Examination of Witnesses (Questions 208
- 219)
WEDNESDAY 19 JANUARY 2005
SIR JOHN
HOUGHTON, DR
ANDREW DLUGOLECKI
AND MS
CHRISTINA HUTCHINS
Q208 Chairman: May
I apologise to everybody in the room for the delay in the start.
I am afraid our Committee domestic business overran, for which
I apologise. We welcome as our first witnesses this afternoon
Our World Foundation and may I thank you for sending in your written
evidence. We welcome Sir John Houghton, the former co-chairman
of the Working Group 1 for the United Nations Intergovernmental
Panel on Climate Change and the former chief executive of the
UK Met Office. I now know who to blame for my weather forecast,
or I used to anyway. Mr Andrew Dlugolecki, the review editor of
the Insurance and Financial Services Chapter of the IPCC Third
Assessment Report and a board member of the Carbon Disclosure
Project, the Tyndall Centre for Climate Change Research and advisor
on climate change to the UNEP Finance Initiative. It is almost
a pocket c.v., your responsibilities. Anyway, you are very welcome,
and Christina Hutchins, the director or Our World Foundation,
who has a wonderfully brief title! As you know, the inquiry which
the Committee has before it is to take stock of where we are with
reference to Kyoto and the targets that we set. Can I ask you
a very straightforward couple of questions. Why is it, in your
view, that the policies which the Government have put forward
effectively are not delivering what they hoped for in terms of
the UK target for CO2 reductions and what principally
do you think the Government should do to recover the position?
Sir John Houghton: Thank you.
That is a good question. We are very disappointed. I think everybody
is very disappointed at the way the renewables energy targets,
for instance, are not going to be met until 2010. Now, the reasons
for that may be many but we notice that other countries, in particular
Germany, have done very much better on renewables than the UK.
Their building of wind sources of energy have been very much greater
than ours by a factor of five or six already. The growth of solar
pv energy in Germany is enormously greater than anything in this
country and they have incentive schemes and mechanisms which seem
to be working very much better than ours, and we would like to
say a little more about that in a minute, I think. We need to
begin to put our house in order and to become more determined,
I think, that what we do is going to actually be delivered rather
than allow forces which would tend to operate against more renewables
taking their place. I think I will ask Andrew to add to that.
Dr Dlugolecki: One practical example
of that is in the electricity industry, which I am sure you must
be familiar with, but just very briefly we have conflicting policies.
One is saying the Renewables Obligation to generate more renewable
electricity and the other one is saying produce electricity as
cheaply as possible. My background is from the finance industry
and now the finance industry is very unwilling to touch renewable
energy because what has happened is that those conflicting policies
have driven some of the green suppliers bankrupt, which means
that now the banks own the power stations, which they never wanted
to do, and nobody is going to build new power stations when the
guiding rule is that you must have electricity as cheaply as possible.
That is unfair when renewable technology is still evolving and
therefore cannot compete at this point in time only on price.
The time will come when it will be able to, but it cannot do it
yet.
Ms Hutchins: The House of Lords
Select Committee on Science and Technology recently said that
the Renewables Obligation tended to act as a cap rather than stimulating
the market and they suggested rolling targets and capital grants.
Also, we are suggesting that perhaps the UK could consider the
German REFIT scheme with a renewable energy feed in tariff, which
basically guarantees renewable energy producers access to the
grid for a fixed price for a fixed term, which is a great stimulus,
and it actually costs less than the Renewables Obligation. Also,
we would suggest that perhaps REFIT could be adopted for community
scale projects and this need not be marginal. For example, in
Denmark 80% of the wind projects are community owned. Other suggestions
that we would like to make to stimulate the UK market would be
the creation of a significant climate change renewable energy
budget to supply significant capital grant cost for the building
of large-scale renewable plant, such as tidal lagoons, should
be reconsidered. Also, as Sir John said, we need to learn from
countries which expand renewables, produce clear policies to bring
renewables more in line. We also need to stimulate the consumer
market through a high profile climate change communications programme.
Just like any other product would be marketed, so too we need
to stimulate support for renewable energy as well as energy efficiency
technologies. In turn, obviously consumer support will build confidence
in the investment sector. Finally, we would also like to suggest
that perhaps in the UK what we could do, which would also help
our targets, is to provide support and grants to help consumers
adopt domestic scale micro CHP. Basically, at the moment 1.3 million
people buy boilers every year and therefore if they could be encouraged
to buy micro CHP within less than 10 years that would generate
sufficient capacity to take over from the existing nuclear power
stations if you take into account the emission losses through
transmission.
Chairman: Right. Thank you for that helpful
start.
Q209 Paddy Tipping: It is interesting
that you have started by discussing the UK policies and the real
engines for economic growth at the moment are China and India.
