Examination of Witnesses (Questions 280
- 295)
WEDNESDAY 19 JANUARY 2005
MR ANDREW
LEE AND
MS CATERINA
CARDOSO
Q280 Chairman: If you want to do
it company by company, fine, or if you want to do it sector by
sector, fine, but tell me who has got to do what and how.
Ms Cardoso: Well, the first step
again I think would be for the Government to set the right framework
because there are many companies who actually would like to become
greener but they do not have the right framework from the Government.
So both in terms of allocations of remissions—
Q281 Chairman: Hang on, I am talking
about the power generating sector.
Ms Cardoso: Yes, I am talking
about the power generating sector as well, and that is what the
power companies have been telling us as well, that they do not
have the certainty that the Government is going to pursue a system
of incentives for green energy. So I think that would be the starting
point. Then basically once that system of incentives is in place
the power companies have a number of options on how to reduce
their emissions. One of them is to close coal. There is no reason
to continue having coal. They can switch to gas. I think the medium-term
solution is to switch to gas. A second one is actually to increase
renewables and for that again we do need a good framework from
the Government. The Government should extend the Renewables Obligation
to 20% by 2020. That would give a much more secure investment
framework for companies. The final thing is actually to start
addressing all the various energy services, which we have discussed
before.
Q282 Chairman: Why do you say no
to nuclear?
Mr Lee: Well, for a number of
reasons. Firstly, because we think there is absolutely no evidence
whatsoever that it is economically viable, and those words come
from the Secretary of State for the DTI, not from WWF.
Q283 Chairman: Do you believe everything
the Secretary of State for DTI says?
Mr Lee: No, but I think on this,
if she is taking the competitiveness argument—
Q284 Chairman: You are selective
in your belief, are you? After having slated Government for poor
coordination and knowledge in the area, you are now according
the Secretary of State probity on nuclear, are you?
Mr Lee: Well, even the DTI is
saying there is no economic case for nuclear, let us put it that
way. The second point is we have not solved the waste problem.
The third point is that it is not needed. The point of the work
we did with this report is to say, "Actually, it is not too
late to get on with this, with sufficient will and with a sufficiently
clear framework for businesses. The trouble is, I think at the
moment the power companies and the Government are looking at each
other to see who will blink first and each, to some extent, is
saying to the other, "You act." "No, you do it.
It's your fault. You need to give us a clear signal," and
the Government is saying, "No, you need to do more."
So I think in the climate change review the Government needs to
break that deadlock by saying, No, this is what needs to happen.
This is the regulatory framework, these are the incentives. It
is now going to be profitable for you to invest in the sorts of
things that Caterina mentioned. We do not think nuclear needs
to be part of the solution.
Ms Cardoso: I would like to add
something to that. It is not just DTI but most studies which actually
look at energy see that nuclear energy is not economically very
viable. They usually do need quite a few subsidies to go ahead.
In terms of alternatives, where to invest the money, one can invest,
for example, in energy efficiency measures and that would be much,
much cheaper.
Q285 Chairman: Have the French got
it wrong?
Ms Cardoso: It seems so.
Q286 Chairman: But they have got
70% invested in nuclear power in terms of their generation—
Ms Cardoso: And they are heavily
subsidised. It is the French taxpayers who pay.
Q287 Chairman: But they are not producing
any CO2 from it, are they?
Ms Cardoso: They are producing
other kinds of dangers and economically you can—by increasing
energy efficiency measures, by reducing energy demand, I think,
for example, if there was a target to reduce energy demand, if
there was, for example, 0.2% reduction in energy demand per year,
which corresponds with what the Energy White Paper has been saying
on energy efficiency, that would be much more cost-effective in
reducing CO2 emissions than giving subsidies to the
nuclear industry and incurring all the other problems that occur
with that.
