Examination of Witnesses (Questions 1-19)
DR RICHARD
DIXON AND
MR DAVID
NORMAN
19 OCTOBER 2005
Q1 Chairman: Welcome. Thank you very
much for coming. Thank you also for your pretty comprehensive
memorandum, which has been helpful to our inquiries. This is the
opening session of our inquiry into "Keeping the Lights On"
and we are delighted to have you with us at the outset. Can I
just begin by commenting on your memorandum? It seems that you
are pretty laid back about all of this and that if only we get
on with implementing the White Paper everything will be okay.
Is that a fair summary of your views?
Dr Dixon: I do not know if we
are laid back, but I would say that certainly the Energy White
Paper appeared to put in place all the right kinds of proposals
and the modelling that we did with ILEX suggested that by delivering
those and not much more than those we would get to the right kind
of place in terms of emissions reduction, prices for energy and
structure of the energy sector, and we would do all of that without
needing to build a single new nuclear power station.
Q2 Chairman: If that is the case, why
do you think there is so much talk about a new White Paper being
needed next year?
Dr Dixon: I think that the nuclear
industry has put a lot of money into a PR campaign which has put
about the idea that we might need nuclear and has, unfortunately,
convinced some quite eminent people of that. I hope when the nuclear
industry is in front of you, you will ask them how much they have
spent on that PR campaign in the last 18 months because that would
be very interesting to know. I am afraid that certain political
people have taken notice of that and decided that they will open
up this issue. To us, the Energy White Paper in 2003 was seemingly
the answer. It appeared to give us the answers we wanted and appeared
to have discussed, considered carefully and come to a conclusion
on the nuclear issue that now certainly was not the time, and
never might be the time. With the Climate Change Programme being
revised just at the moment, it seems strange that we have had
an Energy White Paper Climate Change Programme and now we are
going to reopen the Energy White Paper. It seems that we are debating
energy continuously rather than making decisions and actually
getting on with it.
Q3 Chairman: You do say that there are
some areas of the current initiatives which need to be strengthened.
Could you just very briefly highlight some of the areas where
you think the Government should be taking action today?
Mr Norman: If you are looking,
for example, at the energy efficiency side, we feel that there
is a major area of work that was outlined in the Energy White
Paper about decentralisation. About two-thirds of the energy that
is generated under the current centralised system is wasted through
heat in those centralised power station and transmission losses.
The decentralised model, that was a major plank of the Energy
White Paper, is something that we would strongly support. Immediately
shifting the kind of energy production to that decentralised model
has huge efficiency savings. That is one major area. Micro-combined
heat and power is ready now. It costs about £500 per kilowatt
capacity additional over and above the costs of condensing boilers.
These are things that could be rolled out already and we just
have not seen since the Energy White Paper the specific practical
steps taken to put those kinds of things in place. A final policy
point: the Emissions Trading Scheme—lots of people missed
the point—is about energy efficiency. Putting a strong cap
on the power sector in the Emissions Trading Scheme is precisely
what drives those companies that are able to invest in efficiency
technologies to make those kinds of investments. Again, the cap
was too weak to achieve those kinds of changes in the first phase[28]
Q4 Chairman: Do you think the White Paper
was set up to fail?
Dr Dixon: I do not think it was.
It contained practical proposals. There was a bit of a lack of
join-up and there appears to have been a bit of a lack of commitment
in following some of that through, but there are elements of it
which are really very successful. In Scotland, for instance, where
I work mostly, the Scottish Community and Household Renewables
Initiative ran out of money after three months of the start of
its financial year. It is a scheme which gives grants to communities
and householders to install renewables. It is a runaway success.
Despite having much more money than it did the year before, it
ran out very quickly and this had to have extra money put in.
There is a demand from the public. Some of these measures clearly
are very sensible but there does not seem to be the follow-through.
With the reopening of the nuclear debate it is certainly the case
that we are going to see fewer follow-throughs while we are in
this period of having another think about energy.
Q5 Emily Thornberry: I was interested
in what you said to us talking about the two-thirds of energy
that is wasted because of our outdated electricity system. I think
there is a little bit of confusion about the footnote. You talk
about a report published by Greenpeace and I just wonder if you
could give us more details about that report because it was not
clear from your statement. Also, whilst you are here can you tell
us a bit more about it?
