Select Committee on Environmental Audit Appendices to the Minutes of Evidence

Annex A

The PIU Energy Review


  Just three weeks after the 2001 General Election, the Prime Minister told the Cabinet Office's Performance and Innovation Unit (PIU) to review Britain's energy policy. Seven months later, on 14 February, he published the results. The Government now intends to consult on the PIU's findings and publish an Energy White Paper which will set the foundations for Britain's energy policy for the next 50 years. All being well, this will foster the expansion of renewable power and dramatic improvements in energy efficiency—but it could lead instead to the building of nine or more new nuclear power plants.


  The aim of the PIU's review energy policy was to set the objectives of energy policy, to 2050, developing a framework for reconciling the trade-offs among different objectives and developing a vision and strategy for achieving these objectives. It also sought to identify the practical steps that need to be taken in the short- and medium-term, as well as the longer-term.

  The Review was prompted by concerns over the imminent decline in oil and gas production from the North Sea and the need to meet international agreements to cut man-made emissions of greenhouse gases. It also aimed to inform the Government's response to the Royal Commission on Environmental Pollution's report "Energy—the changing climate".

  On 14 February, the PIU's 200 page report and various supporting working papers were published. The report talks, rightly in our view, about setting energy policy within a sustainable development framework and makes sensible recommendations about the need to prioritise environmental concerns and to shift to a low carbon economy. But Friends of the Earth believes it doesn't deliver on crucial issues: its target for renewables is inadequate; it brushes aside the possibility of strong domestic policies on transport and it proposes keeping the nuclear option open. Moreover, it has failed to deliver a long term vision and is short on detailed policy proposals for supporting renewables or for energy conservation and efficiency.

  Meanwhile, the Government is planning reforms to the planning system that could make scrutiny of new nuclear power stations weaker and plans to separate BNFL from its liabilities. It has approved the use of the Sellafield MOX Plant. This suggests that, far from merely keeping the nuclear option open, the Government is actively paving the way for a programme of new nuclear power plants.

  Friends of the Earth believes applications for new nuclear plant could be made within a year—well before renewable power and energy demand reduction measures have been given a chance to work. Yet, nuclear power is expensive, unsafe, unpopular and leaves a radioactive legacy that is dangerous for tens of thousands of years. The Royal Commission on Environmental Pollution[16] has rejected claims that it is "indispensable" and published two scenarios showing how carbon dioxide emissions could be cut by 60 per cent by 2050, without nuclear power. The Commission also said that "new nuclear power stations should not be built until the problem of managing nuclear waste has been solved to the satisfaction both of the scientific community and the general public."

  In the last five months, over 160 MPs have signed early day motion 57, urging the Government "to reject, for once and for all, the nuclear energy option and to put in place a fiscal and regulatory framework to enable the development of a fully renewable energy system". Friends of the Earth supports this call and will be campaigning to persuade the Government to genuinely set energy policy within a sustainable development framework, by rejecting the nuclear option and expanding its support for renewable energy and energy conservation and efficiency, when it publishes its White Paper.



  The review recommends that where energy policy decisions involve trade-offs between environmental and other objectives, environment will tend to take precedence. However, it often contradicts itself especially when considering security of supply and the UK's competitiveness, demonstrating that making the principle a reality will present considerable challenges.

  It sets a low target of 20 per cent of electricity from renewables by 2020, which is the lowest of the targets considered in the working papers and lower than the EU target for 2010 which is 22.1 per cent of electricity from renewables, despite the UK's evident potential. Other less endowed countries have shown far greater ambition.[17]

1  c. Riso National Laboratory, Denmark

  This is particularly worrying as conversion of our electricity supply to renewables is the first step needed for the successful transition to a low carbon economy (for example emissions from transport, we are told, will at best remain unchanged until beyond 2020). This paucity of ambition is a convenient sop to the nuclear industry as it serves to support their argument that a new build programme is necessary to achieve significant emissions reductions.

Tax and Spend

  The report makes the welcome recommendation that the costs involved in the use of fossil fuels be internalised through an expanded carbon tax system or tradeable permits, covering as much of the market as possible. At present the carbon change levy is targeted solely at industry and the proposed carbon emissions trading scheme is voluntary, and excludes electricity generators and transport.

  The review supports Government intervention to speed innovation and proposes that energy research and development spending be increased, both of which are welcomed. It also recommends a review of capital grants in time for the 2004 spending review.

Security of Supply

  On energy security the report comes down in favour of low carbon solutions as they will give flexibility and diversity, however, a whole chapter of the report (chapter four) is devoted solely to the issue of securing oil and gas supplies with virtually no mention of the role renewables can play in increasing security. This imbalance must be addressed in the Government's White Paper.

