Examination of Witnesses (Questions 440-459)
MALCOLM WICKS
AND MR
PAUL MCINTYRE
10 OCTOBER 2006
Q440 Chairman: Transport is not really
under the auspices of this Committee and we must leave that for
our colleagues in the Transport Committee, but I am glad to hear
that. You gave a figure earlier on, but my figure is that 59%
of total private energy consumption by households is room heating
and you say that is mainly gas, so do we not need a much greater
emphasis on these other issues in the continuation of the review?
Malcolm Wicks: We say quite a
lot about gas supply and we are at a critical time in terms of
gas supply as we move relatively quickly from being self-sufficient
in gas, because of the UKCS, the North Sea, to becoming a heavy
importer, indeed the key statistic always in my mind is at the
moment maybe 10% of our gas is imported but by 2020, quite soon
now, it will not be 10% it will be 80 or 90%. We talk about the
implications of that.
Q441 Chairman: We will look at those
issues later. We have had a huge debate, in this Committee and
in the general public, about the carbon neutrality or otherwise
of nuclear power and the contribution nuclear power can make,
but if you actually manage to move the British population largely
from old boilers to gas condensing boilers with solar systems
in their roof you could virtually halve the carbon dioxide emissions.
Is that not a more important climate change objective than generation?
Malcolm Wicks: It is why the Government
some years ago said that new boilers have to be condensing boilers.
It is why the Department for Communities and Local Government
are working very hard now on housing standards and also—and
I should be happy to discuss this with you at an appropriate time
today—it is why we talk about why we need really a revolution
as we move supply companies, the people who sell us our gas and
electricity who after all have an incentive to sell us more gas
and electricity. How do we move them to becoming what some would
call energy supply companies where actually they get incentivised
for helping us as householders to reduce our energy and our carbon
emissions? We say a great deal about that and indeed some of the
most radical proposals in the document are around energy efficiency.
Q442 Chairman: If I were to express
a view, I should like to see the future debate on the Energy Review
concentrate much more on these issues. There are some really important
objectives to be achieved there.
Malcolm Wicks: It is a crucial
part of the agenda. For some reason people want to talk about
nuclear all the time and we say some important things about nuclear
and we are hardly dodging that issue, but, given at the moment—back
to electricity—19% of that electricity from up there is
from nuclear roughly, I have always said this was not going to
be a 19% review but a 100% review and not just about electricity.
Q443 Mr Binley: My concerns are about
the demands we are placing on specific sectors to reach our goals,
particularly electricity generation and heavy industry. You will
know that they are already subject to a sizeable number of controls
ranging through Climate Levy, EU Emissions Trading Scheme, Large
Combustion Plant Directive, and so forth. I wonder whether we
are not placing too many demands on those specific industries
whilst neglecting others where fuel continues to increase.
Malcolm Wicks: All sectors, and
indeed all individuals, have to play a part in climate change.
One of the distinctive and encouraging features of the British
debate is the way in which we are a society, a democracy, a Parliament
which is increasingly concerned about climate change. I think
most of us in this room would agree that the science is now absolutely
clear, that those in denial about global warming are really the
flat-earthers in the world, increasingly a minority. If we think
that global warming is the most important challenge facing the
world—and I think many of us do—and for once the politician,
when talking about his or her favourite subject, saying it is
the most important challenge facing the world, does not exaggerate.
If we think that is true then frankly we need to have a multi-faceted
approach to tackling it. In simple plain English we throw everything
at it and the heavy users of energy, the industries, the energy
sector, because they are heavy users and therefore heavy emitters,
have to play a full part. Are there significant parts to be played
by other sectors in this situation? Yes, there are and I am happy
to say something about how we want to introduce an energy performance
commitment. We need a framework to encourage people who are not
in the European Union Emissions Trading Scheme, big service industries
like the supermarkets, Tesco's and Sainsbury's, Government, the
National Health Service, to reduce emissions and we are working
hard on that.
Q444 Mr Binley: You are talking about
new tools to help these particular industries, these particular
sectors.
