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UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE To be published as HC 130-iv House of COMMONS MINUTES OF EVIDENCE TAKEN BEFORE ENVIRONMENT, FOOD AND RURAL AFFAIRS COMMITTEE
climate change: looking forward
Wednesday 23 February 2005 MR NICK EYRE and MR BRIAN SAMUEL MR IAN BATEMAN, MR DON LACK and MR BILL EDRICH RT HON STEPHEN BYERS MP and MR SIMON RETALLACK Evidence heard in Public Questions 296 - 413
USE OF THE TRANSCRIPT
Oral Evidence Taken before the Environment, Food and Rural Affairs Committee on Wednesday 23 February 2005 Members present Mr Michael Jack, in the Chair Ms Candy Atherton Mr Colin Breed Mr David Drew Patrick Hall Mr Mark Lazarowicz Mr David Lepper Joan Ruddock Alan Simpson David Taylor Paddy Tipping
________________ Memorandum submitted by Energy Saving Trust Examination of Witnesses
Witnesses: Mr Nick Eyre, Director of Strategy, and Mr Brian Samuel, Head of Policy Research, Energy Saving Trust, examined.
Chairman: Ladies and gentlemen, can I bring the Committee to order and welcome our first set of witnesses from the Energy Saving Trust: Mr Nick Eyre, their Director of Strategy and Mr Brian Samuel, their Head of Policy Research. Gentlemen, you are both very welcome and thank you very much for the written evidence which you were able to send. May I again apologise for the fact that our earlier efforts to have some dialogue on this subject were curtailed. Thank you for your patience and forbearance in coming back. You can see that as a result of what happened we have got a fantastic turnout of talent and interest on this occasion. Paddy Tipping: That is on the other side of the table! Chairman: That is true. You are more than generous to those who are coming to visit us, Paddy. If David Drew would be kind enough to start our questioning. Q296 Mr Drew: Nick and Brian, it is good to see you here. Can I just ask a gentle introductory question because I have been very impressed with my energy efficiency advice centre, they are always keeping ministers informed of things but do they go beyond people like MPs and councillors? To what extent are they able to engage with the general public to get the general public to understand that energy efficiency matters? Mr Eyre: Quite a lot is the easy answer. I will let Brian give you the details. Mr Samuel: I think the energy efficiency centres have been very successful. Typically they have around 750,000 enquiries a year by the telephone and have a further 250,000 hits on the web site on an annual basis. Over the years the 52 energy efficiency advice centres have handled 3.7 million customer enquiries so we believe they do serve the market very well and there is a desire for the market to interface with the centres themselves. Q297 Mr Drew: If you had more money what would you do? Mr Samuel: If we had more money we would look to widen the scope of the services available from the existing infrastructure taking that forward through a Sustainable Energy Network. Basically we would look to engage with consumers not only on energy efficiency but also on embedded renewables and transport issues as well. Transport in particular is very much a consumer issue given the level of emissions in the UK from transport. Q298 Mr Drew: What would be the budget for an average energy efficiency advice centre? Are we talking tens of thousands or hundreds of thousands? Mr Eyre: I have not got the detailed figures with me but I am sure we could provide those. Q299 Mr Drew: It would be quite interesting to see those. Mr Eyre: It is of the order of £100,000 annually. That is our contribution. Currently all the advice centres get contributions from other sources, frequently from local authorities but also from other sources. So we are getting more of a bang for Defra's buck in that way. Q300 Mr Drew: There is some confusion between the role you pursue and the Sustainable Energy Network. Could you define for the benefit of those who are uninitiated in these differential organisations what the differences between yourselves are besides having different names? Mr Eyre: The Sustainable Energy Network is an idea that came out of the Energy White Paper, and I have to say we were involved in getting it into the Energy White Paper. The concept is, as Brian says, we would like to scale up the activities of the energy advice centres to do more and to contact more people because although we think it is good that they contact three‑quarters of a million people a year that is still a small minority of the population. What we would see is the centres distributed across the UK providing a local service which would be managed by the Energy Saving Trust, by ourselves centrally, and we would provide the corresponding services that are nationally provided centrally such as web sites and some hotline facilities and literature support because you need a national back up to that sort of local service. Q301 Mr Drew: Can I be absolutely clear. Are we saying that the Sustainable Energy Network is looking at macro issues? It is trying to persuade the general public that they could do more and this would be having an impact on global warming. The energy efficiency advice centres on the other hand are dealing with the nitty‑gritty of "if you wanted to make your house more energy efficient these are the sorts of things you should do, and there are some grants available to do this work"? Mr Eyre: We are talking about scaling the advice centres up into a Sustainable Energy Network. We are talking about something bigger and better. Q302 Mr Drew: This is a directional thing? Mr Eyre: But you are right, that part of the problem is that consumers in their homes and their cars are responsible for about half the UK CO2 emissions so what is often thought of as an industrial/business problem is not entirely that and we do need to engage people, whether it is as consumers or citizens, if we are going to make a real dent in the problem. Q303 Chairman: How do you measure your success? If people come and ask advice in these energy efficiency centres do you do any follow‑up work to see if they have taken up the advice and done anything about the information given? Mr Samuel: Yes we do try and report on the level of energy savings made based upon the advice. Obviously it is difficult to get an accurate figure. Currently over the life of the energy efficiency advice centres 1996/97 to 2003/04 we have saved some 62 terawatt hours approximately. Obviously there is a band of sensitivities around that that equates to 4.5 million tonnes of carbon on a lifetime savings basis. That is the actual length of time the measure would last for. That has been achieved at a cost of around £7.8 per tonne of carbon. Q304 Chairman: Of the issues raised by the public, what does it tell you about the policy initiatives to deal with energy saving in the areas that people ask about? Mr Eyre: It tells us that people often know some of what they need to do. They have a sense that insulation, heating systems, lights are important and are in some way related to the problem and often that they know roughly what to do, but they may not know where to go and they certainly do not know who to trust. I think the issue of trust is quite a big one. We know that the energy suppliers in their own energy efficiency programmes often feel that consumers do not trust them. We know that consumers in general do not trust builders and do not trust many heating installers so there is a breakdown of trust between the consumer and the people who are best‑placed to deliver some energy efficiency programmes and we have to work hard to overcome that. Q305 Mr Lazarowicz: On the question of getting the message over to the public, we understand that you have recently launched a new campaign to promote energy efficiency in the home. Can you tell us a bit more about that campaign and what form it will take? Mr Samuel: Basically that campaign is in support of the Energy Efficiency Commitment under which the energy suppliers are obliged to deliver energy efficiency savings. It is seeking to raise the level of awareness of the activities of the energy suppliers. Mr Eyre: I think it ties back to the point I was just making that we have found and others have found, including Government, that many consumers are not quite sure why energy suppliers should be offering them deals to reduce their energy because it is counter‑intuitive. It needs to made clear that in a sense Government has made this happen and Government is expecting the energy suppliers to do that and it is not a con; there are some very good deals out there. You can get efficient light bulbs cheap, you can get your house insulated for far less than the real cost of doing it, and people should do those things. That is the simple message from the campaign. Mr Samuel: The costs of providing measures such as cavity wall insulation are a lot lower than the general public perceive them to be. With the Energy Efficiency Commitment they are even lower still. Q306 Mr Lazarowicz: I can certainly see the merit of what you are doing. I think most of us probably have the experience where every single jumble sale you go to there is a large number of low energy light bulbs being sold by somebody who does not know what to do with them. Can I just be clear is the campaign directed very much at this energy commitment from the suppliers or is it part of a wider campaign? Mr Eyre: This specific campaign over the next month or so is particularly geared towards the Energy Efficiency Commitment. We were given an additional £3 million this year by Defra specifically for this purpose. The reason for the timing of course is that the scale of the Energy Efficiency Commitment is going to be doubled from 1 April so there will be more good offers and it is all the more important, given the centrality of the energy efficient commitment to carbon saving targets in the household sector, that people do understand what is going on and why. Q307 Mr Lazarowicz: Is it going to be linked into any other informational activity by the energy suppliers because £3 million is not a great deal of money in contrast to the other advertising outlets provided by the energy suppliers, surely? Mr Samuel: We would certainly like to see the energy suppliers develop innovative products to reach the market through energy services, packages, et cetera. Certainly there are opportunities to do that and we would like to see them take advantage of that. The targets for the second Energy Efficiency Commitment are higher and therefore more will need to be done and energy suppliers will need to reach the market in more efficient and more effective ways so we would like to think that that would happen. Mr Eyre: Just to put the scale in context, we expect the suppliers between them would have to spend £400 million a year to deliver the Energy Efficiency Commitment at the scale that is expected from next April so I would be surprised if they did not do quite a lot more marketing than we are doing with £3 million but the point of our marketing is that it is not from a commercial brand and therefore can be seen to be unbiased information in a way that clearly information from a commercial company cannot be. Q308 Mr Lazarowicz: I know one of my colleagues will be coming back to the future of the commitment later on, so if I could turn at this stage to another area of concern and that is the encouragement of loft and cavity wall insulation and general purchase of energy efficiency products. One of the problems that seems to affect the take‑up by the public of these opportunities is the long pay‑back period. People do not see the benefit in financial terms up‑front so they hesitate sometimes to invest in the products. What are your plans to address these concerns about the long pay‑back periods for domestic consumers of energy efficient products and devices? Mr Eyre: I think it is the point Brian made earlier which is there is a difference between the perception (which you clearly have as well as other consumers) that the pay‑back for these is long. With an Energy Efficiency Commitment deal on cavity wall insulation a customer can get it for perhaps £100 or £150. That pays back in two years so it is a lot more sensible than putting your money in a building society. The difficulty is convincing people of that and getting them to act. It is not the actual pay‑back period that is the problem. They give a pay‑back that any business person would consider an extremely attractive deal. Q309 Mr Lazarowicz: Can the energy suppliers not do more here? Maybe they should pay for the installation and then recoup the savings in the bills that would otherwise have been charged over that period? Mr Eyre: That is essentially what an energy services deal is and changes to the detailed regulation, the so‑called 28‑day rule, last year will make it easier for them to do that. So I think we do expect the big energy suppliers to come forward with more offers of that type, and some of them are beginning to do that. Mr Lazarowicz: Thank you. Q310 Joan Ruddock: I just wanted to ask if I am correct in thinking there is probably no plan to advertise any of this on television? Am I right? Mr Eyre: No, you are wrong. Q311 Joan Ruddock: Fantastic. Mr Eyre: The campaign we have got on the Energy Efficiency Commitment will have some television advertising. It certainly will not be restricted to that. It will have local radio and press as well. Q312 Joan Ruddock: I would make the point that your point about the lack of trust between consumers and utility companies is just so true. When I get the big mailings from them I say, "What are they up to now? Why are they trying to take more money off me?" Getting the message over that this is in the national interest, that the Government is requiring the companies to do this and it is for your benefit would be a really powerful and important thing to do, it seems to me, and I hope you have had an input into this that that is the television message that we need to get across if this campaign is going to work. Mr Eyre: I will just urge you to watch more television then! Joan Ruddock: I cannot; I just want to ensure it is there. Q313 Chairman: She will use up too much energy watching the television! I am intrigued by the fact that in the Energy White Paper it says insulating around 4.5 million cavity walls from this year to 2010 would save 1.2 million tonnes of carbon. How are we doing against that target at this moment in time? How many cavity walls have been insulated? Mr Samuel: About six million have been insulated. Q314 Chairman: Out of how many? Mr Samuel: Out of a potential of 17.5 million. There are just about two million where it is unknown if they have got cavity wall insulation or not and there are some nine million potentially in there to insulate. The problem is getting customers to take those steps. Obviously campaigns such as the Energy Efficiency Commitment Link One should help tackle that market. There is certainly far greater potential than that outlined in the White Paper. Mr Eyre: Can I just add I think they easy answer to your question, Chairman, is that we are not doing very well on cavity wall insulation. The current market size is about 300,000 a year and if you do a quick bit of arithmetic that is not going to give you anything like 4.5 million additional by 2010 so whereas in some other areas of energy efficiency, particularly white goods, there are some very good stories to tell about changes in the market, this is a tough one because it is invisible and it is difficult to get people excited about. Q315 Chairman: In the White Paper it says "illustrate where savings might be achieved". Is that language right? Should