Examination of witnesses (Questions 20
TUESDAY 13 JUNE 2000
and MS SARAH
20. Can I ask the Minister for the DETR what
their proposal in respect of the environmental implications of
open-cast would be on that?
(Lord Whitty) There is always environmental advice
in terms of new open-cast operations, and there are often fairly
restrictive planning requirements on that which would be followed.
Therefore, any such scheme would have to be subject to that.
21. It is right that we have a presumption against
open-cast on environmental grounds?
(Lord Whitty) It is a presumption against most forms
of open-cast, but there is not an absolute presumption against
it. The point Helen is making is that the rules on the aid would
have to be, on the face of it, non-discriminatory. Of course,
whether it was open-cast or deep mining there would be various
other environmental criteria also applying to them that they would
have, because any development of existing plant would have to
go through planning to the extent where these environmental considerations
come into play.
22. It would technically be possible to haveof
that state aid that will be coming in ostensibly to protect the
social economic fabric of deep pit coal mining communitiesthe
scenario where we could have virtually 100 per cent of that money
coming in to enable the expansion of open-cast?
(Mrs Liddell) If any application for additional open-cast
comes forward, as Larry has been pointing out, it has to fulfil
the planning requirements anyway in relation to the environment.
It is not a blank cheque to the open-cast industry, just as it
is not a blank cheque to the deep mine industry. There are rules
that have to be applied, but ECSC aid is non-discriminatory.
23. It is not just a question of adhering to
the planning rules, as you know, particularly Lord Whitty, since
this is the DETR, we believe that there should be a proper environmental
appraisal of all significant policies, and I think the DETR supports
(Lord Whitty) Indeed.
24. The question here is whether there has been
a proper environmental appraisal of this proposed £100 million
subsidy to the coal industry?
(Mrs Liddell) I think it is fair to say, Chairman,
that at the moment we are consulting with the industry on the
nature of any application for aid that will be put forward, so
it is too early to say what the end gain will be in terms of any
aid that will be available to the open-cast industry. What we
have to be absolutely certain of in making any application is
that it is non-discriminatory. If we are discriminating in favour
of one source of coal against another it will not go through a
25. What we want to know is that there is no
adverse effect on the environment. The point of Mrs Walley's question
is; have you looked at this whole policy and the impact it may
have on the environment as apposed to not having such a policy,
or having a smaller policy, or having a different policy?
(Lord Whitty) The way we are constructing the package
and the way we are consulting with the European Commission will
mean that we take environmental considerations into account. We
cannot make it a full formal environmental proposal until we know
what measures are acceptable to the European Commission and what
26. Will you publish it at that point?
(Mrs Liddell) Yes, and in that context it may be useful
to the Committee to know that we are one of the countries that
is in the forefront of ensuring that European Union policy measures
involve an environmental appraisal at the same time.
27. Would it, for example, be possible to tie
elements of the aid package to investment in clean coal technologies
to provide for aid flue gas de-sulphurisation products at power
stations, because that would be a way in which an improvement
in environmental quality could be tied in with the need to support
the coal industry?
(Mrs Liddell) I am not sufficiently well versed in
the detail of ECSC rules on state aid, but, of course, we are
anxious to ensure that we see a state aid package put together
that as well as taking into account the environment also takes
into account the long term future of the United Kingdom coal industry.
That inevitably means that there is a requirement to look at flue
gas de-sulphurisation and, of course, the generators are encouraged
to take that into account as well when they are using coal.
28. Where you have guidance being given to operators
who may have both deep pit and open-cast coal mining operations
will it be possible for somebody making a bid ostensibly for deep
pit to then switch it over in terms of open-cast?
(Mrs Liddell) No. Any proposal that comes forward
has to be very specific. It is done pit by pit. We do not go in
and say, "Look, let's do all of our deep mining coal industry
in this package", we have to put forward a proposal that
is pit by pit, site by site, and at the moment we are waiting
for the industry to come forward with their proposals.
