Energy efficiency should be at the centre of UK energy policy by now. The so-called fifth fuel has always been the cheapest and best environmental option.

To be fair, there are a number of coalition proposals afoot for the Autumn that will further the cause: the extended Carbon Emissions Reduction Target, a Renewable Heat Incentive and a Green Deal that will see home energy efficiency upgraded through long-term loans paid for by savings on bills, to name the key ones.

But there is also still a deep contradiction lying at the heart of Britain’s emerging energy and climate policy that started under Labour, and much more could be done on energy efficiency, particularly in industry and commerce.

This has been thrown into sharp relief by the government’s bombshell announcement in July (ENDS Report July 2010) that it would be redrafting and re-consulting on the energy National Policy Statements (NPS’s) launched last November to make sure they were “robust” to legal challenge. These guidance documents, covering overarching energy policy considerations, fossil fuel generation and nuclear power, had long been called for by business to speed up the planning process. While the Infrastructure Planning Commission that would have been informed by them will now disappear, the coalition wants to retain the NPSs.

Most authorities agree the UK electricity supply industry will have to invest £200bn in energy infrastructure by 2020, both to replace retiring coal-fired and nuclear plant and to cut greenhouse gas emissions by at least 34% relative to 1990 under the Low Carbon Transition Plan (ENDS Report July 2009). Electrification of heating, industry and transport could boost demand. But there is little agreement on the relative role renewables, nuclear and fossil fuel with carbon capture and storage should play.

And there is even less agreement on the role of energy efficiency measures in the mix. Arguably, the focus has moved far too much onto structural solutions. But there is an old adage that the most effective new power plant is the one that never needs to be built.

The overarching draft Energy NPS pays little more than lip service to energy efficiency and other demand-side management alternatives to new plant. That is old thinking that is more akin to the ‘predict and provide’ energy debate of the 1970s. And that is one of the key reasons it faced legal challenge and will have to be redrafted to meet EU requirements under the Strategic Environmental Assessment Directive.

The government should learn from this. Both proper consideration of alternatives – and ensuring the NPSs are properly aligned with binding carbon budgets under the Climate Change Act 2008 – are crucial, not just in the narrow sense of avoiding legal challenge, but to a coherent energy and climate policy and to public confidence.

We have a unique opportunity to put these policy contradictions right – and boost more cost-effective investment in energy efficiency that is so urgently needed at home and in business. A lawyer’s legal tweaking to the NPSs simply won’t do. Before we can say the NPSs are “fit for purpose”, we really need to see more clearly how an ambitious energy efficiency drive could fit into the overall picture.