|
UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE To be published as HC 88-viii House of COMMONS MINUTES OF EVIDENCE TAKEN BEFORE ENVIRONMENT, FOOD AND RURAL AFFAIRS COMMITTEE
CLIMATE CHANGE: THE "CITIZEN'S AGENDA"
Wednesday 7 March 2007 MR CLIVE BATES and MR ADRIAN LONG RT HON IAN PEARSON MP, and MS JACKIE JANES Evidence heard in Public Questions 743 - 857
USE OF THE TRANSCRIPT
Oral Evidence Taken before the Environment, Food and Rural Affairs Committee on Wednesday 7 March 2007 Members present Mr Michael Jack, in the Chair Mr Geoffrey Cox Mr David Drew Mr James Gray Patrick Hall Lynne Jones Daniel Kawczynski Mrs Madeleine Moon Sir Peter Soulsby David Taylor Mr Roger Williams ________________ Memoranda submitted by Environment Agency
Examination of Witnesses Witnesses: Mr Clive Bates, Head of Environmental Policy, and Mr Adrian Long, Head of Corporate Communications, Environment Agency, gave evidence. Q743 Chairman: Good afternoon, ladies and gentlemen, welcome to this further evidence session on the Citizen's Agenda Inquiry into Climate Change issues. Can I welcome our first set of witnesses this afternoon from the Environment Agency, Mr Clive Bates, who is their Head of Environmental Policy, and Mr Adrian Long, the Head of Corporate Communications. Gentlemen, you are both very welcome. Can I say at the outset how grateful I am to the Agency for the support it has been giving my local borough energy saving initiative, Fylde Low Energy. We are grateful to Kate Cox especially for her input into that. It does bear out some of the points raised in your evidence about localised activity; but I was struck by a sentence in the introduction of your evidence to the Committee where you say, "However, emissions from other sectors, notably the domestic and transport sectors, are increasing and there are no suitable measures in place to reduce them." That is pretty strong stuff. It suggests you are not very happy with the approach that the Government is taking to climate change. Perhaps you could explain why you wrote that? Mr Bates: Chairman, I think probably the Government itself is not very happy with the approach it is taking, and that is why it wants to do a lot more. It is introducing the Climate Change Bill, it has got ideas about reform for the commercial sector, it has got a project in the Office of Climate Change working on the domestic sector, it is considering whether there should be an obligation on energy supplies in the domestic sector to cap the amount of energy they expend. So, there is a lot of restless activity looking at how to crack what are actually very difficult and challenging problems. It is the same in the transport sector. There is the forthcoming introduction of the Renewables Transport Obligation, there are efforts at European level to get more vehicle efficiency and there is a great national debate going on about the use of economic instruments in transport, such as road pricing, which has attracted a lot of controversy. I think our demeanour and the Government's demeanour is that we must do more. The problem is very, very difficult and very challenging. Q744 Chairman: It must do more, but you said in your evidence, "There are no suitable measures in place to reduce them." What you have done in your evidence now is to tell us what is happening. What do you, the Environment Agency, think should happen? What are the key priorities that we ought to reflect in our report from your advice? Mr Bates: I think some of the things I have just mentioned will be very helpful, but there is, I think, a general approach that the Government should adopt here to try to change the behaviour of households, individuals, firms, the public sector, bodies that produce emissions, and there is a four-part strategy in place for thinking about this: set up an incentives structure, encourage people to change what they are doing; put measures in place to enable them to respond to the incentives that are in place; engage more, communicate with people and businesses, create attractive propositions about why they should change. That is something that has gone wrong, perhaps, on the road pricing debate. I do not think we have had a really forthright conversation with the public about road pricing, but it is a very important measure. Then, finally, walk-the-talk, lead by example and do more in the public sector. Q745 Chairman: Is that why Defra is number nine on the ranking of the Sustainable Development Commission, because of its poor performance? Mr Bates: I cannot really speak for Defra in this case, but across the Government the Sustainable Development Commission is trying to raise everybody's game and that setting up of league tables is quite an effective way of applying pressure. I am sure any of the departments that are in the lower parts of that league table will want to respond and do more. Q746 Chairman: You said in the Sustainable Development Strategy, and you have just enunciated your four-point strategy, that that was not mentioned. As a piece of methodological guidance you think that this should be developed into something that has got some real-world action attached to it by Defra, do you? Mr Bates: Yes, and it is gradually creeping into the Government's thinking. It is part of the Sustainable Development Strategy, it is essentially signed up to by all the government departments - it is not a Defra policy, this is a government policy to have this - and it is a very effective framework for thinking about these issues applied to lots of different areas, whether it is transport, the domestic sector, commercial emissions, industrial emissions, and so on. The four components of that strategy are quite a powerful way of developing policy. Obviously you have to develop the appropriate instruments under each of those four headings for the particular circumstances. Whether it is a cap-and-trade type system, a tax, or some sort of funded programme, or something like that, those are design choices that have to be made in each specific case, but I think, if you neglect any of those four pillars of that strategy, we will find ourselves in trouble and the good intentions will not be realised. Q747 Daniel Kawczynski: I wanted to ask question three in the context of flood management, which is something of great importance to me as my constituency perpetually floods. The Government's UK Climate Change Programme 2006 only mentions the Environment Agency briefly in the context of flood management. Should the Agency take on a higher profile role in engaging with individuals and communities on climate change issues like this in the context of flood management? Mr Bates: Yes, I think we should. We, the Environment Agency, think we should. In a sense the impacts and what we need to do to adapt to build resilience to climate change is under politicised, because there is a lot of debate and discussion about reducing emissions, and that is quite right, there is nothing wrong with that, but for the foreseeable future we will be living in a warming world and actually most of what we do on mitigation to reduce emissions will not start to change the rate of warming until the second half of the century. So, in a sense, we are now, for the next 30 or 40 years, facing warming that we can do very little about over that period. One of the things that we want to do is to take on a stronger role on public engagement in adaptation to climate change and building resilience, looking at how much and how we invest in flood risk management, a sensible strategy for realignment of the coast in the face of sea level rise that we can do nothing at all about, for now, more on water security and perhaps more on biodiversity and some of the delicate habitats that are at risk from climate change, plus a whole lot of other things that we think should become much more embedded in the politics and thinking of our response to climate change. Q748 Daniel Kawczynski: As a follow up to that, councils sometimes, obviously, ignore the Environment Agency's recommendations on building, i.e. planning applications on areas that flood. Do you feel that the Environment Agency should have more powers to force councils to take your advice? Mr Bates: Actually that position has been changing quite markedly over recent years. We now find ourselves differing with councils less and less. It is down to a relatively small number of cases. We are now a statutory consultee, the Government has just given us more powers in this area, and there is also the power for a call-in for planning applications where there is a conflict and a difference of opinion over these planning decisions; but our advice relates to flood risk management and flood risk, whereas councils are making a broader sustainable development decision. We would obviously try to minimise the amount of development that there is in the flood plain, but councils have other things that they have to square as well and in some ways it is right that they balance the different objectives that they are trying to meet and are held democratically accountable for