Select Committee on Environmental Audit Written Evidence

Memorandum submitted by the Environment Agency


  The Environment Agency is the Government's principal adviser on the environment. Our interest in climate change and energy is informed by our role as a modern regulator and as a champion for the environment.

  In considering options for future investment in energy supply technologies we make the following key points:

    —  Climate change is the biggest threat to our environment. In order to play our part in avoiding dangerous climate change the UK must meet the goals of 20% CO2 reductions by 2010 and putting ourselves on the path to the longer term cuts required.

    —  The UK is not currently on track to meet these goals. All sectors will need to contribute to further reductions in CO2. New policies designed to achieve this ambition should be set out in the revised Climate Change Programme, due to be published this autumn.

    —  The primary focus of energy policy should be energy efficiency and further development of renewable energy sources. We support the goals set out in the Government's Energy White Paper.

    —  We must meet both energy security and environmental goals. There are synergies between the two and these links should be exploited.


  1.1  The Environment Agency has a central role in respect of climate change and energy.

    —  We regulate industries under the Pollution Prevention and Control (PPC) regime that are responsible for 40% of UK greenhouse gas emissions. These industries include major energy users and fossil fuel power stations.

    —  We act as the Competent Authority for the EU Emissions Trading Scheme (EU-ETS) in England and Wales. We are responsible for issuing permits to eligible installations and assessing compliance with the scheme's operational rules.

    —  Adaptation to climate change is critical to our operational functions, especially flood risk and water resource management. We are a lead partner in much of the regional adaptation work.

    —  We support adoption of renewables and low carbon technologies.

  1.2  The composition of future UK energy supply will determine whether many of the environmental outcomes we seek are achieved. We will have an important role in regulating and supporting many of the future energy supply technologies.


  2.1  Climate change is the biggest threat to our environment. Scientists agree it is happening and that human activity is increasing it. Over the past century, global temperatures have risen—with the last 10 years being the warmest 10 in the century.

  2.2  The European Commission has set an indicative long-term global target of not more than 2 degrees C above pre-industrial levels (before about 1750) as its interpretation of the UNFCCC objective to prevent dangerous anthropogenic interference with the climate system. Significant impacts are already built in to the climate system as a result of past and present emissions, and we have already experienced the unwelcome impacts of increased climate variability (drought, flooding) in our operational work.

  2.3  We recently published our first national report on climate change, The climate is changing—time to get ready. The report gives a graphic demonstration of the kind of lifestyle and environment we could be living with in the future if we do not tackle the causes of climate change and build our resilience to it now.

  2.4  Already, in the first years of this century, floods, storms and drought have shown how vulnerable the UK is to the weather. The floods in January in Carlisle, last summer's flash flooding in Boscastle, the catastrophic sewage overflow into the Thames and the record temperatures in August 2003 all serve to highlight the type of problems we have to face as climate change bites.

  2.5  The science tells us that weather events like these will become more frequent and the extremes will get worse. We have to face up to escalating costs, the damage to our property, disruption to our way and quality of life and in some cases increased threat to health and even lives. For example, the DTI Foresight report, Future Flooding, concluded that we might face a rise in the annual flood repair bill from the current £1 billion to as much as £25 billion by 2080 if we do not take action now. Already, since 1998, the cost of repairing damage from extreme weather and floods has increased by 60%.

  2.6  In light of these findings, the costs of climate change either need to be internalised now or the, probably higher, costs of the damage of climate change, such as flood damage will be inevitable.


  3.1  We support the UK energy strategy that is set out in the 2003 Energy White Paper. This sets targets for reducing greenhouse gas emissions while ensuring continuity and security of energy supply and the affordability of energy services to all parts of society.

  3.2  However, emissions projections and trends show that the UK is not currently on track to meet its targets of a 20% reduction by 2010 and a 60% reduction by 2050.