Dr Dixon: Yes, indeed. This report
we are referring to, and obviously there is a lot of work by many
people about decentralising the power system, is a good summary
and contains an excellent diagram which suggests that our current
model of energy generation is extremely wasteful.
Q6 Chairman: It would help future historians
if you could name the report.
Dr Dixon: Yes, that is a good
idea. It is called Decentralising Power: An Energy Revolution
for the 21st Century. It is Greenpeace's report so I would
not claim that I am doing it full justice by telling you about
it. This diagram is a very useful one. It suggests that for 100
units of energy, so 100 units of energy in a pile of coal for
instance, that we bring into a power station by the time it reaches
someone's house there are only 22 of those energy units left as
electricity because our power stations are not very efficient,
we lose some energy as we transmit it over great distances in
many cases, and we use it rather inefficiently in the home. These
are three areas that we can improve upon. Of course, if we are
looking at renewable energy we are perhaps less worried about
efficiency because we are not creating climate change at the same
time. That is where those statistics came from.
Mr Norman: It is not just theoretical
stuff. Woking Borough Council has cut its carbon dioxide emissions
by 77% by precisely putting in place those kinds of practices:
decentralised energy networks and energy efficiency gains.
Q7 Mr Caton: Good afternoon. If we could
look at the reducing demand in your submission for a minute. You
argue that a reduction in electricity demand of only 0.2% a year
would be sufficient, yet the National Grid Company suggest that
electricity demand will continue to rise significantly over the
next seven years. Do you accept that we are still a very long
way from being able to achieve absolute reduction in energy demand?
Dr Dixon: Clearly we are some
way from it. In the assumptions that we used in the ILEX report
that we submitted to you, we looked at three scenarios. We looked
at a business as usual scenario where energy grows at 1.4% a year,
which is pretty much what we have at the moment. We looked at
a medium scenario where energy grows at only half a per cent a
year, so some difference from today. That is based on the range
of forecasts that the National Grid Company itself makes. That
is the lowest estimate for growth that it produces. It is not
our guess, it is someone else's estimate of one of the possibilities.
The final situation, which you referred to which we looked at
in our more extreme scenario, was a reduction of 0.2% a year.
That is taken from the underlying figures that go into the Energy
White Paper. Again, that is not us saying that is where we would
like to be, that is where the Government suggested we might be
going in the Energy White Paper. Yes, we are some way from that.
I think I would refer you to the debates that we have had over
the last decade or so about waste. I think we are in a very parallel
situation in the energy debate. In waste we have got away with
a cheap and dirty solution for many years, we have realised we
have got to stop that and we have got a bit better at the first
thing we need to do, or the easiest thing to do, which is a bit
more recycling, and we are really starting to get to grips with
the fundamental, which is that we should stop producing quite
so much in the first place, and reduction is where we should be
going. In the energy debate we are still very much struggling
with the demand side and reducing demand despite many good efforts.
I think we see that very strong parallel, that we are really going
through that thinking chain and we have got to that stage in the
Energy White Paper of saying, "Here is the key thing, it
is the amount of energy we use in the first place, not just how
efficiently we use it and where it comes from, so let's start
to tackle that". That is where that 0.2 comes from, it is
the Government suggesting that its long-term aim is a reduction.
Rather than even a reduction of the growth rate, it is an absolute
reduction.
Q8 Mr Caton: Thank you. In your paper
you recommend that the Energy Efficiency Commitment should be
transformed into a mechanism based on absolute reductions of energy
or carbon. How do you see such a system functioning, especially
in relation to energy suppliers, given the commercial interest
they have in selling more energy?
Mr Norman: I think it was more
a point of principle in terms of the way targets should be set.
At the moment the energy reduction is expressed in terms of gigawatts
and that is what it is based on. Those reductions, depending on
the source of energy, could achieve very different kinds of carbon
emissions savings. I think it is a more general point. We have
not done the work in terms of putting that into a specific mechanism
but in terms of how targets are set it must surely be sensible
for those to be based around specific carbon reductions rather
than just wattages.
