Memorandum submitted by the Environment
Agency
SUMMARY
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. INTRODUCTION
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. CLIMATE CHANGE
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. THE REVIEW
OF THE
CLIMATE CHANGE
PROGRAMME
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. ENERGY EFFICIENCY
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. EU EMISSIONS
TRADING SCHEME
(EU ETS)
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. RENEWABLE
ENERGY
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. MICROGENERATION
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. CARBON CAPTURE
AND STORAGE
(CCS)
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. NUCLEAR POWER
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. CONCLUSIONS
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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