them. Q749 Sir Peter Soulsby: I would now take you on to the Agency's role beyond the mitigation and adaptation that you have referred to there, because it is the case that in the Climate Change Programme that is the bit that gets some emphasis at least. In your evidence to us you said that there is substantial scope for individual community action to contribute to emissions reduction. You also said there is strong public backing for such action. Is there any evidence to support this? Is there any evidence that people are prepared to make even comparatively small shifts in behaviour, never mind the lifestyle changes that might be necessary to have a real impact? Mr Bates: The statement that is in our evidence that says that draws on polling that was done for the Tyndall Centre by Ipsos MORI that did show that people said they were prepared to respond individually and expected a collective response to climate change, and there is a fair bit of polling that shows that around two-thirds of people are prepared to do something, a much smaller percentage just say they are prepared to do a lot - that is the evidence on which that statement was based - but there is a question of whether people will say one thing and then do another, and, for that reason, we think that a purely voluntary system that relies essentially on goodwill is actually a very weak response to this. I use the example, and it is not a climate change example, of recycling. For years we have been urging people to recycle more and take their bottles to the bottle bank, and so on, but we have just had a massive uplift in the amount of recycling, and it is driven at its origin by quite an obscure EU directive which has been implemented in the UK by some quite strong economic instruments which have put local government in the driving seat, which have caused them to send out these green boxes and have a proper collection system, and now people are able to respond to this. They always wanted to anyway but it was too difficult for them. What I see here is a role for government - this is an example of that four-way Sustainable Development Strategy in action - actually creating the incentives to do it and enabling people to respond easily. Sir Peter Soulsby: As I understood what the Tyndall Centre found in their research, indeed, almost two-thirds of people believed that every possible action should be taken to tackle these issues, but then, when they went on and they were pressed, they felt that the responsibility lay at global and national level and not at individual level. I think that is the correct meaning of it, and that does come really to the point that you raised about the need for incentives and enabling. What do you believe is the right mix of support and encouragement to get individuals engaged particularly with emissions reduction? Q750 Chairman: What is the climate change equivalent to recycling that you have just enunciated? Mr Bates: I think there is a whole variety of things, because, obviously, climate change covers lots of different areas. Let us take transport. I think there are probably four different responses on transport here. The greater availability of low-carbon fuels, such as bio-fuels, incentives that increase the likelihood that people will choose efficient vehicles. You could do more with vehicle excise duty, much higher levels of vehicle excise duty and much more steeply graduated. You could apply technical standards, like the EU proposal. That would, again, promote vehicle efficiency. There are things that you could do that promote car-sharing. That is another form of efficiency. Then I think the third area that you have got is modal shift. We sometimes overstate how much that is capable of achieving, simply because the volume of road traffic is so high it is very hard to move all that mobility on to public transport or other forms, but, again, it was done in London quite well. The Mayor, when he introduced the Congestion Charge, took a proposition to Londoners that he would use the funds to strengthen the bus service, and that was part of his engagement strategy, but he also gave people a modal shift alternative. Then the fourth strategy, more fundamental even than those, is to reduce the transport intensity of the economy in life, essentially to try to have more sustainable communities where people shop, go to school, work closer to where they live, so that we do not spend so much time driving around. That is quite difficult in the long-term to pull off, but if you adjust prices, fuel prices, if you make transport less affordable over time and if you have enlightened planning policies that will help. I could go on. In the domestic sector I think there is a lot that could be done with energy suppliers that would change the business model in the domestic energy supply industry from one of providing power and gas to one that is much closer to the energy services model, and that is what a supplier obligation would do. People would still have to invite people into their homes from the firms to sign those contracts, but that would change the game completely in energy supply. We have done a lot with Building Regulations. It has been fantastically cost-effective. People are making money because of the Building Regulations. We can always go further with those. It costs much less to improve the energy efficiency of a building than the energy savings gained from it, and I think Defra's research shows that the strengthening of the Building Regulations is worth a positive £30 billion MPV over the lifetime of the building, and so that is very, very attractive. There may be things that we can do to encourage people to upgrade the energy efficiency of the home at particular points of ownership. For instance, where they buy a house, sell a house or extend or modify a house there might be scope for tax breaks, because that is a good moment to get the builders in. One of the big barriers to domestic energy efficient is that you have to get the builders in and people, understandably, do not like doing that. Q751 Sir Peter Soulsby: What you have described to us there is no doubt very worthy but it is really quite general. No doubt we will come to some of the specifics later on, but I wonder whether the Agency has a series of specific proposals, your top ten things, for example, that would make a difference? Mr Bates: We have not. We could do, and I am happy to write to you with that. We have not framed it in a sort of top ten format. To be honest, it is slightly off our main territory, domestic energy efficiency. We are the regulator for industrial plant and we do flood-risk management and water resources and everything. We tend to see that as territory for the Energy Saving Trust, for whom it is much more of a bread and butter business, but we have a mission to be the champion for the environment and we do have ideas in this area. Mr Long: One the key pieces of work that we do in that area is based around something called World Environment Day, which is a UN environmental programme in June each year, and I think your Chairman actually took part in this event last year and made a couple of promises. So, we do know that there were 400,000 promises made last year to do some of the very small-scale individualised action that we think is important, and people were basically offered ten suggestions as to what could be done. As Clive says, there is still the point about ensuring that those things happen, but it is clear that there is an appetite out there for change. Clive is quite right that our locus is around regulation and flood-risk management, but I think we would share some of the views from other bits of the Defra family that one of the biggest obstacles is making this easily doable by people. Information does not do very much in and of itself. It is making things easy to do that can have practical results, and it is those sorts of barriers that I think need to be improved. Chairman: When you write to us perhaps you might also comment on how well you think the Building Regulations, if you are able to, are actually being enforced. When we went to Woking there was some evidence that this was not being done with the rigour that it deserved. Q752 Mr Cox: What scope is there, do you think, as managers of the rivers, for small-scale hydro-electric schemes? I have one or two in my constituency. Mr Bates: That is a very interesting question because it brings different environmental objectives into conflict. One of the problems with run-of-river hydro - there is plenty of infrastructure out there already that can be reconditioned and brought back into use, and so on - is that it does impede the movement of fish and it can have some impact on aquatic ecology. To be quite honest, and I was talking about this to colleagues earlier today, we are concerned that we have not actually got the clearest possible guidance on resolving those conflicts at the moment. It is an area we need to be clear on, but clearly there is a lot of potential, there is a lot of infrastructure already down there. Chairman: Perhaps