Examination of Witnesses (Questions 359-379)
MR BRIAN WILSON, MP AND JOHN DODDRELL
WEDNESDAY 24 APRIL 2002
359. Welcome to our meeting, Minister. Thank you for coming along. You may be interested to know we saw the PIU team this morning, and yesterday we had a very pleasant day in Scotland talking to the Scottish Executive and Scottish Power so we feel well versed in the subject, and particularly well versed in the Scottish angle, which may also be of interest to you, although of course you have UK-wide responsibilities. Thank you also for your Memorandum. Is there anything you would like to add briefly to that before we begin to ask you questions on the subject?
(Brian Wilson) Thank you very much for your welcome. I would also like to introduce John Doddrell, who is the Head of the Renewables Division in the DTI. If I could just make a few brief points. I think the fundamental one is to emphasise the extent to which the subject matter of this enquiry is absolutely at the centre of: the Renewables Agenda and the whole Energy Review impact of NETA Renewables Obligation, renewables policy as it is evolving, and particularly the importance of joined up thinking within Government in order to get all of that right. I think it is worth saying that, as I am sure you are well aware, the Renewables Obligation since you began this process is now in place and came into effect on 1st April, and has attracted a great deal of cross party support, both in the Commons and in the Lords. So with the Renewables Obligation in place, we think we now have the main building blocks available to achieve the 10 per cent target. I know that sometimes people say, "Set more ambitious targets. My own view is that you set attainable targets before you set more ambitious attainable targets". I think the 10 per cent is attainable, but it will be a tough target and we now have a 25 year long obligation which again I believe should give investors and industry the assurances that they need to make the commitments that are necessary. We estimate that 10 per cent of electricity from Renewables by 2010 will mean annual savings of around 2.5 million tons of carbon by 2010. When we devised and implemented the Obligation, there were two issues at the front of our minds. First, it was vital that there should be a market led initiative which would stimulate competition and leave the market to decide which forms of renewables and which technologies were going to have primacy in the UK renewables mix. Government is not backing winners, it is allowing the field to run to see which renewables technologies emerge from that field most strongly. Secondly, it was also vital that any support mechanism had to be cost effective in order to maintain the competitiveness of industry and also to keep down the costs for the domestic consume. I do not think you can get too much of a disjunction between what it is going to cost the consumer and what the consumer is prepared to accept. You cannot see that in isolation from our other aspirations. Finally, Chairman, I just want to say that the Renewables Obligation in my view represents a tremendous opportunity for manufacturing industry in the UK. I do not think it is just an energy issue or an environmental issue, I think it is a tremendous manufacturing issue that we have now put in place, something which is going to create billions of pounds of investment over the next few years, and my very strong commitment is to ensure that as many of these billions as possible are spent within the UK and give a whole new market to some of our industries which have synergies with renewable technologies, and others which can seize the opportunities that they present. I hope as we go along I can maybe say a little more about that. That is all I really want to add to the Memorandum, Chairman. Thank you.
Chairman: Thank you for saying that, Minister. As I said before, we had the PIU in this morning, discussing their report over a two hour period, and the first thing we would like to kick off with is to get a clear understanding of the timetabling of your responses to all that and the way the Government is looking at this from the point of view of getting some action on the ground. There has been an awful lot of analysis. We do now need some decisions. I know Mr Challen wants to discuss that.
360. I would like to start by asking about the proposal contained in the PIU Report for the creation of a Sustainable Energy Policy Unit. I note that they say it should be operational by October of this year, but in your Memorandum at question 3, you state, "Because of the need to take account of the PIU Energy Review, the Energy Group has two years to decide and implement any changes in its structure", so it seems to me that there is no great intention to fulfill this particular recommendation?
(Brian Wilson) Maybe if I said, just to put that in context, something about the timetable from here on in in response to the PIU Review, and I have been very anxious to stress at every point that the Energy Review is a report to Government rather than of Government. I think that was important not only from a governmental point of view, but also from the Review Team's point of view that they had the liberty to think freely in the knowledge that they were going to be presenting this to Government rather than being asked to draw up an energy policy. So now they have completed their report, which I think is a very good and thorough piece of work, it will inform the normal policy making process within Government. The next step on that will be the issuing, very soon I hope, of our consultation document, which will in turn lead before the end of the year to a White Paper. There is a Cabinet Sub-Committee meeting within the next couple of weeks which will trigger the consultation process, and then we will come to a White Paper later in the year.
