Select Committee on Environmental Audit Minutes of Evidence

Examination of Witnesses (Questions 160-175)

30 MARCH 2004


  Q160 Chairman: You actually believe that it will be necessary to invest in new generation nuclear plants?

  Professor Sir David King: You are trying to press me to say something I do not wish to say.

  Q161 Chairman: I am trying to press you to get clarity.

  Professor Sir David King: I am now in fear of repeating myself and I take pride in my clarity, Chairman. I am saying that at this point in time it is right to focus attention on energy efficiency gains and on renewables. Therefore I think it is counter-productive for us to dwell on this discussion for the very reason you gave, we need to give confidence to the renewables industry, in fact it has been stretched out in terms of wind power to 2015. I do not know if Claire would like to say something on that, precisely for that reason.

  Ms Durkin: It is a renewables obligation. If I can pick up on the investment point, unless the Government can give a very coherent, very strong and very simple message that they are confident in the development of the renewables market we will not get the investment that is necessary for these very challenging targets. The renewables obligation would appear so far to have had a very big impact on that. There has been more activity in wind this year than there has been in the last ten. It would appear from the industries that are already in the market place, Centrica and Powergen, and the small innovative industries, particularly in wave and tidal, that industry does see there is sufficient encouragement from government to make sense of the renewable market. We did put the renewables obligation commitment up to 2015 in December just so that offshore wind would have the confidence that they would have their pay back by 2012. It was a signal from Government that was very well taken. Thus city and banks are talking to us far more enthusiastically than they were a year ago and I am very pleased to say that big investors from the States and big companies, such as GE, are talking to us very enthusiastically about the renewables market in the United Kingdom. Currently the signals for financial incentives are such that we are confident that we can reach the targets in renewable generation. I think Sir David is right in terms of looking beyond sequestration. The White Paper did a number of scenarios up to 2050, some of them included nuclear, some included carbon capture and storage, which was mentioned earlier. We do not want to shut off any of those options for 2050 and beyond. I am comfortable for 2010 and 2020 we have mechanisms in place that mean that we can reach those targets, but they are very challenging

  Chairman: Thank you.

  Q162 Mr Chaytor: Without prolonging this point can I ask one specific question? I think the essence of the Chairman's line of questioning is that we know that the White Paper set out a series of alternative scenarios, Sir David in your Zuckerman lecture when you described the reduction in the share of electricity output from nuclear going down from 27% to 7% you then go on to say, "The alternative scenario is to build a new generation nuclear power station". Is there not a significant shift from the White Paper's position for a number of alternative scenarios to your assumption here that there is only one alternative? In the lecture you do not seem to mention energy efficiency at all.

  Professor Sir David King: The Zuckerman lecture is a few years old and it certainly pre-dated the White Paper.

  Q163 Mr Chaytor: You subsequently made a statement after the White Paper.

  Professor Sir David King: I believe the Zuckerman lecture had quite an influence on the White Paper, in particular setting that target for CO2 reduction. My own position has moved to what I have just stated in response to the Chairman's question. I do think it is critically important that we push renewables and energy efficiency gains as hard as we can but I equally think we must keep the nuclear option open.

  Q164 Mr Chaytor: Okay. Are you saying your own position has shifted over the years?

  Professor Sir David King: Yes.

  Q165 Mr Chaytor: You seem to imply you are more interested in the renewable and energy efficiency option or is it the capacity to deliver?

  Professor Sir David King: I understand much more clearly than I did then the economic imperative of getting the renewable development moving and the energy efficiency moving by taking the pedal off the nuclear alternative.

  Q166 Mr Chaytor: The conversion gradually along the road to Damascus, if not a particular point on the road to Damascus.

  Professor Sir David King: I believe I can respond to evidence when presented to me.

  Q167 Mr Chaytor: Have the events of 9/11 had any influence on your thinking, the implication being that those aircraft could have flown in to a nuclear power station, has that affected your thinking?

  Professor Sir David King: Yes, it has. I have been involved in giving advice to the Government on vulnerabilities.

  Q168 Mr Chaytor: Thank you. Can I bring us back to the question of the advisory structures that we have to drive forward energy policy and climate change policy, you referred in your Science article to a team that you established that would report early in 2004. I cannot recall whether in your answer to Colin Challen you said if this team has reported yet?

  Professor Sir David King: Can you read that out to remind me?

  Q169 Mr Chaytor: "I have commissioned a new team to consider ways the United Kingdom can attempt to mitigate this threat and they are due to report early in 2004". My question is, who is the team and have they reported? If so, what have they said and how does that relate to the DTI Renewable Innovation Review or is it the same?

  Professor Sir David King: Are we not talking about the flood and coastal defences team? Yes, sorry, you came at me from left field, I am with you, the threat we are talking about here is from increased flooding and increased coastal attack over the next 80 years. The team is a Foresight team and we have completed that work. I will be reporting to the Prime Minister on that in the coming months and it ought to be published on April 22. I apologise for that.