If you look at the population growth, it is going to come from
the developing world. Global warming requires a global solution.
In the developing world how big an issue is it? What priority
does climate change get?
Sir John Houghton: Can I comment
on that? I think it is a global issue and it demands global solutions,
you are absolutely right. But those global solutions are made
up of individual countries doing what they need to do and what
is absolutely clear is that we cannot expect China, India and
countries of that kind to take very big steps.
Q210 Paddy Tipping: I take that as
a given. That is a given, we all agree on that. Let us just talk
about what we are going to do elsewhere. What political policy
priority has global warming got, let us say, in China? That is
where some real growth is taking place.
Sir John Houghton: Well, if we
are talking about China, I know China reasonably well. They are
in fact very concerned about climate change. They know about floods,
they know about droughts, they know about storms, they know the
sorts of things that will happen and they are trying to become
very efficient in their energy. During the 1990s they actually
cut their CO2 emissions. They are going up now quite
considerably, but they actually cut them in the 1990s though efficiency
means. They want to do that. They are a big country, they want
to industrialise and they are going to do that whatever. We have
got to help them do it, of course, in ways which are sustainable.
We have got to help them with renewable energy schemes, with efficiency
schemes, all sorts of things. China are well on board as far as
the ideas are concerned, but China in the political arena will
not move until the US moves and that is the major issue as far
as China is concerned. If I can return to the UK scene and what
we are not doing—
Q211 Paddy Tipping: No, I do not
want to talk about the UK. We will have plenty of time to talk
about the UK.
Ms Hutchins: I would say that
obviously it is true that in China perhaps they are more conscious
than in other parts of the developing world. In many parts of
the developing world people are just trying often to survive.
At the moment there is a great push, which is fantastic, for the
alleviation of poverty. We have Gordon Brown trying to raise £100
billion per annum. We have the new report by the United Nations
trying to increase their budgets from 20 billion up to 135
billion per year and up to 195 billion by 2015. The point is that
a lot of people in the developing world are not conscious of global
warming and yet they are going to be directly affected and they
are already in the front line. There are 183 million extra people
being affected by disasters already. Some of that is climate change.
What we need to do is to obviously increase awareness in those
countries amongst the people, the companies and the governments
that climate change will radically undermine those countries unless
they take on board mitigation policies. Also, what we need to
do is to link the alleviation of poverty to what we were suggesting
linking it to, debt for climate change/renewable energy plans.
Basically, at the moment we are talking about writing off 100%
of the debt, but that money will be applied to health, education
and welfare. What we should be looking to do with the Treasury,
the EU and the G8 and UNFCCC is also suggesting that that previous
debt funding is also applied to the expansion of renewables in
those countries because that will help not only those countries
and also the global community but also it would help their economic
prosperity. As we know, too many people do not even have power.
So we are suggesting that.
Dr Dlugolecki: During a little
bit in my career I was responsible for developing countries in
my old company so I have visited them on business rather than
just climate change. You are right when you infer that they do
not see climate change as the big issue, it is development. I
have been to almost all the COPs[1]
as well, so again I meet people there. The key thing is how to
give them some incentive to want to see climate change as an issue
which will reward them as well. At the moment under the Kyoto
Protocol we have gone along a rather legalistic bureaucratic route
with the CDM, for example, almost on the basis that nobody should
make money out of climate change and we are going to make the
mechanisms as hard as possible to do it. If you take an alternative
model like Contraction and Convergence, which you might have heard
of, I think one of the great benefits or bonuses in that is that
it creates emissions rights for developing countries which are
greater than their current consumption of fossil fuels, much like
Russia has signed up to, and that is the reason why Russia has
signed up to Kyoto. By doing similar things for developing countries
you then give them an incentive to participate in the whole process
of fighting climate change. At the moment the developing countries
are very suspicious that there is a plot to stop them developing
and we need to get around that by letting them see that there
is a way for them to make money and develop sustainably.
Ms Hutchins: Could I just make
two final points. At the moment there is this big push to alleviate
poverty. Climate change will ultimately completely counter the
efforts which are being made to alleviate poverty. They will be
pouring money into a bottomless pit unless we mitigate climate
change.[2]
The second point is that if we are talking about raising $135
billion per annum, rising to $195 billion per annum by 2015, what
we need to be doing is approaching climate change with that kind
of financial clout, ie as we are suggesting, a global climate
change renewable energy plan which is significantly deploying
renewables internationally with that kind of money.
Paddy Tipping: That is helpful, thank
you.
Q212 Chairman: Just a point on that.