361. That is this year?
(Brian Wilson) This year, yes, absolutely. It was originally our ambition to get the White Paper out by the Autumn. I think there has been a little slippage in that, just because of the mechanisms that it has to go through in the consultation process, but certainly the White Paper should be out by the end of this year
362. How long will the consultation period be?
(Brian Wilson) The consultation period should be about 3-4 months, until the early Autumn, and then publication of the White Paper. The intention obviously is not to reinvent the wheel and to go over all the ground that has been gone over very thoroughly and very transparently in the run up to the publication of the Review, but to build on the Review, and then to incorporate that into a White Paper. Some of what the White Paper contains will involve legislation, but probably not a great deal of it, and a lot else of what is in the White Paper hopefully will be able to be implemented without legislation, and I would see advances in this sort of area as being a high priority.
363. Would you actually support this cross-cutting Sustainable Energy Policy Unit? Do you think it is a good idea? Will that feature in the process of consultation?
(Brian Wilson) It certainly features in the consultation, and if you ask my own view, then I think anything that pulls all these strands together is positive. I do not think it makes sense to have a number of different avenues for various branches of energy policy to go down without some clear coordinating theme to link them.
364. That certainly seems to be a very strong conclusion of the PIU Report who do say that there should be a single department as a long term aspiration dealing with climate change, energy policy, and even with transport. Would you support that view? Where should this focus actually lie within Government? It seems to be spread all over the place at the present time.
(Brian Wilson) I think that is a legitimate criticism. If I was offering a personal view in the long term and I make it clear that I am unlikely to be around to be involved in it, I think there is a strong case for an energy department. I think there probably always was a strong case for an energy department and the reasons for getting rid of an energy department were more political than logical at the time that happened. So whether it is brought together as a department or whether it is brought together within one department, I certainly think there is a very strong case in moving towards as much of a synthesis of energy policies and responsibilities as possible.
365. Which is fair, then, to conclude that we should be looking at that now as a long term aspiration. A single department might be all well and good, but where should this focus be now, because if we said it was to be in the DTI and you have perhaps more economic objectives, if it was in DEFRA, it is more environmental. At the moment, we cannot really see if it is economic or environmental. Who has the upper hand?
(Brian Wilson) I certainly would not like to think of it in terms of upper hands and lower hands. This is something for the consultation and the White Paper, to look at all of this. I think it would be a mistake to treat it in terms of inter-departmental rivalries. I certainly do not see it that way. What I do see in my daily work is that there is no particular rationale to where some of the responsibilities lie and where other responsibilities lie, so it seems to me the common sense position is, as far as possible, to bring it together. It goes beyond DTI and DEFRA. For instance, one of the most striking points that was made to me during the PIU Review was that supposing we did everything that we are committed to and aspire to on the energy front, if we did nothing on the transport front, then we would still be worse off in terms of carbon emissions in 2050 than we are today. So you cannot have an energy policy which is driven by the climate change obligations without taking account of transport as well. Therefore, joined up Government goes beyond just two departments.
366. How will DEFRA be involved in the consultations on the White Paper? I would have thought that, they, clearly are going to have to have a big input.
(Brian Wilson) DEFRA have a big input. They were represented on the Advisory Group on the Review, and clearly they will be very much involved in the consultation and the assessment of the consultation. For instance, one of the big winners, if you like, of the Review is the need to reduce the use of energy and DEFRA are very much involved in that.
367. You seem to be persuaded that the fundamental prism of the PIU Report, namely that, in its own words, "Existing structure of institutions involved in the UK energy policy making and delivering tax coherence", you are more or less agreeing that, because you are saying that there are problems with the different departments and so forth and you would like to see it brought together in a joined up sort of way, so you are really rather agreeing with the PIU conclusion that there should be some body which brings all this together; am I right?
(Brian Wilson) I do not think anyone who was sitting down to write the division of responsibilities within government today on a clean piece of paper would divide energy related responsibilities in the way they currently are. We would have more cohesion to them because unlike the forces which created these divisions in the first place, the driving force today is climate change and the need to
368. But if that is so, why do you say in the Memorandum to us that you are going to wait two years until you actually do anything about this?
(Brian Wilson) I do not think we say we are going to wait two years to do anything about it. As I have described, there is a process now of consultation and White Paper which will hopefully allow us to move more quickly on some of these things than others. Certainly at the outer limits there is a very wide window of opportunity, but I am in favour of doing things quickly as long as they are done properly. I think it is very, very important to get this right within the context of our evolving energy policy.
369. So we can expect this issue to be addressed in the White Paper?
(Brian Wilson) The issue will be addressed in the White Paper, certainly.