you can write about the potential to us, but I want to move on to Madeleine. Q753 Mrs Moon: You talked about engagement. I have written to all of my primary schools asking the children, over the Lent period, to give up a number of things, including leaving lights on, things on stand-by, a whole range of basic things that children can engage in. I noticed on the "Fun and Games" section of your website that you have an ecological footprinting. When we went to the Centre for Alternative Technology (CAT) they had a carbon gym where you could calculate your personal emissions. Have you thought of having a similar web-based tool, but also, what evidence do you have that actually web-based tools are the way to actually engage citizens in reducing their emissions? Mr Long: I think the answer to the second point is that they can have some. I think there is a broader point here. People do not loiter on websites any more because of the pace of life changing and what people come to websites to do. Online libraries do not do it any more. So most people, including most of our customers and members of the public, come to our website in order to carry out some kind of transaction, whether they want to get their rod licence, whether way want to receive their permit, that is what they want to do when they are out. With children that may be a wee bit better. I do not think we are ideally placed, or should be ideally placed, to carry out much of that educative work; it is not our role. You are right that we do the footprinting. My understanding is that Defra is developing a carbon calculator which will be web-based, and we would expect to support that and have that available through our website. That will be, as I understand it, a way of trying to bring some of the same methodology and the same awareness to the calculation of people's carbon footprint. Mrs Moon: Perhaps we can ask the Minister when he expects to have that. Q754 Lynne Jones: Is that the same as the toolkit that is being developed by Ashton Hayes, the village? They are doing lots of work in this area. Mr Long: I am not aware of that. I am aware of it; I do not believe it is the same thing. I am not sure. You will probably need to ask Defra about it. Chairman: One thing you might like to think on in terms of writing is: is any effort being made to follow up an inquiry to find out if any action takes place? You might like to reflect on that. Q755 Mr Drew: In terms of your communication strategy with regard to climate change, I note in today's Hansard there is a parliamentary question from Martin Horwood about monies spent on departmental areas, and you come up under flooding. You have previously mentioned World Environment Day. Are you spending any money in terms of a communication strategy or a campaign to deal with climate change? Mr Long: We have just done an exercise within the Defra family, as part of a request from Defra, which I think was an attempt to understand who and how much was being spent and what was happening across the family. Within that benchmarking exercise it looks like we spend something like 1.6 to eight per cent of our income on what I would call communications. We are barely scratching business to business communications. There are others who are much better placed to carry out public-facing campaigning. World Environment Day is our relatively modest contribution. Q756 Mr Drew: Can you say who you think is better suited to carry this out? Mr Long: I think the contribution comes from all around the shop, frankly. I do not think this should solely be a government initiative. I think the NGO community and many community groups have a very significant, important and valid role to play here. There is sometimes a suspicion of government-led communications, and that may well be one that the NGOs have put forward. So I think we have a role, because we are respected, but I do not believe that we can venture too far off that. World Environment Day, as I say, is fairly modest, about 160,000K last year in terms of resource, about 80 to 90,000 in staff time. There are others within the family, whether it is the Carbon Savings Trust or EST, who are better placed to carry out targeted campaigning and communications. I think we need to be aware of where we fit best and do the work that we do. Having said that, at the moment we are developing our communications programme specifically around climate change. It is likely to be a major theme for our public-facing conference, which takes place in November every year, it is likely that we will continue to produce bits of publishing like this document that was launched in 2005. So there are roles for us to play where I think we are beginning to develop a clearer idea of what we need to do to communicate and lead to behaviour change. Q757 Mr Drew: Specifically with regard to the advice that you offer to areas subject to flooding, how much do you try and link what is happening with flood risk to climate change? Mr Long: We do not. Q758 Mr Drew: Why not? Mr Long: Because the campaign that we are funded to carry out is largely one about awareness of your risk of flooding, and it is also about the focus that we need to put upon helping people to do the things they need to do once they have reached that level of awareness of flooding that is the primary purpose of our campaign. Q759 Mr Drew: Should you not be drawing these linkages, in as much as you have got an obvious captive audience of people who say, "Hang on a minute, climate change is not something out there, something that will affect us in 50 years' time. It is affecting me here and now. I cannot get insurance on this property because of the flood risk"? Mr Long: I think it is genuinely difficult to say that an individual event, such as, for instance, Boscastle last year, was the result of climate change. I think it is overwhelmingly likely that it was, but I think it would be difficult to claim that. The flood awareness campaign has to do a number of very targeted things. That is not to say that we do not draw some of the links as the campaign develops and we do a fair amount of what I would call relatively opportunistic work around individual events, but I think we do need to be quite careful. We did not last summer, for instance, when talking about drought in the South East, specifically say, "This is as a result of climate change", because there were certain very important day-to-day messages that we needed to get through. I think we would lose some of the impact of our flood awareness campaign if we broadened it too much, to be honest. Chairman: Thank you very much. Q760 Mr Williams: The Environment Agency has a range of regional and local offices that give advice on climate change. In your evidence you reflect upon the work that you have done with the black and ethnic minority communities in Birmingham, but can you tell us to what extent your regional and local offices work in conjunction with the Energy Saving Trust, the efficiency advice centres and community groups and local government to co-ordinate the provision of advice about climate change mitigation and adaptation? Mr Long: I guess the important thing for us in that is, again, to work out who is best placed to do what. The Energy Savings Trust are the ideal organisation to provide that sort of advice, and I think another organisation such as ourselves getting in the way of that or complicating it makes it more difficult for clear messages to be sent to the people that they are aimed at. Q761 Chairman: Was it a good idea to reduce the Energy Savings Trust's budget this year? Mr Bates: We probably ought not to comment. Q762 Chairman: Oh, go on. I have asked the question nicely, and it is between friends! Mr Long: You may have other witnesses this afternoon who may well be able to help you with that. Mr Bates: We are all facing tight financial circumstances. Q763 Chairman: I think you have answered the question. Mr Bates: It is a bit like sailors complaining about rough seas, to be honest. We are getting to expect the financial position to be tight in the future. Q764 Chairman: Very diplomatically put. Mr Long: If I can return to Mr Williams, on a day-to-day level there are a wide range of operational links between our regions and our areas. Many of those are around regulatory duties and some of them, as we have heard earlier, will obviously be about the discussion around building within flood plains or flood risks at a local level. We are also in several areas throughout England - I know less about Wales, I am afraid - involved in a number of local strategic partnerships, the bodies that have come out of Local Agenda 21. Where we are involved there, I think we are part of that broader consortium or partnership that is able to do some significant work. So we provide data for people to make decisions at a local level; we provide a number of web-based applications for people to get more information; we provide flood warnings at a regional and local level. We do not do that much, to be honest, in terms of the provision of information with local