APPENDIX 25
Memorandum from the Sustainable Development
Commission
INTRODUCTION
This paper is submitted to the Environmental
Audit Committee as part of its inquiry into the likely effectiveness
of the energy White Paper. The Sustainable Development Commission
(SDC) welcomes this opportunity to contribute to the EAC's inquiry.
We note that the evidence the EAC will be taking from the Minister
of State for Energy and Construction is covering four main areas.
Our commentary below, which outlines our key concerns with, and
our view of the challenges for progressing the White Paper, principally
relates to the fourth of these areas of evidence ie delivery and
the specific actions now required of relevant Government departments.
The EAC may also be interested to know that the SDC is also submitting
evidence to the Environment, Food and Rural Affairs Committee
as part of its inquiry into alternative crops, and particularly
biofuels.
The SDC is a UK-wide non-departmental public
body, reporting to the Prime Minister and the leaders of the Devolved
Administrations. It is chaired by Jonathon Porritt. The Commission's
remit is to advocate sustainable development across all sectors
in the UK, particularly within Government, and build consensus
on the actions needed if further progress is to be achieved. This
submission augments our response made in November 2002 to the
Government's "Energy Policy: Key Issues for Consultation"
(at http://www.sd-commission.gov.uk/pubs/sustainable-energy/index.htm)
OVERVIEW
The SDC welcomes the fundamental thrust of the
White Paper, including :
— both the acceptance of the RCEP's
recommendation that the UK should put itself on a path to a reduction
on carbon dioxide emissions of some 60% from current levels by
about 2050; and
— the recognition that this scale of
reduction can be principally achieved by a combination of energy
efficiency (but from the SDC's perspective taken in its widest
sense, including demand restraint—see also below), renewables
and CHP.
Other provisions we applaud include the environmental
cost internalisation plans (including the new (EU) emissions trading
scheme), tackling fuel poverty, skills development, and the absence
of proposals for building new nuclear power stations.
But the White Paper should have been stronger
in its delivery expectations; the 2020 renewables target for example
is only aspirational. This transmits mixed messages, and leaves
companies uncertain about the degree, direction and duration of
Government's renewables policy commitment. Business needs evidence-based
analysis to provide investment confidence, including the knowledge
that they will be penalised by NOT responding to policy developments.
A firm target also makes it more likely that
government will deliver the necessary fiscal policy rewards and
penalties, which can catalyse sustainable energy transformations
in industry and the market-place at the necessary pace and scale.
We will press for this target to be made firm.
The White Paper focuses mainly on the longer
term, and there is merit in doing so. But action is also needed
in the short and medium terms. In our recent audit of the Government's
Climate Change Programme we demonstrated that, without further
measures, the UK will fall well short of the Government's goal
of reducing carbon dioxide emissions by 20% from 1990 levels by
2010. We urged the Government not to abandon the domestic goal
but to redouble its efforts to achieve it. We said that the (then
forthcoming) White Paper was a major opportunity to demonstrate
the necessary leadership and direction. In particular, we recommended
that:
— Defra should take the lead across
Government for developing additional policy measures to reduce
emissions of carbon dioxide, within a sustainable development
framework; and that
— DTI should use the White Paper to
set more demanding targets and associated measures for renewables,
energy efficiency and CHP.
Some of the White Paper's provisions—notably
those aimed at smoothing the way for renewables and achieving
greater energy efficiency savings—could begin to make a
contribution by 2010, if implemented promptly and vigorously.
So in taking the White Paper forward, urgent additional action
is now required to meet the goal that the Government has set.
We therefore welcome DTI's current consultation
on a set of UK energy indicators which, when final, will be vital
in monitoring progress with implementing the White Paper's measures.
In response to the consultation, the Commission is likely to urge
that the proposed indicators be honed taking into account our
six principles of sustainable development, and that the final
set are accompanied by a remedial commitment, perhaps along the
lines of the UK SD strategy: "Where a trend is unacceptable,
the Government will adjust policies accordingly, and will look
to others to join it in taking action"
Overall, we believe that successfully achieving
the 60% goal, and the White Paper's other, more short-term goals—including
those for renewables and fuel poverty—will require concerted
and sustained action both by national, regional and local Government,
and by wider elements of civil society, not least the business
sector.
INSTITUTIONAL DELIVERY
MECHANISMS
We broadly welcome the White Paper's institutional
proposals for delivery. At national level, we maintain a preference
for a Sustainable Energy Agency which we consider would better
placed and be more effective in driving the White Paper's provisions
forward than the proposed central Government/departmentally-controlled
Policy Network.
But as the White Paper recognises, action at
regional and local level is also crucial to delivering its objectives.
