Select Committee on Trade and Industry Written Evidence


Friends of the Earth draft responses to Energy Review questions

  23 March 2006 (please note these are draft responses. The final version for the Energy Review consultation may include small changes. It will be on Friends of the Earth's website by the 14 April consultation deadline)

Q.1  What more could the government do on the demand or supply side for energy to ensure that the UK's long-term goal of reducing carbon emissions is met?

  If the Government is to retain any credibility on climate change & energy policy, it must use the Energy Review to create a long-term framework that will encourage investment in clean technologies. Therefore it should accept a new law setting legally binding year-on-year emission reductions of 3%, with an annual climate budget to make sure we are on track. This proposal now has the support of the majority of MPs. For more information, see

  In addition to this, it must act in the following sectors:

Electricity sector

  Friends of the Earth produced research [1] showing we could meet CO2 emission reductions of 48-71% by 2020 without nuclear power. We could also stabilise or reduce gas use in the electricity sector.

    —  Increase promotion of renewable energy through more ambitious policies.

    —  Transform the energy sector by setting targets for energy efficiency and stimulating the development of a market in energy efficiency services.

    —  Boost incentives for investment in Combined Heat and Power, highly efficient plants producing both heat and electricity.

    —  Force coal-fired power station operators to use state-of the art technologies to improve emission performance. Close old, inefficient coal-fired power stations that don't use these technologies.

  Carbon capture and storage technologies could potentially achieve further reductions.

Buildings, Offices and Heat sector

  Homes are responsible for almost a third of carbon dioxide emissions in the UK. The Environmental Change Institute at Oxford University says emissions from the UK's housing stock could be reduced by 60% by 2050. According to the Carbon Trust, UK business wastes £1 billion a year in lost energy.

  The government should:

    —  Introduce new fiscal incentives for householders for energy efficiency: stamp-duty rebates, council tax rebates, etc.

    —  Implement in full the EU Performance of Buildings Directive and support efforts to amend it in order to make it more ambitious.

    —  Support the Carbon Trust proposals for a new mandatory consumption-based emissions trading scheme covering both direct and indirect emissions which would apply to companies and public sector organisations.

    —  Alternatively, raise the Climate Change Levy; other more sophisticated fiscal instruments could also be introduced such as a carbon credit tax on commercial and transport sectors.

    —  Support proposals for a new European Directive on promoting Renewable Heating and Cooling.

Transport and Aviation

  The Government must push to get all the emissions cuts possible from technology, such as greener cars and improved or alternative fuels. Demand management measures will however also be needed. These include reducing the need to travel and improving alternatives to the private car.

  These should be seen as a form of progression:

    —  Firstly, we should try to make it possible for people to do what they want without having to travel as much.

    —  Secondly, for the journeys that people make, we should provide high quality, less polluting alternatives so that use of private cars can be reduced. Price signals should be used to incentivise this behaviour.

    —  Thirdly, for the journeys that people make by car, we should encourage the use of greener cars and fuels.

  The Comprehensive Spending Review should include big cuts in expenditure on road-building. Road-building often leads to large increases in traffic levels, locking in a carbon-intensive pattern of development.

  The Government must also push for a tough follow-up EU emissions standard for new vehicles to replace the current voluntary agreement.

  The Government should conduct and publish an aviation policy review. This policy review should:

    —  Rewrite the Aviation White Paper to rule-out further airport expansion.

    —  Introduce an Emissions Charge on aviation and include aviation in an EU Emissions Trading System.

  The tool to stop the cost of flying falling is increases in Air Passenger Duty (APD). Doing this would reduce the rate of growth in aviation's emissions. If however the aviation industry argues that the cost of flying is not falling, then according to the Government's own figures there will be no need for new runways.

Cross-sectoral policies

    —  Promote increased use of biomass for electricity and heat needs. Introduce and deliver renewable heat and renewable fuel obligations.

  Growing crops for fuel results in no significant net increase in carbon dioxide as long as the harvested crops are replaced. Many such crops could be harvested in the UK and the EU, which could greatly help improve our energy security.

Q.2  With the UK becoming a net energy importer and with big investments to be made over the next twenty years in generating capacity and networks, what further steps, if any, should the government take to develop our market framework for delivering reliable energy supplies? In particular, we invite views on the implications of increased dependence on gas imports.

  A good market framework that ensure secure supplies AND helps to meet climate change goals:

A-provides long term certainty to investors & is adequately regulated

  A new law setting a legally-binding target for year on year reductions would greatly help to provide the certainty that low-carbon investments will pay off in the future (see above).