it not be savings that "must" be achieved? Mr Samuel: We would like to think that that language will be used in future. Q316 Alan Simpson: Nick, I am not at all unhappy with what you are doing but I was troubled by some of your comments when you said you were confident that EEC2 will prove to be as successful in transforming markets for energy efficient products as EEC1. My experience of this is that people say to me, "There are only so many low energy light bulbs you can eat." The industry has gone for the cheapest, least demanding areas to be seen to be active the. ODPM says that only 16 per cent of our existing housing stock in Britain meets SAT rating 65. We are not going to meet our 2010 commitments to reduce domestic carbon emissions by 20 per cent. How do we count that as a success? Mr Eyre: As I said, we can count as a success markets like washing machines where we have gone from five per cent of A‑rated product to 80 per cent in just a few years and a similar story in fridges and freezers. Q317 Chairman: Can I interrupt you just a sec. Is that models on offer as opposed to models in use? Mr Eyre: That is new sales figures that I am quoting here. Clearly that takes time to work through the stock. I am not sure I agree with you on light bulbs. There are something like 500 million lights in use in homes in the UK and from memory only about 30 million of those are low energy light bulbs so there is quite a lot more light bulbs that people can use saving money and saving carbon at the same time. I take your point that on the fabric of buildings that is where the progress has been slowest and most difficult because those are markets where a lot of the investments are discretionary. People have to buy a fridge, they then have a choice whether they buy a good fridge or a bad fridge and we have now on the whole got them to buy good fridges. For cavity wall insulation people just do not have to do it so most of them do not do it. Q318 Alan Simpson: How far when you peel the surface away on this do the figures that you quote reflect a purchasing pattern that rewards those with purchasing power and in which the poor are still purchasing, fuel efficiently, poor products? We have been having this from the energy industry. They say, "It is not us; it is the consumers they do not buy the products." You ask them why they do not buy them and in a short space of time they will admit it is because people who are fuel poor are also poor, so they are in trap that no amount of advertising is going to get them out of. How can we say that is a success? Mr Eyre: I think that is why market transformation is important because when virtually every product in the shops is A‑rated and then in a few years' time virtually every product on the second‑hand market will be A‑rated then people on low incomes are going to have high‑quality appliances as well as people on high incomes. I think in general the initial niche markets for the most efficient equipment will be taken up by people on high incomes, but those products are working through to people on low incomes. Again for building fabric you are in a different position and that is where the Government and devolved administrations' fuel poverty programmes are absolutely crucial in getting good heating systems and getting insulation into the homes of people on low incomes. Q319 Alan Simpson: All I am trying to say to you is if we are to look for success criteria for EEC2, surely we have to go beyond an assumption that the poor have to wait until energy-efficient products turn up in second‑hand markets, and the only way we are going to do that is to build both targets and obligations into the delivery part of EEC2 rather than waiting for consumer power to reach the poor? Mr Eyre: 50 per cent of EEC2 activity will by law have to be for people on benefits and those people in general are getting free offers from the energy suppliers, so whilst it is primarily a carbon saving programme and it is in general more expensive for suppliers to save carbon for people on low incomes because they cannot make a contribution, I think the Government has taken note of that and ensured that a fair share of EEC activity will go to people on low incomes. Q320 David Taylor: Next year will see the introduction of home information packs and part of that will be home condition reports with obligatory energy audits, which allows at lease in principle for fiscal incentives via stamp duty to those who have invested in energy efficiency measures. Six weeks ago in the Commons a Bill was introduced which would have introduced such fiscal incentives. It seems to be an open and shut case but do you see any problems? What are the problems, what are the barriers to such a measure being incorporated into legislation? Mr Samuel: I think there is one main, obvious barrier and that is in the report actually being carried out to the required standard. Obviously that requires you to have people who are capable of carrying out those surveys. After that it is actually getting people to take up the opportunities that will then exist through reduced stamp duty. Of course stamp duty only applies to the 1.2 million homes per annum that are sold so therefore other mechanisms, perhaps incentives through reductions in council tax, might also be required for those non‑movers. The other point of course concerns those houses that are below the stamp duty threshold of £60,000 (or £150,000 in the most deprived areas) so some form of grant scheme would actually be required to address those particular segments. These could be funded by increases in stamp duty for homes above the £250,000 bracket so it would be revenue neutral. Although that is quoted as a barrier we believe it can be readily overcome. Q321 David Taylor: Your report is admirably concise and pretty comprehensive. The section on fiscal measures has got eight particular suggestions but you identify establishing incentives as the single most important fiscal change needed. Could you just back that up with some figures on the sort of savings there might be and the costs that there might be as part of the incentive? Mr Samuel: I think the level of savings will depend on the level and type of measures that are implemented. If you use the most basic cavity wall insulation and loft insulation you are perhaps looking at 0.2 million tonnes of carbon per annum. That should provide savings of around about £58 or £60 million and at a cost of £190,000 per annum. If you then went further and looked at better heating controls then perhaps you are looking at 0.25 million tonnes of carbon with savings of around about £70 million and at costs of around about £220,000, I guess. Q322 David Taylor: You would tell the Treasury this is revenue neutral because you would be increasing stamp duty further up the range. I presume that you are aware of how controversial stamp duty has become. Do you think this is politically tenable? Mr Eyre: I think we would leave it to people who have to face elections to decide whether ‑‑‑ Q323 Ms Atherton: Thanks a bundle! Mr Eyre: ‑‑‑ whether stamp duty should go up as a disincentive to energy inefficiency or down as an incentive to energy efficiency. What is clear to us is that there needs to be an incentive. All we are saying is that you can make that revenue neutral if you want. It is clearly a political decision how to do that. Q324 Ms Atherton: You mention that council tax could be used as an incentive to encourage energy efficiency for those who are not moving. If I were lucky enough to live, say, in the South of France what incentives might I find in France or other European countries to encourage me to make that investment? Mr Samuel: France has implemented a different system whereby in return for energy efficiency investments in property you would then get a rebate on your income tax. In the case of the UK where there are 4.5 million people who fill in tax returns, the majority obviously through pay‑as‑you‑earn, it would perhaps over-complicate tax forms as well for a number of people. So the French system has definitely got merits and is proving successful there but whether it can be readily applied to the UK, and if so would it be any better than stamp duty and council tax rebates, I would question. Q325 Chairman: How many houses are bought and sold each year out of the total proportion of the housing stock? Mr Samuel: It is about 1.2 million, seven per cent I think. Q326 Chairman: So you have only got seven per cent that could be the subject of your fiscal incentive and 93 per cent remain untouched? Mr Samuel: Yes but it is each year so obviously over time it does increase. From our perspective it is probably better to tackle those 1.2 million houses, bearing in mind there are only 300,000 houses at the moment getting cavity wall insulation. Q327 Chairman: And that number is of the built stock, not new houses? Mr Samuel: It is of the built stock. Chairman: Right, okay. David? Q328 Mr Lepper: Can we turn to transport. 22 per cent of the UK's CO2 emissions are attributable to transport, 95 per cent of that attributable to road transport. We were quite concerned to hear that schemes like Powershift, Clean‑up and New Vehicle Technology schemes were being cut this year. The Secretary of State for Environment, Food and Rural Affairs assured us at our last meeting that although they might be about to be abolished they were going to be replaced by better schemes and so far as she was aware there would be no cuts in the finances available for these replacement schemes. Can you tell us a bit more because I know with the Department for Transport you are involved in those schemes. Could you tell us a bit more about why Powershift, Clean‑up and the rest are going and what is going to replace them? Mr Eyre: I think we can say that the reason is that the Department for Transport, having taken legal advice, was concerned that two of the schemes ‑ Powershift and Clean‑up which are grant programmes ‑ might not comply with the European Union's state aids rules and therefore took the decision to close those as from the end of this financial year. We were already discussing improvements to those programmes with the Department for Transport so we are now working with them to allow the Government to put revised schemes which would be designed to be state aids compatible to the European Commission as quickly as possible. I think to say they have been cut whilst it may be accurate perhaps it could be a little misleading. Certainly the DfT has not indicated that it wishes to reduce our budget for these sorts of programmes for next year and we are hopeful of getting schemes up and running as quickly as we can, but of course that does mean getting the necessary state aids approval. Q329 Mr Lepper: That does suggest that there is going to be a gap between the ending of those schemes which do not meet the state aids criteria and their replacements; is that true? Mr Eyre: That is correct, yes. Mr Samuel: Yes and the length of that gap would depend on the time it takes to achieve state aids approval. Q330 Mr Lepper: Could you give us any indication, any guess at how long that gap might be? Mr Eyre: I think we are talking months rather than weeks. I would happily attempt to be more specific but I would simply be wrong so ‑‑‑ Q331 Mr Lepper: It has been suggested to us that these changes came as a surprise to some people involved, for instance in the road freight industry and other stakeholders. Is that a justifiable criticism? You have suggested some discussions going on over a period of time but others have suggested to us that it came as a bit of a shock. Mr Eyre: I suspect that the hiatus did come as a shock because the Department for Transport, for fairly obvious reasons, had not gone around saying to the industry, "We are taking state aids approval on whether these schemes are legal." That is not the sort of thing you would expect a government department to do. Q332 Mr Lepper: Did the state aids issue apply to all of those schemes which are ending and/or being replaced because again a point the Secretary of State made to us is - and perhaps she did not dwell so much on the state aids issue although she did mention that - there was also a shift from an emphasis on air quality to climate change in the nature of what the replacement schemes were attempting to do. Mr Eyre: The intention is that the replacement schemes should be more clearly focused. The Clean‑up scheme will continue to focus on air quality. The Powershift programme will be replaced by a low-carbon programme which you will not be surprised to hear focuses more on climate change. So the attempt is to be very clear about the objectives of different programmes. Q333 Mr Lepper: Do you feel from the point of view of the Trust that there is sufficient liaison between Defra, the Department for Transport, the DTI and the Treasury on these important issues? Mr Eyre: I think the strict answer to your question is, yes, I think there is sufficient liaison through their management policy network and through other meetings of officials and doubtless of ministers as well. I suspect the issue may be one more of priority given to climate change in some departments. Q334 Paddy Tipping: Such as? Mr Eyre: I think Defra and DTI in drawing up the Energy White Paper have clearly given a very high priority to climate change. Q335 Paddy Tipping: The Department for Transport? Mr Eyre: There are some other departments, of which you have named one, which perhaps (understandably) do not give such high priority to climate change because they have other burning issues. Q336 Paddy Tipping: The oil companies you mean? Mr Eyre: No, I think it is to do with the extent to which they see climate change as central to their objectives as a department. I think perhaps we need to push the message harder that because the use of energy and climate change cuts across the whole of the economy and indeed all human activity then it needs to be a central objective for every government department and that should include the Treasury on taxation, it should include the DFT on transport, and it should include ODPM on housing. Q337 Chairman: Is there a word that is missing from your answer to the question where you said there is enough liaison but is it, question mark, effective because if you disaggregate the gains that have been made by the "dash for gas" just about every other sector in terms of emissions output (and transport probably being the worst example, particularly re aviation) has been steadily increasing over the time when we are supposed to be reducing in overall terms our greenhouse gas emissions? Secondly, climate change judging by the Prime Minister's prioritisation and this is supposed to be at the heart of government. Some of the evidence we have received has suggested that it has not quite reached the heart yet. Mr Eyre: I would agree that the reality is that some government departments are perhaps slower to change than some of us would wish. That is because they have got other understandable priorities. I really do not think it is liaison; I think it is political priority. Q338 Mr Lepper: Have you noticed any discernable shift in those attitudes as we approach the UK's Presidency of the G8 with the Prime Minister's stated emphasis on the importance of climate change as one of the themes of that Presidency? Has that filtered down into every department of government from your perception of it? Mr Samuel: If I can just refer to a different department, the Department for Education and Skills, we believe that informing future generations is a key aspect in order to reduce climate change emissions. We have a very small schools programme at the moment that only addresses 