To varying degrees, RDAs are integrating and addressing sustainable
development into their Regional Economic Strategies. But this
welcome development is in its early stages, and a key role for
central Government—HM Treasury, DTI, and Defra—is
to reinforce this activity, including encouraging RDAs to advocate
the imperative amongst "their" local authorities to
integrate a low-carbon economy within their own strategies and
framework.
ECONOMICS AND
BUSINESS CASE
FOR THE
UK
The SDC is concerned about the White Paper's
treatment of the import/export balance and the importance of an
indigenous energy industry to our economy. The UK already has
a major underlying Balance of Payments problem, much of it arising
from our rapidly declining manufacturing base. The White Paper
assumes almost as a "given" that the UK will be heavily
dependent on imports (whether from relatively secure or insecure
sources) without even regarding that as a problem for such a fundamental
aspect of our economy. Elsewhere, the White Paper points out the
benefits of being at the leading edge of renewable and low carbon
technologies for building a competitive economy. But it does not
seem to make the conceptual link between these two points or to
give any targets or even a preference for indigenous production
beyond the overall targets for renewables.
The SDC recognises the security value of multi-sourced
energy supplies; that renewables-generated electricity can only
offset oil and gas consumption to a limited degree, at least in
the short-medium term; and that constraints imposed by international
trade rules on favouring home economies. We do however believe
that the Balance of Payments argument should be recognised and
used by Government to support the impetus for greater energy efficiency,
and renewables and CHP, and associated infrastructure changes,
which can legitimately help minimise fossil fuel imports.
More broadly, the SDC would have preferred to
see a more overt link between environmental, social and economic
targets and measures; for example, reductions in carbon consumption
can help alleviate fuel poverty. Furthermore, there are real potential
employment and export gains to be had in manufacturing and engineering
from investing in renewables and energy efficiency, as well as
reduced energy bills for homes and businesses from lower demand.
The White Paper pays insufficient attention to this jobs dimension.
As with the Balance of Payments argument above, the employment/jobs
benefits consideration can be used to influence business.
There are also wider economic and competitive
advantages to come from the innovation gains provided by new low/no
carbon energy supply and demand management technologies, made
and used in Britain. And still on this economic aspect, we see
a good case for the introduction of suitable fiscal measures (incentives
in particular—for example credits for "green"
projects from polluter-pays revenues) which would also help publicise
the value of a low-carbon economy, as well as reduce carbon consumption
itself.
DEMAND SIDE
ISSUES
The White Paper is very much about developing
an energy system ie it is supply-side focussed; it includes little
about demand-restraint (other than the considerable and welcome
energy efficiency proposals, including the forthcoming review
of the Building Regulations). Furthermore, the DTI's "UK
Energy Sector Indicators 2003" portray worrying demand-side
historic trends: Chart 11.18 illustrates a 120% increase in electricity
consumed by domestic household appliances between 1970 and 2001,
and Chart 11.12 indicates that (overall) domestic energy consumption
per person has grown steadily since 1970. Similarly Chart 11.8
records that overall energy consumption in the transport sector
doubled bewteen1970 and 2001. So to maximise the prospects for
achieving the aim of further carbon dioxide cuts of 15-25MtC by
2020 as well as the longer-term 60% target, we wish to see significantly
greater emphasis placed on demand minimisation, through:
— Transport measures: it is vital that
the terms of reference for the forthcoming review of the Transport
10 Year Plan reflect (fossil-fuel) demand reduction as a priority,
with associated Government spending being prioritised towards
travel by foot, cycle, bus and rail, rather than roads, and including
the relocation of road space to favour these transport modes.
— PFI: our earlier submission to the
White Paper consultation (see above) stressed the need for White
Paper to correlate with public expenditure plans, including in
particular a call for the Government to issue new guidance stipulating
the inclusion of low-carbon and energy efficiency provisions in
all PFI projects. This specific PFI proposal has not been picked
up—yet, and is something for which the SDC will continue
to press.
— Communications: the White Paper says
little about communicating the case for a low carbon economy (though
para 2.21 of the White Paper does refer to the potential economic
benefits to business of a low-carbon economy). The SDC on the
other hand recognises a strong case for a sustained "hearts
and minds" campaign, not simply to extol the virtues of the
"quality of life" benefits offered by a transition to
a low-carbon economy, but more specifically to generate interest
and acceptance of the considerable local dimension to the nation's
energy system in 2020, as envisaged on pages 18 and 19 of the
White Paper (and including the mention that "people will
be much more aware of the challenge of climate change and of the
part they can play in reducing carbon emissions").
April 2003
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