Select Committee on Environmental Audit Seventh Report



  22. All known sources of energy have undesirable environmental impacts.[19] These range from land despoilation (the extraction of fossil fuels, flooding for hydro-electricity or the visual intrusion of wind turbines); to various emissions (affecting local air quality, regional acidity and global climate change); the depletion of finite natural resources (fossil fuels); and difficult waste issues (nuclear power).[20] Comparing these impacts is a case of weighing up apples and oranges but research into this topic may yield a valuable addition to the analytical tools available to energy policy-makers.[21] The primary concern currently is the emission of greenhouse gases from energy consumption, predominantly carbon dioxide.

23. Of course in addition no source of energy yet discovered has proved to be genuinely 'too cheap to meter'. While overall it is true that the proportion of business and household costs represented by energy consumption is small, there are important exceptions to this general picture. The UK retains a significant energy-intensive industrial sector and also has a serious social problem where the conjunction of low income and poor thermal efficiency of housing results in fuel poverty. These factors need to be integrated into the Government's approach to promoting sustainable energy use and energy efficiency and conservation in particular.

24. There appear to be two approaches to tackling the environmental impacts of our need for energy. The first is reducing the impact of supply by encouraging the more efficient use of fuels and those fuels with less undesirable impacts such as renewable sources of energy. Secondly, there is the encouragement of a more efficient use of energy in transmission and use reducing the level, or at least the growth rate, of consumption. We believe both strands are important for a coherent approach to promoting sustainable energy. The Association for the Conservation of Energy (ACE) argue that energy efficiency should be regarded as a 'source' of power (a fifth fuel)[22] and we note the DTI's White Paper on power generation states that "There is no more efficient use of energy than not needing to use it at all"[23] a statement which was strongly endorsed by DETR officials in evidence to us.[24] We believe that the Government should adopt a sustainable hierarchy in establishing a framework for UK energy policy (as exists in the waste strategy). This hierarchy should start with demand management and the promotion of end-use energy efficiency, then energy supply from renewable resources followed by combined heat and power and fossil fuels, in order of efficiency and carbon intensity, and nuclear power.[25] In this context, while we have focussed upon end-use energy efficiency, we also looked at the Green Paper on renewables, combined heat and power, and the White Paper on sources for power generation in terms of their contribution to the sustainability of UK energy policy and the overall coherence of the Government's approach.


  25. The promotion of renewable sources of energy has the potential to make a greater contribution to the diversity, security and sustainability of the UK's energy supply and logically must be the objective over the long term. We welcome the publication of the long-awaited Green Paper, the commitment to increase the proportion of UK electricity generated from renewable sources to 5 per cent by 2003 and to 10 per cent. "as soon as possible" as well as the commitment to the longer term development of these resources.[26] However, we note with dismay the conclusions of the recent inquiry into electricity from renewable sources by the House of Lords Select Committee on the European Communities. That Committee concurred with "the majority view" of its witnesses that the UK's renewable energy electricity targets will not be achieved under present arrangements.[27]

26. Although we can draw no conclusions ourselves on the level of the renewables target in relation to the UK's need for emissions reductions nor the likelihood of achievement we are concerned about the Government's approach. We believe that policy commitments must have both a targetn- level and a defined timen- period to be meaningful. Without these elements progress may prove difficult to inspire and certainly impossible to audit. We look for the draft Climate Change Programme to propose either a date for the 10 per cent. goal or an interim target for 2010. In the light of the grave reservations over the likelihood of the target being met, expressed recently by the Lords Select Committee on the European Communities, we also look to the Government to produce a clear strategy demonstrating how its goals are to be achieved.

Combined heat and power

  27. Combined heat and power (CHP) bridges the gap between generation and end-use efficiency. CHP is energy generation which captures waste heat from electrical generation and uses it to produce high temperature steam for heating or industrial purposes. Consequently its efficiency, given an optimal balance of demands for power and heat, are higher than is likely to be achieved using separate sources. In the UK CHP is usually used to meet power and heat demand on-site for industrial processes thereby also gaining from reduced transmission losses.[28] The Government has set great store by the promotion of CHP estimating that up to 50 per cent. of industrial carbon savings may come from this source.[29] Appropriate gas-fuelled CHP schemes are exempted from the stricter consents policy (discussed below). Enron Europe Limited argued that this exemption was inappropriate and would encourage CHP capacity that did not achieve optimal efficiencies and where heat and power from stand alone sources might be more efficient and economic.[30] We agree that users should pursue the most efficient means of meeting their energy needs but regard the encouragement of CHP as a potential side-benefit of the stricter consents policy. We do not see an inherent reason why an assessment of the business case for a CHP installation by potential investors should not produce an optimal choice.

