APPENDIX 7
Memorandum from the UK Business Council
for Sustainable Energy
1. INTRODUCTION
1.1 Having been heavily involved in WSSD
activities up to and including the Johannesburg Summit—David
Green, Chief Executive, was a member of the UK delegation to Johannesburg
on behalf of the UK sustainable energy sector—the UK Business
Council for Sustainable Energy (UKBCSE) welcomes this opportunity
to make a submission to the Environmental Audit Committee.
1.2 The UKBCSE brings together Innogy, United
Utilities, Scottish Power, Powergen, BP, Shell and National Grid
Transco. This submission focuses on the UK energy policy implications
of the Summit.
1.3 Following the decision by the Prime
Minister that energy was one of the priority areas, the Council
led consultations between the government and the energy sector
over priorities for the Summit. The Council organised a conference
in April 2002, and subsequently made several submissions to lead
Ministers, including the Prime Minister, to lay out a plan of
action for the Summit itself, and importantly the post-Summit
agenda in the UK.[2]
1.4 At the summit the UKBCSE worked very
closely with sister international organisations—the Business
Councils for Sustainable Energy in US, EU and Australia—to
present a strong position on international action points for sustainable
energy prior to, and during, Johannesburg. The Summit also gave
the four sister organisations the opportunity to formalise an
international alliance, designed to enhance global commitment
to sustainable energy.
1.5 Delivering a low carbon economy is increasingly
at the core of the national and international response to meeting
energy needs. In his speech prior to the Summit, the Prime Minister
reminded us that:
"to stop further damage from climate change,
and to stabilise the global climate system, in fact we need a
60% reduction [of emissions] worldwide."
1.6 This will not be possible to achieve
unless this objective is given priority in the post-Summit energy
agenda. Already Trade and Industry Secretary Patricia Hewitt,
in a recent speech to the Greenpeace Business Conference, signalled
her commitment to turn this world-wide call into a firm programme
for action for the UK.
1.7 The Prime Minister went on to highlight
the inevitability of tightening obligations under the Kyoto Protocol
when he stated:
"The agreements that we have on climate
change, through Kyoto, are not radical enough."
1.8 In anticipation of a second round of
steeper international reductions under the Protocol from 2012,
it will be critical to set emissions on a measurable downward
trend within a decade, through a goal orientated policy for the
delivery of sustainable energy.
1.9 Despite some criticism of the overall
result of the Summit, particularly its lack of specific targets
and timetables for action on sustainable energy, the worst possible
outcome for the WSSD is if it becomes a point in time which makes
no appreciable difference to the national debate in the UK. This
could only occur if the political intent of agreements made by
the Prime Minister and UK delegation are ignored in the forthcoming
Energy White Paper process. The challenge is to pick up the international
themes of Johannesburg, and implement those fully in domestic
policy.
1.10 The Council's submission to the Committee
is therefore particularly relevant in the context of the following
themes:
— how the commitments made at the summit
could/should reshape existing UK policies/strategies or act as
the catalyst for new initiatives; and
— how far the Government has maintained
stakeholder dialogue post-Johannesburg to inform its implementation
of Summit commitments.
1.11 The Council looks forward to any further
assistance it can give the Committee during the course of this
inquiry.
2. WSSD KEY OUTCOMES
AND THE
IMPLICATIONS FOR
UK POLICY
International context
2.1 The energy outcomes of Johannesburg
reflect international attempts to tackle energy from the perspective
of both poverty alleviation[3]
and environmental protection, specifically the need to tackle
climate change.
2.2 Three months ahead of the Summit, the
United Nations Secretary General, Kofi Annan, outlined that the
core energy agenda was to:
"Provide access to more than two billion
people who lack modern energy services; promote renewable energy;
reduce over-consumption; and ratify the Kyoto Protocol to address
climate change".[4]
2.3 The main output from the Summit—the
Johannesburg "Plan of Implementation"—was designed
to set a detailed action plan to inject impetus into the sustainable
development blueprint, "Agenda 21", agreed at the Rio
Earth Summit a decade previously. Energy was not specifically
on the international agenda in Rio, yet it was one of the most
intensively discussed, controversial, topics in Johannesburg,
indicative of the powerful, strategic interests involved.