250 schools but we have noticed more engagement from DfES in relation to developing a Framework for Sustainable Energy. Previously the priorities of that department have been different but it is moving towards addressing these types of issues. I think the thing is the pace of some departments is naturally slower than others because of other issues at the moment. We would like to see sustainable development and sustainable energy efficiency/carbon reduction being much more deeply embedded in the future. Q339 Mr Lepper: Perhaps the Prime Minister needs to be doing a bit more to communicate across departments the importance for him and for all of us of these issues over the next year? Mr Samuel: I would say that applies equally to the regions and local authorities as well. Q340 Mr Lepper: Could I ask about one particular tool in all of this and one in which I as a non‑driver have no direct interest and that is vehicle excise duty. I believe the Trust has argued that the differentiation in vehicle excise duty does not provide sufficient incentives to purchase lower carbon cars. You point out that the difference between band D and others is only £95. What would be a sufficient incentive to encourage the purchasing of lower carbon cars? Mr Samuel: If I could clarify the fact there are six bands. The top two bands for the lowest emission cars only cover three per cent of new vehicles. The highest band, band D, covers 27 per cent so as well as increasing the differential between bands we would certainly welcome at least one further band to penalise the more inefficient vehicles. The actual differentials themselves need to be sufficient to encourage consumers to take action and at the moment the bands A and AA have the greatest differential of £30. That is where the highest level of switch is actually shown to be. So therefore as a minimum we would expect something around £30 to be uprated, increasing over time. However, we would welcome the lowest emission cars being further incentivised, perhaps through some "feebate" mechanism whereby they receive a financial incentive for purchasing vehicles with low carbon emission levels whereas those right at the top end actually are taxed far heavier than currently. Q341 Alan Simpson: I just wanted to come back on the point you were making, Chairman, about liaison and beyond and the point David made about the leadership issue. You mentioned the work going on in the Department for Education and Skills. Do you regard them as a high carbon emitter department and, if not, would you say that there is a caricature that has some merit in it which is that those departments that produce the least carbon emissions and have the duty to clean up take climate change seriously and those that are responsible for the greatest carbon emissions are the ones for whom the message still has yet to sink home? Mr Eyre: I think it is clear there is a tension on an issue like school energy efficiency about which department is responsible for it. Is it the energy efficiency department or is it the schools department? I think we would argue it should be both. Q342 Chairman: Can I just bring this session to a close whilst we just focus on transport. All of the discussion on fiscal measures has been aimed at the consumer, either the fuel or the vehicle. What work, if any, has been done on fiscal incentives to the manufacturer to produce technically more advanced systems that would deliver reduced greenhouse gas output than is at present the case? Mr Samuel: At the moment you have a voluntary agreement at the European level which has not achieved as great a result as perhaps we would have liked and that is to set a level across a company's portfolio of vehicles to achieve 140 grams CO2/kilometre. At the moment that, as I mentioned, has not proved as successful. Whether you want to then take that voluntary agreement and make it mandatory is something that we think needs careful consideration. The European Commission's target of 120 grams CO2/kilometre by 2010, as the Commission admits, is not going to be achieved. Q343 Chairman: With respect, Mr Samuel, you have not answered the question which I put. The question was about whether in fact we should be using a carrot as opposed to a stick, ie some fiscal incentives to manufacturers to improve the energy efficiency of vehicles and whether any work had been done on such instruments? Mr Eyre: I think the direct answer to that question, Chairman, is that we have not done any work along those lines and I am not aware of work by other people. Of course we do provide incentives through Powershift for lower carbon vehicles to the consumer and through the New Vehicle Technology Fund we provide some support for demonstration of low carbon vehicles but as an organisation we do not have any specialism in R&D so I do not think we are particularly well qualified to answer that question. Q344 Chairman: You have done very well with all the other questions we have asked you so thank you very much indeed. Thank you again for the written submission and for your contribution to our inquiry. Mr Eyre: Thank you, Chairman. Memorandum submitted by Local Government Association
Examination of Witnesses
Witnesses: Mr Ian Bateman, Climate Change Officer, Devon County Council, Mr Don Lack, Director of Leicester Energy Agency, Leicester City Council, and Mr Bill Edrich, Energy Manger, Kirklees Council, Local Government Association, examined.
Chairman: Our next set of witnesses comes from the Local Government Association. We welcome Mr Ian Bateman, the Climate Change Officer and you come from Devon County Council; Mr Don Lack, who is the Director of Leicester Energy Agency and unsurprisingly from Leicester City Council; and Mr Bill Edrich, the Energy Manager from Kirklees Council. Paddy Tipping and Colin Breed will start our questioning. Q345 Paddy Tipping: In your evidence you point out, quite rightly, that there is good local authority practice. Can you give us some examples of it? What are the shining examples? Mr Lack: We will take it in turns to provide these examples for you. If you look around the local authorities in the UK you will see that there are examples that you rightly say are shining. I will speak for my authority, Leicester, because we are Britain's first Environment City so we feel that we have been practising quite a lot since 1990. We have a proactive programme for renewable energy in the buildings that we own ourselves as well as in the private sector. We promote energy efficiency. We have adopted the hierarchy of energy efficiency. If we use energy we use it more effectively and energy efficiency‑wise and then maximise renewals before we use fossil fuels. We use best technology. We have an energy efficiency advice centre. You were talking earlier about. It is a touchy-feely centre so people can feel and touch. They can also buy the answers and the solutions. Not only do we give advice and awareness but we point towards solutions. We have the eco house in Leicester, one of the first eco houses in the UK. It has been there now for some 15 years. It is very successful. It has been expanded. Again it is a touchy-feely centre. People live in the house as well so it is a real example. We also have an infrastructure where we generate energies. We are quite unusual in that we are a local authority that is a generator, a supplier and a distributor. We have powers under the Energy Act to supply any building we own, so we do. We maximise those powers and use a thing called Usersystem (?). I am going to slow down now and stop and hand over to my right. Q346 Paddy Tipping: Perhaps if I can carry on with you. You can do it in Leicester, you can do it in Devon, and I guess you can do it in Surrey? Mr Edrich: It is actually Kirklees, Huddersfield and Dewsbury. Q347 Paddy Tipping: A long way away. Your councils are doing it; why cannot all the councils do it? Mr Lack: I think they can. Q348 Paddy Tipping: Why are they not then? Mr Lack: They need to be enabled and empowered. Some of them are doing it and probably not waving the flag so you cannot always see that they are doing it. They need to be empowered through legislation and enabled through resources. One of the key things that we are trying to get across is with procurement policies there is a massive opportunity there. If we have got 400 local authorities why do they each have to individually procure a service when we could have national procurement and save vast amounts of time and resource and finance? That is one example. Mr Bateman: I think the climate change issue is an extremely broad issue and we cannot have it as a single stovepipe activity. What I have learned from my 12 months in post is that it is not a new activity, it is an existing activity. What I have spent my first year doing is bringing together all those threads which have come from lots of other disparate areas of work, bringing in the waste management strategy, bringing in the local transport issues, bringing in the planning and building control issues. You can go across most local authorities and you can see all those strands of work there and it is a matter of corralling them together to make sure it is in a consistent whole and that it can represent a climate change policy, for want of a better word. The majority of local authorities perhaps do not know it but they are already doing it, they are already part of this climate care club in some way or another. Q349 Paddy Tipping: It is about raising the profile, demonstrating you can do it and lifting consciousness? Mr Edrich: It is also co‑ordination within the local authority which is of extreme importance. What you have got here and in the local authorities that I would call excellent rather than just good is strong co‑ordination and drive by elected members as well. Q350 Paddy Tipping: Mr Lack, you told us about the barriers and in your evidence you talk about barriers in central government. Are you going to expand on that? What would you like the Government to do to make this more effective? Mr Lack: We have already heard about the joined‑up thinking approach across all the departments and we sometimes find that we are in the enviable position of talking to a number of different departments and we can join them up through the local output. I think that is a key thing. From the local authorities' perception we are not supposed to be risk takers, we are not supposed to be innovators, we are supposed to be guardians of public funding and yet sometimes the innovation you might argue is risky. My local authority always says to me "Who's done it before?" If I can do them an example, a good case study of somebody who has done it before then they feel satisfied by that because it has reduced their risk. If I say, "Well, we are a bit trail‑blazing here, this is us going for it" they are very concerned about that. If you could introduce a mechanism whereby they could have that risk underwritten that would help, especially through the financial procedures. That would be an example. That can be a procedure thing or it can be an awareness raising opportunity, to enable local authorities to be able not take the risk but go for innovation ‑ and in climate change we are going to need some real technology changes, we need to do things better than we are doing them at the moment. That is one example. Mr Edrich: Also you have mentioned five areas where you say if we could move on it would clear some of the barriers. Certainly planning is one of those areas and I am sure that might be raised anyway. Building regulations is another area. Don has elaborated on the financial and procurement incentives. I am sure we will touch also on cultural change and how you change people's perceptions to "this is something that we need to be doing". Q351 Mr Breed: My perception is that it is a lot easier to get things done in metropolitan areas and big city areas where you have got some critical mass. I recall the Committee visited Leicester not so very long ago. Mr Lack: It is a nice place to visit. Mr Breed: And it was very, very useful and very informative. Turning to Mr Bateman, who comes from Devon, I would say there are some massive problems in terms of trying to overcome some of the real difficulties of some of the schemes that you really want to introduce. I come from Cornwall so I know a bit about what is happening in Devon as such. Ms Atherton: You should not say that too loudly! Q352 Mr Breed: Can you perhaps give us an idea of how the authority has tried to overcome some of the resistance that you get from some of the residents to the things that you really want to do to affect climate change? Mr Bateman: What we are starting to do is put together a climate change communications activity to try and make sure that climate change is relevant to local people. We are trying to build this thing called Agency for Change trying to change attitudes. So that is the first step that we are doing. We have just got a small amount of money put into climate change communications activity. This is based on local heroes. We are bringing it down to the local people to try and identify local people who might be heroes in saving the planet by doing something. That is the first step we are taking because it is the communications bit up-front that is the important thing and you will not get behavourial change without changing attitudes. If you come from Cornwall you understand the wind farm debate; we have that debate now going in Devon. Q353 Mr Breed: You have not got any wind farms yet, but that is another matter. Just finally, do you think that there is sufficient Government support for the rural schemes as such? I think there is quite a lot of support into the cities for many of the initiatives they do. It is a lot easier to get recycling and all the sorts of things that Mr Lack was talking about. Bearing in mind the sparseness of population in rural areas the costs are incrementally more in order to get the same sort of effect. How does the LGA try to tackle the two different areas of rural as opposed to urban when you come to look at the support they are getting? Mr Bateman: I do recognise the problem but I do not have any information at the moment to be able to answer that. We could come back to you and provide an answer. Mr Edrich: We have got two areas which could provide answers to that type of question. One is certainly Shropshire which is a two‑tier council, and the other is Cornwall. Both of those councils have gone for Sustainable Beacon status and I am sure that both of those would be able to provide evidence to the Committee. I will check that with the LGA but I am sure they will be able to provide something to you. Mr Lack: One of the examples we have got is that within the regions local authorities do network so within the East Midlands you have the Nottinghamshire and Derbyshire partnership which allows the bigger authorities to enable the smaller authorities. That is working quite well. In Northamptonshire 17 authorities have joined together to get a lot of their projects working across the whole of their area and the same effect happens within Leicestershire with the Leicestershire authorities. They also utilise the Home Energy Conservation Act Forum to bring those devices together. I think that is another opportunity within the regions. They are working well at the region but sometimes ‑ and it comes back to the question you asked me ‑ one of the barriers can also be the region itself, how the development agencies work within the region, how they work off the local authorities and enable local authorities. There is a lot of opportunity there and the development with the regional assemblies is obviously also a powerful opportunity. This