Examination of Witnesses (Questions 600-619)
21 NOVEMBER 2005
JONATHON PORRITT
CBE AND MRS
SARA EPPEL
Q600 Colin Challen: Does the SDC take
a view on the proposal for some kind of independent carbon auditing
committee, perhaps something similar to the MPC of the Bank of
England?
Mr Porritt: I have followed those
proposals with interest. Certainly, in terms of the point I have
just made about monitoring, we have not had a chance to come to
a collective opinion about that, but I think some kind of independence
in this process is going to be fundamental. It is so difficult
for people to get a really strong sense that we are delivering
against these goals, these targets, unless there is a degree of
independence built into it. A lot of the monitoring and calculations,
the auditing that is done at the moment, is not as robust and
transparent as it needs to be.
Q601 Mrs Villiers: I would like to take
you back to the energy efficiency issues which were raised briefly
before. Although obviously considerable progress on energy efficiency
was a key part of the White Paper, clearly you are worried about
progress being made on that, as are many of this Committee, I
think. Perhaps you could expand a little on your views on the
Government's record so far in this area?
Mr Porritt: I think the first
thing to say is that considerable progress has been made. There
is a school of thought, which seems to be gathering strength in
various quarters in Government, both in DTI, as I understand it,
and elsewhere, that "efficiency does not work," that
the gains to be had from a concerted, strategic pursuit of efficiency
through the economy will not produce the gains that actually we
need. We would rebut that suggestion completely, and if you look
at the EEC, which clearly has been a very successful intervention,
indeed many of those involved in delivering against that target
are well ahead of their target and will be delivering the 2008
target by 2006. From our point of view, that says one thing: fine,
it works, let us get after a much more ambitious Energy Efficiency
Commitment in the next round, let us look at some of the design
issues associated with it but let us drive it harder. The Home
Energy Conservation Act has had some marked success, and some
local authorities will be able to point to tremendous achievement
in terms of their responsibilities as energy efficiency bodies
in that regard, but it has not worked across the board and there
are many local authorities that are falling far short of what
is asked of them. Our take on that is, if it works for best practice
in the sector, work out what it is that made it work for them
and then find interventions either to incentivise or drive, (sticks
and carrots, I am not sure which the best route to that would
be), to make sure this becomes common across the whole of local
government, rather than in, I think it is, just a third that have
now achieved their targets under HECA. For us, we would look at
relative success in those areas and we would say if you have got
relative success you have got some ratchet opportunities here
to wind up this stuff. However, that will not get us far enough,
which is why I mentioned that clearly we need to step up our act
on, I was talking about, equalisation of VAT on refurbishment
and new build. We think there are ways in which local authorities
could be empowered to do more, in terms of rebates perhaps on
council tax, which is one initiative being taken forward by Braintree
and being looked at now by a number of other local authorities.
Is it possible to achieve greater commitment from "able to
pay" consumers around energy efficiency than we have been
able to do up until now. Clearly there is a cost entailed in all
of that and you might well ask the question, have the energy suppliers
really worked hard enough to drive the products which would persuade
many people in those "able to pay" categories to make
more investments in the use of energy in their own home. I am
sure they would have given you evidence saying this is proving
to be extremely difficult and it seems like consumers are very
reluctant to take up these offers. Okay, then you go back and
ask what is necessary to incentivise consumers to get much more
involved in those improvements in their own homes.
Q602 Mrs Villiers: You mentioned there
were certain lost opportunities, in terms of changes to the Building
Regulations, which could encourage energy efficiency. Perhaps
you would expand on that and say what you think are the other
big challenges the Government faces on energy efficiency. In what
other areas could they be driving forward this agenda?
Mr Porritt: Could I ask Sara to
come in, from the Commission's point of view, in particular on
our disappointment about some of the outcomes this summer from
the debate about the Building Regulations, and then move on to
the sustainable buildings case.
Mrs Eppel: In the consultation
document which ODPM released last year they did have a proposal
which would expand the Building Regulations to people applying
for extensions, loft conversions, basement refurbishments, etc.,
which would require them to get permission from the local authority.
The proposal was that if you applied for permission to do such
a conversion, or an extension, you would have to have an energy
audit, which would be the same audit as will come in in 2007,
the Home Condition Report. That would give cost-effective advice
on what you could do to your home to improve the efficiency, so
you could catch people who perhaps were paying for a £20,000,
£30,000 refurbishment of part of their home and say, "Please
do the cavity wall insulation, which will cost you an extra £500,
and you can get grants from the energy suppliers to do that."
