Supplementary memorandum submitted by
the Institution of Civil Engineers (ICE) (CIT 42a)
REQUEST FOR WRITTEN EVIDENCE
INSTITUTION OF
CIVIL ENGINEERS
1. We welcome the opportunity to re-submit
evidence to the committee, and thank them for the chance to do
so. We have limited ourselves to three specific areas, and are
available for follow up discussions or meetings on any issue we
have raised in this and our previous submission.
GREEN TAXATION
2. ICE firmly supports the efforts of Government
to influence behaviour and promote sustainability as regards to
the environment. Green taxation, or eco-taxes, is one way in which
to achieve this.
3. In our previous submission in September,
we outlined our support for eco-taxes such as the landfill tax
(which we believe must be raised at a higher rate than planned
to affect real reductions in landfilling) and policies where contractors
have to prove to the government that they are meeting recycling
and sustainability targets (as the Government of Hong Kong demands).
We also explained our support for the "polluter pays"
principle, something eco-taxes can easily address.
4. Eco-taxation has been successful in other
countries, such as Sweden, Germany and Norway. The UK should adopt
similar measures soon, as the European Union has made it clear
that it supports broad eco taxation targets from its member states.
5. In Sweden, they have been one of the
forerunners of what will probably be the most widely accepted
future eco taxing policy, the carbon tax.[11]
In the early 1990s, Sweden introduced a tax (roughly £50/per
tonne) on the use of oil, coal, natural gas, liquefied petroleum
gas, petrol, and aviation fuel used in domestic travel. Carbon
emissions were cut, and biomass fuel use rose.
6. There were, however, problems that can
and should be avoided to guarantee even further success. These
include the fact that the overall tax level for industry users
of fossil fuels was reduced as a result of the 1991 carbon tax.
They also have noted that since energy costs represented only
a relatively small percentage of a firm's total costs, many industrialists
were slow to modify or upgrade their existing plants as a result
of the new taxes.
7. Another problem resulted from the tax
exemption on the use of waste fuels. Before the introduction of
the carbon tax, most industrial waste by-products were sent to
hazardous waste dumps or recycled. However, as the carbon tax
granted tax exemption on the use of waste fuels, many oil-based
by-products began to be used by local heating districts for heating
purposes. This resulted in large amounts of pollution.
8. Finally, perhaps the greatest flaw of
the new Swedish tax code was its inability to truly tax carbon
emissions. While most carbon-based fuels were taxed, this tax
did not reflect the actual level of carbon emitted from these
fuels. For example, low emission diesel fuel and high-emission
diesel fuel were both taxed at the same level despite causing
different levels of environmental damage. All of these problems
could easily be experienced by a UK Government, so planning and
foresight will be necessary.
9. ICE believes that green taxation's effectiveness
is best when the tax burden is constant. For example, Germany
has introduced eco-taxation laws in 1998, 1999 and 2002, but at
all times has reduced income taxes to maintain the same level
of taxation.
10. Moreover, people will respond positively
if they believe the money from these taxes is directly benefiting
the environment. Noted Canadian economist Phillipe Ghayad has
written that eco-taxes can create more efficient and comfortable
public transportation, thereby encouraging its use.[12]
Ghayad insists that everyone has a price they are willing to pay
in order to use a car rather than public transportation. It is
Government's job to convince those drivers whose price is relatively
low.
11. We support the taxation of cars based
on their fuel efficiency. This could be a sliding scale that could
be adjusted to go lower based on how poor the vehicle's fuel efficiency
is, with the base goal being increased every few years.
12. Yet households emit more harmful C02
than vehicles, through everyday activities such as doing laundry,
boiling kettles or washing dishes. A tax on water usage, or a
water meter, (such as Hydro-Quebec in Canada does with electricity)
would create a deterrent to waste this precious resource. This
is already practiced elsewhere in Europe. Additionally, in our
response to the Energy Review and our State of the Nation report,
we committed strongly to the idea of an "Energy Hierarchy"
which promotes conservation and efficiency. We would also support
a new household environmental rating tax, where homes not meeting
standards would face more tax pressure than those that do.
13. In principle, we support individual
carbon credit programs. However, we are aware that the possibility
exists to create so-called "carbon poverty", wherein
people with more money can simply buy up other people's allotted
credits, and continue polluting. We are also interested to see
how carbon credits would be allocated. Would it be a flat system,
or would people be granted more credits based on needs—ie
disabled individuals who are required to drive more due to inaccessibility
of public transportation? We believe individual carbon credit
allotment can work, but the planning involved will be considerable.
14. To encourage improved energy performance
in commercial buildings, we support tax deductions for commercial
buildings that exceed government standards for energy efficiency.
We also support tax credits to encourage sustainable building
practice. This should reduce natural resource depletion for both
construction and energy bills of the structure. Credits allow
early adopters in the market to overcome the early price barriers
to new technologies and practices while increasing the market
share of green buildings and technologies. Tax credits also validate
green building practices through Government endorsement. As the
market share for green building increases, the barriers to these
practices will decrease and the credits will no longer be needed.