Dr Dixon: I agree that there is
a general point about incentivising the industry and there is
a mechanism in law to allow the companies to set up Energy Services
Companies which has not worked because of the operation of the
market. No company has felt that is an attractive option for them,
mainly because any customer can change supplier at 28 days' notice,
so if you are trying to build up a long-term relationship with
them you are going to fail because they will just switch to someone
else. The Government has done some pilot work to see if we can
make this work better. That is an area where we desperately do
need to make that system work. In fact, one sensible vision for
the future is that every electricity supply company should only
be allowed to operate as an energy supply company so that it is
talking to its customers about their total energy use, not just
the price of electricity and gas it is offering today.
Q9 Mr Caton: The Government still wants
to maintain low domestic energy prices in order to address fuel
poverty. Is there a conflict here with the need for energy prices
to rise to reflect the environmental costs associated with them?
Dr Dixon: I think in general energy
prices are going to rise and that sends a useful signal but there
are, of course, sectors of society that need to be protected from
those rises and in social terms it is the fuel poor. We need to
find ways to protect the fuel poor, and there is plenty of work
done on that, in ways that do not hold us back from letting everyone
else see that the future is higher prices and that energy is something
to be conserved and not simply something that is not thought about,
as currently. We are absolutely committed to the idea that fuel
poverty, as something that the Government has committed itself
to, must be ended and any change of energy policy which puts up
the price must not recreate the problem. We are committed to that,
but that must be done by a mechanism which does not put a brake
on the whole thing so that we can never have a rise in prices
and never have a proper consideration of the true value of energy
to the environment and to society.
Q10 Mr Caton: Have you such a mechanism
or a policy instrument in mind?
Dr Dixon: In the UK we have a
number of mechanisms which are being implemented as part of the
Government's commitment to eradicate fuel poverty. If you have
a home where there are two pensioners living they can get free
central heating installed in Scotland, for instance. Scotland
has the worst fuel poverty problem in the UK. There are really
quite creative schemes which are improving people's homes and
quality of life or giving them money, which is the simplest but
less satisfactory thing to do, to help them through fuel poverty.
Mr Norman: The cost challenge
must be put to those proposing different types of approach to
meeting our energy challenge, must it not? The European Commission's
own research makes clear that it is always cheaper in policy terms
to save energy than to generate more, even with the cheapest forms
of generation. That should give a really clear policy steer. From
our work it is clear that renewables is the next stage up from
that. Some of the kinds of technologies that are capturing public
debate at the moment are those that once you account for the real
costs of carbon capture and storage, and obviously nuclear generation,
they take it far in excess of the peak price of electricity. I
think that cost challenge must be put to the nuclear industry
and others.
Q11 Mr Caton: Do you think low prices
inhibit the establishment of properly functioning energy services
markets?
Dr Dixon: I think they do with
the proviso that the fuel poor need an absolute protection. We
must honour the commitment the Government has made to eradicate
fuel poverty. In both the domestic sector and industry, whenever
we have seen even the hint of rising prices we have seen a success
story of people taking energy use more seriously and doing something
about it. The Government's own analysis suggests that the Climate
Change Levy had twice the impact of its real financial value because
people worried about it coming and did something about it. There
was a psychological early up-take of energy efficiency measures
because they were scared that the Climate Change Levy was going
to hurt their business when the reality was that it probably was
not going to make all that much difference. There is a clear demonstration
there that a signal about the price of energy, even if it is not
today, that in the future it is going to be more expensive does
make a difference to people's individual or business investment
decisions. Clearly for the environment that is the direction we
need to move in.
Q12 Dr Turner: Listening to your earlier
remarks it rather sounds as if you felt that if only the White
Paper were acted upon then all would be right with the world.
That hardly seems to be right given that China alone is commissioning
1,200 gigawatts of coal-fired power stations which on their own
would be sufficient to push CO2 levels well into the range at
which apocalyptic climate change scenarios would click in and
you would not have many wild species left to protect as WWF. Yet
you do not seem to pay any attention particularly to the use of
carbon capture and sequestration technology. It seems to me that
if this is not used on a major scale in China, India, America,
and to a lesser extent ourselves, the world has no future.