It was meant to try to stimulate home owners who were doing work
already to install the energy efficiency measures, for which they
could get grants. That was not in the package which ODPM announced
this year, so we were very disappointed with that.
Mr Porritt: I think we are disappointed
about the slowness with which ODPM has brought forward what we
would see as being a perfectly reasonable set of demands, around
its policies in the growth areas, in particular. Without getting
into the debate about the numbers of new homes that are required
to meet housing demand and affordability issues, it is clear that
we are going to see a very large number of houses built over the
course of the next 10, 15 or 20 years. That is going to cause
a lot of impact, there is no question about that, particularly
in some of the growth areas to the east of this country. We cannot
quite understand why ODPM has not pursued single-mindedly a sort
of deal, if you like, which is to say: `if that is the consequence,
according to Kate Barker and the Treasury, dealing with demand
and affordability issues, then the price you are going to pay
is that not one single extra house will be built which does not
meet the highest sustainability standards available to builders
anywhere in Europe' (and we do still lag a long way behind their
standards). What is the downside to that? The downside is certainly
not a competitive downside, because everyone would have to compete
on a level playing-field. There may be a cost downside, inasmuch
as those sustainability additions, if you like, will increase
the cost of each unit built, not by a very great deal, according
to the Sustainable Buildings Task Group, and those extra costs
will be absorbed very quickly into the net value of that home
and certainly will be buried, in terms of the benefits to the
house owner, in terms of reduced energy costs, and so on. When
we look at a kind of "big picture deal" like that, it
seems incomprehensible to us that ODPM has not been absolutely
explicit in saying "That's what we're now going to secure,
and not a single house will be built in those growth areas without
it meeting these standards." We have even put forward a number
of, I hope, more creative ways of doing that. One of the ways
in which you might do this would be to go for carbon neutrality
on all that new build by securing improvements and efficiency
elsewhere in that growth area, so that instead of trying to make
new homes completely carbon-neutral, you seek an accelerated set
of mechanisms to drive increased efficiency within the same area,
so that the consequence is net carbon neutrality. There is just
so much more that could be done here, and this is very frustrating,
to see how—the word which springs to mind is, unfortunately—"constipated"
this entire approach is at the moment, for no good reason, as
far as we can understand it.
Q603 David Howarth: Can I press you for
just a few more details, because it strikes me as being a very
important area. Have you had any discussions with ODPM about what
you have just said, and what is the content of their argument
for not going along what seems to be a perfectly reasonable and
sensible course?
Mr Porritt: To be fair, the principal
area of work that we are engaged in with ODPM is around existing
stock and we have been working with ODPM on a substantial piece
of work looking at what needs to be done to secure major efficiency
savings in the existing stock as well as pressing hard on new
build. We believe that is critically important, because obviously
most housing is existing stock not new build so that is where
we have had our principal focus. We have engaged with ministers,
with David Miliband and others, on the opportunities that we see
to be there, as regards the projected new housing in the growth
areas, and our advice has been listened to sympathetically. There
is a lot of concern about the degree to which this might drive
up the cost of new housing. Our argument is that this is something
the house builders will get their heads around very quickly. They
have already discounted the fact that they are going to have to
get better at sustainable construction techniques and have been
expecting a major hike in the efficiency demands put upon them
for many years now and they have not emerged really as yet. As
soon as something becomes standard and part of the basic business
of building any new house, costs will very quickly start to come
down. Instead of it being a niche area where you are having to
go out and source the materials on a case-by-case basis, a lot
of additional cost involved in the supply chain, (as soon as this
becomes a set of standard practices then manufacturers, building
material suppliers will accommodate to that change), you get economies
of scale coming through the system and the net cost is reduced
very rapidly. Why that argument—and it is not just our argument,
I should add—is not as influential with ODPM as it might
be, actually I am genuinely mystified.
Q604 Mrs Villiers: It is very interesting,
the extent to which a really serious eco-home standard, yes, it
might add cost to some developers but it would be incorporated
quickly into the value of the eventual home and I think consumers
would be prepared to pay extra for the long-term benefits. Turning
to the overall cost of energy efficiency, it was put to this Committee
by Dieter Helm that energy efficiency was sold to the Government
originally as being a zero cost, or a negative cost, option. Now
it seems pretty obvious that to do it properly and effectively
does require some money to be spent. Do you think that one of
the reasons why relatively little progress has been made on this
is because policy-makers have expected it to be zero cost, when
in fact it has considerable cost if you do it properly?