governments. Again, for some of the reasons I have put forward in my previous answers, I do not think it would be best value for money. I think our linkage is really an operational one. Q765 David Taylor: A decade and a half ago, we had the Earth Summit and the massive interest and surge of enthusiasm that flowed from that, particularly in the area of Agenda 21; and, indeed, in your own evidence to us, which is linked in with this engaging and involving people, on page five, you still believe that local authorities have a key role to help draw down so-called action on climate change from national to local level. The Committee went to Germany a week or two ago, to Freiburg in the Black Forest, close to the French border, in a state that has got an excellent track record, Baden-Württemberg, in terms of encouraging local action, a city of a quarter of a million or something like that. Why are cities of that size in the south-west of Germany able to still move fairly effectively along the Agenda 21 route and all enthusiasm, knowledge and commitment seems to have died in the vast bulk of British local authorities? Why should that be? Mr Bates: I am not sure that is actually the case. I do not think you see things labelled "Local Agenda 21" any more - that is true - but I think a lot has been done to assimilate the environmental agenda into the way local government thinks and operates. As Adrian was saying, we have been participating increasingly in local strategic partnerships, a lot of the regeneration agenda has a strong environmental bent to it, and, of course, local authorities have many duties to do with waste management, traffic management and being the local sort of public realm, so I do not think the will has gone. Perhaps what is interesting, though, is the extent to which the Mayor of London has taken on the environmental agenda and made climate change a big issue for London. In some ways the Mayor has more power, more autonomy, more responsibility than is typical in most of local government, and that might be why he is able to make a stronger run at it. Q766 David Taylor: In your evidence, when you use that phrase about local authorities and Agenda 21 "as they once did", implying that they are not doing it now, you are seeking for ways to give incentives for them to pick up again the Agenda 21? Mr Bates: I think that is right. I do not think we would want to compare how it is now with how it was in the past, because circumstances have changed so much and the environment has gone up the political agenda in many ways. Q767 David Taylor: We are talking about the local authority role, the leadership role that they have in engaging their communities, whether they be 2,000 people in Freiburg or 400 people in Mannheim that we saw, not too far away from there? Mr Bates: That is right. I think the will is there amongst local authorities do that, and perhaps if we had more mayors, if we had more autonomy in local government, they would be out doing more of it, which is why I drew the comparison with London. Q768 David Taylor: Is that what you are saying to the DCLG - we need more Ken Livingstones scattered throughout the country? Mr Bates: I do not, in all honesty, think that is a view that they would depart that much from. They want strong local government and they are champions of strong local government. Whether they want to replicate Ken Livingstone is another matter, but there is a lot of interest in government and having more mayors and more powers devolved to local government. Q769 David Taylor: Are you putting strongly to your colleagues in DCLG the point that local authorities should be encouraged to seize the environmental agenda again, as they once did, although things have moved on in a decade and a half, you are saying? Mr Bates: To be honest, I do not think we need to do that. The CLG has moved. It is taking this agenda quite seriously and taking it on quite strongly. It has got the zero carbon homes commitment and a bunch of other things that it has announced recently that it wants to do on the environmental climate change agenda, so I do not think there is a problem there that requires us to badger them into doing more. In many ways, many of the government departments now are focused on what they can do to actually get a better response to climate change, and that includes CLG, it includes DTI, it includes the Department for Transport and, of course, Defra. Mr Long: Certainly the relationship between the Environment Agency and the representative bodies within local government has got stronger in the last two to three years - I think that is fairly evident - and that is a sign, I think, that things are beginning to move much more in the direction we would wish. Sandy Bruce-Lockhart, for instance, from the LGA, spoke at our conference this year, his deputy spoke the year before, and a big section of our conference was about building and strengthening regional and local relationships between us and partners and making sure that the work that was happening at a local level was as concrete and able to involve people as possible. Our Chairman, Sir John Harman, has a distinguished career in local government and is passionate about our relationship with local government. I think things like the Nottingham Agreement and other issues and initiatives are genuinely beginning to help work at a local level. Q770 Chairman: Do you think that local authorities are sufficiently resourced in these straightened times, to which you referred a moment ago, to get things off the ground? I know from my own experience it has been a tough haul to get the resources in place to employ one person to actually turn these good intentions, with a huge list, into anything like reality. Mr Bates: I think there is more that could be done there. I think the local area agreements could have a greener component to them, and that would start to provide that funding. Of course, that is, to some extent, under the control of local authorities themselves, and one of the things that we are trying to do through local strategic partnerships is encourage a greener dimension to local area agreement. Q771 Chairman: Let us move on to fiscal instruments. In your evidence you say fiscal instruments should be used to penalise behaviour that is environmentally damaging and reward that which is environmentally beneficial by introducing inefficiency charges for products that are the least energy efficient. The price would more accurately reflect the true environmental cost of the product. Would you be in favour of increasing the price of incandescent light bulbs to achieve the same objective that the Australians have in moving towards, for example, the introduction of low-energy light bulbs? Mr Bates: I think in that case there is a question about what the most appropriate intervention is. The Australians have gone, quite boldly, for a regulatory approach on the basis that it involves much less complexity, it requires much less information to be understood by the individual. There may well be a case for doing something around lighting efficiency from pure standards - what is actually allowed onto the market. It might be a more efficient way of getting to the outcome. I think our advice there probably should not be generalised to every possible circumstance and every possible product, but done where it is really appropriate, for instance for vehicles or for other large energy users. Q772 Chairman: Have you as an agency done any evaluatory work on the effectiveness of green fiscal measures? Mr Bates: We tend--- Q773 Chairman: It is either yes or no. Mr Bates: I am trying to recall what we have done. We, basically, survey the literature. We are not out there looking at---. We are not basically doing what academics do. We commission work through our science programme and our economics programme that has a flavour there, but I am not absolutely certain what we have done on particular fiscal instruments. Q774 Chairman: Perhaps you would like to go and have a look, because I am intrigued to know why in aviation emissions the five quid or the ten quid on the air passenger duty was chosen as the fiscal instrument to achieve a reduction there? Mr Bates: Obviously we did not make that choice. We learnt about it at the same time everyone else learnt about it. Q775 Chairman: It would be useful to have some commentary from about you about what works and what does not in the green fiscal environment. Mr Bates: In fairness, Chairman, we did put in quite a heavy duty submission on those themes in response to the supplementary question that the Committee asked. We went through a lot of what is effective and what is not effective in our second submission. Q776 Chairman: In that case, I will re-examine it and, if necessary, I will come back to you. Mr Long: It came to you in January, Chairman. Chairman: We are in March now, I have almost forgotten January, but I shall go back and have another look at it. Q777 Lynne Jones: I wanted to ask you about personal carbon allowances, which the Secretary of State has flirted