15. The money generated from these taxes
can also be used to create incentives such as direct tax reductions.
These incentives can rage from tax reductions on the purchase
of hybrid cars to the purchase of electronic and energy saving
thermostats by households. Government must acknowledge the whole
life cost of construction, and its policies regarding its own
contractors and private contractors must reflect this.
SOLAR POWER
When ICE was invited to present evidence to the
committee, we were asked why solar power (specifically, photovoltaic
technology) was not cheaper and more readily available. The following
addendum addresses that question.
16. The main appeal of solar power is its
ubiquity. Solar is more diffuse than other renewable energy resources
(such as wind), making it more expensive to extract, but it is
much more evenly distributed over the Earth's surface. Despite
this potential, solar still only produces less than 1% of the
world's power. This is a result of the cost. The technologies
needed to convert sunlight to electricity have been far too expensive,
especially compared to readily available, far cheaper fossil fuels.[13]
However the cost of solar power has been declining steadily since
the first photovoltaic (PV) cells were made, and almost every
serious analysis of the renewable energy industry suggests that
PV technology will be cost-competitive within five to 15 years.[14]
17. Today, there are encouraging signs that
solar power will become an increasingly important player in the
future of energy diversification. The recently introduced California
Solar Initiative, which has committed US$2.9 billion to creating
3,000 megawatts by 2017, is one of the most ambitious attempts
to bring solar to the American mainstream.[15]
18. Polysilicon, used by 90% of all photovoltaic
cells, is still costly and energy intensive to produce, despite
silicon being the second most abundant common mineral on earth.
Shortages in supply result not only from its expense, but the
difficulty in quickly producing mass quantities. It has been the
recent and rapid growth of solar PV systems plans and installations
in particular that last year left producers unable to keep up
with demand. However this may soon be change.
19. South African engineers and scientists
have achieved a breakthrough in solar power technology. Low-cost
PV devices can be created using cheap amounts of active semiconductor
materials rather than the larger quantities required for crystalline-silicon
cells. Using copper, indium, and diselenide (CIGS) has reached
18.8% efficiency under standard test conditions, meaning the best
CIGS cell has exceeded the best efficiency of a polycrystalline
silicon cell (17.8%). In addition to being light-weight and more
portable than current panels, they also have a lifespan of about
25 years.
20. This research has created world-wide
interest. Presently, more than a dozen organisations are pursuing
full-scale production within the next six to 18 months. For example,
Shell Solar Industries in Germany is marketing a new 80-W thin-film
power module for a number of applications. Also, the world's second-largest
manufacturer of solar cells, Q-Cells AG, again in Germany, is
turning its attention to CIGS thin-film technology and plans to
build a factory which will have an annual production capacity
of 25 to 30 megawatt peak.
INNOVATION
During his original presentation of evidence,
ICE's head of Engineering, Policy and Innovation Jon Prichard
argued for a review of EPSRC's funding decisions. R&D funding
remains a key area of interest for ICE.
21. One of ICE's goals for the engineering
profession is to dramatically improve the sharing of knowledge
across all of its areas. It is felt that the construction sector
is an example of an industry that especially needs to improve.
22. Presently, construction R&D spending
is extremely limited, representing no more than 01-02% of the
industry's total value, where it should be closer to 1%-3% (an
amount more appropriate for an industry that represents roughly
10% of the UK's GDP).
23. Private industry should be contributing
more to research and development. ICE believes that 60% of all
research funding should be coming from the private sector. Unfortunately,
this has become an increasingly difficult proposition in the UK.
24. Construction lacks the immediate rewards
that other industries provide, and many breakthroughs or innovations
will only reap rewards five, 10 or 20 years in the future. These
rewards also benefit the consumer much more than the provider,
which therefore lessens the incentive for industry to commit to
R&D.
25. Our challenge is "industry transformation".
This can be accomplished through a shortening of the innovation
cycle. We urge Government to consider funding systems aimed at
addressing this gap. It is the commercialisation of academic research
that the UK has struggled to deliver, not the research itself.
How do we get the information into everyone's hands, and not just
high-tech companies? How do we speed diffusion of new technology
across the industry?
26. ICE believes that one way of accomplishing
this is through EPSRC. EPSRC must develop better relationships
with industry, especially in creating incentives for universities
to work with the private sector in such a way that hastens sector-wide,
long-term relationships.
27. Through our research, we have found
it difficult to get more recent statistics regarding construction
R&D funding. Following our contacting a number of organisations,
including DTI, nCRISP, EIC, BRE and EPSRC, it became apparent
that this is an area of statistical analysis that needs to be
addressed, considering construction's importance to the UK.
Institution of Civil Engineers
January 2007
11 http://www.colby.edu/personal/t/thtieten/eco-taxation.htm Back
12
http://centrerion.blogspot.com/2006/06/creative-taxing-can-save-environment.html Back
13
http://www.solartoday.org/2005/jan_feb05/chairs_cornerJF05.htm Back
14
http://www.innovations-report.com/html/reports/energy_engineering/report-46669.html Back
15
http://www.cpuc.ca.gov/Static/energy/electric/051213_casolar.htm Back
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