Mr Porritt: I am not sure about
that bit of the history. Again I might turn to Sara, because Sara
was Policy Director at the Energy Saving Trust at the time when
many of these ideas were first being raised. I do not quite remember
the history of it in those terms, in Dieter's terms, as it were,
and I do not remember anybody saying it was completely zero cost.
Mrs Eppel: It was presented as
being a lot cheaper to save energy than to find new supply, and
that remains true, and if you take a bottom-up approach, in terms
of what measures you put into a home, for example, and what you
can save from each of the measures, whether it is insulation or
a new boiler, still it remains true. I think perhaps his interpretation
was that therefore it was presented as a zero cost option, which
I do not think was true. The major policy instrument is the Energy
Efficiency Commitment and that is not a cost to the Treasury,
because it depends on the energy suppliers to deliver it and the
cost for it goes on to the householder, fuel bills. What I think
is not correct in his assumption is that therefore it was presented
as not needing any government involvement or any government money,
because I know that is not true. It was certainly emphasised at
the time that government communications, and government engagement
with local authorities was needed to stimulate a total package.
Q605 Mr Hurd: Low-cost energy efficiency
has been presented as a policy of no regrets; therefore it is
disturbing to hear your sense that the Government may be cooling
a little, in terms of enthusiasm. Do you think underlying that
is a concern about the difficulty of relying on energy efficiency
to deliver absolute reductions in carbon emissions against a background
of growing demand and the risk that future demand turns out to
be higher than anticipated?
Mr Porritt: It is a legitimate
concern because if efficiency does not deliver absolute savings
then clearly it is not delivering what Government needs it to
deliver, there is no question about that. I think a lot of this
goes to the culture of people responsible for energy use, at a
home scale all the way through to those managing very large amounts
of energy, in a factory or in a building, whatever it might be.
The Sustainable Development Commission has just done a piece of
work for the Sustainable Consumption Round Table, looking at some
of the attitudes of consumers associated with microgeneration,
what is it that gets them focused on this, what is it that turns
them from being perhaps dangerously oblivious to the responsibilities
that they have now and the opportunities they have to reduce their
cost into energy-responsible and energy-intelligent consumers.
It is quite clear, even from this very small piece of work that
we have done through the Sustainable Consumption Round Table,
that an absolutely critical aspect in this is the knowledge and
understanding of the individual household to see the advantages
coming through the system. The study that we did looked at a small
number of people who, as it were, inherited microgeneration, so
they did not go out and make the investment for themselves, they
came into it through an affordable housing scheme, in a housing
association system, whatever it might be. I am touching on this
only because it is fascinating to read the way the research tracks
how they turn into people who become much more knowledgeable about
energy in general, about connectedness between point sources and
huge greater issues like climate change. For me, underlying this
issue about the Government's ambivalence, hesitation, over energy
efficiency is the complete befuddlement on their part as to how
to engage with citizens now about the challenges of climate change
and what it means, and to do so in a positive, upbeat way that
does not look as if they are beating them round the head again
with a sort of instant, apocalyptic meltdown. That means we have
not got a properly-informed, conscious, intelligent body of citizens
able to take advantage of both efficiency and renewable offers
at the domestic scale which would really drive the absolute gains
that we are talking about. There is a process here, there is a
loop in this system, you have to drive up awareness and commitment
before it is likely that you are going to achieve some of those
really big gains.
Q606 Mr Hurd: With respect to the challenge
of engaging consumers, is there a structural problem with the
EEC, as the chief policy instrument, that it requires the consumer
to believe that energy companies want to sell them less energy?
Mr Porritt: Sarah, do you want
to go for that one?
Mrs Eppel: I think there is. I
think it is difficult for consumers even to read the information
in the fuel bill. Information from the energy supplier selling
them less energy is a bit counter-intuitive. It seems to me incredibly
easy to overcome that by communicating to the householder that
it is part of the government programme on climate change. It sounds
terribly straightforward and I am not quite sure why government
has not already done that.
Q607 Mr Hurd: Would it not be even easier
to open up that market to clients which the consumer might trust
to sell them energy?
Mrs Eppel: They would need to
restructure the Energy Efficiency Commitment slightly, as it stands,
because the obligation is on energy suppliers only and anybody
else who wanted to participate, for example, a supermarket or
a major brand that consumers trust, would do it only if they were
going to make enough profit. That would create a "middle-man"
between the energy supplier and the consumer and making a profit
in that way is very difficult. They would need to restructure
EEC but then there is an opportunity in 2008 to do that, so our
recommendation would be to look very much more closely at the
way it is structured at the moment to try to create those opportunities.