  3.3  The Climate Change Programme Review should identify what more we need to do meet the 2010 target and longer term reductions. With sufficient effort from all sectors, these national targets for carbon dioxide (CO2) reduction can be achieved. This will show international leadership and set an example for others to act.

  3.4  We want Government to reaffirm its commitment to the 20% goal in the revised Climate Change Programme and set out a stronger framework for action involving all sectors and committing to the policy measures listed below.

  3.5  The major focus of future energy policy should be to reduce demand and to increase the uptake of renewable energy and other low carbon technologies. Energy policy should be considered in the context of the revised Climate Change Programme, the scale of emissions cuts required and the likely contribution from other sectors.

  3.6  When considering which energy supply options should be promoted the whole life cycle environmental costs of each technology need to be identified and considered. In order to create a level playing field to enable decision-making the environmental costs of all energy technologies need to be internalised. Different schemes can then be judged on the same basis for their costs, impacts and benefits.

  3.7  Many of the measures that are put in place to meet environmental goals can also help meet the social and security goals of energy policy:

    —  Energy efficiency is the most cost-effective way to address all of the goals of energy policy.

    —  Renewable energy comes from a diverse mix of energy sources, most of which are free and plentiful in the UK.

    —  Moving towards a much more diverse energy system with a mix of large scale and small scale localised generation will have energy security benefits.

  3.8  Measures that contribute to all energy policy goals should be identified and promoted.


  4.1  Energy efficiency is identified in the Energy White Paper as the safest, most cost effective way to meet all of the energy policy goals, particularly the national goal to reduce CO2 emissions by 2010.

  4.2  In the second annual report of Energy White Paper the Government reaffirms that energy efficiency could contribute more than half the emissions reductions in our existing Climate Change Programme and further ahead, around half of the additional 15-25 MtC savings we are likely to need by 2020. This is achievable using currently available tried and tested technologies. Households and businesses will save over £3 billion per year on their energy bills by 2010 as a result.

  4.3  Unless energy efficiency is addressed, any gains from switching to low carbon options could easily be lost through increased energy use overall.

  4.4  The scope for greater energy efficiency in the industrial and commercial sector is substantial. Environment Agency research[54] found that industry could cut its energy consumption by 20% by 2020 if the right policies were put in place. The findings found that without new policy objectives, energy use would only be cut by 10%. Other research[55] explored the potential for energy savings from different industry sectors. It showed that savings could be made in chemicals, refineries, food and drink, and paper production—all from adoption of CHP in the near future.

  4.5  We would like to see businesses given more support from Government and others to help them reduce energy consumption and to overcome barriers such as a lack of information or access to capital. The work of Envirowise and the Carbon Trust should be strengthened.

  4.6  Economic instruments such as trading, and the Climate Change Levy, can be used to reward behaviour that helps meet climate change targets, and penalise behaviour that hinders action. We want to see the price of carbon embedded into the costs of energy and services so that people are paying the true costs. The price of carbon in the economy will therefore have to increase.

  4.7  We share concerns that the target for domestic energy efficiency has been downgraded even as the overall share of this sector in energy and emissions is expected to grow. The target of 5 MtC in the Energy White Paper has been reduced to 4.2 MtC in the Energy Efficiency Action Plan. New measures will be needed such as differentials in stamp duty or council tax to encourage investment in this sector. Also, the very welcome commitments to improve building standards must be enforced and the Government's Code for Sustainable Buildings should be adopted as the basis for its procurement on buildings and as a signal to industry of the direction of future Building Regulations. Recent proposals by Government to review the incentives for introducing energy efficiency in existing homes are welcome.

  4.8  A comprehensive programme is needed to tackle CO2 emissions from the transport sector. Traffic growth means the sector is responsible for a growing proportion of emissions. We need a package of measures including technological improvements, fiscal measures and transport policy solutions together with creating new space for cycling and pedestrians. Aviation emissions (not covered by the Kyoto Protocol) may well overwhelm the effects of measures under the UK Climate Change Programme. We support the government's plan to bring the aviation sector into the next phase of the EU ETS. If this is not possible then other interim measures should be considered including charges and bringing UK only flights into the National Allocation Plan.