Malcolm Wicks: Yes.
Q445 Mr Binley: Can you expand on
that just a little?
Malcolm Wicks: Yes. If you look
at the range of mechanisms, the range of tools we have to reduce
emissions—we can talk about the relative balance and the
pros and cons of different ones but I have said that we need a
whole menu of these things—we have the EU Emissions Trading
Scheme essentially aimed at the energy sector and the heavy industrial
users of energy, the big emitters in steel and chemicals, glassware
and so on. It is a newish scheme, it is not without difficulties
at the moment, but by producing that scheme on a European basis
we are encouraging those industries to make savings in terms of
emissions, to become more energy efficient. When they do they
can sell their allowances and make bigger profits as a result.
Those who do not make a contribution in terms of energy efficiency
have to buy allowances. I think it is a particularly intriguing
way in which governments across Europe have found and produced
a market mechanism to produce the desired results. We can talk
about how successful it is at the moment; I think it is rather
fragile. I should liken it to a two-year old who is just learning
to walk, but if we can grow that two-year old into a mature mechanism,
then all sorts of things become possible in terms of bringing
in surface transport, aviation and could also be one way—probably
not the only way—of helping us fund carbon capture and storage.
So we have that for the heavy industries, but we do not have it
for others who are not such sizeable emitters but quite significant
users of energy and therefore contributors to carbon emissions
like the retail sector, like the Government even. The idea of
an energy performance commitment which we are consulting on the
pros and cons of would be to produce a kind of emissions trading
scheme for those sectors. Do we not already see signs of some
of those retail people being on the agenda?
Q446 Mark Hunter: It seems to members
of this Committee that it would be unreasonable to expect the
DTI alone, perhaps even the DTI plus Defra, to implement all of
the changes outlined in the Energy Review report. Yet we are concerned
that in the past other departments have paid little heed to the
impact of their policies on energy use. How do you propose that
the Government energy-proofs these policies across the board and
how will you achieve buy-in from other colleagues?
Malcolm Wicks: The implication
of the question is right, that although you need a lead department
on energy and a lead department on the environment those two departments
are not the whole picture. We have already touched on housing,
which is absolutely crucial and therefore the Department for Communities
and Local Government, the Treasury obviously has a strong interest
and so on. How we achieve buy-in is through the Cabinet committee
system. There is a Cabinet committee on energy and environment
which we report to in this process through to the Cabinet. Perhaps,
with your permission Chairman, I might ask my colleague Mr McIntyre
to say something about how we do this machinery of government
at official level?
Mr McIntyre: May I start by referring
to the way we prepared the Energy Review report. We had an inter-departmental
team based in the DTI but with representatives of all the departments
with an interest in that. In terms of preparation of the White
Paper, we have established a programme board chaired by the DTI,
but again with representatives from across Whitehall, and that
will drive progress towards preparation of the White Paper.
Q447 Mark Hunter: Would you accept
that in the past evidence has suggested that other departments
have not always paid as much heed to the impact of their own policies
on energy use as perhaps they should have done?
Malcolm Wicks: Yes, one would
have to accept that.
Q448 Mark Hunter: What is going to
be different this time?
Malcolm Wicks: Most institutions
in Britain have not taken energy savings seriously enough. Most
institutions have not and still do not take their contribution
to the problem of climate change seriously enough. Therefore across
Government as a whole, apart from the policies we have on transport
and housing and energy, we need to make sure that the entire Government
moves towards a carbon neutral status and this is our objective.
I could go into what that means, but the power of government procurement
is really very important here because after all the Government
buy a lot of lighting, as does this Parliament—I suspect
not terribly well—a lot of appliances of different kinds
and we said in the Energy Review that we are going to use government
procurement to drive up standards in terms of electrical appliances;
it is one part of the question.
Q449 Roger Berry: Could Mr McIntyre,
just for the record, be quite specific about which government
departments are involved in the way you have just described?
Mr McIntyre: Yes, I can: first
of all the DTI, then also Defra, the Treasury, the Department
for Transport, the DCLG and the Number 10 Strategy Unit as well.