28. The current target for CHP capacity is 5000 mega watts of electricity (MWe) by the end of 2000. Mr Meale assured us that this target was achievable given current trends and the 4000MWe of capacity currently installed or pending.[31] Official estimates for the cost-effective potential for CHP in the UK are for between 10,000 and 17,000MWe. In addition BRESCU estimates that there is a potential for a further 2,000MWe of CHP capacity based on community heating[32]. In the Climate Change paper the DETR calculate that the wider use of CHP could deliver 6 MtC of savings by 2010 but a target is not specified.[33] The CHP Association (CHPA) wrote that the achievement of 10,000MWe[34] by 2010 would yield an annual reduction of 15 tonnes of carbon dioxide (about 4.1 MtC).[35]

29. The CHPA told us that the primary requirement for CHP to gain ground is better treatment for the electricity that is available from schemes for sale across the grid. CHP is most often sized to meet a particular demand for steam or heat. This may give rise to excess electricity generation at optimal efficiency of operation. Indeed larger CHP sites will be required to meet higher targets and are likely to need to sell, or 'export', more electricity to maintain their economic attraction. The CHPA estimated that with 10,000MWe of capacity about 10 per cent of the total electricity produced would need to be sold off-site.[36] The Director General of Electricity and Gas Supply, Mr Callum McCarthy, told us there was a need to remove pricing disadvantages in the local electricity distribution system for CHP.[37] The CHPA argue for the provision of the sort of long- term price stability on offer from the Non Fossil Fuel Obligation (NFFO) to renewables.[38] Another element is the separation of the supply (the bills) and distribution (the pipes, pylons and wires) functions of the former Public Electricity Supply companies. This offers an opportunity to reform the economic incentives of electricity distribution away from investment in more infrastructure towards demand-side solutions to increased need for power including CHP.[39] The CHPA reported one Director of a Regional Electricity Company (REC) as saying that he was all in favour of CHP 'as long as it was in someone else's area.'[40]

30. We agree with the CHPA that if the Government is going to give effect to its rhetoric on the promotion of CHP then it will have to create an effective framework, including challenging targets, and mechanisms to encourage take-up. If the mooted target of 10,000WMe of CHP by 2010 is to be achieved it seems likely that larger installations will be needed with the potential for more substantial sales of electricity to the national grid. In these circumstances any new framework for electricity distribution should incorporate incentives encouraging demand-side solutions such as CHP and other embedded generation with environmental benefits. The Government should also consider what could be done to secure long-term access to fair market prices for CHP using the NFFO as an example.

The stricter consents policy

  31. We also took an interest in the stricter consents policy which currently acts to limit the construction of new gas-fired power stations which have contributed so significantly to the UK's climate change performance since 1990.[41] Mr John Battle, MP, the Energy Minister, was at pains to emphasise that the policy was neither a moratorium nor an attempt to assist the coal industry. He argued that it was necessary ensure diversity and security of supply while flaws in the wholesale market, artificially favouring natural gas capacity, were addressed.[42]

32. The Environment Minister had told us in an earlier inquiry that: "The moratorium on gas fired stations was designed... to provide some assistance to the extremely hard hit coal industry... as a result of recent history the coal industry has been in very substantial difficulties and it was generally believed that for that reason and to also achieve diversity and balance in our energy supply we should not diminish coal towards zero and push gas to 90 per cent—one needed a better balance. That was what really lay behind that."[43] We put this to the Mr Battle who told us that he did not agree with Mr Meacher: "It is nothing to do with the coal industry. The coal industry digs the coal out and they have to sell it to power stations. Power stations which generate energy from coal can and do buy their coal from international sources... It was not a policy designed and constructed to help the coal industry."[44] He went on to say that "In a sense it will work through to ensure that coal-burning power stations get a look in. To that extent I may simply be playing with words."[45]

