Memorandum submitted by the Country Land
and Business Association (CLA)
INTRODUCTION
The Country Land and Business Association (CLA)
represents approximately 40,000 members who between them own and
manage more than half the rural land in England and Wales. We
have long held concerns on the effect of climate change on our
members property and businesses, and published a ground breaking
report in 2002 "Climate Change and the Rural Economy",
available from our website at www.cla.org.uk/climatechange
More recently we have undertaken our own review
of current renewable energy policy, a copy of which (together
with a copy of the executive summary) we are pleased to enclose
by way of the substantive element of our response to the EAC enquiry
[not printed].
INQUIRY ISSUES
1. THE EXTENT
OF THE
GENERATION GAP
Whilst we were unable to quantify the real extent
of the generation gap in our report, we recognised that current
policy is unlikely to deliver secure and sustainable energy supplies
in order to keep the lights on in 2020.
We have laid out a range of policy recommendations,
set out in the paper, which we consider are likely to deliver
sufficient carbon neutral electricity generation, at the same
time as delivering significant carbon savings in other forms of
energy supply, notably in renewable heat and transport fuels.
Clearly, maintaining a secure and stable electricity
generation capacity is a key target. Our members, like other business
and domestic consumers rely on electricity. However, we have pointed
out that, even in renewables, carbon savings can be achieved at
lower costs in the heat sector which has so far been ignored in
policy terms. We find this astonishing, given that more than a
third of UK emissions are created in space and process heating.
It is for this reason we fully support the proposed
"Renewable Heat Obligation" set out in Mr Mark Lazorowicz
MP's private members "Climate Change and Sustainable Energy
Bill" which we urge the EAC to support at its second reading
on 11 November 2005.
2. FINANCIAL
COSTS AND
INVESTMENT CONSIDERATIONS
Our report "Renewable Energy: More than
Wind" deals with the relative costs and benefits of alternative
technologies. We have not sought to cost nuclear generation, it
being outside our area of expertise, but have brought together
information on relative carbon savings from different policy options.
Our analysis leads us to the conclusion that
addressing the requirement to reduce greenhouse gas (GHG) emissions
will add costs, but that in order to secure a thriving economy,
energy efficiency alone cannot be relied on.
We have factored in a wide range of external
costs and benefits which we see flowing from different forms of
renewable energy, and have flagged up the very large contribution
that the countryside can make to the mix.
We would urge the EAC to recognise the importance
of renewable delivery outside of the electricity sector. Whilst
this is important, it can only ever address the current GHG produced
in that sector: some 25% of the UK total. Renewables have a place
in addressing the remaining 75%.
Our policy recommendations are designed to ensure
that the countryside, and rural business, can make the maximum
contribution possible to delivery of secure and sustainable energy
supplies.
We are confident that the capacity exists to
deliver were our recommendations adopted.
3. WHAT IS
THE ATTITUDE
OF FINANCIAL
INSTITUTIONS TO
INVESTMENT IN
DIFFERENT FORMS
OF GENERATION?
The design of the Renewables Obligation, in
a "one size fits all" policy, together with the New
Electricity Trading Arrangements, has ensured that wind power
has secured very nearly all the capital investment available.
We see real dangers in this policy in terms
of long term security of supply. Our analysis shows that costs
rise significantly when wind power provides more than 10% of supply
(owing to its intermittency) and that even this level required
significant investment in the network which is not costed to the
generators.
We see a real opportunity for a more widely
dispersed and sustainable local generation policy, in which system
risks are minimised by a large number of smaller scale local generators,
backed up by stable load generation and the National Grid.
This implies that nuclear has a future, but
we doubt that current policies will deliver the required investment,
nor will the private sector alone be able to deliver the necessary
waste management solution.
4. STRATEGIC
BENEFITS
Our report, cited above, shows that very large
public benefits can be delivered in building capacity other than
nuclear generation. In particular, we would point to the huge
benefit to the range of public goods and services provided in
the countryside through improved management of woodlands, new
planting, and reduction of waste disposal.
That said, we are concerned that the strategic
importance of security of supply, in particular in relation to
intermittent wind generation, has not been recognised in renewable
policy to date.
It is for this reason we argue that less should
be paid to intermittent generators, and more to secure and stable
generators, under a banded Renewable Obligation (RO).
We doubt that the RO is suitable or capable
for securing replacement nuclear generation capacity.
We regard the replacement, and perhaps enhancement,
of existing nuclear generation on the same sites as at present,
as important alongside new renewable energy development. We agree
it is necessary for replacement to take place to keep the lights
on, and whilst there are undoubted risks in respect of security
and terrorism, we do not regard these as fatal. Indeed, the current
policy option of increased imports of compressed natural gas by
ship presents more numerous and rather harder to defend targets
to terrorism activity. Our report quotes the RUSI analysis that
details security concerns on increasing exposure to risk as the
UK becomes a net energy importer.
5. NUCLEAR V
RENEWABLES: COMPATIBILITY
We see little conflict between a new nuclear
replacement policy and a wider and more sustainable renewable
energy policy taking in heat and transport fuels.
The necessary precursor is that Nuclear should
have its own support mechanism, separate from renewables more
generally, and that steps should be taken to resolve the question
of nuclear waste.
We regard a wide mix of renewables in all sectors,
including microgeneration, SME based CHP or heat units, and regional
renewables installations as being as important as nuclear. We
do not suggest that there is one magic bullet.
Even if all electricity generation was nuclear,
UK would still face a huge challenge in energy efficiency in order
to meet the RCEP 2050 target for GHG reductions. We do not see
such efficiencies arising without an overall reduction in economic
activity and consequently our standard of living, and therefore
regard it as essential we seek renewable energy in the heat and
transport sectors.
6. HOW CARBON
FREE IS
NUCLEAR?
Please see our report [not printed].
7. SHOULD NEW
NUCLEAR BE
CONDITIONAL ON
WASTE SOLUTIONS
Yes, subject to a reasonable risk assessment.
We do not see that an absolute guarantee is feasible in this area.
23 September 2005
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