2.4 Many business groups[5],
NGOs and governments[6]
supported a target-setting approach for sustainable energy, specifically
for increasing the share of renewable energy in the energy mix
globally. The review and subsequent phase-out of environmentally
damaging subsidies, and the formation of a new poverty-reducing
international plan for access to energy, were also widely supported
despite not finally making it through the UN system.
2.5 While justifiably criticised for failing
to agree specific or new goals in these areas, the effectiveness
of the final Plan of Implementation can only be judged, in the
end, on how seriously and ambitiously it is implemented at home.
Hence the vital role of the forthcoming UK Energy Policy White
Paper.
2.6 In addition to the Johannesburg Plan,
a series of "partnerships" (or "Type 2") agreements
were registered. These are voluntary, self designed, initiatives
involving configurations of government, private sector, civil
society and UN actors, and the most pertinent to the UK are outlined
briefly, below. The UK government registered a "Renewable
Energy and Energy Efficiency Partnership" (REEEP) to promote
international uptake of these technologies.
2.7 The Prime Minister's commitment to going
beyond Kyoto and the recognition of the need for substantial cuts
in CO2 emissions, together with Mrs Beckett's restatement of the
Government's policy to:
"reduce, by 2010, emissions of greenhouse
gases by up to 23% over 1990 levels, and to stimulate development
and investment in renewable energy, low carbon technologies and
other innovative mechanisms,"[7]
are positive signs that Johannesburg has raised
the level of the UK's ambition for sustainable energy.
3. JOHANNESBURG
AGREEMENTS[8]
3.1 The Johannesburg Plan results on energy
came in two main headings: Poverty Alleviation, and Sustainable
Production and Consumption.
3.2 Many of the subparagraphs repeat UN
language from previous agreements. However the issues on the agenda
which were most controversial—the renewable energy target,
energy subsidy review and new actions for energy access for poverty
alleviation—are key elements of the shift to a sustainable
energy future, and as such are the main focus of this briefing,
along with other statements relevant to the UK energy white paper
process.
3.3 For political credibility, it is important
to demonstrate the UK is prepared and able to implement the full
political intent of what was finally agreed in these areas.
RENEWABLE ENERGY
3.4 "With a sense of urgency, substantially
increase the global share of renewable energy sources, with the
objective of increasing its contribution to total energy supply,"
[19(e)]
3.5 "Establish domestic programmes
for energy efficiency, including, as appropriate, by accelerating
the deployment of energy efficiency technologies, with the necessary
support of the international community;" [19(j)]
3.6 This establishes a clear mandate to
the UK energy review process:
— to set new national sustainable energy
targets to ensure the rapid additional development of renewables
and energy efficiency technologies post 2010; and
— to establish new instruments to accelerate
the uptake of end-use efficiency technologies and energy efficiency
technologies.
3.7 A strengthened set of sustainable energy
targets, together with the policy measures to secure their implementation,
should be set within a clear objective of achieving long term
carbon reductions—as envisaged in the Prime Minister's speech
at the Summit reiterating the need for a 60% reduction worldwide.
3.8 In the shorter term ensuring an effective
policy framework for increasing renewable energy and energy efficiency
will be essential to reverse the rising emissions trajectory from
the electricity sector. Nearly 30% of the rise in national CO2
emissions since 2000 have come from the power sector[9].
As such, it is vital to reset regulatory and market mechanisms
specifically in order to both meet the government's national climate
change policy, and to prepare for the more "radical"
Kyoto Protocol second commitment period, as envisaged in the Prime
Minister's speech.
3.9 At present the multiple objectives for
the energy sector do not provide a sufficiently clear signal on
the priority of reducing emissions.