with, and then there was the report produced by the Centre for Sustainable Energy. The Environment Agency is the UK registry administrator for the European Emissions Trading Scheme. Based on that experience, what is your view about the practicality of going down the road of personal carbon allowances? Mr Bates: I think the first thing to say is that the Secretary of State, in raising this idea, has done us a service, because he is having what is quite an imaginative and challenging idea widely discussed now and, as an approach to communications, it is good because it makes the point that people have a carbon footprint and that there is a basic entitlement to carbon that most of us exceed and there would be the possibility for trading. So, as a communications exercise and in engaging people, he is doing the right thing by getting people to think about it. However, there are (and he accepts this and Defra and the Government accept this) quite formidable practical difficulties to bringing in a full-scale compliance personal carbon trading system in which everybody in the country would be a participant. It would be at least as complicated as the ID card project and it would have to have virtually 100 per cent coverage. It would be almost like introducing an entirely new currency. It is quite a subtle idea. It would be difficult to communicate to the people, and so on. There are, as I say, formidable practical difficulties to doing this, but it is worth discussing. The other question that ought to be asked about this is: is there another easier, lower cost way of getting to the same result or getting 80 per cent of the way for 20 per cent of the effort? I think doing more with the business model that energy suppliers have might be a more promising route to explore, at least in the medium term, so that they are operating an energy services type business rather than rushing into personal carbon trading. I would not want a debate about personal carbon trading to distract us from doing things in the short to medium term that will actually make a difference. Q778 Lynne Jones: Do you think it could possibly be tied in with an identity card system? Mr Bates: I do not think anyone has reached the point of actually designing it. It is very much a "thought experiment" that the Secretary of State is challenging us with, and it is good. It is good that we think about these things. How would one do it? One would need some form of identity and accounting regime. If you think about what it takes to design a system like that, you would have to know who is on the system, you would have to have some way of allocating emissions to them and then some way of managing the trades that they have. We can at present register individuals on the Emissions Trading System Registry. If you pay £170 you can actually become a member of the Emissions Trading System and start buying and selling carbon allowances as an individual, if you are so minded. Expanding that to 60 million people would be difficult. Q779 Lynne Jones: What are the advantages of doing that, if I wanted to do that? Is there any advantage? Mr Bates: Judging by the number of people that have done it, there is very little advantage, I think. I think there are other interesting areas around off-setting that are easier to get into than joining the Emissions Trading System, to be honest. I think if you want to do that sort of thing, looking for good quality off-setting might be a more promising route for taking personal responsibility for carbon than joining our Emissions Trading System as an individual member. Q780 Chairman: I think I would feel more convinced that they could manage personal carbon allowances if they could pay 121,000 farmers on time, but there we are, that is a personal point of view. Thank you very much indeed. I have just refreshed my memory about your green tax mission, and I think that is more than adequate, so there is no need to do further work on that. Can I thank you both very much indeed for coming. We have inevitably been constrained by time today. You are obviously aware, by virtue of the written evidence, for which I thank you, and the line that the Committee is taking, that we are very much focused on thoughts about what engages the citizen into action, and if as a result of hearing colleagues' inquiries there are further points and recommendations that you would like to make on how the citizen's involvement between, "I have heard there is a problem, something should be done, but what can I do?", can be strengthened, then your further thoughts would, as always, be very much appreciated. Thank you very much.
Memoranda submitted by Defra Examination of Witnesses Witnesses: Rt Hon Ian Pearson MP, Minister for Climate Change and the Environment, and Ms Jackie Janes, Head of Climate Change and Energy - Households and Markets, Defra, gave evidence Q781 Chairman: Minister, good afternoon. We welcome Ian Pearson, the Minister for Climate Change and the Environment, supported by Jackie Janes, the Head of Climate Change and Energy, Households and Markets. I bet you have got your hands full then! Miss Janes, do you monitor the number of households who are positively practising energy efficiency methods as opposed to having ticked boxes and sent bits of paper back? Ms Janes: We do a survey for our climate change communications initiative. Every year we commission a survey, at the same time in the year with the same questions, to find out how attitudes and actions are changing. So that helps to provide a yardstick. Q782 Chairman: What proportion of English households would you estimate are actually doing something to save energy? Ms Janes: The statistics say that in excess 50 per cent of people say they do something, but the evidence suggests that that might be something relatively minor, like energy-efficient light bulbs, and what we need to do is move them on a journey from taking one relatively small action to taking a number of more significant actions, like insulating their attic, cavity wall insulation, driving less, off-setting emissions. Q783 Chairman: Thank you very much. Let us move to a big thing, Minister, and welcome you, and thank you very much for your various pieces of evidence and the information that you have sent about the range of programmes which Defra is involved in. I wonder if, for the record, you can confirm that the Climate Change Bill draft is going to be published on Tuesday 13 March? Ian Pearson: What I can say, Chairman, is that the Climate Change Bill will be published shortly. Q784 Chairman: You could, surely, be a little more specific if we are getting as close as we think it might be. Is "shortly" within a few days, weeks, months or years? Ian Pearson: "Shortly" is exactly when "shortly" is. Q785 Chairman: "Shortly", Minister, is that beautifully elastic ministerial word which is deployed when you do not want to give a specific answer to a very specific question. Ian Pearson: That is absolutely right, and I think I have made my intention clear not to give you the specific date; but we do hope to publish the Bill shortly, we do want to have the widest possible dialogue and debate on the Bill, we think it is a landmark piece of legislation, and we are keen to ensure that this Committee has full access to the Bill. I will be very happy to make myself available to discuss the contents of the Bill, and we want to see widespread public debate on the Bill and on what more we can do to avoid dangerous climate change emissions. Q786 Chairman: So you would welcome this Committee carrying out an exercise of pre-legislative scrutiny on the Bill, and we would have full co-operation from your department if we did it? Ian Pearson: As I know you are aware, we have had discussions about how pre-legislative scrutiny would take place on the Bill, and I think it is right that there should be pre-legislative scrutiny on an important piece of legislation like this. Q787 Chairman: Perhaps you would convey to your Secretary of State our continued enthusiasm to undertake this work in the shortest possible time but in the most thorough manner and, should it appear next Tuesday, we would be only too happy to indicate publicly our willingness to get on with that work. Ms Janes: We have been discussing which would be the best way of ensuring that we have proper pre-legislative scrutiny, whether it should be through one select committee, whether it should involve both Houses, and I think that we need to be clear about what is the best way forward on this, but certainly the Government wants to be as open as possible on the Bill itself and we want a bill that is going to work and make a real difference in the United Kingdom. Q788 Chairman: Let us look at the overall position that your department is in. It would appear that if we take the years 2000 to 2004, CO2 emissions only went down by 0.1 per cent and you are running somewhat behind in achieving the Government's CO2 reduction target of 20 per cent by 2010; so could you give us the main headlines as to how you are going to make up time and, in overall