Q288 Chairman: My final point. If
it is so straightforwardly expressed as you have said, just 0.2%
reduction—
Ms Cardoso: That is our interpretation
or their target—not ours exactly, ILEX's interpretation.
Q289 Chairman: Okay. So it is well
supported and well documented. Why do you think the Government
are not leaping towards that achievement of that straightforward
objective given the problems they are facing in having to row
back on their own target?
Ms Cardoso: It is a very good
question. I personally would think that one of the reasons is
that there is not a strong lobby behind it. When it comes, for
example, to the power sector there is a very precise group of
industry who actually want to lobby for something. When it comes
to energy efficiency, the benefit of energy efficiency, they are
spread all across society. So you will not have basically all
the UK population lobbying for that. They are not concentrated,
the benefits, they are spread out. So that is why I think it is
so important. All right, we commissioned the report to ILEX, which
was reviewed by most major players in the power sector. It actually
says if we can actually meet the 20% target with no nuclear energy
and at a much lower cost, then business as usual. But what happens?
Those costs are spread out, so who is going to be lobbying for
that? That is one of the problems.
Mr Lazarowicz: You mentioned earlier
on the UK's position in the leadership of both the G8 and the
EU later this year and the Prime Minister has said that climate
change is a major priority in both those two presidencies. What
would you put as a kind of headline of things that the Government
should be doing to make use of its presidency period in both these
organisations? Obviously engaging the US is undoubtedly one of
the priorities, but could you tell us what would be the best things
the Government could do to make use of that opportunity?
Q290 Chairman: Can I just presume
on Mr Lazarowicz's question by just raising a point which came
at the last sentence of paragraph 1.5 of your evidence, where
you say, "The UK must ensure that re-entry of the US into
the international climate change regime is based on US commitments
to tough emissions reductions domestically." Does that dilute
Kyoto, and if we achieve that objective, to follow Mr Lazarowicz's
point, how is the United States going to engage in this when they
have rejected Kyoto?
Ms Cardoso: I think there is an
important difference between what the federal government says
and what is happening at the levels of the different states. The
state of California, New York and New England, they are all seriously
considering to actually have caps on their emissions. They are
also considering a cap and trade system. So we would think that
an important way, and a very useful way, of engaging with the
US would be through the states, for example exploring ways of
how we can link potential cap and trade systems in these states
together with the European system. That would be a way. Much of
the policy in the States, from what I understand, much of it actually
comes from the states. It is very bottom-up on many issues. So
foreign policy would be top-down but issues, for example like
this one, which actually comes down to what the local people do,
is very much bottom-up and it is much stronger. I think there
is much more potential for achieving a cut-down in emissions in
the US if one goes via the different states. So that would be
my first suggestion as far as the US is concerned. As far as the
most important achievement of the G8, I think it comes out of
commitment from different countries that we do not go above the
2 centigrade increase in temperature. That is absolutely
key. There are many countries which support this view, so it is
a matter of bringing it together and making it public.
Q291 Mr Lazarowicz: What the people
have said to us today and all the other evidence we have received
is very convincing and we as a Committee are most likely to be
convinced and we will, no doubt, be doing our best to convince
our colleagues and we will have a very strong report and very
strong recommendations at the end of our process, but the issue
which I suppose always concentrates the mind is that to achieve
real change does not just require the governments of the world
to act, it requires above all a worldwide public movement effectively
and you do what you can as NGOs to bring it about and obviously
governments try to do what they can as governments. What can Parliament
do to actually help encourage the kind of worldwide pressure for
change, which is really the only way you are going to bring on
board governments?
Mr Lee: I will have a crack at
it. This is a huge issue, of course. In the UK there is a fledgling
organisation called the Climate Movement being set up by all the
major environmental NGOs in response to the issue that this is
such a massive thing we have to deal with that no one organisation
can do it. The model there is to build a coalition more like perhaps
the Jubilee 2000, the drop the debt sort of model, which involves
church groups, trades unions, business, a very disparate network.