can be well co‑ordinated with the government office within the regions. This is something that has been changing quite a lot recently with quite a bit of shuffling of the and that always has a knock‑on effect to local authorities, in holding them back or delaying them. What we need to be saying is how this can happen at a region. To give an East Midlands example, we have completed a strategy for the East Midlands and we now have a co‑ordinator working in the East Midlands. Of course funding for that co‑ordinator post is relying on where you can grab the money from each time and who can do it. We have been fortunate to be JI funded. It is always a challenge, a battle, and that is the problem, where the local authorities are working quite well is because they have battled to try and get the resource or find the funding to make it happen in the region or in their own locality. Mr Edrich: Or they see particular problems or areas that they might have to address and do some work about. If you look at the East of England they have done some work and are probably one of the leading areas on adaption issues to do with climate change. That is a whole group of local authorities working at a regional level trying to solve problems which they perceive are going to be coming to them as local authorities. Q354 Joan Ruddock: Obviously you have spoken about your own authorities. I have yet to meet Mr Jones, who has been employed by the Mayor of London and who I think comes from Woking which I understand was able to demonstrate overall carbon CO2 reductions. Have you in your own authorities been able to demonstrate actual reductions that are measurable as opposed to saying we have all these programme and all these interesting things we have done. Have you got a baseline and you can show reductions over a period of years? Mr Edrich: You have got to understand there are two elements to that. There are reductions in CO2 in the community and reductions from councils. Q355 Joan Ruddock: Indeed, the question I am asking is for your whole authority are you doing that piece of work? Mr Edrich: Yes. Mr Lack: In Leicester we developed the DREAM model with the Open University and De Montfort University back in 1990. It measured the whole city - business, domestic, city council and the energy and carbon emissions, re‑visited that on two occasions (the last full run being in 1999) and that showed that we had made a 32 per cent carbon reduction in that period and a six per cent energy reduction in that period which was quite significant and showed we were on the right lines. However, it also showed the transport sector was soaking up what we had been trying to achieve in the building sector. It did not show we were going in the wrong direction. It encouraged us and also showed us the complications of the modeling. I would like to go a bit further with that, that one of the effects of the modelling is that in 1990 we had a utility system where we only had one supplier for electricity and one supplier for gas. In 1999 we had a utility system where there were 32 different suppliers and the quality of data has gone down. So that is one of the biggest effects we have seen. The way we have dealt with that is that we have started to install an intelligent energy metering system across the city where we monitor what is happening not only in our own buildings but what is happening in businesses, and we are able to monitor in real time, half-hourly data, and that is a massive potential. I would have liked to have thought that this is something that would come out of the de-regulatory energy market and enable people to have access to real information in real time, not only for commercial and local authorities but for the public sector, because obviously if you open the bill and you get well informed data about what you are doing in your own home you can take action, but if you just see the bottom figure and it shows you in credit you get a well-being factor straight away; you feel good about that, you have made this money, you are saving money and you think you are efficient when in actual fact you probably are not. Chairman: David Taylor wanted to follow that up and Candy wants to come in as well. Q356 David Taylor: I will do my area now, Chairman. Earlier on we had no lack of good examples from Leicester in terms of environmental successes, Eco House in particular, but would you not accept that perhaps the twin towers of the New Walk Centre, which are the council headquarters in Leicester, are not a specially shining example as you drive up a long drag of road and, set against the night sky quite late on most days, whether they are working late or not, it seems to me there is an immense amount of light consumption. Mr Lack: It is an old 60s building that is a challenge for any local authority. You are quite right, there are two big towers. On the top of the smallest tower, B block, is an array of solar panels creating energy from the sun, so it is a shining example of how you should do it. The whole of the electricity for both sites - it is a megawatt site - is supplied by two wind generators in Leicestershire, at a place called Beacon Energy. So that building is carbon neutral right from day one for its electricity use. Q357 David Taylor: That is good, but I was thinking about the consumption monitoring, following your point about intelligent metering. Mr Lack: Half-hourly data; we are able to monitor exactly what is happening in the building every half hour - we can actually see what is happening. We could see, when the summer came and it was very hot, that we had a three degree temperature increase; that the electricity consumption raised dramatically because people were bringing in their own fans from home and putting them on their desks, switching them on, and that peaked and showed that we are going to incur a £9000 penalty just for the few days where we peaked. But had we had solar films on the windows, which we were arguing to put on, as an energy efficient measure, we could have avoided that. Q358 David Taylor: All of that is great, but the point I am trying to make - and I am sorry to interrupt - is that maybe there has not been sufficient focus on energy conservation at times when the building would not normally be operational. I am interested in what you have to say about intelligent metering. Years ago, in another life, I designed software which was involved in this area and tracked some of the things that you are talking about. But actually providing accurate information - and you notice some of the more recent difficulties on that - is not necessarily a precursor to that information being acted on by the component parts of a large building or a large department or a large organisation. Do you think that it really can always lead to a reduction in energy usage when sufficient information is provided, or are people just overwhelmed with the information and do not feel that they have sufficient control over their own environment to be able to take the necessary decision to change? Any of the three of you, not just Mr Lock? Mr Bateman: I think the important point in all of this is to try to work out for a county council's operations what its carbon footprint is, because after all what we are trying to do is to reduce CO2 equivalent levels. We have done this for Devon County Council and we recognise that we produce an estimate of about 76,000 tons of CO2 equivalent per year. But it can only ever be an estimate and it is a build-up from the bottom, and it is not only the electricity consumption, it concerns our use of water, the waste we produce, the business miles that we do, the commuting impact that we have on the environment, our street lighting and things like that, our use of gas and electricity, what our vehicles do. So we have to look at it in the complete round and identify what our carbon footprint is. Then we have to identify a target. If we are going to meet the Government's aspirational targets of 60 per cent reduction by 2050, if we start today that is only a two per cent year on year reduction, and it is getting the mentality that you can make a small reduction, using current technology, that we could probably go on for 15 years to make reductions. Q359 David Taylor: Mr Batemen, I am signed up to the dream, I really am; I committed and I am with you and I have been involved in this area for a fair length of time. But is it not the case that it is quite feasible and highly desirable to build in the sort of equipment and infrastructure in new buildings relatively cheaply, to do the intelligent metering and intelligent monitoring of all utility usage - a fair point that you make - but to actually adapt existing buildings which may have quite a long life ahead of them is enormously expensive, is it not? Mr Edrich: If I can just come in there? We actually run an internal loan fund within our council - it has been running since 1997 - and we found that basically for every piece of work that we do, for every ton of energy that we save is actually a negative figure. So if we do not carry out that work we cost the council the actual revenue amounts. For the lifetime of the products we are getting down to round about minus £70 per ton for electricity and insulation work to be put in. So to answer your question directly, there are mechanisms; there are internal loan funds that you can actually do. Lend the money to services, they carry out the work, they take half the savings, they pay back half the savings to the loan fund and you recoup the money and you send it out again. That sort of loan fund can be expanded up to national level; there is no reason why it should just be at a local level and the Carbon Trust have looked at it and started to do that. So energy efficiency pays for itself and pays for itself fast. Q360 David Taylor: The last part of the question is: can all of this be handled within a voluntary framework? The frustrations that I hadm four miles left of you at County Hall, trying to be involved in this sort of programme, were significant some years ago. Is there not a compulsory element or a formal structure needed? Should it not all be done within the UK Climate Change Programme, for instance? Mr Lack: Certainly on the utility side if we can get the right meters fitted in the buildings so that they can provide half-hourly data across gas, electricity and water, that is a simple operation that would enable the data to be available. That does not happen in existing buildings; most public sector buildings do not meter water half-hourly at all, gas very rarely, electricity only if it is above 100 kilowatt. We are doing it across all our buildings. Coming back to your point about can we turn it into real actions? We have people who go out to the buildings and explain to them how it actually works. We utilise a thing called a Display Certificate, which is a forerunner to the Energy Efficiency European Directive, which goes into buildings, which shows how much energy that building has used. All local authorities will need to do that in January 2006. We are doing it now in our buildings; we are part of a European project to do that, and we are putting people into the buildings to educate and to raise the awareness. But in fact when you send one of these little charts with a pictorial diagram showing when it was used and where it was used the day before to the manager or the person responsible for that building, and you have at the bottom how much it has cost them, that works - they turn that into action straight away. That is behavioural change and we can see it happening. Chairman: Thank you very much. Candy. Q361 Ms Atherton: I would like to ask a question on regeneration issues. There are many schemes going on around the country - Thames Gateway, Urban Regeneration Companies, many local authorities working with RDAs and others. Do you get a sense that there is a real push from ODPM to make sure that climate change and energy efficiency are at the very top of all these regeneration plans? I sit on an Urban Regeneration Company and we are committed, but I do not get it as a central tenet. Mr Bateman: I think with the recent issue of PPS1, which has a significant chunk on climate change right up front, if it is not now a part of that process it certainly will be in the future because it is there now in black and white. I think all authorities will be required to take on board the guidance that is provided there. Q362 Ms Atherton: But there are opportunities, with the scale that we are talking about, actually to have a real impact on driving down the costs. Mr Edrich: I think would be helpful for public authorities would be if we had maybe some powers to assist the renewable energy targets that are carried out, just to have that sort of power there. It does not necessarily mean we would actually have to use them as local authorities, but that would certainly help the case and then it is up to the local members and the local regions to decide whether they would want to use that or not, to do with whatever the feeling is in that sort of area. Another sort of area about that is to look at Regional Spatial Strategies as well. Certainly within the Yorkshire and Humber Regional Spatial Strategy there is quite a large discussion around climate change and looking at renewable energy targets and things like that as well. So, yes, it is coming through, is what I would say. Mr Bateman: It has found its way into the Devon Community Strategy through the Devon Strategic Partnership as the key issue in terms of environment to be addressed. So it is moving out into the community in that way too. Mr Edrich: There are also tensions though in these large regenerations that local authorities and planning committees actually have to deal with and that is a real problem and real difficulty, because what we have is a society that has still not completely gone over to a low carbon society, so we still have these tensions there and they are actually part of any decision- making, whether it is at a local level or a national level, or even at an international level. Mr Lack: I think the other key thing about regeneration is in a lot of local authorities areas they become arm's length operations and are not directly controlled by the local authority. I am not saying it is a definite barrier but it is another mechanism to go to, and then they do have to make decisions around affordability. We will see standards on building control standards current, as being the minimum standard that you would be aiming for. You would want to be aspiring to much better, so the challenge is to design to better standards, and sometimes obviously that has to be traded off against the cost-effectiveness of going for those higher standards - is there a cost and can you argue the case? It depends how strong an influence you can have over your regeneration companies as to whether you can - not make them toe the line - make them go the extra mile, and what is the incentive and encouragement for them to do that? I think that is an area where there might be a opportunity in the future to make some concessions as to whether there will be a win-win from it, rather than just having it as a challenge that you could go to the higher standard, but what would they get back for that, what additionality would they get back for that? And I think that is an opportunity. Mr Edrich: Obviously the building regulations are being reviewed anyway. Chairman: We are going to look at that with Alan Simpson's questions. Q363 Alan Simpson: Chairman, I was going to begin by asking Mr Lack to take us through the details of the proportion of energy supplied by Leicester to its own properties that comes from