I would say also, in addition to that, I think smart metering
is a very, very powerful tool, and that is not just up to energy
suppliers it is also for Ofgem to facilitate the inclusion of
smart meters in the total package for the householder.
Q608 Mr Chaytor: You said earlier, I
think in respect of the current review of energy and revisited
in the White Paper, that as Chairman of the SDC you did not have
access to such processes. Your main complaint is that neither
the ODPM nor the Prime Minister's Office are listening to your
advice, so my question is, where is the SDC going wrong, if you
do not have access to the processes and they are not listening
to your advice?
Mr Porritt: As an advisory body,
if everybody automatically acted on every piece of advice we offered
them life would be very easy, but it is not really like that.
Clearly, when we are offering advice that cuts against what Government
believes is the best way forward then they are going to resist
that advice. I cannot envisage a day when the Sustainable Development
Commission will ever achieve the status that everything it said
was adopted automatically, to be honest, and we are listened to
in other respects. Again, and I must be fair to ODPM here, much
of what we have been saying about existing stock is being taken
very seriously now by the Department and we feel they are making
very good progress on that front. There is still a lot to do there,
but it is an open door now whereas before it was a closed door.
As to the Prime Minister, I think that there are many issues surrounding
his own views about climate change and how to deal with that and
it is not my experience that the advice that we offer has been
disregarded by the Prime Minister.
Q609 Mr Chaytor: Should the SDC be involved
essentially in this forthcoming energy review?
Mr Porritt: I very much hope that
it will be and that is something that we have raised officially.
My feeling is that the review does need to be ultra-attentive
to issues of trust, transparency and accountability. The Government
might be minded to push that through without taking much care
of those particular aspects, and I think that would be an own
goal, it would cost them very dear in the end result, because
people would say, "Well, it was all a fix, wasn't it?"
A bit like the time when the Government was pushed very reluctantly
into the public debate about GM, which turned into a national
debate called "GM Nation", my hope is that the Government
will anticipate high levels of public concern about this in advance
and create a process which brings independent advisory voices,
both inside and outside Government, fully into that process.
Q610 Mr Chaytor: Just switching tack
a little bit, you are very confident about wind power meeting
its targets and it is on track to achieve 500 megawatts by the
end of this year, in fact. Are you equally confident about other
forms of microgeneration?
Mr Porritt: These are very early
days for microgeneration technologies, in reality. If you look
at the sorts of core opportunities there, if you are talking about
mini wind turbines, micro CHP, solar water schemes, PV, there
is a body of operating experience in this country, a much larger
body of operating experience in other countries where these things
have been rolled out more purposefully, and that body is sufficient
to say that we can already achieve substantial gains by virtue
of making these technologies easier to use, more effective. I
think the example of Merton, in the first instance, then Croydon
and now I think there are more than 25 local authorities that
have stipulated this 10% of the electricity for a new development
must come from point source renewable systems, has been extremely
well received, as we understand it. People were very worried that
it was going to create this massive negativity on the part of
developers, "Oh, we're not going to go to Merton, we're not
going to Croydon, so we're not going to faff around with this
ten per cent." As I understand it, the evidence reveals that
there has not been a phenomenon of that kind, developers have
been much more positive about it. What it shows me is that, if
really you start to drive these things, make them more easily
accessible, give people a chance to experiment, get some of the
scale advantages that you need, with mini wind turbines, for instance,
until we get real scale around those turbines the price will not
come down far enough to make it available to a large enough number
of people, so can we incentivise that, in the first instance,
can we make it easier for people to make those investments now.
Q611 Mr Chaytor: Targets are essential
to the development of microgeneration?
Mr Porritt: Targets are becoming
an extremely controversial area of policy, of late, from the biggest
climate change negotiations all the way down to smaller-scale
targets. For me, any strategy that is brought forward without
carefully thought-through targets is not going to be worth the
paper it is written on.
Q612 Mr Ellwood: Mr Porritt, you spoke
about the 40 nuclear reactors as lemons, I think it was, earlier.
To go back to nuclear energy in general, and bearing in mind the
comments that have been in the papers today made by Tony Blair,
and indeed the increase in the gas prices that we have seen recently,
could you bring us up to par, just very briefly, with what the
SDC has been doing, I understand you are doing some research on
this subject of nuclear power, and what your findings have been
so far?
