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
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
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 winnersthat would be an
over-statementtrying 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
Q171 Mr Chaytor: Are there any inconsistencies
in policy which you have identified because this does imply that
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 researchagain
this corresponds with the answer I gave earlier on a different
questionwe need to be looking at research and development
across the whole board, including fiscal policy, to drive the
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.
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