Energy Efficiency

  The report is strongest in its recommendations on energy efficiency, calling for a step change on our approach to this issue. However, the proposed targets are little more than had been previously been asked of local authorities in guidance under the Home Energy Conservation Act 1995. That said the report details a range of welcome measures to improve efficiency across all sectors, including the extension of the Energy Efficiency Commitment on suppliers to include the commercial sector and the setting of Government departmental energy efficiency targets. It also recognises that Local Authorities need powers, duties and funding to enable them to place energy efficiency in the mainstream of their work and as such supports the Warm Homes Private Members Bill currently being considered by Parliament.

Sources of Energy


  The Review recommends extending the target for renewables to from 10 per cent by 2010 to 20 per cent by 2020. This is low given the massive potential for renewable energy in the UK.[18]

  Recommendations are made to remove the barriers to renewable and small scale embedded generation including revising national planning guidance, the inclusion of energy in regional planning and the identification of areas for renewables. DTLR are called upon to revise building regulations and the DTI are advised to develop policy on strategic off-shore issues. The report endorses the view that NETA (the new electricity trading arrangements) are currently not cost reflective and sets January 2003 as the target for the introduction of transitional measures if current ones prove unsuccessful.

  It also recommends connection, regulation and pricing intervention needed to facilitate growth in micro generation—ie the small scale generation of electricity from a variety of renewable sources for use at point of production and/or export to the grid.

  On the negative side the role of bio-waste (energy from agricultural and forestry residues) is omitted. The role sustainable sources of biomass can play in enabling reductions in emissions from existing fossil fuel plant through co-firing is also overlooked. Also there is virtually no mention of the need to stimulate demand for renewables through for example increased public information about energy and labelling on electricity bills.


  The Government is wrong to recommend that the door should be left open on nuclear power which after decades of public support is still unprofitable, unsafe and unpopular. The nuclear industry failed to get all that it wanted from the review as even with the proposed exemption from a revised climate change levy for new installations, nuclear power will remain uncompetitive in the liberalised electricity market. The report clearly states that the industry's preferred approach of building a large number of power stations of the same design to achieve economies of scale would be inflexible and therefore undesirable. It also highlights that the nuclear option is the most expensive means of achieving emissions reductions and involves a high degree of cost uncertainty. It is important that Government does not succumb to pressure from the industry to subsidise the extensive new build programme that the industry proposes. Government should instead act on the recommendation that all costs be fully internalised including liabilities insurance—a proposal which was allegedly dropped from the final report due to political pressure.


  Despite the considerable environmental impacts of coal burning, the report considers that it has a medium term role in the UK energy mix. It goes on to recommend softening planning laws to benefit open-cast mining and introducing rate relief for generating plant in the interests of retaining coal fired stations for reasons of security. It also criticises the EU's draft carbon trading directive because it would lead to mandatory carbon reduction targets for combustion plants. This is an excellent example of where the stated objective of giving precedent to environmental concerns is undermined by concerns about diversity and security—despite the fact that renewable technologies can also achieve these objectives.


  On balance Friends of the Earth welcomes the review as it reflects a significant departure from existing energy policy, placing a far higher priority on environmental considerations. It is however inconsistent in its assessment of the roles of different energy fuels—failing to adequately assess the environmental impacts of nuclear and coal and placing undue emphasis on oil and gas as sole guarantors of security of supply.

  That said Friends of the Earth also welcomes measures to remove the existing barriers to the deployment of renewable energy and the aim of achieving a step change in energy efficiency. Friends of the Earth believes that with sufficient political will and increased support, reduced demand for energy and the substitution of renewables for nuclear and coal can be achieved and greenhouse gas emission targets met.

16   RCEP report: Energy-The Changing Climate, June 2000. Back

17   The German government has announced plans for a massive increase in wind generation capacity over the next 25 years foreseeing that "within a generation ... one quarter of today's energy needs will be generated with environmentally-friendly wind power". The Environment Minister added that wind power already provided an additional 35,000 jobs and that: "the wind power sector is to become a self-supporting industry, something the nuclear sector has never achieved". Back

18   The recent Scottish Renewables Study, suggested that Scotland alone had the potential to supply even up to 30 per cent of the UK's electricity supply from renewables-this report did not take account of the potential for larger wind farms which are further offshore than the initial 18 sites allocated by Crown Estates. Back

previous page contents next page

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

© Parliamentary copyright 2002
Prepared 22 July 2002