SUBSIDY PHASE-OUT,
NEED FOR
POLICY CONSISTENCY
3.10 "Policies to reduce market distortions
would promote energy systems compatible with sustainable development
through the use of improved market signals and by removing market
distortions, including restructuring taxation and phasing out
harmful subsidies." [19 (p)]
3.11 "Take action, where appropriate,
to phase out subsidies in the areas that inhibit sustainable development,
taking fully into account the specific conditions . . . considering
their adverse effect particularly on developing countries."
[19(q)]
3.12 While it was the second of these paragraphs
that engendered controversy over the matter of a deadline for
subsidy review and phase out, the preceding paragraph sets the
specific matter of subsidies in the context of a wider effort
to reduce market "distortions". The UK and EU, at the
Summit, supported timeframes for review and the need to phase
out environmentally harmful subsidies.
3.13 THERE ARE
TWO ISSUES
INHERENT IN
THESE DECISIONS:
3.14 Firstly, ensuring that different elements
of energy markets and energy policy are consistent and mutually
reinforcing in their promotion of sustainable energy.
This underlines the need to:
— adopt a clear overriding objective
to ensure all policies accelerate the transition, within the energy
sector, to a lower carbon high efficiency economy and significant
reductions in greenhouse gas emissions;
— set a timeframe for the identification
and removal of all market or regulatory barriers to the uptake
of sustainable energy nationally, including subsidies; and
— secure within the EU, an overall
review and plan for the removal of subsidies to environmentally
damaging fuel sources, and other regional market or regulatory
barriers to sustainable energy uptake, consistent with the UK
and EU positions in Johannesburg.
3.15 Direct and indirect subsidies of particular
energy forms, such as fossil fuels and nuclear energy, continue
to distort the market in favour of those sources, thereby undermining
the effectiveness of sustainable energy and greenhouse gas reduction
policies and markets. One of the barriers to removal of these
subsidies is the absence of clearly defined, consistent reporting.
3.16 Secondly, the final part of 19 (q)
above ". . . considering their adverse effect particularly
on developing countries" embodies the theme that energy policies
implemented in industrialised countries should not compromise
the ability of developing countries to achieve sustainable development.
ENERGY FOR
POVERTY ALLEVIATION
3.17 This is clearly a complex area, particularly
when seeking to participate in solutions to meeting the energy
needs of the poorest communities, or when assessing cost effective
options for energy related projects that simultaneously reduce
local health and pollution costs. There are some areas, however,
which most obviously require attention in the UK.
3.18 An important task is now to ensure
national policy goals to shift to a low carbon future are reflected,
in an appropriate way, in UK supported activities in developing
countries.
3.19 The Prime Minister's announcement at
the Summit that £50 million per year would be made available
through the Export Credit Guarantee Department (ECGD) for supporting
renewable energy exports is a very welcome first step in this
direction.
3.20 However, it would seem a more thorough
approach is required given that over £1 billion has been
channelled, by ECGD, into coal-fired power station projects since
1997[10].
Such carbon intensive investments overseas, which are inconsistent
with the shift to a low carbon economy, should be reviewed, and
energy or industrial project proposals be audited to maximise
efficiency and low or zero carbon alternatives where possible.
3.21 The G8 Renewable Energy Taskforce identifies
options for ECAs including establishing minimum standards of energy-efficiency
or carbon-intensity for projects.[11]
3.22 Further, the targets adopted domestically
to foster sustainable energy technologies should logically extend
to international energy-related activities.
3.23 As such the government should:
— initiate a cross departmental review
of activities relating to energy activities overseas, including
export credit agencies and other institutions, to ensure their
activities reflect and go beyond domestic sustainable energy targets
and policies; and
— support mechanisms that ensure UK
institutions are able to foster smaller scale renewable energy
and energy efficiency technologies and services for overseas markets.