Mr Norman: Our response to the
Committee was very much focused on the UK's energy security needs
in line with the questions that were posed. The UK has got the
best renewables energy resources in Europe and if we as a nation
are saying that even with the best renewables resources in Europe
we are not able to solve these problems in line with the Energy
White Paper's model, what is that saying to countries that we
would be concerned about adopting nuclear power, for example?
If we are not able to do it, how can we possibly be encouraging
some Third World countries not to be taking up nuclear energy,
for example? For the UK, our answer is clear on this. We believe
that over the next two to three decades there is plenty that can
be done with energy efficiency and renewables without relying
on those technologies. You are right, in terms of a global context
that is potentially a different story and we are at the stage
of looking at carbon capture and storage, how it relates in economic
terms and environmental terms. It is a new technology, something
that is much less mature than the existing energy efficiency and
renewables technology that we already have available to us now
to address the UK's energy security needs in line with our carbon
emissions targets.
Q13 Dr Turner: For a start, the UK only
accounts for 3% of the world's CO2 emissions and there is a limit
to what China can do with renewables because it is not in the
same fortunate position with raw resource that the British Isles
are. Do you not feel that we have to promote the earliest and
most active use of carbon capture and storage, assuming it to
be practical, which still has not been proven on a massive scale,
otherwise all our other efforts will be set completely at nought?
Mr Norman: We would certainly
support having the work done to see whether this is practical
in that context. Yes, China has extraordinary resources of coal
that it is going to be using, so the logic is to look towards
a kind of technological solution that can deal with it. At the
same time, even within the Chinese context there is enormous value
in looking at the decentralised model. Remember, carbon capture
and storage still applies generally to large power plants, long
transmission systems which are themselves potentially in some
parts of remote rural China quite inappropriate. Compare that
with the value for poor communities of a decentralised model in
which they can earn livelihoods as well as generate power for
their economic development at a localised level and solving climate
change at the same time. We accept that there is a need to look
at the practical principles behind carbon capture and storage
but we do not see it as a technology that is ready yet. Climate
change is an immediate challenge. There are quite a lot of scientists
saying, "We have got to get this right over the next ten
years", and nuclear and carbon capture and storage are not
going to do that for us.
Q14 Dr Turner: The fact is they are building
these darn things at the rate of about one a week already. Carbon
capture has to be pursued otherwise we have no chance. I quite
agree that nuclear is on too long a timescale to be useful, but
you do make a point in your memorandum of referring to the actual
CO2 emissions as a result of the construction and operation of
nuclear plant. You gave a very wide range of figures. I take it
these are the grams of carbon emitted for ongoing generation throughout
the plant life, yes?
Mr Norman: Over the life of the
plant, that is correct.
Q15 Dr Turner: Where do you get such
a wide range of figures from? Can you just put them into context
by comparing them with the grams of CO2 emitted per kilowatt hour
from, let us say, a combined cycle gas turbine?
Mr Norman: We used other organisations'
research on this because we have not got the capacity to do our
own. That reflects deliberately the diversity of opinions out
there if you look at a range of different research institutes
out there. Typical was the Oko Institute in Germany, which is
well respected, that is looking at something like 30 to 60 grams
of CO2 per kilowatt hour of generation. The problem is that there
are a variety of different sources and, depending on whether you
choose industry sources or independent research institutes, that
is reflected in the full range that we have reflected in our report.
I agree, it is not very satisfactory that there is not a definitive
research statement out there of exactly how carbon intensive nuclear
power is. There is a new paper by Smith and van Leeuwen[29]
that compares nuclear power stations with the most modern gas
turbine plants and it suggests that nuclear power produces about
a third of the carbon emissions over its life cycle compared with
the most modern gas-fired power turbines. That is not so far behind.
Again, I can send the reference for that. One of the points about
the nuclear power's carbon intensity is a lot of that carbon intensity
is generated upfront, so through the mining of uranium ores that
are becoming more and more diluted, in other words it takes an
awful lot of carbon to extract uranium now as the ores become
of less good quality, and all the build costs are upfront before
you have a kilowatt of generated supposedly carbon free energy
from nuclear power.