terms, the 60 per cent by 2050 reduction, which means that we have got to run at something like a 1.5 per cent reduction nationally in carbon dioxide if we are going to make it. How are we going to do it? Can you give us some numbers and a time line as to how we are going to achieve this? Ian Pearson: You have put a number of things together there, and let me try and distinguish between them. Firstly, there is the issue of the Government Office Estate itself and the sustainable development targets that we have got, including targets to reduce our CO2 emissions, and I have to say that performance overall is not as good as it should be and we do need to up our game. I think it is one of the reasons why we appointed the Sustainable Development Commission to act as an advocate on SD issues. Q789 Chairman: They have not been very nice to you, have they? They only rated you as ninth in their hit-list of the material that they published today. There are lots of "could do betters" for Defra! Ian Pearson: There are lots of "could do betters" for Defra, there are lots of "could do betters" right across government as well, but there are also examples of good practice, and I think the SDC report makes it very clear that there are a number of pockets of excellence at the moment, and I think the task for us in government as we move forward is to mainstream sustainable development to make sure that we hit our sustainable development targets, which, as I say, include not just climate change targets but a wide range of other targets as well. Q790 Chairman: In the context of the Bill as such, is that going to contain further measures which will help the process of capture? Ian Pearson: As far as the Government Office Estate is concerned, we have a range of measures in place at the moment. For instance, within Defra we are constructing a new building with AMEC that will have a number of renewable technologies and will be low or zero carbon, and we have said in our sustainable development targets that we want new buildings to be built to BREAM excellent standards. We are working with the Carbon Trust on a carbon management policy right across Defra, and there is a range of activities already underway. When it comes to the broader picture about achieving a 60 per cent CO2 reduction by the year 2050 across the UK economy, it is clear that that is a challenge for us, and we believe that having a Climate Change Bill, having enabling measures in the Climate Change Bill, the Carbon Committee to advise us on, all the things that were in David Miliband's statement to the House that he made, is very much the right approach. We have through the Climate Change Programme Review, as you know, a number of policies already in place, and no doubt we will go on and talk about a number of these in a few moments, but we do need to do more, and as a government we recognise that we do need to do more if we are going to hit our future targets and ensure that we are on the right pathway. Q791 Chairman: Let us talk about some specifics. You very kindly sent an overview document of a range of initiatives which were designed to involve (the focus of this inquiry) the citizen in things that they can do to contribute to our carbon reduction programme, and a lot of them have sums of money (some big, some small) attached to them. Can you take us through the decision-making process, bearing in mind not all of these programmes are in the gift of Defra, they involve the Department for Trade and Industry, the Department for Transport, and possibly others, and how you decide how much money you are going to spend on these different programmes, bearing in mind the differential achievements in terms of carbon reduction? Perhaps you might just, in parenthesis, help me to understand why on some of the programmes in your list you have measured that performance in terms of the reduction in carbon but others are measured in terms of carbon dioxide; there is no common denomination in terms of the measurement. Let us look at the money. How do you decide as a Government how much you are going to spend in terms of these different programmes? Ian Pearson: Firstly, on carbon or carbon dioxide, I agree we ought to be clearer and I apologise that this table is not as clear and consistent as it should be. Personally, I think we just ought to use carbon dioxide all the time, it would be far clearer all round. Q792 Chairman: Just to help us, how many tonnes of carbon dioxide have we actually got to save on an annual basis between now and 2050 to get there? Where are we in the CO2 tonnes savings, so we can put these programmes in context? Ian Pearson: If we look at the household sector, emissions will need to have fallen from around about 40 million tonnes of carbon at the moment. Q793 Chairman: Carbon or carbon dioxide? Ian Pearson: Carbon, 40 million tonnes of carbon at the moment. If we are going to reduce that by 60 per cent you can do the maths yourself. Q794 Chairman: So that is 24 million tonnes? Ian Pearson: Yes, that is right. Q795 Chairman: Good. Ian Pearson: Our calculation is that to be on track by 2020 we need to have got down to 29.4 million tonnes of carbon. When you look at our existing policies in the Climate Change Programme Review we think these will take us to 35.2 million tonnes of carbon by 2010 and by 2020 we think we can be in the range of 28.8 to 30.5 million tonnes of carbon, so we are almost on track in terms of our 60 per cent target. Q796 Chairman: Those numbers are helpful but what would be helpful to us to relate it to these programmes is if you might go back and do a bit more work to relate the downward march of carbon as to how these programmes are going to contribute to it to make certain that we can relate the effectiveness of the programmes that you have outlined to the target track that you have described to us. To come back to my question in terms of the use of the public money to help this movement, how do you decide how much you are going to spend by programme? Ian Pearson: Well, I think some of the things I have just said help provide a context to that because we believe that the household sector needs to reduce its carbon emissions by 60 per cent by 2050, we want to see a pathway to achieve that, and we want to put in place a range of policy instruments that are going to help us do just that and, therefore, we go through a rigorous policy evaluation process that determines the overall balance of policy mix. Q797 Chairman: For example, Minister, you say in here, the Carbon Trust, that you are going to spend 78.6 million in financial year 2006-07. Somebody must have determined why that was the right number. In Defra do you have a value of the price of carbon so that you are saying, "This is the value we put on it, these are the number of tonnes we want to save by this programme, therefore expenditure will be X", or is it perhaps less precise than that? Ian Pearson: I think it is a little less precise than that but we do have a social cost of carbon that we use in calculations when determining what the overall benefit in carbon reduction from different policies is. Q798 Chairman: I know what the benefits are, I am anxious to try and understand because when my colleagues come to ask you about some of the pressures on the finances of some programmes it might help us to understand how the expenditure was determined, in other words how much carbon do we get for the use of the public money. If you had said to me, "We use the social price of carbon", that would have been a useful benchmark but I do not get the impression that even that degree of precision is the one that counts, is it? Ian Pearson: When officials are putting up submissions to me about different policy options we do quite rigorously look at the different carbon impacts and relate those to financial expenditure, so there is quite a clear and rigorous process that is gone through when determining our policy in these areas. Q799 Chairman: As far as citizen-based activity is concerned, which gives the best value for money at the moment in terms of carbon or carbon dioxide saved? Ian Pearson: I think you have to look at it on a measure-by-measure basis. It is not just about expenditure because you can achieve carbon savings through regulation, you can achieve carbon savings through grants and fiscal incentives but also through other means as well. You just need to look at policy in the round on this. I want to assure you that when we are evaluating our policy and determining our overall budgets for Defra and individual organisations we look closely at carbon as one of the key metrics. Q800 Chairman: If we take the cross-departmental discussions that, for example, must inevitably occur over something like microgeneration, something which has caught the public's imagination, what is Defra's role in determining the DTI's activity in that area because they currently run the programmes that help to fund microgeneration? We are going to talk about that in some detail in a second but just in terms of Defra's role, the mechanism, how does it