Examination of Witnesses (Questions 190-199)
MR PHILIP
SELLWOOD, DR
NICK EYRE
AND MR
DAVE SOWDEN
25 OCTOBER 2005
Q190 Chairman: Thank you very much for
coming. Can I begin by asking you, Mr Sellwood, whether you think
we need another energy review?
Mr Sellwood: I think probably,
on balance, we do actually. I would divide it into two parts,
I think. I think we actually would say that the fundamentals which
were set down in the Energy White Paper two years ago, certainly
in the areas where we have expertise, remain the same as they
were. We believe, as was written in the Paper, that energy efficiency
still remains, and should still remain, the first choice of energy
policy; it is the cheapest, it is the cleanest and it delivers
on all of the current Government's energy policy initiatives.
Therefore, as far as energy efficiency is concerned, we think
those fundamentals are still very much valid. However, as we have
just been hearing, things have changed elsewhere in the last couple
of years with the whole question of reopening the nuclear debate
possibly and public opinion for and against onshore wind. These
are events which have taken place in the last two years, so to
that extent I think it is appropriate that we take a look at the
policy levers that were put in place two years ago.
Q191 Chairman: The problem I have with
that is that actually the nuclear debate was around at the time
of the PIU Report, it was around at the time of the Energy White
Paper, it was considered and considered very carefully and thoroughly,
and it was decided to frame the Energy White Paper in such a way
as effectively to exclude nuclear from the solution, so that really
has not changed and the fundamentals have remained the same. It
is very hard for us to understand what dynamic is driving the
sudden decision effectively to tear up something which I think
you signed up to very much at the time and, I have to say, I think
many other people did.
Mr Sellwood: First of all, I am
not prepared to defend the Government's policy on whether it reopens
nuclear or not. That is entirely a judgment that they would need
to make. I do not necessarily agree that things have not changed.
I think the point that I was trying to say is that in the area
of energy efficiency and certainly domestic renewables, there
are certain things that remain fundamentally true. Having said
that, we are also in a position where the targets which were set
are now looking exceptionally challenging in certain areas.
Q192 Chairman: Is that because they were
too challenging at the outset or because not enough has been done
meanwhile?
Mr Sellwood: I think that the
targets, whether they are in energy efficiency or whether they
are in renewables, are achievable. They are pretty tough, but
they are achievable. However, having said that, there are certain
areas, local authorities, public procurement, transport, where
clearly it is just not happening, so to that extent I think it
is appropriate that we take another look at some of those areas.
Q193 Chairman: You point out in your
memorandum that energy efficiency has doubled since 1970. The
White Paper, I think, reckoned it was going to double further.
It has not happened, has it?
Mr Sellwood: Yes, it has happened.
Q194 Chairman: Has it?
Mr Sellwood: The issue is around
energy efficiency versus energy saving. The biggest issue we have
is that the consumption of new goods plus the increase in temperature
in domestic households has grown at a rate largely consistent
with the energy efficiency that has taken place since 1970, so
I absolutely do not accept that energy efficiency has not worked.
It is our judgment that had we not had in place plans for energy
efficiency domestically, we would be looking probably at an annual
rate of increase of CO2 of nine million tonnes, 6% more than we
currently have. Now, the question is how do we ramp that up beyond
holding the line and that is really the issue that we are seeking
to address at the moment.
Q195 Chairman: And one of the reasons
why you seem relaxed about another energy review is that you feel
that would be an opportunity to make your case?
Mr Sellwood: I feel very confident
that whatever the nature of the review, the fundamental validity
of energy efficiency, particularly now it is allied with going
forward with micro-generation, is more valid and even more important.
The scale, as you have just alluded to, of what can be achieved
in energy efficiency is huge and I think one of the issues that
we want to get across again to government is that energy efficiency
and mass market renewables are not about small targets, but these
are about substantial sums of saving in terms of CO2 and also
saving for consumers, about ten billion, we think, since we started
on these programmes and about 28 million tonnes of carbon. Just
to put that in context, that is actually three times the reduction
of emissions generated by nuclear and it is almost the entire
reduction in carbon emissions for the whole of the coal industry,
so this is not small stuff.