Q16 Joan Walley: My question is to Dr
Dixon just looking at the whole issue. I notice that you are the
Head of WWF-Scotland and I wondered what the difference is between
thinking in Scotland, the Scottish Parliament, and the thinking
down here. Have you got a perspective that would be useful to
our considerations here on that?
Dr Dixon: The politics of energy
is extremely interesting in Scotland. Obviously there is a division
of reserved and devolved powers when it comes to energy, so energy
policy is reserved to you lot and the promotion of energy efficiency
and the promotion of renewables is something that is devolved
to the Scottish Parliament. There is a kind of frustration that
Scotland is not the master of its own destiny in terms of energy
policy. That makes the politics extremely interesting. Nuclear
is one of the issues, and it may even become the deciding issue
of the 2007 Scottish Parliament election because you have, on
the one hand, a Labour administration which appears to be in favour
of new nuclear power stations, which are even less popular with
the public in Scotland than they are with the general UK public,
and, on the other hand, you have an opposition which is much stronger
in terms of the Liberal Democrats and the Scottish National Party,
both of whom are absolutely against any new nuclear stations in
Scotland. In terms of the politics it is very finely poised. If
you read the First Minister's comments on nuclear whenever he
is cornered on this you will find that he is treading an extremely
fine line between the message he is receiving from here that nuclear
is still to go on the table but not decided yet and what he picks
up from Scottish politics and the Scottish public which is that
he would not still be in power after the next election if he were
to promote that issue strongly.
Joan Walley: That is very interesting.
Thank you.
Q17 Mr Hurd: Can you point us to another
country that has been successful in picking the low hanging fruit
of energy efficiency and reducing energy demand? Successive governments
in this country for about 20 years have talked about this and
have failed. Has anyone out there succeeded?
Dr Dixon: I think I would have
to come back to you on that, I do not have an example off the
top of my head. You are seeing other people in the queue of witnesses
today and in future sessions who I think will give you a clear
answer on that. I will look into that and I will send the Committee
something on that.
Chairman: Thank you very much indeed.
Q18 Mr Ellwood: The concerns that we
are all focused on are to do with carbon reduction and I think
Dr Turner has illustrated very well the fact that we can do good
here but it could be overshadowed by what is happening on the
other side of the world. Bearing in mind that focus on carbon
reduction there is a danger, if you like, that in determining
a strategy on how we move forward we could end up picking a winner
inadvertently by promoting a particular design or asking to go
down a particular route. Do you think if we were to step back
completely and just leave carbon reduction as being the sole objective
that we would see more nuclear power stations or less?
Dr Dixon: Certainly I think we
would not build a new generation of nuclear power stations. It
will take a very large step in political will to give us new nuclear
power stations because it requires such a fundamental change in
the way that the electricity supply industry works and such a
set of guarantees for any private sector body to be interested
in building them that it is really politics which will decide.
If we took our hands off and said, "In the current situation,
who out there would like to build nuclear reactors?", no-one
is standing up and saying that. No-one in the financial industry
is saying that. Even British Energy is refusing to say that it
would like to build new reactors; it is actually saying that it
would not like to.
Q19 Chairman: Given that, and given what
you said right at the beginning about why you think nuclear is
back on the agenda and there may be a need for another White Paper,
which is basically the Government has been rolled over by the
nuclear lobby, what is in it for the Government to allow itself
to get into this situation?
Dr Dixon: You would suspect that
the failure to make a great deal of progress on the climate change
target that the Labour Party proposed for itself in the 1997 Manifesto,
a 20% cut in CO2 by 2010, is one of the motivations but they have
been convinced, I think incorrectly, by the industry's arguments
that this will help them and, of course, it will not help them
by 2010 because even if they started today they would not have
built one, not by a long way, but they are thinking longer term
perhaps. I think the industry is making great play that it can
create jobs, which is not really true in comparison to the alternatives
which would create a better spread of jobs and perhaps ten times
more jobs. I am slightly puzzled as to why the nuclear industry
has managed to find quite so many converts.
28 Footnote added by witness: Of the EU Emissions
Trading Scheme. Back
29
van Leeuwen, JWS and Smith, P Nuclear Power: the Energy Balance,
revised August 2005. Back
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