  Q170 Mr Chaytor: It may be my confusion in quoting selectively. In addition to the forthcoming report on the impact of coastal erosion we had the report from the DTI Renewable Innovation Review recently which identified the issue of incentives and funding gaps. I am also looking at a quote here which refers to the need for consistency in the policy as well as strategic spending, and my question is, where are the most obvious current inconsistencies in policy? In respect of strategic spending what kind of bids are being submitted to this year's Spending Review? What is the balance between research on fusion and research on energy efficiency and research on renewables?

  Ms Durkin: The Renewable Innovation Report was mine so I will answer that. What was very useful in the research was looking back over the last ten years. There had been a tendency to try and pick winners—that would be an over-statement—trying to pick likely contenders in the renewables world. With the renewables obligation we stepped back and hoped that the market could develop most economically and effectively. The Report showed quite clearly that as well as the obligation we would need research and development and that research and development needed to be more strategic. Interestingly it also showed that the biggest impact that the Government would make would be in policy, it would be in fixing the grid, in helping in terms of planning and in the classic DTI way in terms of business relations and making connections with businesses nationally and internationally and speaking consistently in policy terms. We have taken that forward and indeed in my patch we have realigned our activities so that we are concentrating more on where we can make the greatest impact.

  Q171 Mr Chaytor: Are there any inconsistencies in policy which you have identified because this does imply that there are?

  Ms Durkin: There are weaknesses. If one looks at the development of biomass, Defra has been developing work in terms of the farming community, we have been developing work in terms of generators and yet we were not making the connections that were needed nor were we making the connections regionally that we ought to. For the development of biomass we still have a long way to go and I think we need to tackle it in a different way and we need to tackle it regionally. That is a good example of what came out. What also came out was that we were treating similarly energies that are going to have a very different impact, for instance photovoltaics are not going to have a significant impact on the electricity supply, certainly in 2010 and probably 2020. They are of a different order to such as marine and wind and they ought to be treated differently. The review challenged us in our thinking and challenged us to treat the differently technologies more appropriately and to think outside the box of just R&D. I cannot possibly comment on the Spending Round.

  Q172 Mr Chaytor: Without commenting on the Spending Round what do you feel should be a prioritisation in future research and development given that in the Chancellor's Budget two or three weeks ago he focused on science as one of his key themes in the budget?

  Ms Durkin: We have used the Innovation Review that was referred to as the basis of our discussion with Treasury and I do think it points to in certain directions where we might put emphasis. I was very pleased to hear that was the Government was committed to science and innovation. There is nothing in that report that is not fundamentally science and innovation. I happen to think it is science and innovation in a fairly economically fundamental area because without energy innovation we are not going to have a particularly strong economy in any terms. I think that the Report has indicated in our discussions with Treasury that we need to have certain support beyond relying on the renewable obligations for the whole array of renewable technologies: but they need to be timed. The Report showed that onshore wind is economically viable now, offshore wind ought to be reducing costs dramatically by 2010, marine is still very much in the demonstration phase and we may need considerably more government support in three to five years' time than we do now. I think in both amount of support and timing, we were influenced by the review.

  Professor Sir David King: Can I just add one comment, in terms of our preparation for the Spending Review 2004 in this area my High Level Energy Group is involved in pulling together all government departments on this issue. We do have a cross departmental approach to the Spending Review Round in terms of energy R&D, and that is quite a big breakthrough.

  Q173 Mr Chaytor: Can I ask generally about the DTI approach to the climate change problem which sees market solutions combining with research in new technologies as the chief means of dealing with the threat of climate change, are you both still convinced that the market alone with a modest amount of Government intervention can deliver the solutions we are searching for? What is the role of fiscal measures in alleviating the threat of climate change and in changing human behaviour?

  Ms Durkin: From the energy industries I would observe that it is not a question of the market alone in any sense: it is a fairly regulated market. All the influence that Ofgem has in terms of how the market develops will make a difference and Government policy makes a big difference. So it is not a laissez faire approach to the market. In terms of the market responding to the challenges set by the Ofgem structures and Government policy I have been very surprised in the last two years at just how rapidly the market has been able to respond and with what enthusiasm it has responded. I think currently as long as we get the policies right and get the incentives right I am confident that the market response in the energy field will be positive in the next 10 to 15 years.

  Professor Sir David King: I have always argued that in terms of our energy research—again this corresponds with the answer I gave earlier on a different question—we need to be looking at research and development across the whole board, including fiscal policy, to drive the right behaviour.

  Q174 Mr Chaytor: Have we got the right fiscal framework now or does that need further refinement?

  Professor Sir David King: I think that when I say we need more research in that area the implication is that we can always do better. Yes, I think it could yet be improved. We have to see, for example, when Carbon Trading comes on board in Europe how that impacts on our own development.

  Q175 Chairman: Thank you very much indeed, Sir David, indeed both of you, this has been a fascinating session. We may have a few more questions, if we may we will put them in writing to you.[2] Thank you very much it has been fascinating, as ever, with these issues. It seems that the problem, indeed possible catastrophic problems have been identified and the solutions are painfully slow in coming forward, it is not entirely reassuring but it has been very interesting.

  Professor Sir David King: Chairman, thank you. I hope that your comments do not mean that you have not taken on board that Britain is taking the world leading position on this issue.

2   Please see memorandum below, Ev 37


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