Q196 Chairman: It makes it even more
worrying that CO2 emissions are rising though, does it not?
Mr Sellwood: Absolutely, and that
is why in some of these areas, as I have alluded to, transport
and in work with citizens and consumers beyond the home, we have
got to do much, much more.
Q197 David Howarth: It is not just that
though, is it, because if you look at electricity demand, that
is rising by 1.5% a year, so we are not talking about transport
there? The forecast is that that is going to continue for the
next, what, seven years to the extent that we can forecast it
at all, so one of the policy aims here was to decouple economic
growth from increased consumption of energy, and electricity in
particular. Now, that has not happened, has it, that kind of decoupling
has not occurred?
Dr Eyre: I think it depends precisely
what you mean. I would say it has largely decoupled. You quoted
electricity, but we tend to look more at the total energy mix
and certainly electricity is on a sharper upward trend than other
fuels certainly in the household sector. The figures that Philip
quoted imply that energy efficiency has improved typically in
the household sector by about 2% per year over the years since
the initial oil crisis. It has perhaps slowed down a bit in the
last decade or so to something like 1.5%. To put it in context,
the underlying pressure, because of the increased number of homes,
higher temperatures in homes and more appliances, is forcing up
the demand for what we want from energy at about 2% a year, so
it is the difference between those two numbers, the 0.5% a year
that energy is going up. I think that shows you that actually
we do not need to make huge changes to that 1.5% to tip the curve
gently negative and I also think that, as we look out to the longer
term, one of the major drivers of increased household energy use
will tend to slacken off and that is rising temperatures in homes.
It will keep on going up, but at some point people do not want
to live in hotter and hotter buildings, so that will tend to flatten
off, although there will be other pressures around consumer electronics.
I am not saying that growth will not generate more demands for
energy, it will, but I think energy efficiency, with a serious
effort, should be able to reduce consumption.
Q198 David Howarth: I suppose, as colleagues
have mentioned, there is a danger that people then switch to wanting
air conditioning and we get the kind of American-style increased
consumption of electricity during the summer.
Mr Sellwood: I think unless you
firmly believe that global warming will deliver the situation
where we are using air conditioning domestically for five or six
months of the year, which I suppose for some people is a tenable
position, though it is not ours, we actually do not think at the
moment, certainly not on the projections that we have done of
industry, that air conditioning actually represents quite the
challenge that people are talking about, an order of magnitude
of about three%. Now, that can change, but that is where we are
at the moment. I think, just to add to Nick's point, one of the
things that we really want government to get engaged in, which
currently we believe they are not sufficiently engaged in, is
working with the EU particularly to ensure that the sorts of product
standards that are being brought forward for some of these exceptionally
energy-inefficient products, plasma TVs, second-generation DVDs,
et cetera, et cetera, where we believe, looking at some of the
figures we have seen, that if we do not take the necessary steps
to work with the European governments and also beyond Europe,
what we will actually see is a situation where all of those gains
we have made on energy efficiency in the home could actually be
replicated by the growth in these goods. The answer actually lies
at the design stage; just do not let them make them.
Dr Eyre: Just to give one illustration
of that, the average set-top box, I am told by colleagues now,
consumes something like six watts which individually is not very
much, but, when you consider how many of them there might be in
our homes by 2010, adds up to an awful lot. Technically, we know
that at very low cost that can be one watt, so that is a saving
of over 80% that can be achieved by just having a good product
policy in place at the European level.
Q199 Chairman: Are you discussing this
with the BBC, for example, who are in charge of rolling out digital
technology?
Mr Sellwood: Well, we started
by discussing this with the DTI actually because, with the switch
from analogue to digital, they have the opportunity at a stroke
to prevent this happening. Now, at the moment the thrust of that
move from analogue to digital is very much literally about getting
people to change. Their view currently, and not the current Minister,
I have to say, but the previous Minister, was that any additional
complication that we put into that particular parcel of goods
would prevent the uptake and the switch from analogue to digital,
so, to answer your question somewhat elliptically, the BBC unsurprisingly
are not very engaging on this particular subject.
|