29. Can I move onto the renewable energy and
combined heat and power? We have looked with interest at the 1999
Lords Committee Report on the prospects for encouraging more renewable
energy in the UK, and I think that the recommendation there is
that the 10 per cent, to say the least, is gloomy. Can I ask each
of you to tell the Committee what you see as the main barriers
to the success of the recently announced obligation on suppliers?
(Mrs Liddell) Let me start before passing on to Larry.
10 per cent is a challenge. There is no doubt that the 10 per
cent obligation is a challenge, but there is no point in having
an obligation unless it is a challenge to the industry. One of
the reasons why we are changing to an obligation from the old
arrangement is to bring renewable energy into the mainstream.
If I can make one point. I am a great supporter of CHP and I think
one of the great advantages of the stricter gas consents policy
is that it was a sort of coming of age of CHP and it then became
headline. We cannot just read across from CHP to renewables. There
are certain aspects of CHP that are not necessarily renewable
depending on the energy source that is being used for the CHP.
So the Chancellor making it clear in the budget that good quality
CHP projects will be favoured by the Treasury, I think, is a very
important signal. In relation to overall renewables, I am anxious
to see, through the obligation, the creation of some economies
of scale for the renewables industry. We are consulting at the
moment and will be consulting through the autumn in relation to
how the obligation is in practice put into play, and I envisage
a situation where you will have some generators who concentrate
exclusively on renewables. One problem with renewables, because
they cannot be stored in the way that other conventional energies
can be, is that they start out from a disadvantage. One way of
helping that is if you can create economies of scale. That is
why I am not as pessimistic about the achievement of the 10 per
cent target. We are on target for the 5 per cent by 2003 and I
think if we can mainstream renewables I am hopeful that that challenge
will be met and it stays in place.
30. Could you also comment upon the likelihood
that we are going to have, by the year 2012, over two thirds of
the nuclear capacity closed. I think it is something like 16 per
cent of the United Kingdom's current generating capacity. In view
of what you have just said, could you not envisage a situation
where support for renewables could go hand in hand with that so
that you can actually link targets from renewables without the
phasing out of that nuclear energy production?
(Mrs Liddell) I think if you do an either/or situation
you limit the prospects for renewables.
31. I am not saying either/or, I am saying phasing
out, because as one gets phased out you actually link the phasing
in of renewables to match that phasing out.
(Mrs Liddell) I think in terms of getting an exact
match that would be quite difficult to do given the fact that
some aspects of renewables are far from market. At the moment
our main priority, and why we are doubling our research fund to
the renewables industry and renewables technology is to bring
renewables, those that are further from market, closer to market.
In terms of our overall energy projections in relation to targets,
nuclear is in there, and we also have to take into account where
hydro fits into the renewables picture as well. We have taken
into account the phase-down in nuclear over the next decade, and
beyond, in terms of the targets.
32. Are you looking to link that more to renewables
than to any other?
(Mrs Liddell) Not as a direct lead, of course. We
see the targets for renewables as targets in themselves and ones
that we will put the weight of our commitment behind.
33. When you say that you are going to double
the research budget for renewables, can you just remind me what
it is that the budget is at the moment?
(Mrs Liddell) It goes up from £9.7 million in
1998/1999 to £18 million in 2001/2002.
34. Do you know how that compares with other
European countries, Germany or Denmark?
(Mrs Liddell) I could not tell you off hand, but certain
other European countries have different ways of supporting renewables
by a cost on electricity prices. I think in Germany they call
it the `99 pfennig law'. What we are anxious to do is state a
change in our attitude to renewables and moving from NFFO, which
was purely technology specific, to something where we are saying,
"Look, governments are not good at picking winners. Let's
look to the market to help us generate these winners." What
we have got to do now is mainstream renewables, and not just government
research going into renewables, we also have to see the industries.