Q450 Chairman: One thing which has
always puzzled me is why the Treasury leads on carbon capture
and storage.
Malcolm Wicks: I do not think
it does lead on it.
Q451 Chairman: Your document talks
about the Pre-Budget Report and Treasury consultation.
Malcolm Wicks: Because it is an
expensive commodity is the very simple answer to that question.
They have been doing consultative work on that and there is every
likelihood that in the PBR there may be some words from the Chancellor
on it. We have a great deal of interest in that at a technical
level; we are doing a great deal of work. I do not think it is
such a mystery. This is quite an expensive commodity and how do
we enable and incentivise?
Q452 Chairman: If the Treasury led
on everything which was expensive there would be no need for any
other government department. That argument is a road to perdition.
Malcolm Wicks: You are talking
about very close colleagues.
Q453 Roger Berry: Given the importance
the Government rightly attach to fuel poverty, why is the DWP
not involved?
Malcolm Wicks: Mr McIntyre talked
about the major departments we have been consulting.
Q454 Roger Berry: Is the DWP not
a major department? It was.
Malcolm Wicks: I served my time
there for four years. I have had conversations with a DWP minister
and we have met with the DWP officials about some of the aspects
on fuel poverty.
Q455 Mr Clapham: Just picking up
what you said about the Treasury, are negotiations taking place
with the Treasury regarding a demonstration plant on carbon capture?
Malcolm Wicks: In the Energy Review
we talk about the need for a demonstration project; that is our
judgment about this. As you know, around the world now there are
bits of good practice which suggest that carbon capture and storage
could become a reality, not least in Norway where they have successfully
returned CO2 to depleted reservoirs and the CO2 had been there
for eight or nine years. This is not just theory; this is beginning
to be practice. What we do need in the world now are some major
projects, some major demonstration projects. There is a lot of
interest in Australia. I was talking to the Australian minister
about this only last week when we met for a climate change meeting
in Mexico. There is interest in the United States and certainly
interest in Europe. Therefore it has been said that there could
be some statement on this in the PBR.
Q456 Chairman: To be fair, though
I have doubts about the balance of the document when transport
merits eight pages—which must thrill the supporters of the
fictitious unlimited-spurt campaign, which has puzzled some of
my constituents over the weekend, but leaving that aside—I
think this report is quite a good document, but probably the document
should have begun the consultation process rather than concluded
it. It seems to promise so many consultations. My staff tell me
there are 17. Some are specific: Annex A says nuclear power is
to get a proper consultation; there are references to seeking
views for the policy framework so that is a consultation and individuals,
supported by officials will lead discussions with industry on
something else. I do not know how many consultations there are
in this document in total of one kind or another, but it is a
huge ongoing work programme, is it not?
Malcolm Wicks: Yes, because this
is a serious business. One can always have fun about something
leading to another consultation; it is good fun. With respect,
it is serious because there is a range of things; we have set
out a framework and thank you for what you said about the review
which is a serious evidence-based document.
Q457 Chairman: It is a good document.
Malcolm Wicks: Inevitably, once
one has made a decision that in the right circumstances there
should be nuclear reactors, there is a whole range of issues around
disposal of waste and we might come onto planning. Similarly what
we say about distributed energy is important and needs further
work with the regulator to see how that might be brought about
et cetera.
Q458 Chairman: I am always nervous
when governments promise to seek views and consult. I just want
to know what procedures you have in place to make sure every single
one of those pledges to consult and seek information is delivered
on and people like us in this Committee become aware. For example,
we think yesterday you issued a consultation document on the Renewables
Obligation.
Malcolm Wicks: Yes.
Q459 Chairman: We cannot get hold
of it. These consultations are very important, but Mr Marris could
not even find it on the website this morning. What I should like
from you, Minister, is an undertaking that after these consultations
are launched this Committee is kept fully informed about each
and every one of them and perhaps, where documents are produced,
that they are sent to the Committee. That would be helpful.
Malcolm Wicks: I am told that
it is on the web, but we shall check on that.
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