Select Committee on Environmental Audit Minutes of Evidence

Examination of Witnesses (Questions 220 - 239)



Sue Doughty

  220. You have mentioned, and we understand, that renewables will include a contribution of energy from waste, which at the moment is a very big political hot potato. When we are looking at incineration that is one source but there does not seem to be much in the way of gasification going on at all, nor pyrolysis. There is also a quite substantial possibility that incineration will be taxed in the same way that landfill is. What would you see is the likelihood of a quarter of the target of renewables being contributed by energy from waste given the political backdrop that we have got with that increasing unpopularity?
  (Mr Byers) I can feel an itch on my right, but I shall just start the answer, if I can. I think one must separate energy from waste and the consideration of municipal solid waste, which is the hot potato in terms of incineration and dioxins, etcetera. I would agree with you that there are no visible signs of massive-scale pyrolysis and gasification which are proven yet, but there are a number of smaller-scale technologies which are further than just the prototype stage. Energy from waste includes all types of waste, whether they be anaerobic digestion of sewage or whatever. The difference I think Mrs Clark alluded to is that we talk about growing crops for energy. It is actually different from using agricultural wastes in some form of incineration or gasification, and avoidance of landfill by utilising agricultural waste and biological waste from human beings is an area which we are developing in this country far behind some other European countries. Collectively the energy crop and the biomass generation from waste fuel, whether it be hedge clippings or whatever, needs a fundamental, different way of harvesting, organising local authorities, so that these do not become waste, they become avoidance of incineration, avoidance of landfill and active recycling effective enough to produce renewable energy.
  (Dr Pitcher) Yes, it was a similar point I was going to make on the fuel. The definition of waste at the moment in England and Wales differs from that in Scotland. For instance, some of the material which comes out of the harvesting operations of woodland is regarded in England and Wales as a waste and therefore currently cannot be used in projects, whereas in Scotland it is not so regarded. So there is a clear action there to have that defect put right so that there is a clear definition of what biomass is. What in the past may have been considered as a waste is now actually a biomass fuel and grown as part of future projects. The second point I wanted to make was that the Arbre project utilises gasification technology, and the fuels which we use for that are energy crops and forestry. However, for the future that technology, once it has gone through a series of commercial demonstrations, may well prove suitable for gasification of other fuels, of other materials currently regarded as waste which could be regarded as a fuel.
  (Mr Byers) We would like to see Government advocate slightly more flexible definitions, so that certain technologies can trial themselves, whilst qualifying as renewable energy, without such strict guidelines. For instance, the 2 per cent limit on non-biological fuel in certain guidelines recently agreed stops certain technologies going ahead purely because of the string round the bales.

  221. Do you think that if you did that, though, you would leave the door open for domestic waste incineration to be further strengthened, as a possible alternative waste, in amongst all the other things that you have described?
  (Dr Pitcher) Perhaps I can cite the work which we have done with the European Commission on this sector. The primary objective is to increase recycling aspects from the current waste streams that we have. What we are saying is that the biodegradable material which is left it must classify as biomass. However, the point that David was just making in terms of material which is used to bind straw bales is that that element which is going into future projects actually takes it above the 2 per cent limit, which is preventing the projects going ahead. We have made this comment to the DTI and we have asked that it is urgently reviewed, where it can be demonstrated to be part of the fuel supply chain.


  222. We spent a little time in Germany the week before last. The technical problem they emphasised to us was first the problem of storage which the storage advisers still felt had not been cracked technically, and the second was the fluctuations and the intermittent nature of the supply from solar, wind and so forth. This is still a huge problem in their eyes. Do you agree?
  (Mr Byers) It has been ever since I studied physics. I think there are solutions on the horizon. If you invite Brian Count from Innogy

  223. But are there any on the horizon?
  (Mr Byers) Regenesis. In terms of chemical or electrical storage beyond batteries, it is still quite a considerable challenge, but I think there are systems not only biological but chemical which are pretty well commercialised.
  (Dr Pitcher) I would like to come in in response to your earlier question about the mix and picking winners. I think one of the other advantages of having a spread of technologies is that it reflects the intermittent nature of some resources, but there are others which can be regarded very much as base load, and biomass is one of those which is under the control of the generation plants to get the fuel in.

  224. None the less, things like solar and wind are intermittent, with problems of fluctuation, are they not?
  (Dr Pitcher) Yes.

  225. While that remains the case, is it not going to be difficult to argue for your cause while you have alternatives which are not fluctuating?
  (Dr Pitcher) Yes. I think the point I was making was that by having a portfolio which includes more base-load type generation, the effect of a rapidly increasing percentage from renewables is not only going to be based on the intermittent sources, it will have a strong element in there of high capacity generation.
  (Mr Byers) I think the National Grid are on record now as saying that the intermittency from interruptible renewables is not at all a problem from the general load curves of the United Kingdom.

