Select Committee on Environmental Audit Fifth Report



1. The supply of energy is fundamental to our society. Each year the UK uses an amount of energy equivalent to 240 million tonnes of oil. Of this, only about 1 per cent is derived from renewable sources.[1] The UK is therefore a very long way from sustainability. We note that the Government's full list of sustainable development indicators does not include any indicator for renewable energy as a percentage of primary energy supply.[2] It would be a salutary reminder if it did.

2. This report does not cover total UK energy use. Much of the oil and natural gas which the UK produces or imports is used directly for transport or domestic heating purposes. In these major demand sectors, we will be dependent on fossil fuels for many years to come, and a wide range of different policies is in place to reduce demand and encourage energy efficiency (Figure 1). But new technologies also offer the potential to generate energy from renewable sources, and—over timeto reduce and replace our dependency on fossil fuels. To the extent that most 'new renewable' sources of energy generate electricity, this report therefore focuses mainly on renewable electricity.

3. Nor does this report cover demand side measures, though we would take this opportunity to stress the importance of adopting a holistic approach to energy policy which also encompasses planning and transport policies, urban design and building standards, and energy efficiency. Energy efficiency, in particular, and reductions in energy use offer huge potential for reducing carbon emissions, as the recent Performance and Innovation Unit (PIU) Energy Review has indicated. In our Seventh Report of 1998­99, we highlighted the importance of this area and made a wide range of recommendations, on many of which the Government has yet to act.[3]

4. It is also worth noting that there is much talk of moving to a carbon­free hydrogen economy, without always enough awareness that hydrogen is only a carrier and not a fuel source. At present, the most practical way of producing hydrogen is from fossil fuels with all the attendant problems of carbon emissions which this gives rise to. Other carbon-free ways of producing iteg through electrolysis—currently require large quantities of energy. Whatever form future energy storage may take, therefore, adequate supplies of renewable energy will be crucial if we are to move to a truly carbon­free economy.

Figure 1
Policy instruments to promote energy efficiency, reduce energy use, and promote alternative more environmentally friendly energy sources
(NB: the table is illustrative rather than definitive)
Transport- the Fuel Duty Escalator (now discontinued) and generally high levels of fuel taxation
- fiscal incentives for more environmentally friendly fuels (eg Liquid Petroleum Gas (LPG) or biofuels)
- Vehicle Excise Duty and company car tax reform
- the voluntary agreement with European car manufacturers to reduce emissions and increase efficiency
- Powershift (Energy Saving Trust), Motorvate, 'Think car', etc
- Foresight projects (Foresight Vehicle, Clear Zones, Informed Traveller)
- other policies aimed at encouraging more environmentally friendly forms of transport or reducing demand (eg. bus lanes, light rail transportation systems, walking to school campaigns etc.)
Domestic- Home Energy Efficiency Scheme
- Energy Efficiency Commitment (replacing the Energy Efficiency Standards of Performance)
- reduced VAT on home energy efficiency services and materials
- subsidies on efficient gas central heating boilers
- Energy Saving Trust
- Energy Advice Centres
- energy efficiency labelling schemes
- promotional advertising campaigns on energy efficiency (eg the former (Department of the Environment, Transport and the Regions (DETR) "Doing your bit" campaign)
Business / Industry - the Climate Change Levy (CCL) and negotiated agreements
- recycling of CCL receipts via the Carbon Trust
- the new UK Emissions Trading System (ETS)
- Energy Efficiency Best Practice Programme
- fiscal incentives for improving energy efficiency (eg. Enhanced Capital Allowances)
- capital grants for research, development and demonstration projects
- other promotional bodies/campaigns (Renewables UK, ETSU, ACE, ACBE)
Generators / suppliers - the Renewables Obligation (replacing the Non Fossil Fuel Obligation (NFFO))
- exemption of renewables from CCL
Other- Research and Development (R&D) expenditure by Government departments and Research Councils, and EU funded programmes (eg schemes for specific technologies such as solar roofs, energy crops)
- regulatory controls, eg. Integrated Pollution Prevention and Control ( IPPC) [to the extent they may encourage more efficient resource use, or alternative energy sources]

Source: Environmental Audit Committee

1   DTI, Digest of UK Energy Statistics, 2001, para 7.11. Back

2   The full list of indicators is at http://www.sustainable­ Indicator N4 relates to renewable electricity only, even though the objective refers more generally to energy from renewable sources. Back

3   Seventh Report from the Environmental Audit Committee, Energy Efficiency, Session 1998-99, HC 159. Back

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