Mr Porritt: We are in the middle
of that piece of work now. It is a major piece of work for us
and we are looking at seven major areas. We are looking at waste
and decommissioning, safety and security, environmental impacts,
CO2 impacts, resource availability, public perception and cost.
They are each big studies in their own right. Some of it is specially-commissioned
new work from a variety of different academics and consultants.
Some is desk research, which we have done inside the Commission.
We are on track with that piece of work, we hope to have that
finalised in January/February next year to feed in immediately
to help shape some of the review, if that is the point at which
the review eventually is commenced. We hope at that point to bring
forward a quite definitive set of insights into the degree to
which nuclear power may or may not have a role to play in helping
us deal with the challenge of climate change and the parallel
change of energy security.
Q613 Mr Ellwood: Can I confirm that it
is January/February, which is only about three or four months'
time, rather than a year hence?
Mr Porritt: No, definitely January/February,
within the next three months.
Q614 Mr Ellwood: Rather than leaning
on the SDC's views and considerations, which I presume you are
not going to comment on at this stage; would that be right?
Mr Porritt: I can comment on what
our existing position is, in terms of the policy that we presented
to the Government at the time of the Energy White Paper, but it
would be hard for me to have anything definitive to say about
what we are going to say in January or February.
Q615 Mr Ellwood: Are you allowed to step
outside that SDC bubble and give your own views, or would you
be reluctant to do so?
Mr Porritt: I think that might
be unhelpful.
Q616 Mr Ellwood: We might find it very
helpful.
Mr Porritt: One can understand
that. I would not mind putting on the record, just very quickly,
where the SDC is now, because you might find that helpful.
Q617 Mr Ellwood: That would be very helpful.
Mr Porritt: It is just a brief
paragraph, Mr Challen. This was when we were asked, as part of
the contribution to the White Paper, to look at different supply
options to see how they performed against the then Sustainable
Development Strategy, so here I am quoting: "Nuclear power
does not perform as well against the sustainable development criteria
as energy efficiency and renewables and on the basis of the above
analysis" and there is a whole great report about this, "realisation
of the full potential of energy efficiency and renewables would
render the building of new nuclear capacity unnecessary."
We have revisited that position, clearly, in the light of current
concerns about both climate change and energy security, and it
is against that sort of comparative methodology that we will be
offering advice to Government.
Q618 Mr Ellwood: Bearing in mind what
you have just said and the fact that we have had an indication
now from the Prime Minister on his views on nuclear energy, where
do you think the Government will be going?
Mr Porritt: There have always
been a number of people in Government who have remained persuaded
that nuclear power is a critical mix of our energy supply system,
and that was made very clear at the time of the Energy White Paper.
It did not dismiss nuclear for all time, it said simply "We're
not bringing it forward now." I do not want to try to take
a guess on where the Government is going to go. My feeling is
that too many people are panicking at the moment about nuclear
and they are coming up with all sorts of ludicrous statements
about the degree to which nuclear will or will not help us to
meet these targets. We have done a calculation, for instance,
of the benefits that you would get from a new build programme,
both replacement and new generation, in terms of supplanting different
amounts of CO2. It is much, much smaller than people think, much
smaller. Lots of people are using very dangerous phraseology,
like zero carbon or carbon neutral, this is complete nonsense.
This is a technology that is not zero carbon and most people in
the business of promulgating nuclear technologies know that, so
they are either lying or they are trying to pull the wool over
people's eyes. This is a technology that still has a carbon burden,
not as much as other technologies but still it has a carbon burden
and we need to be aware of these things. There are a number of
statements flying around about nuclear being the panacea to these
problems, which cause us enormous anxiety, because that is not
the right way to address these issues. The right way is systematically
and rigorously to assess the contribution of nuclear against these
very demanding criteria of energy security and climate change.
Q619 Mr Ellwood: Two very short questions.
First of all, the entire debate on nuclear energy seems to have
been speeded up, partly because of, hopefully, our own choice
of debating this in the first place, but also Digby Jones came
out with comments this week as well. Do you think we may see the
position taken by the Government on nuclear prior to the actual
results of the energy review being reviewed?
Mr Porritt: That would be a catastrophe
and extremely foolish. What is the point of offering people a
proper review and a chance to re-engage in these critical areas,
which we have welcomed openly, we have said it is a good thing
to go back in and re-examine the nuclear option, there is nothing
wrong with that, it is stupid of the NGOs to say it is not necessary.
It is always necessary to keep options on the boil, keep reviewing,
but simply to jump to a conclusion before any of that analysis
has been done I think would cost the Government a lot in terms
both of credibility and public support.
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