renewable sources, but I think he may have given an answer to that in relation to the wind farms and the town halls. But perhaps I could widen it? I think it would be helpful if the Committee were able to get from the LGA some breakdown of the Beacon authorities or Beacon achievements of your own Local Heroes that we should start to be pulling together as the template for a national strategy. If we could ask for that it would be extremely helpful. Mr Lack: I am sure the LGA would be happy to provide the list of the Beacon authorities and also the authorities --- Q364 Alan Simpson: I am not asking for a list of Beacon authorities, I am asking for a list of Beacon achievements, of what measurably, collectively the LGA would want the Committee and the Government to recognise is already in place with measurable impact, which we could then draw together. I think that would be helpful. My questions are more about the ability that you have currently to impact on building regulations. I am happy to start from Leicester and say that if you were to look at the properties that have gone up over the last ten years, what proportion of them in the public sector or the private sector for residential or private commercial, what proportion generate any of their own energy? Mr Lack: Within the housing sector, over which we have direct control, our own stock, we have been able to rebuild some of the old "Boot" houses in Leicester. They had been built to the maximum NHR standard of ten at the time - this was all done in '96. I cannot say to you that they have all got renewable energy systems but some of them were fitted with solar thermal panels, but unfortunately because of the right to buy they no longer belong to us because they were seen as a very good offer to take houses over. Q365 Chairman: We are talking about the Saffron Estate? Mr Lack: Yes. Q366 Alan Simpson: This was built in the last ten years? Mr Lack: Within the last ten years. But coming back to the question you were going to ask me but you did not, which was what percentage of renewable energy do we have across our own buildings? That is 33 per cent from renewable energy, which is procured from the region. The reason we cannot have any more than that is because we generate our own electricity as well and we cannot put that at risk by going on to maximising further renewables. Q367 Alan Simpson: So you generate that from? Mr Lack: From combined heat/power, within district heating estates, and put that back into the system. Q368 Alan Simpson: But to come back to this question that I did ask, and that is going beyond the estates that you build and are now sold, what proportion of the other buildings that have gone up in the last ten years have you required to have a proportion of energy self-generation? Mr Lack: We do not build many new houses ourselves, we are not allowed to. Q369 Alan Simpson: Let me be clear, I am not talking about you as a builder, I am talking in terms of local authority powers and the obligations that you as local authorities - and I am not necessarily asking for a Leicester thing, I am asking for an LGA response on this - how far are you successful in making energy self-generation a precondition of planning consents and part of building regulations? Mr Edrich: The first planning consent really is to go back to the Merton Ruling, where Merton was challenged and won its planning challenge to require installation of renewable energy on a large development by the Government Office of London. That was fairly recent, probably within the last two to three years. I would say that nationally probably very little has actually happened or been required by local authorities prior to that, and this is where the building regulations can play an important part, especially as the building regulations are going to be reviewed this year. We would like to see an embedment of energy efficiency renewable energy into building regulations as a local government situation, and we would certainly also like to see the embedding of sustainable construction principles and approaches within the building regulations as well. What we mean by that is something like eco homes or the building research establishment environment assessment model for commercial buildings. Those are the two areas which would be very beneficial, and the reason for building regulations is that they actually provide a level playing field across the country and there is a statutory duty to undertake the work as well and that is checked by local authorities. So that is what we would like to see. Q370 Alan Simpson: You will know that there is a Government commitment to having 15 per cent of our energy supply coming from renewable sources by 2015. Are you asking for the right to incorporate that as a requirement in building regulations? Mr Lack: We are being asked in our standards. In Leicester our target is 20 per cent by 2020. Q371 Alan Simpson: The national figure is 15 per cent by 2015. Mr Lack: Yes, but we have been working since 1990 for a 20 per cent by 2020 as across the whole of our influence, and the estate that is being built by private developers now, 4000 homes in Ashton Green in Leicester, all benefit from renewable energy. It has to take its energy sources from renewable energy, and it always has to be the high standard of energy efficient homes. Q372 Alan Simpson: Is that 100 per cent renewable energy? Mr Lack: It will not be 100 per cent because there will be times when they will need to have a backup supply, but the desire is that they are carbon neutral homes and they are very high efficiency standards and they are to maximise renewable energy. How they do that is down to the individual developer as to which way they would achieve it. The point I was going to make here is that the local authority owns all the land, that is how it has been able to put this caveat in there, and without that it could not have done that, so it has to be fair across the board. And the trade-off there is one of the problems that has delayed the sale of the land is that our property services want to maximise the revenue for this land and the developer is saying that you are putting such high standards on it that we want to trade that revenue off, and there is a conflict of issue there. But that is the standard that we are going for. Q373 Alan Simpson: Let me come back again to the question which I have asked, which is that in the representations being made by the LGA to Central Government are you asking for a 15 per cent by 2015 or a 20 per cent by 2020 figure to be allowed to be put into building regulation requirements so that that is the new level playing field? Mr Edrich: I think what we would say to this Committee is that we are requiring or we would like to see a requirement within the building regulation for renewable energy. I suspect our submission to the Building Regulation Review this year will actually come up with a figure that we would be looking for. But I would suspect - and this is from consultation with other officers and members - that we will probably be in line with whatever the national and international target is. Mr Lack: If you say 20, does that stop you getting 25 or 30? There is always a danger. Does it become the standard that everybody works to? Q374 Alan Simpson: If you say nothing you get nothing, is that it? Mr Edrich: The other issue about it is, is it embedded or can it be off site? Q375 Alan Simpson: At this stage I do not care, I just want to know whether that is something that you are seeking as an obligation rather than a wish list. Mr Edrich: Absolutely. Q376 Alan Simpson: Two further technical things. At a previous session the Chairman drew the Committee's attention to someone who had managed to install solar panels for a photo voltage roof and they had to take them down because it was a conservation area. Are these issues that you are trying to address and in what ways are you trying to address the issues about incorporation of renewable responsibilities into sensitive areas like conservation areas? Mr Lack: We certainly have a very positive methodology in Leicester and there will be other examples as well, but one of the things we are doing is to have a sale or rental system, which is aimed at anybody - fuel poor, anybody, because you do not buy it, you rent it - and we come along to the building and do an energy survey and make sure that the building is facing the right way, it is orientated the right way; we make sure the building is energy efficient and if it is not we will make it energy efficient. Q377 Chairman: You turn houses round, do you! Mr Lack: We turn them round to become energy efficient. So the idea is that you make the home energy efficient and the reward for that is that we then install a solar rental system. But we do that with our planning departments involved. So if we are in an area which is a conservation area and there is a restriction on the front of the building there and the panel should have gone there, we can put the panel remotely - it does not have to be on the building, it does not have to be on the roof, it can be in the back garden - as long as it can be faced directly. It is a technical fix, so there are ways of doing it. Mr Edrich: In our authority it is taken on an individual basis. Alan Simpson: It is helpful to have this evidence, this information about Leicester, but what we are receiving here is evidence from the LGA, and it is about LGA policy and the representations and the position that you are taking. I am sorry to sound finicky, but we have this with other people who come and give evidence to us, that they sound out the best to us as though it is representative of the rest, but it is not. So I would ask you to come back to us in respect of the LGA. Q378 Chairman: I think the point that Mr Simpson is making is that it would be helpful to have an assessment in terms of you represent very good practice, but how the rest of England's local authorities stack up. In other words, what is the potential to be had if other authorities were as rigorous as you have illustrated to us, because the Leicester approach is quite remarkable, I have not met anything like that before; but how many local authorities do not adopt as rigorous an approach as you do? Mr Edrich: There are quite a lot that do, that is the whole thing. There could be three other people sitting here. Joan Ruddock: In terms of the material that is being sent, that is already being sought and the points that you are just making, could we know the cost of installing the intelligent monitoring systems that you have in Leicester, because to know what that would cost, to see if it could be rolled out across the whole country would be a very important point for this Committee? Q379 Chairman: You have the idea. Mr Lack: Do you want me to give it to you now? It costs 17p to get the data from the meters, that is the actual cost, and the return is £1.11. Q380 Joan Ruddock: Yes, but the cost of installing it and all the rest of it, we need to know that. Mr Lack: Yes. Chairman: Ms Atherton and Mr Lazarowicz have some snappy questions to ask. Q381 Mr Lazarowicz: I am interested in the proposal in your paper for a national procurement facility to, "enable those local authorities with skills or resource shortages to make risk-free choices with regard to suppliers and services, and thus develop renewable energy." Can you tell us briefly what that procurement facility would look like? Mr Lack: At the moment each local authority would have to go through a procurement route if it was having to go through the EU procurement route for a major investment, in, say, energy systems and panels, and if we can have a national procurement, which would go through the European procurement group but then allow local authorities to cool off from this national procurement, installation of solar panels or condensing boilers, it is to try and save the time and resource of having to do this exercise individually at each local authority. Mr Edrich: I can give you a practical example? Our council uses the OFCOM Commerce Procurement for computers; goes to that and says, "Right, we will pull down these computers," whatever the numbers we actually use, and that is effectively what we are saying there. We are part of a large-scale procurement purchase of solar panels, as part of a European project where our Dutch partners are purchasing five megawatts of PV and we have actually just called off that contract. Q382 Mr Lazarowicz: Without getting too much into technical detail - and I raised it because it was raised in your paper - I wonder what is the problem here? Is it a problem of lack of a procurement facility or is it actually to do with the drive to adopt that kind of approach? We have heard from yourself, we have heard from previous witnesses that in fact energy saving, energy efficiency can lead to returns in a very short-term period. You are talking about a risk free choice. Most people like to make risk free choices when they come to procure anything, but is it not really more to do with the commitment by local authorities to go along the environmentally sustainable purchasing path that is really the problem and that is really what is needed? Is that not the real issue? I am not quite sure why procurement facilities are going to add something to this. Mr Edrich: What you are getting set up is a sense of regional excellence for procurement and that is being driven by local authorities to do that, to meet some of the Gershon requirements that we have placed upon us anyway. If you go to our authority, we are actually part of the Yorkshire Purchasing Organisation and we purchase our fuel through that organisation and we get extremely good rates for that and have made quite significant savings ourselves. So there is a real drive by local authorities to see procurement as a way to reduce costs and to reduce revenue costs. Q383 Mr Lazarowicz: I can see the advantage of national procurement in many respects but I am not sure it is particularly a feature to do with energy efficient supplies, and that is something I am still to be convinced about, but perhaps we can leave that for another time. Can I ask a related question which comes from that part of your paper as well? You did make the complaint that local authorities that attempt to address climate change are beset by problems associated with the competitive and fragmented nature of funding opportunities. Is that a real problem as distinct from the problem that applies in any case where a local authority is seeking to access what are inevitably complex funding streams in many areas of work? Mr Edrich: If you think that we have over 23 funding routes that we can apply for energy, that starts to give you a feel of wasting officers' time to make those competitive bids against those funding streams or initiatives. So, yes, ideas of actually streamlining and bringing funding together would reduce the amount of officers' time we spend in writing bids competitively against other local authorities. Q384 Mr Lazarowicz: Is it really a problem? I am sure it would be an idea if it was one source, but I am sure if we look through the EU there is probably 1000 plus funding streams for EU funding and there are no doubt 100s from UK Government funding in many areas as well. Is it really a problem in practical terms? Mr Lack: It has to be time and resource and to meet the cause, and if you are unsuccessful that has an effect, and some local authorities will not make the bid because they do not want to run the risk of not being successful. To give you the example of the Carbon Trust, the local authorities' energy financing scheme came out before Christmas last year and of the 100 local authorities