Government and local authorities are urged to do more to encourage the various ways in which individuals and communities can produce their own low-carbon energy. The call comes in a report published today by the Trade and Industry Committee 'Local energy-turning consumers into producers'.

The Committee concludes that local energy is capable of making a major contribution in the long-term to the nation's energy requirements both through electricity and heat. But it is not a panacea for plugging the energy gap faced by the UK in the short to medium-term.

Conventional generating capacity, whether recently closed, or due to close in the next few years, will need to be replaced urgently and the grid upgraded if we are to "keep the lights on". If the UK is to derive full benefit from the potential of local energy, then central Government and local authorities need to do more to reduce obstacles to its adoption by community groups, businesses and individuals. For example, if home-owners' invest in solar panels or wind turbines, or energy efficiency measures, this is likely to increase the value of their properties and result in higher council tax bills.

The Committee concludes that given the potential climate change and security of supply benefits of such investments, homeowners should not be penalised in this way. The Committee is also critical of the obsession with low-carbon electricity at the expense of low-carbon heat. Low-carbon heat is potentially three times more cost-effective as a means of reducing carbon dioxide emissions. At the moment only households that fit electricity-generating systems, such as wind turbines, are eligible to receive a reward for their carbon dioxide savings under the Renewables Obligation-low-carbon heat is not eligible in the same way.

The Committee urges the Government to correct this anomaly. Local energy can be produced in a variety of ways, using either renewable or fossil fuel sources. In many cases these are not new energy sources. What is new today is the technology available to harness these sources and the way in which their use in a modern context presents new benefits by reducing carbon dioxide emissions and contributing to the UK's energy security.

The Committee is also concerned that less than a fifth of local authorities have in place targets for renewable energy. While pioneering councils such as Woking and Merton are leading the way, many are still lagging behind. The Government should ensure all local authorities adopt such targets and follow the examples already set. The Committee also calls on the UK's larger cities to learn from current experience in London in establishing their own strategies for tackling carbon dioxide emissions.

"Local energy is a developing concept with real potential. However, it must be remembered that it is not a panacea that will `keep the lights on' in the short-term. It is a long-term project, which the Government and local authorities must do more to support." said Trade and Industry committee Chairman Peter Luff.