  226. That is a very strong statement.
  (Mr Byers) Yes, and I am prepared to repeat it as well. The National Grid will go on record that anywhere up to 20 per cent of renewables in the national energy mix will not cause technical problems due to intermittency. I can give you a reference, if you like, for them. So we do not feel that intermittency is a great detraction from renewable power. I would certainly agree that if we had reliable, 100 per cent fission storage it would solve many problems, not least peak loading from expensive sources of gas turbines. The best type of storage I believe we have is pumped water storage which we only have, I believe, in two sites in Wales and perhaps some in Scotland.

  227. The other aspect of our German experience was that the level of investment which they had put in was clearly several factors greater than what is currently the case in the UK. They felt that in many cases, for example solar and wind, this had to be done if you were going to be a serious player in this market. Would you agree?
  (Mr Wolfe) Yes. Certainly there are great advantages to be won investing at a significant level at an early stage in development, particularly in solar where the primary issue, as I say, is one of interim volume. If the German Government put investment into creating a short-term market, then they will obtain benefits in terms of commitment of industry, and therefore they will be reaping the rewards down the road in terms of having the industrial infrastructure to install into the market in the future.

  228. To interrupt you, what they said was that the solar industry would not exist if it were not for subsidies, and that really in Europe that would always be the case; they said that they looked to their real market as the two billion people who have no electricity in the Third World, because you put a little power in at relatively low cost and it is the cheapest way of producing energy, but Europe forget that.
  (Mr Wolfe) No, I do not think we see things in that way. We see investment as being in the interim to enable industry to drive the cost down to a level where subsidy is not needed in the future.

  229. You will reach that point?
  (Mr Wolfe) Certainly the thin film solar technologies can reach that point.
  (Mr Byers) I think we would also comment there that mass generation in the classical sense from solar photovoltaics is not likely. There are many examples at the moment where building materials with embedded PV are equally cost-effective with other building materials, and all it requires to install them in any new buildings are government changes in building regulations. I think we are arguing from the position of the RPA not primarily for British exports and British jobs, we are arguing for renewable generation because it is good for the environment. If we can also build indigenous technologies and export them, all to the good. That is really a matter for Government to decide, again picking winners, but if you want to build an industry capable of exporting large volumes of jobs and goods, then it is certainly a very good one to look at, but it will not be done without government support, and that includes some funding for the future technologies.

  230. Would you say the case rests on the environmental argument, and that if that did not exist we would not be considering any of these things?
  (Mr Byers) I think so, yes.

Mr Challen

  231. As a point of clarification on the various costs, grants and subsidies and so on, I have in front of me Table 2 of your memorandum of evidence. I want to ask for some clarification on the timescales here for the various monetary sums that are mentioned. Looking at page 12, "Energy crops", it talks about £33 million in the form of £/MW grants from the DTI. Is that this financial year? Is that the entirety of the three-year programme? Is this all relating to this financial year?
  (Dr Pitcher) No, it is over the lifetime of the programme. To put that in context, the level of that support will deliver around about 50 MW or about 60 MW worth of new generated capacity, and we are looking at a contribution, as we discussed earlier, of around about 1,000 MW typically from biomass. So we add that to the sum total of that.

  232. I am not terribly good at arithmetic, but I have tried to total up the amounts in this table, and it comes to something like £170 million or thereabouts. The Chancellor's Pre-Budget Report last year spoke of £279 million over three years going to renewables. Would you say that that is an adequate sum? It is actually an increase, because I cannot compare like with like here.
  (Mr Byers) From the RPA's perspective, I am not quite sure you can rationalise the two figures you have in mind. We do not think this is an adequate support for a fundamental plank of this Government's and future governments' environmental policy. We have received the PIU report. We have had a lot of talk about carbon by 2050. Energy efficiency itself is the greatest aid that is going to reduce carbon emissions. I will not speak here about nuclear, but renewable energy is definitely another major component in reaching overall environmental targets. I see the hand of the Treasury in determining the policy here. I suspect that a certain amount has been allocated and a policy has been made to fit. We shall see how it goes over the next one to two years, but I do not feel, on the scale of the challenge that we are facing and from the low level on which we start, that this is an adequate capital grant structure across multiple technologies some of which need volume to mature and penetrate. So the answer is no, we do not feel that it is adequate, but recognise that what the Government has done over the last year or so has been a great step forward.