that made a bid there could only be 18 authorities that would successfully get an award of money. But they all went through the same procedure of making that bid, taking up that resource and admitting Gap cost and that is the problem, and if that is one of a number of bids you should argue how much money has been set aside in making these bids collectively within the public sector and is that a good use of public funding? We would argue that if we do not go there we would not get the extra additionality. Mr Edrich: The other aspect is that the officers who make the bids are often the officers who have to implement the work on site as well. So there is always a tension between that officer making the bid and failing the bid and thinking, "I could have gone and implemented that work better." Mr Lazarowicz: It is a wider issue to local government finance, but it is not the time to pursue it today, so I will leave it. Chairman: Candy, will you draw our questioning to its conclusion in this area? Q385 Ms Atherton: You have been calling for a national campaign to be held and last week DEFRA announced a £12m package of a communications rallying call across the nation and region. Who is going to coordinate it? Are you pleased? Are you involved? And who is going to make sure that Kirklees, Leicester and Devon are singing from the same hymn sheet? Mr Bateman: I am very pleased with the outcome. I was involved in some of the workshops that came to that outcome and the fact that it is focused on local campaigns is the right solution, with this overarching national campaign to badge it all locally because it is about local people, it is making it relevant to local people. We understand that there is £4m in each of the next three years, and that if it is spread across all local authorities or all government offices in the regions it is only a very thin amount. So there is some concern there, yes, but we have not really studied the details and we do not know the mechanism for delivering those funds. So we have no idea whether Devon, Leicester or Kirklees will actually see any of the funds, but we are very hopeful that it will come down there so that it will give a boost to our own campaigns at the moment. Q386 Ms Atherton: You have said in your evidence - and I am going to quote, because I think it is quite startling - that "there are case studies which demonstrate that tackling climate change and energy efficiency issues both collectively and as individuals has led to reductions in NHS admissions, crime rates, domestic violence and also higher employment and academic performance of pupils in schools." That sounds to me like a manifesto for any political party and it strikes me it would be helpful if you gave us, snappily, case studies of just how you have hit these targets in various parts of the LGA up and down the country that can be used as case examples in any future national communications strategy, because they are extravagant claims. Mr Bateman: I think that particular one was focused on the Beacon housing estate in Falmouth. Q387 Ms Atherton: Which is fantastic! Mr Lack: With the education one and the one relating to schools, the houses I talked to you about in the Saffron Estate and one of the benefits that the school reported and recorded was an increase in pupil numbers attending, less respiratory disorders in the classroom - asthma attacks - less peer pressure because the clothing no longer smelt of mould and damp. Basically what it proved to us was if you have fitness standards, if you have good housing then it has a knock-on effect and one of the tests for that was the education, that the school was telling us what they were seeing. We were not probing them; they were giving us the results. So that is one example as a case study. But also Newham and Shirley have done a lot on their fuel poverty and health benefits and that is another case that we could provide. Q388 Chairman: I think we understand even more clearly now why the Prime Minister puts climate change at the heart of his agenda with all of these attributes to which you have been kind enough to refer. Thank you very much indeed for some genuinely fascinating information and also for your agreement to supply some further perspectives from an LGA standpoint, as opposed to your three authorities, which certainly have an impressive record in this area, and I think it is very interesting listening for the Committee. So thank you for your written evidence and thank you for being here, and our apologies again for having to cancel before. Anyway, you are here and you have been heard, so thank you very much. Mr Lack: Could I just say that we are very pleased to be here as the three authorities and we are pleased that you thought we were excellent, but if it had been Southampton, Newcastle or Manchester, they would have been just as good.
Witnesses: Rt Hon Stephen Byers, a Member of the House, Co-chair of the International Climate Change Taskforce and Simon Retallack, Research Fellow at the Institute for Public Policy Research, examined. Q389 Chairman: We welcome our final set of witnesses this evening, the Rt Hon Stephen Byers, who co-chairs the International Climate Change Taskforce, supported by Mr Simon Retallack, a Research Fellow at the Institute for Public Policy Research. Stephen, we are very grateful to you for coming to join us this evening. The Committee's interest in your activities in climate change were heightened when we sensed that you may have some input into trying to find ways to re-engage the United States in matters connected with climate change. Certainly the impression that has been given by a lot of our witnesses is that there is a reluctance from the United States' standpoint to fully embrace Kyoto and all that lies behind it. In fact I went on to the White House website and amongst the myriad of information about climate change was a remark by President Bush in 2002 in which he said it would have cost the economy billions and would have lost 4.9 million jobs if America had signed up to the Kyoto Protocol. Equally, in the same speech he then outlined a series of things which he felt in terms of climate change and technology development, sound science and other activities, which he felt were actually enabling the United States to address the question of climate change. Given that you work very closely with your co-chair of the organisation that you are responsible for, Senator Olympia Snowe, you may well have a better understanding of the American perspective on climate change, and if that is the case you might care to share it with the Committee? Mr Byers: I will do my best, Chairman, and I could say that I welcome the opportunity on behalf of the Taskforce to appear before you and your Committee this afternoon. The difficulty we have with the American position is that we see it primarily through the prism of Kyoto and a lot of the comment is based on justified criticism of the United States not being prepared to ratify the Kyoto Protocol. I think it is worth reminding ourselves though that this is not something that began with President Bush. President Clinton refused to put Kyoto to the Senate because he knew very clearly that the Senate would defeat Kyoto if it went there for ratification. When the Senate did vote on Kyoto it was not actually on ratification; they voted basically to give guidance to the US administration and they voted - I think it was 95 or 96 to nil - effectively against the Kyoto Protocol. The thing that struck me, not just in conversations with my co-chair, who is a Republican Senator, but with many other groups in the United States - and I have been over there several times in this particular role - is that it is a cross-party agreement as far as Kyoto is concerned; it is a non-starter for a variety of different reasons. We then have a choice: either we can criticise America for not signing up or we can try to find ways of engaging them, and I think the Taskforce was trying to find ways of engaging the United States. I think the important thing for all of us to be aware of is that President Bush is now under increasing political pressure at home domestically to do something on climate change, for a number of reasons. If I can just go through two or three reasons? The first is that both the financial institutions in general but the insurance sector in particular are increasingly worried about the financial costs to them of severe weather conditions. I do not know whether these figures are in the public domain yet, but certainly internally the insurance sector in the United States has estimated that the four hurricanes which they had in the Gulf of Mexico last August and September are going to cost the insurance sector over 20bn in claims. That is a huge impact on that particular sector. They are not without influence politically within the United States and I think they are beginning to bring that influence to bear on President Bush. Secondly, a number of States are taking their own initiatives. Eleven States in the north east of America, six of them Republican, five of them Democrats, are going to enter their own voluntary trading scheme for emissions. It is important because a lot of power generation in America is located in those northeastern States. So that potentially is significant. Then we have California, which is introducing - a not very nicely worded scheme - "the tailpipe emissions reduction", which is to stop the level of emissions from cars. So potentially very significant, in which California is introducing a requirement on car manufacturers to reduce emissions - a far reaching proposal, so far reaching that the American car manufacturers are threatening the State with legal action, and they may well be joined in that action by the Federal Government. But examples, if you like, of States beginning to do their own thing. The third thing which is significant, is that we have the Ford Motor Company, Dupont and four of the electricity utilities agreeing on a voluntary basis to cut their greenhouse gas emissions to four per cent below the 1998/2001 average, and to do that by 2006. So there is a lot going on in the United States; perhaps not as much at the level of the Bush administration as we would like to see, but I think increasing political pressure is being brought to bear, and in the last couple of days the McCain/Lieberman proposal has been re-tabled again in the Senate. So the Senate will have another opportunity to vote on those particular proposals. Q390 Chairman: When you launched the Taskforce you and Senator Snowe put your name to a statement that started, "Our planet is at risk. With climate change there is an ecological time bomb ticking away and people are becoming increasingly concerned by the changes," and you put forward the thought that the Taskforce with its diverse membership had been able to find common ground, and indeed your report does suggest that, given the international basis of it, that there are common areas of thought, at least amongst the Taskforce members that support action in this area. If that can be done by a group of people who take a real interest in the subject what prospects do you think there are of there being within the G8 more concerted action on this subject as a result of the fact that the United Kingdom has put it top of the agenda? Mr Byers: To be honest I think time will tell. I think the important thing is that the Prime Minister has made it one of the two key issues for his Chairmanship of the G8 so it is very much firmly now on the international agenda, politically on the international agenda. We saw the Exeter science conference; we are going to have a meeting in March of the Energy and Environment Ministers from 20 leading countries, and that will be followed up by a meeting of Ministers from the developing world; then we have the G8 at the beginning of July. So I think those are significant developments. Q391 Chairman: Does that give any thought that there might be any thought for a what comes after Kyoto Agreement, that in fact players like the United States and Australia who currently do not embrace Kyoto could become involved in? Mr Byers: They could and I think we have to find a way to almost allow them to get engaged in the process. I was interested by the comments by President Bush in Brussels on Monday where he mentioned climate change; he did not have any specific proposals about how to tackle global warming, but he acknowledged that for Europe climate change was a major issue and he said that we need to find ways in partnership of working together to tackle the consequences of climate change. I do not think that President Bush would have said that a year ago, so I think that is a shift. But the expression I used is that I think 12 months ago the climate change door was locked as far as America was concerned; I think it is unlocked but it is still closed, if you get what I mean? There is still a closed door there and the challenge for those of us who recognise climate change is the most pressing international issue facing our globe at the present time, is to find a way not just of criticising America for not signing up to Kyoto - which I think we can justifiably do - but to say for their own reasons they are not doing it, they are not signing up to it, so what is the practical agenda to engage the United States bearing in mind that there are now these domestic pressures building on President Bush that may not have been there 12 months, five years ago. Q392 Alan Simpson: I am sure you know better than most of us the gap that exists between what countries say they are going to do and what they actually do. Mr Byers: Why should I know that more than most people! Q393 Alan Simpson: I think you may have been closer to where decisions and delivery was located! In terms of the Taskforce comments you gave Britain quite a good press and yet in practical terms the latest figures coming out of the DTI suggest that we are not going to meet our targets of 20 per cent emissions reductions by 2010; it is highly unlikely that we are going to meet the commitments to have 15 per cent of our energy supplies coming from renewables by 2015. You talk to sectors of the energy industry and they say, "The market rules require us to compete on at least price terms not on energy conversation terms." So how do we put ourselves in a position of European leaders when we are pretty consistently going to fail to meet our own targets? Mr Byers: I think it is worth saying we will meet our Kyoto obligations so that is to the good. I think you are absolutely right to say that as things stand at the moment our own domestic target of 20 per cent reductions in CO2 by 2010 will not be met. On the modelling I have seen it is estimating that it will get to 14 per cent reductions if we continue as we have done, which is why I think the Government is right to decide to conduct a review of its climate change programme. What I think is very important, as the Chairman has said, is that the Prime Minister has made climate change a major issue for the G8 and indeed for our Presidency of the European Union in the latter half of this year. If we are going to be successful, giving leadership on climate change, we have to lead by example, and the worry I have is that the present review of the climate change programme will be used as an excuse to move away from the 20 per cent target reduction of CO2 emissions. I have to say that if the Government adopts that approach then almost everything we say as a Government on climate change will be devalued as a result. So I think there is a responsibility on all of us, whether as a Select Committee or individuals, to really say as clearly as we can to the