book on energy efficiency. We are looking at a wide range of measures, be they fiscal, regulatory or voluntary."

Dorothy Thompson, chief executive of Drax, the UK's largest power station which will graduate to the FTSE 100 later this summer, has also asked the Government to lift restrictions on more environmentally friendly "co-firing generators".

Generating electricity by co-firing, or burning together coal and biomass such as crops, reduces carbon emissions.

Under the current rules, however, only 10 per cent of renewable energy that qualifies for state subsidies can come from co-firing.

The Government has, however, already unveiled initiatives aimed at boosting renewable energy use in homes.

Last week Yvette Cooper, the housing minister, said the Government would ease planning restrictions on "micro-generation" in private households, including the use of solar panels and mini-wind turbines.

(c) 2006 Independent on Sunday, The. Provided by ProQuest Information and Learning. All rights Reserved.