  5.1  The EU ETS is an economy-wide instrument that can deliver emissions reductions efficiently. We supported a more stringent cap on emissions in the National Allocation Plan (NAP) from installations covered in its first phase.

  5.2  The weakness of some of the caps set by Member States for the first phase undermines the effectiveness of the EU ETS, representing as it does a "business as usual" emissions path. The DTI's Updated Energy Projections show that, without any action, the power sector will achieve a 30% reduction in emissions between 1990 and 2010. The first phase cap thus represents a significant windfall for the sector as it will be allocated allowances in excess of those it needs to meet its target.

  5.3  A Carbon Trust report The European Emissions Trading Scheme: Implications for Industrial Competitiveness[56] finds that the EU ETS does not threaten the competitiveness of most industry sectors in Europe, providing the EU Member States take a broadly consistent approach. The electricity, cement and paper sectors are shown to profit under all economic scenarios used in the study. Only the aluminium industry is expected to lose, despite, or indeed partly because of, the fact that it is not within the EU ETS system.

  5.4  The UK government will need to set a tougher cap in the second phase, taking account the need to achieve the 20% target and the potential shortfall of other measures in the current UK Climate Change Programme. This would give the UK greater credibility in putting pressure on other EU Members States to tighten up their National Allocation Plans and the European Commission to tighten and ensure effective scrutiny of National Allocation Plans respectively.

  5.5  The Environment Agency supports moves to expand the EU ETS to other gases and sectors such as the aluminium sector, parts of the chemical industry (for non-carbon dioxide greenhouse gases), especially those that have been under the UK ETS, as well as food and drink and engineering, and perhaps the vehicle sectors. Those sectors currently subject to Climate Change Agreements could most readily be included.

  5.6  We are concerned that the interaction between existing mechanisms, such as the Climate Change Levy and Climate Change Agreements, and the EU ETS is not well understood. All aim to reduce emissions from the energy and industrial sectors. The Government should review the need for the continued use of the many different policy instruments to tackle emissions of carbon. The second phase of the EU ETS could be the main policy instrument to control carbon emissions, provided more parts of the economy are brought under the scheme. The revised set of projections should make transparent the relative contributions of each instrument to meeting the national targets.


  6.1  We should encourage a more rapid but environmentally sensitive adoption of renewables to work towards the goal of 20% of electricity generation by 2020. More effort is needed to encourage diversity of sources for heat and power including solar photovoltaics, solar thermal, biomass (including liquid fuels), tidal currents and wave power.

  6.2  Developers of new technologies need long term consistency in policy making and certainty for investment to assist their financial planning and for making the business case for projects to sell power.

  6.3  The Government should do more to recognise and support generating heat from renewables sources. For example, they could implement the Royal Commission for Environmental Pollution's call for developers of new housing developments to use renewable heat and power.

  6.4  We will play our part in supporting renewable energy developments where this does not compromise other environmental obligations.


  7.1  We welcome the development of the Government's Microgeneration Strategy. Local and small scale generation of low carbon heat and power will play a far larger part in meeting the needs of communities in future, in line with the Energy White Paper. Building integrated systems and local sources of heat and power use a diverse range of resources and technologies which can reduce overall emissions of greenhouse gases, contribute to security of supply, help provide affordable warmth, and promote competition in the energy economy.

  7.2  We support the widespread adoption of microgeneration. This needs to be implemented in ways that are sensitive to the local environment. We would like to see:

    —  Clear roles set out for national, regional, and local players, and targets/actions for each in the strategy as this will help drive action.

    —  Guidance to reduce uncertainties around the planning implications of some installations such as solar thermal panels and roof mounted wind turbines.