Government, that this review must not be used as an excuse to backtrack but must be used as an opportunity to identify new ways and new methods by which we can achieve that 20 per cent reduction. If we were to pull away from it then all of the fine words about climate change and about how we will use the G8 to give leadership on this issue will come to nothing because people will say that you talk internationally in one language, you do something quite differently at home. That is certainly the message I have been giving to people, if they have been prepared to listen, that time alone will tell. I think it is very important that we act at home as we would want other people to act in their own countries. Q394 Alan Simpson: Just before you arrived the Local Government representatives were taking us through a range of interventions that they had made, but were saying to us that really if you want significant change the rules have to be changed, whether it is in terms of new rules for building regulations to raise the threshold upon which the market then operates, or whether it is the rules that some of the energy companies are saying to us need to take place, such as we need to create a market that sells less consumption and in which they can compete for selling less, rather than markets that only focus on selling more consumption; or in the market that you cited about California, which seems to introduce new constraints on the nature of vehicles that will be permitted in California. But in each case, when you push us a bit someone will say to you, "We are open to really serious challenge under existing WTO rules"; that each of these initiatives would be challenged on the basis of it being a non-price distortion of the market. So in the role that we have in the G8 and in the European context, are you saying that the lead has to come in pushing for new market rules? Mr Byers: It effectively applies across the board because sometimes people will use WTO as an excuse for their own inaction, but I think through the G8 and the power that the G8 has, coupled with the need to bring on those big developing newly industrialised countries like China and India, who are not part of G8 but actually are major players in all of this, to find a way of bringing them on board in the discussions - China now has just become a member of the World Trade Organisation. But if there is an agreement then effectively - and I was involved in the WTO when I was in Government - the way that the World Trade Organisation operates, providing there is an understanding between the major developing countries, European Union, Japan, the United States, then an awful lot can be done. What I think has to happen is a recognition, not just to do with the environment but also that wider social and economic objectives can be achieved through an international system, and the World Trade Organisation needs to be more flexible in what it is prepared to see as the terms and conditions under which trade operates. If it is purely a market-led approach then the desirable objectives that we want to see from international trade, we will not get them, and that is whether it is in terms of helping the least developed countries to pull themselves up out of poverty or whether it is in terms of doing something on the environment, as you will understand they are not the priority of the market. So we need to use the WTO in a way that allows us to achieve those wider social environmental and economic objectives. It can be done but you have to change the basis on which the WTO operates, but within the rules of the WTO it is possible to do that. Q395 Alan Simpson: I am glad you took this into China and for me, also India, because the question I want to finish on is how we as a British Government in our own right, and how within the international fora in which we exercise some international leadership, we approach our relationship with emerging nations that will have their own massive impact on carbon emissions and climate change. I think it was in 1990 that the World Bank was given the lead responsibility for a sustainability agenda in the developing world and yet over 80 per cent of the investments that they have supported since that time have been in fossil fuel using industries. The recent criticism of DFID is much that our own involvement in aid programmes in the developing world has also been focused on fossil fuel generating industries, and that is at the same time as a claim to want to give a lead in the opposite direction about the reduction of carbon emissions. How do we square that circle? Mr Byers: There are two comments I would like to make. The first is specifically on your final point. We should also be addressing our own things like the Export Credit Guarantees Department, and the report specifically says that when it comes to the various Credit Export Agencies we have our own, and many other major countries have their export credit bodies, and we should be factoring environmental concerns into those projects that you are prepared to back through Export Credit Guarantees. I remember from my time when I was Secretary of State for Trade and Industry having to deal with a particular proposal to do with a coal fired power station in India, and we were being approached for a very large sum of export guarantee cover for this particular project, and I remember at the time raising the issue and saying, "Do we not have an environmental audit to see if this is something that we want to support?" and unfortunately the election was called before there was an answer, and I got moved, so I do not know what the reply was! But it was an indication that these factors then certainly were not taken into account, and why I was very keen that we had a specific recommendation about Export Credit Guarantees being used for positive environmental purposes. In 2000 China was already the second largest carbon dioxide emitter - it was 15 per cent, 14 per cent for the whole of the European Union, and that was in 2000 - and China has expanded economically significantly since then, so it is a major emitter of carbon dioxide, and it is vital that we find a way of bringing them on board. What has been fascinating to me through the work of this Taskforce is that China and the Chinese Government have been very responsive, and they are concerned about this whole agenda and the effects of climate change, I have to say on China itself, because if you look at the implications for rice production in China then fairly minor changes in temperature have a devastating effect on the Chinese rice crop, so I think for those reasons perhaps more than any other they are acutely aware that something needs to be done. We make a recommendation of what we call a G8 Plus Climate Group, the G8 certainly in China, India, Brazil, South Africa, and maybe one or two others - but those are the key four - that we say should come together with the G8 to try to identify ways forward to tackle global warming, and I hope that the Prime Minister for the Gleneagles Summit at the beginning of July will extend an invitation to those countries to attend. I think it will send out a very important signal if he were to do that and I think that would then provide an opportunity, and I think would help the Americans because the difficulty President Bush has is that under Kyoto there would have been huge cuts in American emissions and, as we know, nothing for China and India, and that could not be solved politically in the United States. But if you can get the United States with China and India and the other G8 sitting around the table, identifying what might be the way forward, then I think that would be potentially a very healthy and constructive dialogue. Q396 Chairman: Can I pick up on a point that you made? You have been very strong on saying what ought to be done and indeed in your Taskforce report on page 11 you say, "Reviewing and significantly increasing the World Bank target to increase its investment in renewable energy arising from the extractive industries' review." What are the politics, particularly bearing in mind the key role in both the World Bank and (IMF) that the United States plays in actually getting somebody to say, "Fine, (a) we agree with that proposition; (b) how do we then amend the target and move forward?" Is there a political will to take forward in real work what you recommend here? Mr Byers: We have to bring as much pressure to bear as we can and for the reasons I mentioned at the beginning, to do with the change in domestic situation in the United States. I certainly think that bodies like the World Bank are becoming increasingly aware of the financial cost of severe climate change, and I think that is a new dynamic coming into all of this, and if we have oil that is above $50 and $51 a barrel yesterday evening, that is going to have a huge impact and helps some of the argument to do with climate change. There are real worries in the United States to do with energy security post-September 11th. So it is a very dynamic situation that President Bush now has to deal with, which perhaps was not the case when he started his first administration. So I think things are changing. I do not want to be overly optimistic; I think we need to use every opportunity to bring as much political pressure to bear as we can. But I do think that there is an opportunity there now that was not there even 12 months ago. Q397 Mr Lazarowicz: Very briefly, on the G8 Plus group, you have mentioned the positive signs coming from China. Do you see the same type of positive response coming from the other countries which you envisage as being in that G8 Plus group? Will there be a positive response to the invitation, for example, in practical terms if it is to be issued? Mr Byers: I know China and India better than I do in relation to Brazil and South Africa because we had a representative from China on the Committee and our scientific adviser was Dr Pachauri, who is head of the UN body and also based in India and very well respected and close to the Indian Government. I would not like to say, to be honest. I am not sure I can answer that. Simon, you know Brazil better than I do. Mr Retallack: I think that the most favourable response will come from China, there is no doubt; India has yet to develop the same sort of scientific capacity as China has as far as understanding the impacts that climate change will bring to India, and therefore there is less a sense of urgency around the issue. Nevertheless, I think the fact that China does seem increasingly willing to take the issue seriously and to commit, for example, to ten per cent renewable energy target by 2010, which is after all what we have in the UK, will send a very strong signal to other major developing countries and will encourage them to take part in similar efforts. Certainly the Brazilian Government and the Chinese Government in the latest round of UN climate negotiations in Buenos Aires in December jointly presented their own domestic programme of action on climate change, and certainly the Brazilian Government takes the issue very seriously, and I imagine would respond positively to an invitation from the British Government to attend the G8. Q398 Mr Lazarowicz: Presumably this G8 Plus group will be fairly small in terms of the additional countries to the existing G8. What is the risk of having that type of group set up, having negative consequences on other countries outside the G8 and outside the G8 Plus group? There will be other growing economies that will be part of the process. Mr Byers: I think the important part is not to see it as a replacement of Kyoto, so it would run alongside Kyoto, and if you were to do that then the combination of those who signed up to the Kyoto Protocol and the G8 Plus group, you are getting pretty much total coverage of the world's emitters of greenhouse gases. So that in a sense is the attraction of that group, bearing in mind that Australia, although they are not signing up to Kyoto, have set their own target, which would have been their Kyoto target. You may say why have they not signed up to Kyoto, but I am sure they have had some interesting conversations with the American Government about why they have not signed up. So Australia is going to meet its target anyway. We have been very clear as a group saying that we are conscious that our proposals, if we have not got them and have not used the right language, could be seen to be undermining Kyoto, and our whole remit, our terms of reference was to support Kyoto and to try to add to it rather than undermine it. But I think your point is well made, what we do not want to do is to set up a group which takes over and somehow relegates Kyoto; Kyoto was an important first step really, international concerted action to tackle climate change, and we need to be adding to it rather than trying to move away from it, and I am confident that a G8 Plus group can be of benefit rather than have the potential negative consequences that you have touched on. Q399 Mr Breed: Can we turn to Emissions Trading and the report recommends that all developed countries ought to effectively to set up schemes like we have in the EU, of which the UK is a part. It is very interesting to hear about the 11 States in America and I hope that pattern might continue, but the whole idea of looking very visionary into the future was perhaps at some stage this could be brought together into some sort of international Emissions Trading Scheme, bearing in mind we are at a very embryonic stage at the moment. What sort of time scale realistically do you think could be put upon that and when we would begin to see some sort of embryonic international Emissions Trading Scheme? Mr Byers: Globally everybody is looking at the European Union Scheme, which it really is a political imperative to make sure that that Scheme works. I am sure that many members of this Committee will share my concerns about the way it has got off to a rather shaky start, particularly this sort of standoff between the UK Government and the European Commission to do with the levels of allocations within our own national plan. So I would hope that we would get to a situation where that could be resolved, because it is in no-one's interests. So I think we should be trading emissions rather than trading insults, which is where we have got to at the moment with this standoff. So we need to get the European scheme running effectively and once that happens we will have many international companies that will be part of the European scheme and I think when they can see it operating they will be quite comfortable with it, and somebody will be in America saying, "We should be having something along similar lines," and then you have the potential - which I think is very exciting - because if you then have the 11 northeast States with their own scheme, we could then say within the European Union that we want to extend it and bring in those 11 States, and once you start to do that the potential is very significant, I think, to get a global trading scheme underway. The other attraction is that within the United States, because Emissions Trading is seen to be a market solution to the problem it is very attractive to a lot of people, so I think it has a big potential. And why it is interesting is that of the 11 States six of them have Republican Governors, five of them Democrats, and they are very interested in the whole concept of a market solution to emissions. So I think it has big potential, but we have to get the European scheme up and running and working effectively. Q400 Mr Breed: So that effectively perhaps is the potential barrier, demonstrating that a really effective scheme