We seem to load into what we expect people to do to relieve their
debt lots of things and you have now loaded another requirement
on to the less developed world to achieve. In other words, they
have got a shopping list and they have got to tick the boxes before
debt is cancelled. Given, for example, removal of corruption might
be an absolute key to getting any improvement in a less developed
country, how are you going to rank all of these extra things you
are asking countries to do to get themselves relieved of debt?
Ms Hutchins: We were suggesting
at first instance, before the recent push has come, for the alleviation
of debt being tied in to those monies being completely applied
to health, education and welfare. Initially we were not suggesting
that the alleviation of debt finance would go into renewables
but that one would look at each country on a specific basis, one
would assess their renewable sources, see what funding (if any)
they could apply to the expansion of renewables and that that
money should be levered with developed countries either on a one
to one, five to one, 10 to one basis and if the country was so
impoverished they did not have to apply any monies but they made
a commitment to work with developed countries to expand renewables.
It is only since the global push to alleviate poverty is tying
in all that money to health, education and welfare that it would
seem futile if one did not include climate change mitigation,
the expansion of renewables, into that mix because, as I have
just said, if they do not mitigate climate change they will become
increasingly undermined through human suffering as well as economic
disbenefit.
Q213 Patrick Hall: If I could ask
Ms Hutchins, with regard to the evidence submitted to this Committee,
the paper on a global climate change renewable energy plan, one
of the elements of that is the proposal that Government should
instigate debt for climate change/renewable energy plan swaps.
How would that work?
Ms Hutchins: What we were suggesting
is that at the moment, as I say, Gordon Brown is leading on the
alleviation of debt, so basically number one is that climate change
and the expansion of renewables need to be introduced significantly
to the Treasury so he can take it forward, also through the EU
and the G8 presidencies and through the Kyoto, UNFCCC process.
Basically, how that could work on a practical level. Number one,
the key principle, will be the alleviation of debt, as I have
just said, and that each country should be considered individually.
Secondly, that the country commits to working with developed nations
to progress a realistic schedule of deployment and that realistic
targets are set for each country. Then we move on to the funding
and obviously, as I said a moment ago, if the debt at the moment
is being earmarked for health, education and welfare then climate
change and the expansion of renewables need to be put into that.
That then could receive leverage from developed countries through
the GEF and otherwise either on a one to one, five to one or 10
to one basis. Also, we need to increase awareness in these countries
of how climate change will radically undermine the peoples and
the nations because that can create a ripple effect for future
policy. As I mentioned a moment ago, economically it can only
help to benefit the countries and they need to be made aware of
that because not only do these countries need energy in order
to grow economically but also countries such as North Africa have
great resources in the Sahara for wind and solar thermal which
they could, given support, help to export and that would help
them financially as well. The final point is to not impose a debt
for climate change/renewable energy plan swap gives such countries
complete unfettered licence to further expand using fossil fuels
which, as we all know, means we will never mitigate climate change.
On that final point I would like to say, as everybody knows here,
the IPCC at present are projecting a 5.8 centigrade increase
this century at worst. I imagine many of you are aware of the
Hadley Centre and the global dimming problem, which is now projecting
possibly a 10 centigrade increase this century, 2 centigrade
possibly by 2030, 4 centigrade possibly by 2040. So it is
critical that we encourage and support developing countries to
expand their renewables as well as ourselves.
Q214 Patrick Hall: On the point the
Chairman raised about how much can we realistically expect to
attach to debt relief, I do not think you have said you wish to
replace the other programmes with issues to address global warming
and sustainable energy but to add that to the list. Okay, but
do you see that as being realistic given the pressing poverty
in certain parts of the world? I think if you are going to develop
that argument you need to show the links between these things,
if indeed there are links between global warming and poverty and
environmental degradation and the economy. Those are the sorts
of arguments which might work, but is that something that you
have developed so far?
Ms Hutchins: I would say that
if we study, as many experts have internationally, the increase
in natural disasters since the 1960s we will see how already climate
change may be radically affecting countries both in the number
of people affected and also economically, as Andrew will be able
to tell you. Therefore, if the present debt payments are being
applied to health, education and welfare, on a health level under
climate change many counties will become increasingly stricken
with diseases such as malaria and other diseases. As per Peter
Cox and the programme, many of these countries will become uninhabitable.
When we are talking about a 5.8 or a 10 centigrade increase
that is the global average. That means other regions may rise
far higher. How is that going to affect peoples' health and welfare?
So therefore to not have it in the mix—it is the number
one priority, surely, because it affects everything else.[3]
Q215 Patrick Hall: Okay. What can
Britain do, not only when it has got the presidency of the G8
but in the long-term, perhaps taking up your partnering scheme
suggestion?