370. Let us come on to renewable energy. Most people seem to be in favour of renewable energy, more renewable energy
(Brian Wilson) In principle.
371. Absolutely. Let me ask you as the Minister: what do you see as the main reason for wanting more renewable energy?
(Brian Wilson) Because I think it has a crucial contribution to make to a cleaner energy mix and to meeting our obligations
372. So it is about a low carbon economy?
(Brian Wilson) A low carbon economy, yes.
373. That is the main reason, in your view?
(Brian Wilson) I think that is the driving force, but I think that there are then a great many other reasons why it is a thoroughly good thing.
Mr Owen Jones
374. Minister, you spoke optimistically about meeting our 10 per cent target. You have spoken in the past quite frankly, describing the present renewable contribution that Britain makes as a "pitifully low base". The latest figures we have for 2000 are a 2.8 per cent level of contribution to electricity generated in the United Kingdom. Can you tell us what the figure is for 2001?
(John Doddrell) It is likely to be slightly higher, excluding hydro. 2001 was a particularly dry year in terms of rainfall, so the existing hydro output as I understand it was slightly lower, but the underlying trend in production of other sources of renewable energy went up a bit, but please bear in mind that the instruments like the Renewables Obligation, the Capital Grants programmes and all the other things that we have been putting in have not yet taken effect in 2001.
375. We understand that. We are trying to get an idea of the level of challenge. How much of the new production in 2001 was eligible under the Renewables Obligation?
(Brian Wilson) The Renewables Obligation only came in in April 2002. Incidentally, I am told that the figures will be published in the Summer for this year. The answer to your question is that hopefully it will show some increase, but it will not be a large increase, and that again emphasises the scale of the challenge in the remainder of the decade.
376. We are not rolling yet. Government set the target for 5 per cent of electricity from renewables by 2003. What does 2003 mean? Is it end of 2003 or the start of 2003?
(Brian Wilson) I would say it would probably mean the end of 2003. I would also say that we are not going to meet 5 per cent in 2003, so again it emphasises the scale of the challenge thereafter.
377. So we are not going to meet that?
(Brian Wilson) No, we are not going to meet 5 per cent.
378. Thereafter, the next target is 2010, and you have already spoken optimistically about how we will get to there. I do not want to ask whether those targets are realistic because I am sure everyone on the Committee believes they are realistic, but with present policies, they do not appear to be realistic. What would you see as the major obstacles that you need to get rid of to start meeting those early targets?
(Brian Wilson) I think there are two obstacles. One is investment: you need to have investment or the commitment to investment in order to even have the theoretical possibility of getting the generation which will meet the targets. I will name three. The second one is the infrastructure: in other words, you need to have the ability to get the power to where it is needed from the places where it is generated. Again, I am happy to say more about that, but it is quite a major constraint at present. Thirdly, the projects actually have to happen, and maybe the most sobering statistic in all of this is that two thirds of the projects approved under the predecessor of the Renewables Obligation, the Non-Fossil Fuels Obligation, never actually happened, and the reason mainly was because in hundreds of cases they were successfully blocked at a local level. If we continue to see two thirds of projects fail to come to reality, then we are not going to meet targets, it is as simple as that. I just use this as an example: I went to Cornwall a few months ago just after a wind farm had been opened. It was quite difficult to say where it was because part of the problem was that it was half in Cornwall and half in Devon. It was 16 turbines. I was told that this was the biggest wind farm to open in England since 1994. At that rate of progress, if we come back here in ten years' time, I do not think we will be celebrating 10 per cent from renewables. That is the reality, if projects are blocked or delayed in the way that they have been with great regularity until now. It will be extremely difficult to meet these targets, so we have to ask people who are in favour in principle of renewables to start squaring their conscience with their intellects and allow some of them to happen.
Mr Owen Jones: Thank you, Minister.
379. Do you think the Government is failing at the present time in getting the message on renewables across in terms of the importance of dealing with these local obstacles to achieve the overarching policy?
(Brian Wilson) Whether it is Government which is failing, the statistic I have just quoted suggests that somebody is failing, and I suppose everything ends up with Government. I think that it is true that there has not been coherent success in persuading people that if they are in favour of renewables in principle, then they also have to occasionally be in favour of them in practice. I do not think that effort has really been made, because until now, they have not come forward on a sufficient scale. They have come forward in a spasmodic way, and each one has been seen as an individual project. I think we are really at the start of a process now of confronting society with a more general choice, that either they are going to have a significant contribution from renewables or they are not and if they are going to have that contribution, then they are going to have to show reason in accommodating it.