can operate, but once that has been set as the example then you will be able to do that. So really there is a lot of pressure on the UK and the EU to demonstrate that this really is a market solution and once that has been proven to a certain extent that will then hopefully be able to be rolled out elsewhere. Mr Byers: Yes, and the work we have done on the Taskforce, it is very much the case that whether it is the United States or Australia or the major developing countries like China and India, they are all looking with great interest to the EU scheme, and if it founders in this first few months we will pay a heavy price if we allow that to happen. Q401 Joan Ruddock: I would like to turn our discussions to renewables. One point on the Export Credit Guarantees, which you mentioned earlier. I am sure you are aware that there is £50m annually available to companies that wish to export renewable technologies, but certainly when I last enquired none of it had been taken up. I do think that is a very interesting thing to be pursued, given the comments you made earlier. I wanted to ask about targets. We have a target of 15 per cent of renewable sources by 2015; your Taskforce suggests that it ought to be G8 countries 25 per cent by 2025, and that some countries ought to have higher targets still. So I wonder which countries should have higher targets, how high should they be and what implications this might have for the UK? Mr Byers: It is interesting looking at where other countries are in relation to renewables. Just by way of a side comment, last week President Bush announced $700m of tax incentives for companies to go into renewables, so it is a big chunk of money being provided there by the Bush administration. Within Europe and the G8 countries, France has a target of 21 per cent electricity generation from renewables by 2010 and Italy 25 per cent by 2010. So they are well on course to meet the target that we have set in the Taskforce, which is why we have said that for other countries - and particularly we had in mind Italy and France - there would need to be a tougher target, if I can put it that way, because they have already made such good progress as far as renewables are concerned. Q402 Joan Ruddock: May I interrupt, Stephen? Are they going to achieve the targets they have set? It is not just aspiration, but they will achieve? Mr Retallack: They are currently on track. A lot of the renewable regeneration will come from large hydro, particularly in France and Italy as opposed to solar and wind and the sorts of technologies that we would like to encourage here. But, nonetheless, it does indicate that they should go further for 2025 and certainly beyond the target that we recommend in the Taskforce Report. Mr Byers: At what level? To be honest, I am not sure we are able to say what the new target should be for those countries; we would need to do detailed work in relation to the exact position in those countries, which as a Taskforce we simply have not been able to do. Q403 Joan Ruddock: And implications for the UK? Mr Byers: It makes us realise that our target, although people thought it was severe, is really quite modest, and I hope that as part of the climate change review we are going to put a greater emphasis on the importance of renewables and take either some financial incentives to encourage renewables further, and also ways in which we can make it easier for people to see projects carried through to fruition, which at the moment we all know that sometimes a planning system works against it, and so on, and we have to find ways of supporting renewables in a more positive light. Q404 Joan Ruddock: So there is no suggestion that the UK would get a lower target just because some are getting a higher one? Mr Byers: No. Q405 Joan Ruddock: The 25 per cent would be what the UK would have to get? Mr Byers: Yes. Q406 Joan Ruddock: You spoke earlier about the McCain/Lieberman proposals having been re-tabled. Do you have any estimate of what is the likelihood that these proposals might be passed? Mr Byers: There have been some changes in the Senate following the elections in November and certainly the conversations that we have had people are less optimistic; the changes apparently have not been helpful, as things stand, just to do with the Senators who have left and the new ones that have taken their place. However, if you talk to either Senator McCain or Senator Lieberman, they believe the momentum is growing and is on their side and each time they put it to a vote they increase the number voting in favour of it, and both of them seem amazingly confident that they will get a better vote this time - which is why they have resubmitted it in the last week - and they will keep submitting it through the life of this Senate. There are some more Senate elections next year and if they go according to the way in which they would normally go, then that is likely to see Senators coming in who are going to be more sympathetic to McCain and Lieberman. The way the Senate works it will not be good enough just to get a simple majority; they actually need to get 60 Senators because that will deny the opposition a filibuster to keep it dead, as it were. So their target is to get 60 Senators voting for it. They seem confident that they are going to be able to do that at some stage within the next four years now, and whether that is true or not they are a better judge than Simon or myself, but both Senator McCain and Senator Lieberman seem very optimistic that the momentum is on their side. Q407 Joan Ruddock: Is that the only game in town or are there alternatives to getting renewable targets and cap-and-trade schemes in the States? Mr Byers: I think what is happening is that you have action at Federal level and then you have lots of initiatives happening in individual States and it is quite difficult with our concept of the political governance here in the UK. But States have huge power in America, particularly when it comes to energy matters, and I think that when a number of them begin to move - and if you get California, on its own the fifth biggest economy in the world, a very car-centric society, and if the tailpipe emissions reductions gets through then that will have huge significant in terms of how people look at the whole issue of the environment and climate change. Q408 Joan Ruddock: Do they have renewables targets? Mr Retallack: They do not. There have been efforts to introduce renewable energy portfolio standards in the Senate and they have not gone anywhere, but I would add --- Q409 Joan Ruddock: I was meaning State-wise. Mr Retallack: Yes, a growing number of States are now adopting them, and again in the same sort of areas and there are efforts underway to roll that out across the country, but in Congress it is interesting to note that there are efforts to pass a Bill that would cap the four main pollutants, including CO2. The Bush administration plan is to cap only three of them, not including CO2 and the Democrats at the moment are refusing to give their consent to vote in favour of it unless CO2 is included, and it looks as though there is potential for trade to be done here and there is certainly interest amongst the electric utilities in the US that a deal should be done now and not in two years' time when perhaps Congress may become Democratic, or certainly in four years when there could be a Democratic President in place and more stringent requirements imposed on them than they could possibly get away with now. So I think that is definitely something to watch carefully in the next few months. Q410 Chairman: Can I follow on in this line of inquiry about legislation? I noticed that Senator Snowe and others have put their name to a Bill which they entitled The Abrupt Climate Change Research Act 2005, and the objectives, according to the short title to the Bill, is "to provide for the development and coordination of a comprehensive and integrated United States Research Programme that assists the people of the United States and the world to understand, assess and predict human induced and natural processes of abrupt climate change." That still suggests to me that there is still one heck of a debate going on in the United States as to whether in fact global warming issues are real or imaginary. Does that in itself make it difficult to move forward decisively, politically, whilst you still have this background of argument for and against going on? Mr Byers: There are still people, as there are scientists in the UK, there are scientists in America who will deny the fact of global warming and climate change. They are getting fewer on the ground. There was a very interesting report from the US Chief Scientific Officer last summer, which for the first time there was an acknowledgment of climate change and global warming. I think the administration is beginning to acknowledge that climate change is not the fiction but is real and is potentially damaging. But you are right to say that there is still a debate and there are some Senators who would deny climate change and would say that even if it does exist it is beneficial. I think the new Chairman of the Senate's Environmental Committee is one of those fundamentalists who say that this is not a problem and even if it is happening it is going to be for the good rather than detrimental. But I think those people are fewer and far between. I tell this little anecdote, when I was in the States in September and I was meeting with the senior member of the Bush administration talking about climate change and the need for action, and he said, "Gee, Steve, we are not keen on this stuff, it is going to affect the American way of life," and I pointed out to him as we were meeting they were evacuating three million people from the Gulf States in Florida and Louisiana because of the hurricanes, and I said, "Their American way of life is already being affected, you are going to have to do something about this." I think he acknowledged that maybe there is a problem. Q411 Chairman: Let us pursue another one of the findings in your summary of main recommendations, where you said that the G8 Plus climate group agreed to shift their agricultural subsidies from food crops to bio fuels and you make further comments on that. One of the things that has mystified this Committee is that as far as a move in the United Kingdom to have an indigenous bio-fuels industry, the industry tell us that the concessions made so far on duty are not sufficient to make investment, particularly, for example, at the bio-ethanol plant in the UK, a viable proposition. The Government responds by pointing out that on bio-diesel the use of recycled cooking oils and similar waste materials is helping the embryo industry move forward, but somehow we do not seem to be as committed as perhaps we think we ought to be on this. You seem to be rather more enthusiastic about this as a policy development area. What is your own take as to why we have not made more progress in the UK on this particular front? Mr Byers: I think to put it very simply the fiscal incentives are not there, and I think if we are serious about encouraging a new market, as it were - and this is why we make the specific recommendation on the Common Agricultural Police as far as the European Union is concerned - if we were to see a shift, and bear in mind the budget for the CAP is now set to 2011, so we know how much money is going to be in the Common Agricultural Policy, what we are saying is that rather it being committed to production, which it is at the moment, why do we not divert some of that into bio-fuels? Q412 Chairman: But the new configuration of the CAP does precisely that, in the sense that you are not having money paid to farmers geared to what farmers produce, but you still have difficulties in the use of, for example, set-aside land, you cannot use it for things like bio-fuels. But we come back to the hard-edged issue that the industry, in the case of UK produced sugar beet to fuel a Bio-ethanol industry, and British Sugar have been in front of this Committee time and time again and said a 20 pence per litre duty derogation is not sufficient, and yet when it came to air quality we had a 40 pence duty derogation for liquefied petroleum gas, and it just seems that there is a reluctance to say, "We will do this." The argument that the Secretary of State put to us is, "Of, if we are too generous it will invite imports," but if on the other hand you are going to meet European Union targets, which are not mandatory, they are targets which people pay attention to, to blend bio and mainstream hydrocarbon fuels, you are going to have to get it from somewhere, and I find it difficult to understand the logic as to why you do not at least kick-start your industry here. So if you have any thoughts on that we would be very interested to hear them. Mr Byers: Certainly I think the Taskforce would agree with the thrust of the point that you are making, that we have to be far more courageous in terms of using the financial power which is there. If one thinks about it, if the present system is not working as we would like it to work - and clearly it is not because we are not seeing this sector taking off in any way - you have to change the incentive and you have to make it more attractive, and you can within the CAP rules do precisely that, and it just needs the political will to make the decision. Q413 Paddy Tipping: I would like to pursue that for a few moments longer. Fiscal incentives are one approach and the other approach is to have the notion of a bio-fuels escalator, increasing the proportion of the bio-fuels used both in the EU and the UK. The Department of Transport has legislation to do it; the Department of Transport has been consulting about this, but the consultation seems to have been extremely slow and perhaps given a low priority. You have had dealings with the Department of Transport, is there a problem there? There does not seem a lot of enthusiasm in the Department for bio-fuels, whereas DEFRA, whenever they come and see us, are very strong on the issue. Mr Byers: I was at Transport about three years ago, so I am not quite sure where the thinking is now as far as this is concerned, but I think it is true to say that the Department of Transport has not seen this as an area which is a priority for them, which is perhaps stating the obvious. I think what we do need to see across Government - because it is a Government-wide issue - is not individual Departments playing off against each other and trying to block proposals, but saying, "What is for the common good here?" and if, as the Prime Minister has said, climate change is a key priority for the G8 and our European Presidency later this year, then going back to the point I was making earlier we have to lead by example because you lose credibility if you are talking of good game internationally but you are not doing very much at home, and I think this is one of those issues where if we could do something and make real progress then we would be in a far stronger position. Chairman: Thank you very much indeed. It has been a genuinely fascinating insight into some of the discussions that are happening internationally and certainly the agenda which the Taskforce set out was provoking and challenging, and I think your point about making certain that you put your own back yard in order if you are going to have full leadership in this area is a point well made. Thank you very much for sparing the time to come to talk to us. I am sorry that our first attempt to get together was aborted but nonetheless we have benefited from your views on this occasion. I also thank Mr Retallack for his contribution as well. |