  Investment in new nuclear power stations does not necessarily provide a long-term stable framework for secure energy supplies. Nuclear power stations take long to build and have a history of cost overruns.

  Interestingly, the electricity company created by the Woking Borough Council [2] to promote decentralised power solutions and to reduce emissions locally was considered to provide attractive and safe returns, enough to attract investment from Danish pension funds.[3]

  Woking Council has proven that it is possible to have a more decentralised model for energy generation. However, this requires a number of regulatory changes to become viable more widely. Ofgem's mandate needs therefore to be amended.

B-promotes an efficient use of fossil fuels

  Fossil fuels will continue to be used for a few decades. Therefore we need to make sure we use fossils as efficiently as possible. This means maximising the share of Combined Heat and Power and the use of the most efficient technologies to burn both gas and coal.

  Friends of the Earth's "A Bright Future" report [3] shows that the UK could at least stabilise, and in many cases even reduce, use of natural gas in the electricity sector. For example, in the "good mix" scenario, gas use could be reduced by 33% in the electricity sector by 2020.

C-reduces the need for baseload power and over-reliance on unflexible and large-scale nuclear

  Over-reliance on large nuclear power plants for base-load energy creates risks. In 2003 in Sweden, two large nuclear power stations had to shut suddenly within a few minutes of each other because of technical problems, at a time when other nuclear power stations were already shut. This led to a huge blackout affecting the whole of southern Sweden and Eastern Denmark, leaving four million people in two countries without electricity, and facing severe disruptions of trains and airports. The same year, French nuclear power generation faced severe problems because of the heatwave, which caused river water levels to run so low that there was insufficient water for cooling purposes (nuclear power stations need very large amounts of cooling water).

  Instead, increased take-up of decentralised power and energy conservation policies would reduce the need for both peak demand and base-load.

D-promotes technologies that ensure reliability of the system

  A well designed renewable electricity system takes advantage of different patterns of variability to smooth the overall supply of electricity generated from a combination of resources. [4]

  As for wind power, a report for the DTI [5] studied over 30 years of UK wind records in the UK finding that there was not one occasion when the UK as a whole was becalmed. Electricity from wind is produced at the right time of the day and wind turbines produced more electricity than those in Denmark and Germany due to more favourable wind conditions, it found.

  The UK wind power source is located in various parts of the country, ensuring greater reliability, because lower wind speed in one region will be compensated by higher wind speed elsewhere. [6]

  Another technology that could help us reduce the need for capacity investment is dynamic demand.[7] This means controlling peaks in demand for electricity with smart devices that control when fridges, air-conditioners, and water-heaters consume electricity.

F-is able to respond quickly to disruptions

  No matter what we do, these may occur under any fuel mix scenario. The government should be prepared to respond by "saving energy in a hurry". The International Energy Agency published recommendations on this based on experiences in California, Brazil, Norway, New Zealand and Japan and other parts of the world. In these countries temporary shortfalls in energy supply and/or price spikes have been successfully dealt with through energy efficiency measures, leading to demand reductions of up to 20% in a few months' time.[8]

Q.3  The Energy White Paper left open the option of nuclear new build. Are there particular considerations that should apply to nuclear as the government re-examines the issues bearing on new build, including long-term liabilities and waste management? If so, what are these, and how should the government address them?

  Nuclear power is not the answer to climate change. A government advisory body, the Commission on Sustainable Development [9] has drawn together the most comprehensive evidence base available, to find that there is no justification for bringing forward a new nuclear power programme. The report, based on eight new research papers, finds that the problems with nuclear power outweigh the advantages.

  To justify this conclusion, the Commission on Sustainable Development states that even if the nuclear capacity of the UK was doubled, this would only achieve an 8% in CO2 emissions by 2035, and no emission reductions before 2010. This is a small amount, set against the country's commitment to reduce CO2 emissions by 60% by 2050, and would not happen fast enough to contribute in any way to current Kyoto targets. This, the Commission says, must be set against five "major disadvantages":

    1.  No long term solutions for disposal of radioactive waste are yet available, let alone acceptable to the general public; it is impossible to guarantee safety of the long-term disposal of waste.

    2.  The economics of a new nuclear programme are highly uncertain. There is little justification for public subsidy. If estimated costs escalate, though, the taxpayer will be have to pick up the tab.