  233. So £279 million over three years is not adequate. What would be?
  (Dr Pitcher) To take the example I have just given on the biomass sector, this will deliver around about 50 or 60 MW of new capacity. My company is ready to develop around about 350 MW of new generation biomass projects, and we want to bring in the private investment that is necessary to enable that to happen. The best way to do that is not to do it as one project at a time, but to have a proper programme in place in order that manufacturing industry, designers and so on have something to get their teeth into and we get economies of scale coming more rapidly. So on a straight multiplier, you can see the level of support that that one sector would need alone. We are very confident that the cost reduction that we have seen in other sectors like wind over the last decade—

  234. That is a big multiplier, is it not?
  (Dr Pitcher) Yes, it is. We will see the same coming on, but that is the one sector I can speak for.
  (Mr Byers) I would like to add that we would like not just more money, but a greater clarity of how you get at it, because it is extremely difficult. I believe we have identified at least 25 different ways of getting money out of some department in some part of Government. The industry is very frustrated by bureaucracy, by sometimes inability to tap two funds. I might add that if the whole purpose of grant aid is to encourage efficiency, drive down the costs, then we do not like some of the processes whereby only projects that are completed, therefore could have been financed anyway, may receive grants. I would rather see a European model, which I have experience of in several countries, whereby you have got the grant and the grant will be taken away if you do not perform, rather than if you perform you might get a grant, which is illogical to me.

Joan Walley

  235. Can I follow that up and ask you how much do you think it is not just about the money, or the grant and the availability of extra support or subsidy, but how much it is about the overall culture? I am thinking particularly, for example, of when we were interviewing the International Development Secretary last week, and we were looking at the options and possibilities for investment in developing countries. We linked that back to a previous question that was asked by someone in the House, which related to what kind of investment there could be in renewables. There was somehow the understanding that renewables were what could be considered when the main thrust of investment and infrastructure investment had taken place first; that somehow or other when we have done the major bulk of the investment we can add on renewables as an extra. How much do you think there is scope to look at the culture of actually understanding that renewables can be at the core of infrastructure investment?
  (Mr Byers) I think I could talk for hours about that. There are many things I am proud of about Britain and many reasons why we should fundamentally analyse what our culture is. I think part of Denmark's success is that they look at the windmills and they say, "It's our windmill, it's not some American company's windmill." I am here representing investors who put money at risk to make money, so I am not advocating completely new public ownership, but I think that in certain communities and in certain regions if there was a higher degree of involvement, there might be a higher degree of acceptance that this is part of solving my life. That is as true for transport, waste disposal, water services, but from where I am sitting at the moment, if communities know, not as an obligation but by a desire which was perpetrated through schools, through television, through whatever source, that actually they benefit here in some tangible as well as intangible way, then it would be a very good thing to inject into the British culture. It is one of the three or four major aims of the Renewable Power Association to inform and educate NGOs, the press and the people, but it needs help from all, in my view.

David Wright

  236. I think that is an interesting point, and I think it links back to a point you made earlier about photovoltaics and embedding in overcladding for buildings. I was involved three or four years ago in a project to put external photovoltaic cells on a public sector high-rise block to win the landlord's supply. That proved to be quite expensive. I was interested in your comment when you said that embedded cells in overcladding material now are very cheap. Why have we not seen an expansion in that area, then, particularly in the local authority sector, and also on the production of commercial buildings? Can you give us some background on that? A note may be more appropriate. I do not want to take up too much time on this, but it is interesting.
  (Mr Wolfe) There has been an expansion in that area, from a very low base. I have to point out that while photovoltaics is embedded into materials there is still a cost premium compared to traditional grid generation as we understand it. That premium is coming down all the time, and particularly under the subsidised programme like what we hope will eventually be a 70,000 or 100,000 roofs programme. That enables the cost premium to come down from the users' point of view to relatively modest levels. To put numbers round that, typically today if someone installs, let us say, our solar roof slate instead of a traditional roof slate, we have designed this product so that it is to all intents and purposes interchangeable, with no planning issues, it looks like the standard roof slate, but it generates power. If someone did that and funded it themselves, the payback time has been calculated out at something over 30 years, which for most users is excessive. That will come down as volume builds, and our target is to get that down to the three-year to five-year payback time that people are prepared to use for double glazing, for example. Another way of approaching this, of course, is to integrate it into building regulations. One of the main things that has created a massive increase in the use of cavity-wall insulation is not the fact that it is economic—the payback time on that is arguably ten years plus—but it is done because it is a requirement of the building regulations. The same could be applied for photovoltaics and building insulation, roof insulation, for example. That, of course, would have a massive effect on the uptake of it and enable it to be done arguably at a rather longer payback time than would otherwise be the case.

  David Wright: Some further information on that would be quite interesting.