work? Ian Pearson: Defra works very closely with DTI on the whole energy agenda. We worked very closely at official level and at ministerial level last year on the Energy Review and we are currently working very closely again in the run-up to the Energy White Paper and we will talk to them about the Low Carbon Buildings Programme and other programmes as well. Q801 Chairman: Minister, you have just described what you do but you have not told me how it works. Is there a committee? Do ministers meet jointly? What is the decision-making team? Who has the final deciding "yes" or "no" on the programmes in question? Ian Pearson: DTI lead on microgeneration and that is very clear. Defra officials, like Jackie and others, will regularly meet with their DTI colleagues to discuss policy. Similarly, I will have meetings with Peter Truscott, and before him Malcolm Wicks, and David Miliband regularly meets Alistair Darling to discuss these issues. Q802 Chairman: Coming back to the target setting, you are the overall keeper of how we are doing, because we have just discussed that. Do you look, for example, at the DTI and say, "Look, guys, this is what we would like you to take responsibility for with your microgeneration programmes, X amount of savings of carbon dioxide" and then look to them to justify that their programmes can do that? Ian Pearson: If you look, for instance, at the Climate Change Programme Review and how that process operated, I was not in Defra at the time but I was on one of the Cabinet committees where the Climate Change Programme Review was discussed and it had members of all government departments looking at the overall range of policy measures and how those measures would help to achieve our climate change targets. Right across Whitehall there is a process of involvement and clearance when it comes to key policy decisions and documents like the Climate Change Programme Review that are cleared across government and involve ministers in a number of different government departments. Q803 Chairman: That is a very nice general description but let me bring you back to the question I asked. If you take the microgeneration programme which involves individuals being given an opportunity to work in that field, when you looked at the way in which your track that you described to us a moment ago towards achieving certain carbon savings was moving forward, did you, as Defra if you like, take a segment and say, "Right, that's the bit we want micro to do, we think this is the potential and you, oh DTI, we want you to deliver this number", or did it work the other way round, that they said, "Oh no, this is what we can deliver to you"? I am trying to get the idea of who is in charge. Ian Pearson: Defra overall has lead policy responsibility when it comes to climate change. Q804 Chairman: So you are in charge. Ian Pearson: But the process of government is an iterative one between government departments and that is why it is right and proper that we have ongoing dialogue with ministerial colleagues on a whole range of policy initiatives. Q805 Chairman: I know that but somebody somewhere, even if it is not iterative, must sit down between these two departments and say, "Here is the domestic sector, let's have a look at what we think the potential is for energy saving by a whole raft of citizen involvement matters" and then you look at who is responsible and do you say, "What can you achieve?" or do you say, "We would like you to achieve this number"? I want to find out who actually initiates the process of saying, "This is what we would like you to do because we have got the overall target to achieve". Ian Pearson: We clearly have an overall target to achieve and that is the important thing to stress. Q806 Chairman: Yes. Ian Pearson: Then the decision about how you divide up that target by different sectors results as a process of discussion and debate within government and an evaluation of different policy options. Officials will come up saying, "These, Minister, are your overall objectives and these are a number of different ways in which you could achieve your objectives". Jackie might want to say something about that. Q807 Chairman: When you go knocking on the door of your colleagues in the DTI and say, "Right, look, these are the things you are in charge of. We think you can do this, this and this in terms of carbon dioxide saving over this period of time, yes or no, can you do it?" do you actually work the number out? Do you start the process? Ian Pearson: Sometimes yes, sometimes some of the initiatives might come from elsewhere. The key thing is the fact that there is effective co-ordination across government. I know it is fashionable to say that government is not joined-up but it is a lot more joined-up than most people actually recognise. Q808 Chairman: Ms Janes, I sense you want to contribute. Ms Janes: It might be helpful to give an official level perspective. Q809 Chairman: Yes. Ms Janes: What we do is we say for the household sector where we need to be by 2020 to deliver the reductions that the Minister outlined and we break down the actions and behaviour that we need to achieve. So by 2020 we need really all lofts and cavities to be insulated. We estimate that by cutting waste in households, like standby power, people leaving lights on when they leave the room, there is a ten per cent potential for improvement. We know that we need to make a step change in products, so to push up from the bottom and regulate out the worst products and incentivise people to buy better products through labelling, et cetera. We also know that we need to start rolling out more expensive measures like solid wall insulation and microgeneration and for new building we need the standards to be reflected in regulation, the zero carbon aspiration. That is where we need to be by 2020. What we do is we go back and look at what the obstacles are to reaching that goal. Q810 Chairman: Which are? You might like to tell us about some of those. Ms Janes: The obstacles are multiple and challenging. One obstacle is consumer inaction due to the hassle factor, the high upfront cost, poor information. That issue then leads to consumer inaction. Often consumers are confused because they are subject to multiple messages coming from multiple sources and they do not have a framework for assessing the relative value and impact of different measures. Access to low cost finances is another issue, particularly for more expensive measures. What we then assess is how we can look at the range of different policy instruments to try and tackle some of those barriers so that we can move towards where we need to be by 2020. Sadly it is not as simple as saying there is one single approach to that, you need a blend of instruments. You need the regulation to start pushing up the quality of products on the market but you also need grants and incentives to encourage people to go out and invest in loft insulation or their cavity walls being insulated, but to do that you need to provide them with effective information to help them on that journey. In addition to that, because products are subject to mandatory standards within the EU, we can work at a voluntary level with the retailers and shops and the lighting industry to try and get them to push above the regulatory minimum. We need to work with a blend of instruments to try and achieve the kind of step change we are seeking to secure. As we develop policies we do that through the creation of project boards, and the project board will have members from different government departments invited to it. If I use the Energy Efficiency Commitment as an example of a project board, Defra is the lead department responsible for driving forward the analysis but we have a board that meets every month to discuss the policy issues on which Ofgem and DTI are represented. The Treasury has been invited but they are unable to attend all the meetings so we have separate brief catch-ups with them. Through that process we discuss and evaluate policy and the costs and benefits of it and expose it to scrutiny and challenge across departments. On that basis we work up recommendations for ministers which show how this instrument will play a role in taking consumers on the journey we need to take them on and how it relates to other instruments. With respect to the Energy Efficiency Commitment, clearly ministers have just agreed to allow all forms of microgeneration into the Energy Efficiency Commitment so we need to look at how that relates to policies on ROCs, how that relates to the Low Carbon Buildings Programme, are we giving multiple subsidies, is that a bad thing or is it, because microgeneration is so costly, actually a positive thing. That is broadly how we work. At periods like the Climate Change Programme Review and the energy Review we have big evaluations of all the policies and their relative cost-effectiveness. One such analysis was published with the Climate Change Programme Review last March where it was an evaluation of the effectiveness of all policies ranking them