    3.  Nuclear would lock the UK into a centralised distribution system, at exactly the time when opportunities for micro-generation and local distribution network are stronger than ever.

    4.  A new nuclear programme would give out the wrong signal to consumers and businesses, implying that a major technological fix is all that's required, weakening the urgent action needed on energy efficiency.

    5.  If we build new nuclear power stations, we cannot deny other countries the same technology as part of international climate change negotiations. With lower safety standards, plant in such countries may run higher risks of accidents, radiation exposure, proliferation and terrorist attacks.

  In addition, according to Friends of the Earth, nuclear power is not a solution to climate change for the following reasons:

    —  One of the arguments sometimes used in favour of nuclear power is that it would be easy to build new stations close to the existing ones. However, a report by government agency Nirex reveals that at least 11 preferred sites are at risk from flooding or coastal erosion from climate change. [10]

    —  Nuclear is not an "emissions free" solution. The mining and transport of uranium, the making of nuclear fuel rods, the building of nuclear power plants and the storage of nuclear waste all lead to carbon dioxide emissions.

  In addition, it is currently estimated that the cost of nuclear waste disposal will be around £56 billion, according the Government's Nuclear Decommissioning Authority (NDA) which is an increase of £8 billion over previous estimates. The Government's rescue of British Energy in 2003 is expected to cost British tax payers £12 billion over the next 100 years.

  Despite this, since 1974 the UK government has spent £6.8 billion in research and development funding for nuclear fission (compared to £540 million for renewables) according to information from the International Energy Agency.

Q.4  Are there particular considerations that should apply to carbon abatement and other low-carbon technologies?

  The Intergovernmental Panel on Climate Change (IPCC) has produced in 2005 a report assessing the technological potential of carbon capture and storage. The draft IPCC report does now suggest that there are no insurmountable technological hurdles to implementing carbon capture and storage.

  However, a number of legal, regulatory and liability issues need to be resolved.

  Also, there needs to be internationally agreed criteria on storage standards, site selection and leakage. Large-scale implementation of carbon capture and storage can only be supported after these issues have been addressed.

  There are some storage options which are less understood and some which pose unacceptable environmental risks. For example, while the petroleum industry has experience with the injection of CO2 in oil and gas fields, there is limited experience of injection into saline aquifers and limited geological knowledge of potential sites. Also, the use of marine storage poses significant environmental impacts on little understood and vulnerable ecosystems. As the IPCC draft report states, the suitability of storage sites can only be determined on a case-by case basis.

  Should the technical, regulatory, legal hurdles and site selection hurdles be successfully overcome, within the UK there could be a role for carbon capture and storage as part of a transition to a low carbon economy. This recognition is based upon the following understanding:

    —  That the latest scientific research suggests that deeper cuts in carbon dioxide are needed sooner than envisaged 10 years ago.

    —  The need for these bridging technologies is also increased because the UK Government has failed to make progress in cutting emissions (carbon dioxide levels are higher than when the present Government came to power in 1997).

    —  The UK needs to simultaneously wean itself off nuclear power whilst shifting from fossil fuels and although the UK has a huge potential to provide its energy through renewable sources it will take some time to realise this potential.

  Therefore, the government should:

    —  Redouble its efforts domestically and through European Union legislation to tap into the very large and cost-effective potential for reducing demand for energy and to promote renewable power.

    —  Develop, with others as necessary, the legal, regulatory, and liability regimes needed for the development of carbon capture and storage.

    —  Contribute to the adoption of international standards for site selection and monitoring to ensure that there is no leakage or that leakage rates are negligible and that environmental impacts are minimal.

    —  Ensure that fossil fuel power plants are modified to ensure they are using best available technology, and that all new fossil fuel plants incorporate the ability to implement carbon capture and storage.

    —  Ensure that when carbon capture and storage is ready to be introduced that regulatory and trading regimes ensure that fossil fuel plants implement carbon capture and storage without government subsidies or other forms of public support (which should focus instead on promoting energy efficiency and renewable energy).

    —  Ensure that the promotion of carbon capture and storage at an international level is not seen as an alternative to binding international agreements on climate change or to the promotion of energy efficiency and renewable power and does not divert attention and resources from the latter.

Q.5  What further steps should be taken towards meeting the government's goals for ensuring that every home is adequately and affordably heated?

  As a solution to fuel poverty the government must enhance its energy efficiency policies, especially in the domestic heating sector and housing standards. The UK has among the most energy inefficient houses in Northern Europe.