3.24 In addition, the Johannesburg Plan
agreed to:
3.25 "Take joint actions and improve
effort to work together at all levels to improve access to reliable
and affordable energy services for sustainable development sufficient
to facilitate the achievement of the Millennium Development Goals,
including the goal of halving the proportion of people in poverty
by 2015." [8]
3.26 "Accelerate the development, dissemination
and deployment of affordable and cleaner energy efficiency and
energy conservation technologies, as well as the transfer of such
technologies, in particular to developing countries, on favourable
terms, including on concessional and preferential terms, as mutually
agreed;" [19(i)]
3.27 The G8 Renewable Energy Task Force
Report, July 2001, provided an international blueprint for provision
of renewable energy to one billion people, mainly in developing
countries, within a decade.
3.28 Importantly it linked the provision
of affordable renewable energy to the poorest communities with
the need to accelerate market expansion in industrialised countries
in order to cut sustainable energy technologies costs globally[12].
The Task Force recommendations command strong UK Ministerial support[13],
but have lacked a coherent implementation plan domestically. As
part of an international approach to UK's energy policy review,
it should:
— Reinvigorate implementation of the
G8 Renewable Energy Task Force recommendations establishing a
timetable and a specific set of actions. This should include the
review of international energy activities of the Export Credit
Guarantee Department and other institutions, as above.
3.29 The importance of tackling energy and
poverty was reinforced recently when the then Minister of State
at the Foreign and Commonwealth Office, Peter Hain, stressed the
importance of renewable energy provision in Africa, for example,
as part of a global energy security agenda[14].
The Department for International Development (DfID) also did substantive
work in preparation for the Johannesburg Summit on the importance
of energy for the poor, and specifically raising matters about
the need to attract capital and innovative financing[15].
4. PARTNERSHIPS
4.1 Partnerships are essentially voluntary
schemes, registered with the UN, to initiate activities which
will further implement or go beyond the Johannesburg Plan[16].
The intention is that they involve different sectors and "partners"
including government, civil society, business groups.
4.2 These partnerships demonstrate a consolidation
of international support for renewable/sustainable energy, partly
in response to the failure to reach formal agreement on the renewable
energy target.
4.3 The challenge is to ensure that these
partnerships evolve into a well-co-ordinated and efficient way
to facilitate regional and multilateral action that will reinforce
and build on domestic leadership.
4.4 Two key initiatives directly concerning
the UK are:
An EU-forged "Joint Declaration" by
a so-called "coalition of like minded countries" at
the Summit's final session. The countries "intend to go beyond
the agreement reached in the area of renewable energy"[17],
and further states that this group will "work together to
substantially increase the global share of renewable energy sources,
with regular review of progress, on the basis of clear and ambitious
timebound targets set at the national, regional and hopefully
at the global level."
The EU further launched a Partnership on "Energy
for Poverty Alleviation and Sustainable Development"—designed
to further efforts to improve energy services for the "energy
poor" in developing countries, principally through bilateral
arrangements integrating sustainable energy factors into existing
national poverty reduction strategies.
A UK Partnership, launched by the Secretary
of State, Margaret Beckett, to promote Renewable Energy and Energy
Efficiency (REEEP) at the Summit[18].
The main objective of which is "To accelerate global market
growth and deployment of renewable energy and energy efficiency
systems (REES) in pursuit of national environmental, economic,
social and security objectives."
This is supported by governments including Brazil,
Italy, Mexico, Morocco, New Zealand; other partners include WWF,
Shell, UK Business Council for Sustainable Energy, IT Power, ITDG
and others. The initiative is still under development and the
intention is that activities fitting within this framework will
be active by mid-2003.
4.5 The UKBCSE supports these and other
energy related partnerships and looks forward to a defined set
of action points and political agreements for taking these further.
Expanding on the statement the Council and its sister organisations
made at the summit, the Council would expect efforts to be focused
on market development for sustainable energy technologies.
For a summary list of other energy-related partnerships
see Annex G.[19]
5. CONCLUSION
5.1 At the Summit the Prime Minister was
at pains to lay out the full significance of the Earth Summit
in Rio de Janeiro a decade previously. He stated:
5.2 "Without Rio the issue of climate
change would never have made it centre stage. Without Kyoto, although
we were deeply committed as a country and a government to tackling
climate change, without Kyoto and without the binding targets
Britain would not have adopted a climate change levy, introduced
the world's first economy-wide national greenhouse gas emissions
trading systems; reformed the company car taxation system to a
new green based system; and invested over £200 million in
combating fuel poverty and improving energy efficiency."