    —  More practical and financial support to expand the uptake of microgeneration such as buyback tariffs, fiscal incentives and economic regulation that encourages embedded generation.

    —  Incorporation of microgeneration in buildings through changes in Building Regulations made possible through the Secure and Sustainable Buildings Acts and the Code for Sustainable Buildings.

  7.3  The overall strategy needs to drive microgeneration while recognising the need for high standards of environmental protection. The risks of diffuse pollution needs to be guarded against through the adoption of high standards and monitoring the effects of large scale adoption of some technologies (eg possible air quality impacts of biomass).

  7.4  The public sector needs to be an exemplar and the Environment Agency is taking steps to adopt microgeneration where practical, as we have with new offices at Wallingford.


  8.1  We acknowledge the need in the short to medium term of using fossil fuels in cleaner ways in order to achieve our domestic emissions targets. We recognise that CCS could provide a bridging option that supports a transition from our current dependence on fossil fuels to a future of more sustainable energy choices. However, as yet the science behind the long term viability of CCS has not been validated and we have significant concerns that the development and deployment of CCS technology will:

    —  distract effort from more cost-effective and proven solutions;

    —  prolong unnecessarily our dependence on fossil fuels, which is counterproductive for the environment overall given the associated emissions of acid gases, heavy metals and solid wastes; and

    —  lead to unacceptable environmental and social risks from slow or catastrophic leakage.

  8.2  Nevertheless, we welcome the publication of the Government's Strategy for Developing Carbon Abatement Technologies for Fossil Fuel Use, that includes CCS, providing it fits within the vision of the 2003 Energy White Paper and is consistent with the UK Climate Change Programme. As the Strategy emphasises, CCS can only be part of the solution to climate change. It is only suitable for large point sources that make up about 35% of UK emissions. We do not want investment in policies to promote energy efficiency and renewable energy diverted to support a CCS programme.

  8.3  A key issue for the Environment Agency is the legislative and regulatory framework for CCS activities. If these technologies are to exist in the UK, we want to see an effective system that adequately protects the environment and human health. The additional funding for CCS demonstrations should include studies on the potential for environmental impacts, the criteria for site selection and the options for monitoring and regulation. In parallel, Government should resolve the legal status of carbon dioxide as a waste and whether it is subject to waste legislation.


  9.1  Until we have a sustainable long-term strategy for radioactive waste management—and public concern is properly addressed—any major changes of policy to encourage the construction of new nuclear generating capacity would appear to us premature. Doubts remain about viability and security of the technology and its flexibility and these need to be addressed. If nuclear power reflects the full costs of waste and clean up past experience has shown that the economics are not robust.


  10.1  In order to avoid dangerous climate change we must put policies in place to meet the UK goal of 20% reduction in CO2 by 2010 and to put us on the path to longer term cuts.

  10.2  With a contribution from all sectors we believe these carbon reduction goals can be met. Government in its revised climate change programme should reaffirm its commitment to the 20% goal and set out a stronger framework for action.

  10.3  There are links between energy security and environmental goals. Options that can contribute to both of these areas should be identified and promoted.

  10.4  In considering future energy supply options the full environmental impact of different technologies should be taken into account.

  10.5  We believe that energy efficiency and the development of renewable energy sources should remain the first priorities for energy policy and that both have a substantial contribution to make to energy security as well environmental and social goals.

  10.6  The Environment Agency will play its part in working with business to achieve efficiency improvements and supporting the deployment of new low carbon energy supply technologies.

26 September 2005

54   Potential for Energy Efficiency in Industry, Environment Agency, 2002. Back

55   The Environment Agency Contribution Towards Achievement of Greenhouse Gas Reduction Targets. R&D Technical Report P4-089/TR, Environment Agency 2001. Back

56   The European Emissions Trading Scheme: Implications for Industrial Competitiveness-Carbon Trust, July 2004. Back

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