  Making sure products or houses that come on the market are as efficient as possible and that financial support is available for eg insulating homes or installing double-glazing is good for fighting both climate change and fuel poverty. Microgeneration and household scale renewables have low running costs. Therefore, the spread of these technologies will be helpful for fuel poverty—if the equipment is provided to those in fuel poverty free of charge or at a subsidised cost. The development and promotion, for climate change reasons, of such technologies and equipment will help bring down their costs.

  The government has in the past few years increased energy conservation grants and developed initiatives for low income over-60's, chronically sick and the disabled people. However, many fuel poor households still fall outside the eligibility criteria for these programmes.

  In developing its fuel poverty strategy Woking Council recognised that some fuel poor households in the private sector needed top measures over and above the normal grants to provide them with full energy conservation measures (eg, draught-proofing, cavity wall and loft insulation).

  Out of 32,500 private sector households in Woking, over 12,000 households have so far taken advantage of the Council's energy conservation schemes from 1996 to 2004, of which over 3,700 households have been provided with energy conservation grants to provide full insulation measures.

  Importantly, it is worth noting that by creating a new energy service company, Woking Council was able to provide energy at low prices for the fuel poor.


(i)The long term potential of energy efficiency measures in the transport, residential, business and public sectors, and how best to achieve that potential

  The Performance and Innovation Unit's 2002 Energy Review says the UK could reduce current energy use by up to 30% through adoption of cost-efficient and existing technologies. The Energy White Paper recognised this potential.

  The current Energy Review, however, appears from the very beginning to neglect and/or underestimate energy conservation opportunities, despite stated intents. The consultation document—and speeches given so far by ministers about it—put a lot of emphasis on the question of how to tackle lack of awareness of energy efficient options and their lack of take-up.

  While creating awareness is hugely important, a lot of what energy efficiency is about is good regulation and good incentives. Setting minimum standards for products, buildings, cars, etc, is key. The taxation system, and the regulatory framework, are also hugely important. Behavioural change, although important, will not deliver by itself.

  Studies for the European Commission have identified the potential to make significant cuts in electricity-use and considerable financial savings by ensuring that industry uses correctly-sized and super-efficient motor devices. There is the potential to reduce electricity consumption by around six per cent in the UK by 2020. [11]

  Around one nuclear power station, or two medium sized coal plants in the UK have to be kept running in order to provide power for appliances not in use and on "standby" mode. Around 24 nuclear plants are kept running throughout the industrialised world for this purpose.

  Replacing ordinary light-bulbs with energy efficient light-bulbs could reduce electricity consumption by at least two per cent (equivalent to one nuclear power station) by 2020. And the potential is much higher if we implement a programme to replace inefficient street lighting and lighting in the commercial sector.

  Legislation [12] is currently being considered by the EU to set minimum efficiency standards for a variety of energy using products such as lightbulbs, but also including the stand-by function (see below).

  In addition to measures outlined earlier on housing and the office and retail sector, further measures the government should take to promote efficiency are the following:


    —  The minimum standards within the Code for Sustainable Homes and PPS3 (Housing) need to be improved.

    —  Local authorities should also tackle housing efficiency in new developments through the Local Development Frameworks, where these exist.

    —  Planning consent should be informed by anticipated energy performance; reform of planning rules.

    —  Local and regional authorities should produce energy strategies.

    —  Spatial development plans should be required to identify both renewable energy opportunities and high-density heat demand suitable for community heating.

Product policy

    —  The EU Directive on Eco-Design of Energy Using Products was approved in 2005; when implemented, it will set minimum efficiency standards for many energy-using products on the market. There is a very large potential for savings. The UK should drive this process forward.

    —  Possible obligation on retailers or voluntary agreement to sell increasingly efficient products.

    —  Establish government procurement standards for a wider range of goods.

    —  Subsidy on best appliances, and higher tax on worst appliances.


    —  Increase green taxation. Green taxes have decreased under Labour—despite a 1997 pledge to shift the burden of taxation from employment onto environmental pollution.[13]

    —  End the anomaly whereby householders are charged more than three times as much tax for buying materials for saving energy as they are for using energy.

    —  Introduce nationwide council tax rebates and cut stamp duty for low-carbon, energy efficient homes.

    —  Introduce a much higher zero-rated tax disc (VED) for gas-guzzling vehicles. The biggest gas guzzlers should pay at least £600.

    —  Introduce tax breaks, grants and other incentives for householders to install micro-generation systems.