One of the positive aspects is the extent to which we see the
major players in the industry now turning their attention to various
aspects of renewable energy. That is a sign that we are moving
in the right direction and that the industry itself is getting
35. Can I ask, insofar as the Government itself
is a major player, whether or not through the Green Ministers'
Committee or through any other mechanism you will be looking to
mainstream increased targets for renewable energy within and between
each government department so that you will actually look to really
increase the amount of dependence upon renewable energy, and how
are you actually doing that?
(Mrs Liddell) There is one very important area. I
spoke at the photovoltaic conference in Glasgow at the beginning
of May and, of course, the Government is pushing our enthusiasm
for seeing large building projects looking at, for example, photovoltaics
as a means of mainstreaming. I have been meeting with Michael
Meacher to discuss a number of these issues. There are a great
deal of processes for DETR with the construction hat on and local
government hat on. We need to talk to the opinion formers in relation
to the commissioning and design of large-scale public buildings,
because I think the big push will come there first rather than
in domestic usage.
36. Does that mean that you will seek to establish
10 per cent targets within each government department for renewables?
(Mrs Liddell) It would be very difficult to say every
government department has to have a way of reaching 10 per cent
renewables. 10 per cent renewables in what? Does the Treasury,
for example, have to have 10 per cent of its energy generated
by renewables? They may actually be achieving an awful lot more.
There is a district heating system that operates in Whitehall.
I do not know off hand what the generation capacity is, but it
is not inconceivable that we would be able to move forward using
CHP and using district energy in great loops of public buildings,
rather than just saying to each government department. Some government
departments may be able to do much more than 10 per cent, particularly
in the commissioning of new buildings.
37. My concern is what is going to be the mechanism
for achieving that? Would Lord Whitty like to comment on the barriers
that there are in getting that 10 per cent achievable renewable
(Lord Whitty) You were concentrating very much on
public buildings and buildings in general. As far as buildings
are concerned, the biggest barrier is that the stock does not
get renewed very fast, and, therefore, in terms of improving the
energy mix, a lot of existing public buildings will be looking
at CHP or district heating in some form rather than direct renewables,
although, of course, there is some overlap between the two in
that some CHP can be fuel from renewable sources. John Prescott
was opening a couple of those in Sheffield and Nottingham a couple
of weeks ago. In terms of new public buildings and the new building
regulations more generally, they use not only new materials, but
different forms of heating. The use the renewable sources, and
the use of CHP is very much prioritised there, but how rapidly
you can achieve a target figure, whether it is 10 per cent for
renewables or a target for district heating, will depend very
much on the existing building style.
(Mrs Liddell) I think there is a simple way to meet
Mrs Walley's point about making sure that government departments
can meet the 10 per cent renewables; the actual electricity companies
and the energy companies who supply government departments must
themselves meet the 10 per cent target. So if we are on a district
heating loop here in Whitehall and Westminster the company or
companies that supply that energy must meet the 10 per cent obligation.
38. Is that part of the procurement regulation,
as it were?
(Mrs Liddell) It is part of the Utilities Bill that
public electricity suppliers must meet a 10 per cent obligation.
So, if it is London Electricity here, London Electricity must
source 10 per cent of its output from renewable sources.
39. My concern is how we can measure that. How
are we going to get from here to there? How can we actually measure
the progress that individual government departments are making
if we do not have a mechanism to chart that?
(Mrs Liddell) I think in terms of getting the electricity
supply, it is given now that the companies that are supplying
them must supply 10 per cent because of the obligation. In the
longer term, whenever we look at a building, if we ever get to
the position where the Government is building new offices in Whitehall,
obviously we would be encouraging departments to look at renewable
sources of energy.
(Lord Whitty) It might be easier when we have buildings
at 100 per cent CHP. I think that will apply to a lot of the more
modern buildings. I am not entirely sure how quickly we can get
Whitehall into that process.