33. We do not feel that the Government is clear about the objectives of the stricter consents policy. There appears to be a difference of views between the Environment Minister and the Energy Minister on the extent to which the policy was intended to assist the UK coal industry. We heartily approve of assistance being offered to hard hit coal mining communities but question whether a policy on power station consents can make a significant contribution over the longer term. In addition, a policy to slow the displacement of coal consumption with that of gas does appear to run counter to the UK's environmental priorities. Enron UK Limited, a major gas and electricity company, defined gas as the most carbon efficient fuel available for power generation and thus the best technology for an economy in transition to a zero-carbon energy supply.[46] In riposte the Association of Coal Producers pointed to the development of clean coal technologies and the need to pursue these further.[47]

34. We note the recent conclusions of the Trade and Industry Committee that there are no reasons on grounds of security of supply to resist the growing use of gas; and that even under unrestricted growth of gas use, UK energy supply would still be more diverse that it has been for most of this century.[48] With regard to the impact of the stricter consents policy on meeting the UK's climate change targets, Mr Leslie Packer of the Sustainable Energy Division, DETR, told us: "we are looking at these issues in the context of between now and 2010, and our judgment is that in that context policies introduced here are not going to materially affect gas and coal burning."[49] The DTI's environmental appraisal of the stricter consents policy asserted that the Government would deliver its climate change commitments but we were surprised to read that it was not possible to quantify the impact of the new policy on emissions.[50] However, Mr David Lewis of Enron made the reasonable point that reducing emissions just in time to hit a particular target is one thing, but the incremental loading of the atmosphere with avoidable carbon dioxide in the meantime is quite another.[51]

35. We regard the stricter consents policy to be serving no particular purpose and as running counter to the spirit of the Government's commitments on climate change. We recommend that the Government conclude the reform of the wholesale electricity market as soon as possible so that it may bring the stricter consents policy to an end. However, we believe that tinkering with power station consents is peripheral to the vital work needed to establish a sound footing for the development of sustainable energy sources for the UK over the longer term.

19  With the possible exception of passive solar. Back

20  See Appendix 1 and Q391 Back

21  QQ3-7 (HC1038, 1997-98) Back

22  Q135 Back

23  Conclusions of The Review of Energy Sources for Power Generation, Cm 4071, p80. Back

24  Q223 Back

25  See Energy services for sustainable communities, The local government position, report from Local Agenda 21, Local Government Management Board and the Local Government Association, pp12-13. Back

26  New and renewable energy, prospects for the 21st Century, DTI, p3. Back

27  House of Lords Select Committee on the European Communities, 12th Report, 1998- 99, HL 78-I, paragraph 208. Back

28  Ev pp108-110 Back

29  Climate Change consultation paper, p17. Back

30  Ev p130ff Back

31  Q641 Back

32  Ev p 109, paragraphs 13-15.  Back

33  Climate Change consultation paper, p17. Back

34  This target of 10,000MWe was put forward in the Labour Party's 1994 environmental policy document In trust for tomorrow. Back

35  Ev p 109, paragraph 18. Back

36  Q332 Back

37  Q522 Back

38  Ev p 111 Back

39  Ev p 111 and Q331 Back

40  Ev p 110, paragraph 23 Back

41  The proportion of UK electricity generation from natural gas has risen from zero in 1990 to 30 per cent by 1997 (Cm 4071, p30). Back

42  QQ413 and 418 Back

43  Second Report from the Committee, Climate Change: Government response and follow-up, HC88, 1998-99, Q65 Back

44  Q413 Back

45  Q415 Back

46  Q376 Back

47  Ev p 282. The Government concluded that "carbon emissions per unit of electricity from clean coal can be expected to be about double those from natural gas in a combined cycle gas turbine" and that running flue gas desulphurisation (FGD) reduces the thermal efficiency of a power station by one per cent. at baseload (Sources for Power Generation, Cm 4071, p75 and Ev p 172) Back

48  Fifth Report from the Trade and Industry Committee, Energy Policy, HC471, 1997-98, paragraph 42. Back

49  Q223 Back

50  Sources for Power Generation, Cm 4071, Annex H. Back

51  Q357 Back

previous page contents next page

House of Commons home page Parliament home page House of Lords home page search page enquiries

© Parliamentary copyright 1999
Prepared 22 July 1999