  237. If you have anything, it would be useful to have a note on it.
  (Mr Wolfe) Yes, I would be happy to do that.

Mr Thomas

  238. I wanted to go back a little bit to what you said about public participation and ownership. Perhaps I can give you an example of my own constituency where we just faced the planning application from the largest wind farm in the United Kingdom to date, and one which is on the horizon, which is three times that size. There the decisions were taken directly by the DTI, because this matter is caught within certain sections of the Act, over 50 MW and so on. Increasingly we are going to see wind farms to be over 50 MW and therefore they will be taken significantly by the DTI, it will not be a local planning decision and process at all. The complaint in your document about public inquiries, which is particularly true in Wales, of course, holding up wind farm development, will not necessarily be there. How do we reconcile what will be an increasingly centralised decision-making process with your views, as a renewable energy association, to see that the public can actually be involved in these decisions? That is one part of the question. The other part is to ask, do you have any thoughts about actually identifying now the areas and sites that would be suitable for particularly onshore wind, rather than biomass which in theory can go anywhere, and where these should be? I think we found when we were in Germany that they had done this, they had identified the sites in advance and then they allowed the local government and the Lánder to work with the population on how they should be developed. What are your thoughts on those aspects?
  (Mr Byers) I know personally at least 12 entrepreneurial wind development companies, and there is a very active effort to identify not just the best sites, which are largely easy to find, it is the second level of good sites that have not been identified at the moment. I assure you that a lot of commercial activity is spent doing that. One or two of those companies are specialising in ensuring investment comes from the local authority or the town, particularly if it is willing to buy the electricity so generated. So I think there is a lot of effort focussed now on making sure the community buys into the project. I think it is a misnomer to think that renewable energy companies have an enormous amount of money to butter up councils or Government, because the margins are typically thin, they do not have the sort of money to do community work compared with, say, a house builder or a developer of land. Having said that, since the last decade, without consulting the community you get nowhere. So that is one lesson that has been learnt from the renewable developers. The involvement and education of the community to get planning permission is fundamental. You can take it further than that in terms of an arrangement of selling electricity to the local community. As to centralised decision-making, it is a very tough one. Certainly above a certain scale it is going to be centralised. We are advocating a regional responsibility, more or less for the same reason that the electricity efficiency analysis says do not put on individual consumers the obligation to make sure that their iron conforms to certain regulations, make the iron manufacturers make standard conformity. So the further down you go towards the individual consumer of electricity, the less likely you are to get an easy and speedy approval. Therefore, planning permission has fallen foul of very local politics in this country, not at the regional and not necessarily at the central level, because of "nimbyism" and because of political support which fades as soon as they realise that it is within their immediate parish. So we are advocating community responsibility at a regional level, and we recognise that the larger-scale renewables will be centrally approved, but I do not think there are too many sites of anything other than wind that are going to be 50 MW and above. Perhaps Keith might have one or two examples. 20 to 30 MW is a large renewable plant.

  239. It is the visibility of wind farms which opponents of course oppose and if we could have a note about the environmental impact that would be useful for the Committee. How would you overcome the fact which you referred to earlier that the energy is in the remote west and north basically and the use is elsewhere and therefore the community that you are trying to encourage to support these developments in fact is not going to make use of that energy? For example, in my constituency we have one of the hydroelectric storage stations you referred to. I could make a very convincing argument that my constituency is 100 per cent renewable now, or will be when the new wind farm comes on board. How can I persuade my constituents—how does anyone persuade my constituents—to take another wind farm on top of that when it is plainly not needed for local need? There is a wider question here. I appreciate it is wider than your Association and wider than your developments. The other part of that is that you mentioned selling locally. Have you any examples of that happening now in the United Kingdom and, if you do, could you give a note to the Committee?
  (Dr Pitcher) Yes, I do. Again, my experience in the last few years relates directly to biomass. What we have found is that there is a desire to have projects in areas such as the four metropolitan councils and the more traditional county councils, such as South Yorkshire. All of those have asked us to come and develop the project in that area and, if not, they would like to give their support for the fuel supply from there. Going back to the earlier point about a diverse range of technologies, this helps to overcome the fear that it is not just going to be one particular form of development we are going to see. There is a very important message there. Also, what we are finding is that there is a desire for people to purchase their electricity from green sources, and again some of the local authorities in our region are investigating that. Leeds is doing that, a number of well publicised commercial organisations are doing that. We are seeing that there is a growing customer demand for buying green electricity from projects of this type. It is trying to make that fit with something in their vicinity that they can be actively involved in and support. I echo what was said earlier by David that a lot of the time we have spent in developing projects is at the front end talking to local communities, regional communities, statutory consultees, who are interested in the principles as to why we are doing it here and what the benefits at the local level will be. Provided that is done properly and thoroughly then you hope that people will then take the ownership of the projects, not only for the planning but in the years they are in operation thereafter. We have seen direct confirmation of that process now.

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