Part of the thinking behind setting up the climate movement is
that it could become a trigger for similar movements in other
countries. There was a discussion about whether it should be set
up as a global organisation and the feeling was that that is too
much to bite off in one go. Let us see if we can get more of a
movement here. But the other part of my answer to your question
would be, going back to this thing about what does it look like,
what does a low carbon lifestyle look like and why would people
be interested in it, there are some very symbolic and very important
decisions about to be taken by the Government. The Sustainable
Community summit, which is going to happen before the end of January,
is a critical opportunity for the Government to say in advance
of the publication of the climate change review that every new
home built in these new communities in the south-east will come
up to the higher standards in terms of actually not just energy
efficiency but a whole range of other things. That does a lot
of things. It does not just impact upon the people who go into
those homes, it also sends a very powerful signal to the market,
it also creates volume just in terms of the number of houses built
to those standards with the kind of kit that you were talking
about earlier, so it brings the production cost down, and the
idea of a sustainable building code (which is what is being vigorously
debated right now to go into that summit) is that that would then
set a benchmark across the construction industry. Okay, that only
deals with new houses and you have then all the issues of refurbishment,
but those sorts of things could be used much more actively, I
think, as a way of promoting "This is what it means to you
as a citizen. These are the sorts of choices." Then I think
you would find more people supporting it and saying, "That's
a good idea," and there is clear evidence from the construction
sector that there is a market demand for this sort of property
and that people are actually prepared to pay more for it. We think
that the very small extra build cost, which would be very tiny
if there was the volume, could easily be covered by things like
a green mortgage at a preferential rate, looking at council tax
levels, and so on; in other words to take out the front-loaded
cost and give customers the benefits over the years. I think there
is the public movement, climate movement end and there is what
the Government could be doing now with issues like housing.
Q292 Mr Lazarowicz: That is helpful.
If I could turn very briefly to a separate aspect of the issue
and just ask you to say a little bit more about why, with regard
to the EU Emissions Trading Scheme, you are unhappy at the idea
of sourcing emissions from outside the EU. Should international
emissions trading be encouraged? You have heard the evidence from
Our World that it is actually needed to bring developing countries
on board the worldwide Emissions Trading Scheme?
Ms Cardoso: We are definitely
extremely supportive of an international trading regime, very
supportive of that. We are lobbying for that and the Kyoto Protocol
actually sets already the basis for that. With regard to this
particular issue about sourcing emissions reductions from outside
the EU, the reason why we oppose that is because for an emissions
reduction to actually have some value as a reduction it has to
be a reduction in addition to business as usual or less than business
as usual. For example, if we are sourcing it in countries where
they do not have targets it is extremely difficult to actually
make sure that that reduction is a real reduction or whether it
is just a reduction that would have happened anyway by accident,
in which case it has no value. So that is the main reason why
we oppose that. The second reason is that our objective is very
much to reduce emissions at home, to set the example for the rest
of the world of how one can reduce emissions without that having
a negative impact on the economy, in fact it can even have the
contrary. So we are very supportive of an international trading
regime. There are countries outside the EU which are interested
as well, such as Japan and China, and we think those options should
be pursued.
Q293 Mr Mitchell: What sort of cost
are you talking about? Is it a small extra cost? The Government
wants to build these houses in the south-east for £60,000,
which the Institute of Chartered Surveyors says would not build
a cigar box! Can you put a figure on the amount of extra cost
involved in being energy efficiency for new buildings?
Mr Lee: The best figure we have
is that if you take the highest quality housing in terms of the
environment like the BedZed development in London you are talking
about 2% on the build cost and that is without the volume. That
is partly because quite a lot of the technology is expensive because
it is still not in the big market and we think that is not a big
percentage.
Q294 Chairman: Can I just conclude
by turning now to the role of agriculture and particularly the
use of biofuels. There seems to me to be a paradox in this country.