5.3 The Johannesburg Summit is focused on
the challenge of implementation, and as such should produce an
equally determined set of additional policies and new approaches.
The opportunity in front of us is to ensure the Energy White Paper
process is fully utilised to achieve such a new round of policies
leading to a fully coherent and consistent approach for the much
enhanced delivery of sustainable energy.
5.4 UK Ministers have been centre stage
in the international negotiation. The forthcoming Energy White
Paper is the domestic opportunity to turn the carefully crafted
words of international negotiations into practical reality in
the UK.
December 2002
The views expressed in this paper cannot
be taken to represent the views of all parts of all the companies
in the UK BCSE. However, they do reflect a general consensus.
2 See Annex A. Back
3
The poverty alleviation agenda was led by a UN "Millennium
Development Goal" to halve the number of people living on
less than $1 per day by 2015. Back
4
14 May 2002, speech by Kofi Annan at the American Museum of Natural
History, New York. Back
5
See Annex B: business organisations supporting specific
renewable energy targets globally include: UK Business Council
for Sustainable Energy, together with US, EU and Australian sister
organisations, the Canadian Environmental Industries Association
and the Brazilian Business Council for Sustainable Development. Back
6
Countries supporting the EU-led "coalition of the likeminded
countries" supporting a target driven approach for renewable
energy uptake included many Eastern European countries, Iceland,
Norway, Switzerland, Turkey, Argentina, Brazil, Croatia, Chile,
Egypt, Uganda and the Alliance of Small Island States. Back
7
Speech on WSSD by Margaret Beckett, at SERA conference, 17 July
2002. Back
8
See Annex C: full final text of the Johannesburg Plan
of Implementation on the key controversial items in the energy
area. Back
9
"UK's new electricity market drivers up CO2 emissions"
Reuters July 15, 2002, quoting two separate independent power
sector analysts. Back
10
Parliamentary question from Lord Williams of Elvel, answered
by Lord Sainsbury of Turville on 7 November 2002. Back
11
The G8 Renewable Energy Task Force report, recommendation "C3"
states: "The G8 should extend so called "sector arrangements"
for other energy lending to renewables and develop and implement
common environmental guidelines among the G8 Export Credit Agencies
(ECAs). This could include: identifying criteria to assess environmental
impacts of ECA-financed projects, and establishing minimum standards
of energy-efficiency or carbon-intensity for these projects; developing
a common reporting methodology for ECAs to permit assessment of
their local and global environmental impacts." Back
12
See Annex D: short summary of G8 Renewable Energy Taskforce
recommendations, July 2001, co-authored by Sir Mark Moody-Stuart
and Dr Corrado Clini. It found that it is feasible to provide
one billion people with renewable energy within a decade-given
an international policy and financing framework. Back
13
eg press release from Energy Minister Brian Wilson, 2 May 2002
"Wilson tells G8: energy has crucial role in world poverty
battle". Back
14
Peter Hain, "Enhancing Energy Security", 17 October
2002. Back
15
"Energy for the Poor, Underpinning the Millennium Development
Goals", Department for International Development, August
2002. Back
16
See www.johannesburgsummit.org for a summary of all the
partnerships registered before the Summit. Back
17
See Annex E for the full text of the EU Coalition of like minded
countries. The list of countries supporting this initiative includes
many Eastern European countries, Iceland, Norway, New Zealand,
Switzerland, Turkey, the Alliance of Small Island States, in addition
the EU Commission noted that Argentina, Brazil, Croatia, Chile,
Egypt and Uganda had supported the initiative in their final remarks
at the Summit. Back
18
See Annex F for the full text of the UK's REEEP. Back
19
Energy Partnerships From Official WSSD Documentation (A/CONF.199/CRP.5) Back
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