  An additional measure the government should take is mandating differentiated tariffs for electricity that penalise profligate users and reduce costs for those who use less.

(ii)Implications in the medium and long term for the transmission and distribution networks of significant new build in gas and electricity generation infrastructure

  As explained above, there is a very large potential to reduce the need to build new transmission and distribution infrastructure if we implemented a policy to decentralise the power system and to promote ambitious energy efficiency policy.

  The International Energy Agency estimates in its World Energy Investment Outlook [14] that at least $700 billion in investment in generation, distribution and transmission could be saved worldwide through even modest energy efficiency policies.

  The types of investment needed in new capacity and networks depends on whether or not the governments promotes the development of decentralised energy systems and a more sustained effort to promote energy conservation.

  The Energy Review must for example take in consideration the fact that a new decentralised energy system might need infrastructural investments of a different kind—ie less focused on transmission and distribution and more focused on eg smart metering. It is important not to lock our electricity generation system into the wrong type of investments.

(iii)Opportunities for more joint working with other countries on our energy policy goals

    —  The government should accept the principle of long-term year on year targets, and work to persuade other industrialised countries in Europe and around the world to adopt similar long-term approaches.

    —  The UK should work with the Internal Energy Agency and the EU to set up global initiatives on energy efficiency standards.

    —  It should support international initiatives to promote decentralised power and energy efficiency around the world. Decentralised power can be a very efficient way to bring energy services to the 2 billion people in the world currently without them. The UK should take the lead in promoting the take-up of these technologies. And by developing them here, it will support technological developments that will help tackle both climate change and the challenge of growing global energy demand.

    —  The UK could join efforts by other governments investigating proposals to import electricity from large-scale solar power plants in the Sahara. This cutting-edge technology is currently being investigated by the German government in cooperation with other countries including Italy, Spain, Morocco, Jordan and Israel. It is also being studied by UNEP, the World Bank and the IEA. [15] Electricity is already traded throughout Europe, with plans to expand the grid into North Africa.

(iv)Potential measures to help bring forward technologies to replace fossil fuels in transport and heat generation in the medium and long term

  Opportunities to reduce carbon emissions from heating have been explained in the answer to Q1.

  In the transport sector, the current best bet long-term alternative to the use of fossil fuels is hydrogen fuel cells. Widespread use of hydrogen as a fuel for private cars is at least 20 years away, as substantial progress is needed in research and development into hydrogen storage and transfer. Another key issue to be addressed is how the hydrogen will be generated. Hydrogen made from electricity produced at fossil fuel-fired power stations will still generate carbon. Nor, as explained above, is the use of nuclear power the answer. The "dream ticket" would be hydrogen produced from electricity from renewable energy sources. This would require a step change in the renewables sector. Measures to ensure this happens are addressed above.

  The development of hydrogen-based transport fuels offers huge potential. The Government should ensure that there is sufficient investment in the development of hydrogen storage and transfer for this country to benefit from this potential.

  However, as has been explained above, technological measures alone will not deliver the emissions cuts needed. Measures to change travel behaviour are also essential.


[1]    Friends of the Earth, "A Bright Future", March 2006.

[2]    Woking Council pioneered a network of over 60 local generators, including cogeneration and trigeneration plants, photovoltaic arrays and a hydrogen fuel cell station to power heat and cool municipal buildings and social housing. Cutting CO2 emissions by 77% in 15 years. It was funded through capital raised through energy efficiency savings. For more information on Woking:;


[4]    Wind Power and the UK wind resource, p 7. Also, Oxford Environmental Change Institute submission to the Science and Technology Select Committee of the House of Lords, "The Practicalities of developing renewable energy stand-by capacity and intermittency", 2005.

[5]    Environmental Change Institute, University of Oxford (2005), Wind Power and the UK wind resource.

[6]    Wind Power and the UK Wind Resource, p 3.


[8]    International Energy Agency, "Saving Electricity in a Hurry", 2005; IEA, "Saving Oil in a Hurry", 2005.

[9]    Commission on Sustainable Development, "Nuclear power in a low-carbon economy", March 2006.

[10]  Full details of the study available here:

[11]  Fore more information: see

[12]  The so-called implementing measures of the Eco-Design of Energy Using Products Directive, which was approved in 2005.

[13]  In 1997, green taxes stood at 9.5% of all taxes; by 2004 this had slipped to 8.3%.

[14]  International Energy Agency, World Energy Investment Outlook, 2002.

[15]  Several studies on this technology are available here:

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