That is that Defra on the one hand are very enthusiastic. They
tell us about the benefits. The Chancellor, on the other hand,
makes a reduction in duty for biodiesel and bioethanol, but as
far as the use of indigenous raw materials from UK agriculture
is concerned, to the best of my knowledge nobody has built a plant.
The Secretary of State, upon being probed about this problem,
says: "If we are more generous this will encourage imports
of biofuels, but on the other hand if we meet our obligations
under the EU directive for blended fuels, if we do not have a
biofuels plant it will be imported." This paradox appears
to be irresolvable. What is your practical advice about what should
happen? Should we first of all have a UK biofuels industry? Secondly,
what do you think we need to do to get one actually underway?
Ms Cardoso: WWF is supportive
of biomass but it is also supportive of the way the market works.
So I think, for example in the context of the CAP reform there
should be more support for biomass. Whether, on giving those supports,
the UK farmers decide to go ahead with it I would say is a different
question. I think what is very important is that the options are
explored, the pros and cons are explored and that there is a diversion
of subsidies from excess of food to biomass. That would be our
view on that point.
Mr Lee: In terms of the dilemma
you have just described, it is curious that that point of view
is being put for biofuels, that imports are the problem, we should
have our own industry. That argument is happening. Whereas for
wind energy, for example, the argument put by the DTI—I
am sorry to mention them again—is exactly the opposite,
"Oh, well, it doesn't matter if we just import all the technology."
What we and I think actually all the NGOs have said is, "Look,
there is a huge market opportunity here for the UK to be a leader
in the world on some of these things." So personally, yes,
I think biofuels, biomass is a part, probably a small part in
the UK, of the solution but certainly part of the mix. It has
other benefits, rural development benefits, benefits for land
managers, and we should be trying to get a slice of the action,
if you like, in that case. It would probably have much bigger
benefits in other countries, of course.
Q295 Chairman: Do you think as a
principle it is important to tackle these issues on as many fronts
as possible? I come back to the point I made to our previous witnesses
that if you look at what gives the best value for money for the
expenditure of the public pound in CO2 savings it is
loft insulation and biofuels suddenly comes right at the bottom
of the spectrum, which is where I personally suspect the Treasury
are camped by saying, "We have a limited amount of money
to spend in this area so let's put it where we get the biggest
bang for the buck," which is a rational economic judgment.
But what it means is that you close down not just biofuels but
many other options if you are looking to put public money into
trying to stimulate the types of development that we have been
talking about. So do you consider it important that you fight
on as many fronts as you can or should you just concentrate all
your resources, coming back to your observations about the power
sector, for example, on where you are going to get potentially
the biggest hit?
Mr Lee: Well, I think we have
outlined where we think some of the big hits are now. I think
this does relate back to the climate programme review and the
lack of a clear long-term vision. What scale of climate change
are we trying to avoid? What degree of real reduction in emissions
do we want and what does that look like in terms of the energy
future, because going back to your point about nuclear earlier,
is our vision in the future of highly centralised energy production
and lots of imports or is it of more decentralised production
in combined heat and power, using biofuels, and actually there
needs to be some thought about what that looks like, how it all
fits together, because then there is some kind of direction. Then
in the shorter term I think it is possible to make some really
quite clear economic decisions about if we put the investment
here it will bring this technology nearer to market. But as part
of an overall view—and this is part of the problem, I think,
with the debate about wind at the moment in the UK—it has
been hugely polarised because it is sort of, "Wind farms
will do nothing." Well, wind is an important part of the
mix, but it is only part of it and by not talking to people about
what the whole thing looks like all the attention is focused on
the wind debate. So a clearer plan, I think.
Chairman: Thank you very much indeed.
Your answers have been very clear, and thank you for your very
interesting written evidence. If there is anything else you feel
you wanted to respond to in writing following these exchanges,
please do not hesitate to let us know and thank you very much
for coming.
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