Sir John Houghton: I think one
has to be realistic, of course, about what is possible in the
shorter term and then in the longer term and I think in the short
term of course there is going to be a great deal of emphasis on
poverty, education, welfare, and so on, but nevertheless there
has to be some education not only of people in the UK but also
people in the developing countries about what is likely to happen
with climate change, particularly in floods and droughts, extreme
events and extreme heatwaves and the whole problem that is going
to cause for their agriculture and to some extent for their survival
in certain parts, particularly the Sahara and African countries.
We are certainly not proposing that there should be some bureaucratic
arrangements which are made as part of the debt removal scheme
because what we need is more bottom-up procedures which will help
those countries to grow for themselves the necessary contributions
to their growth in energy, renewable energies rather than fossil
fuel energies. I happen to be a trustee of the Shell Foundation
and the Shell company has put $250 million—and they are
going to put another $250 million—into a capital fund, a
charity for supporting renewable energy growth in the Third World,
in the poorest of countries—
Q216 Patrick Hall: I was asking what
Britain could do and I think your answer is a more general one,
also about what corporations can do. If I have misunderstood,
I apologise for interrupting you, but could you look at what Britain
specifically can do so that people here can relate to that and
maybe keep Government to account on what has actually been achieved,
or is it just some general vague international activity which
it is not always easy to relate to?
Sir John Houghton: I am sorry,
this is not vague international activity, it is activity undertaken
by a British company which is actually very effective and I was
using it as an illustration of something which is very effective
in developing countries because of the way in which they do it.
It is done from the bottom-up and it is done making sure that
poor people actually run the schemes and develop their own processes
rather than just some top-down approach. If Government and industry
in the UK can get together in ways which would enable this to
occur, not in the bureaucratic sense but in an actual real sense
then progress would be made.
Q217 Chairman: Ms Hutchins is bursting
to say something.
Ms Hutchins: Basically, Sir John's
point is that we need to avoid bureaucracy and it does not have
to be complex. The partnership should be seen as positive development,
not unwieldy impositions. Basically, how do you do it simply?
Well, simply you bring together in the UK parties such as the
Shell Foundation, the investment sector from the City. You have
small groups, not unwieldy groups. So you have a finance group
and you also have a technological innovation group to give advice
and technology transfer. You have a country which they are paired
with, for example someone in Sudan recently said to me that they
were trying to find funding for a renewables project but they
did not know where to begin really. So simply a country could
have a list of renewable projects which sought funding and they
would come to that partner, say it was the UK, to the finance
group, who would be able to see whether there was anything here
that the UK could assist with. If not, that could go to a finance
group in another country, which would be a pivotal centre for
investment in renewables basically and have key people involved,
as would the technical group.
Q218 Mr Drew: In terms of negotiations
with those countries that are trying to develop, is there any
case whatsoever for conditionality, to say to them that there
would be additional aid if they were to look at means of producing
energy and forms of transport which were environmentally acceptable.
I know this is provocative, but one way in which you could argue
that you could at least stop the world from getting worse is to
actually take those countries that are in the early stages of
economic development and give them incentives so that they were
able to do that through sustainable means of energy and transport.
Sir John Houghton: If I might
try and answer that. In the first instance you have to help them
do it. You cannot say that a condition of giving them this is
that they should actually do things which are perhaps technically
quite difficult for them or even administratively quite difficult
for them in developing new forms of energy and putting those forms
of energy out and financing these schemes, and so on. There is
no point in us putting conditions in unless we are prepared to
actually help them do that. I think the way to help them do that
is not just via Government, it is via Government/industry cooperation
because a lot of industries are involved in those countries too.
There will have to be some sort of backing with some finance,"
but this comes from what you are basically trying to do, by that
sort of cooperation and making sure that it works from, as I say,
the bottom-up rather than something just imposed upon them and
saying, "Take it or leave it." We cannot do that. We
have to help them a great deal. Technological transfer is one
part of it, but it is even helping them rather more than that
with developing business techniques in addition to developing
the way in which they can grow waste-to-energy schemes. The Shell
Foundation has done a lot of those, which are very effective,
much more efficient than the World Bank because they are doing
it on the ground floor level rather than from the top.
Q219 Chairman: Just a quick brief
comment, Ms Hutchins.
Ms Hutchins: Well, obviously aid
would be great but, as we know already, a lot of it does not get
to where it is meant to be going and there is corruption, so another
thing that we could consider would be to send out micro generation
CHP technology—give it instead of finance to such countries.
1 Conference of the Parties under UNFCCC Back
2
Note by Witness: The World Bank recently stated that it
had become the world's third largest reinsurer internationally,
because so much of its development funds are being diverted into
disaster recovery. Back
3
Note by Witness: Promoting renewable energy will also
create sustainable wealth in developing countries, as well as
avoiding climate-related disasters. Wind, solar, run-of-stream
and modern biomass reduce the need for oil imports, and make use
of locally available resources. Back
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