according to how much they cost per tonne of carbon to deliver. We have a group called the Interdepartmental Analysts Group which involves officials from the different departments which does this kind of cost benefit technical analysis to constantly check the relative cost-effectiveness of policies. Q811 Chairman: Is that appraisal by project in the public domain or something that you did internally? Ms Janes: The CCPR synthesis is available on the Defra website. Q812 Chairman: That is very helpful indeed. Ian Pearson: It is actually in the report. Q813 David Taylor: Our inquiry is called "Climate Change: the Citizen's Agenda" and I guess the Minister would agree with me that to maximise the contributions of individual citizens you need to bring opinion-formers on board and the movers and shakers, the leading citizens, do you not? Can I quote to you a snippet of Sky News from January. I will reveal who said this in a moment. "I would frankly be reluctant to give up my holidays abroad" in Sir Cliff's villa I imagine is what he was referring to, and he went on to say, in relation to climate change: "you can deal with it through developing the science and technology". Do you agree with your Prime Ministerial boss on that? Ian Pearson: What I think it is important to recognise is that what the Prime Minister was saying there was how many people in the United Kingdom think they do want to see technological progress and the best available technology to help reduce CO2 emissions and most people in the United Kingdom do not want to give up their annual holiday. What we need to do, therefore, is recognise where people are when it comes to the issue of climate change but to encourage them to change their behaviour. In Germany at the moment they are encouraging people to holiday closer to home, that is a good idea. The key thing is to ensure at an individual level we all try to reduce our CO2 emissions and we can make choices to fly less, we can make choices to use less energy, we can make choices to have different ways of getting around, using public transport more and using the car less. What the right balance is will vary from individual to individual. Q814 David Taylor: Is technology more likely to reduce greenhouse gas emissions than eliciting individual behavioural change, in your view? Ian Pearson: I think we have got to do all of these things. Q815 David Taylor: Of course we have, but let us not hide behind words; is it likely to contribute more greatly, would you say? Ian Pearson: I am not hiding behind words, I am being very clear that we do need to do all of these things. Q816 David Taylor: Of course we do, but what I am asking is what is the relative importance of those two broad areas, technological investment or behavioural change? Ian Pearson: Both are hugely important, it is not a question of either/or. If it was a question of either/or then we would not get anywhere close to reaching our targets. Q817 David Taylor: No-one is suggesting it is that. You are wriggling a bit here. Ian Pearson: No, I am not wriggling, I am trying to make you understand that we need to do both and there are key technological improvements that we will need to see, such as carbon capture and storage, that are going to be absolutely vital if we are going to avoid dangerous climate change, and so is behavioural change. Q818 Lynne Jones: Can I just come in there. Who should be responsible for this technological innovation? Ian Pearson: A lot of the technological innovation is going to be driven by the private sector. What we can do as Government is provide the right sort of policy framework which encourages innovation to take place. Through government research and development support we can also help foster some of that innovation directly ourselves but a lot of it is going to be business driven. We are already seeing a lot of innovation at the moment where some of our best companies have been very innovative in terms of taking carbon out of their business models. What we have got to do is take action not just at a business level and a technological level but at a household level as well. Q819 David Taylor: Thank you for that. Can we move on briefly to one area where the Government has shown some enthusiasm, which is smart metering and information displays. Why is our Government so cautious on this area when state and national governments like Sweden, Ontario and Italy, are taking steps to require their installation in all homes? Are we not being a bit timid on this front, would you say? Ian Pearson: I am a strong supporter of smart meters, I believe this is a key enabling technology for the future. I would like to think that in ten years' time every home will have a smart meter and every business will have a smart meter as well. Q820 David Taylor: Retrofitted as well as ---- Ian Pearson: I think that installing smart meters gives you an opportunity to do a lot of things, such as peak load shifting, which can help in terms of reducing CO2 emissions. It can also, when you ally it to displays, provide household information on energy use on a real time basis which I think can be used by citizens to help reduce their CO2 emissions. Q821 David Taylor: I do so strongly agree. Early day motion 821, which I tabled a few weeks ago, has got a lot of support. At the end of the statement it is: "calling on the Government to mandate smart metering with a minimum level of functionality in the Energy White Paper recognising that savings", as you said, linking displays and smart metering, "can be as high as 25 per cent in individual homes". Do you hope that that might be present in the White Paper in the way the early day motion calls for it? Ian Pearson: I do not think it would be right for me to speculate on what is going to be in the Energy White Paper. What I can say is we have been having close discussions with DTI colleagues about smart metering, about real time displays, about better billing as well, and you can expect something in the Energy White Paper that will take things forward. In the future we have to see a movement to household energy management systems whereby from your mobile phone you can phone up your home and turn your heating on when you want to. That sort of technology is available and can be made widely available and smart metering is just the start of that, I think. I would like to think that we can get to a stage of saying we want a long-term vision for smart metering. Q822 David Taylor: Can I just say this, because I know we are all pressed for time: smart metering is now being put out on field trials for some reason but is it possible, in your view, that the conclusion of those field trials might be that smart metering will be discouraged rather than encouraged? Ian Pearson: Yes, there are trials taking place. I do not think that the trials are designed to present obstacles to the introduction of smart metering throughout the United Kingdom, they are there to facilitate it and to look at some of the practical problems when it comes to installing smart meters widespread across the United Kingdom. There are some challenges there and, as you are well aware, there are some technical issues about functionality and interoperability. There are some important issues that we need to grasp as well given the competitive nature of the marketplace in the United Kingdom when people can switch suppliers over the Internet or over the phone. Those issues need to be sorted out. I have got no doubt that we are moving in the direction of smart meters in the United Kingdom, I think the issue is how fast we go down that route and how we do it in a sensible and practical way. Q823 David Taylor: Defra believes that information displays are ready to be rolled out, no field trials required there. Ian Pearson: Well, information displays is a highly useful technology that is there. There are a number of displays on the market at the moment. There is still a lot of development work going on that I am aware of on the issue of real time displays. This is something that can be done and I believe that we should do it because it will help households to manage their energy bills better but, importantly, manage their CO2 emissions better. Q824 Patrick Hall: Can I just ask, Minister, would you agree that information displays would be the most convenient, most effective way of changing behaviour both of households and businesses? If so, should we not be a bit more ambitious than talking about a ten year programme? Ian Pearson: The thing to say about this is we have some reasonable information about what we think the anticipated level of energy efficiency savings is that can be achieved through displays but we probably need more information to make it as robust as possible. There is a danger, of course, that people get a real time display and use it for a few days or weeks and then put it in the drawer and do not get the benefit from it. Personally, I think there is strong potential in this area and that is why I have been pushing to see greater progress on smart meters and real time displays. I do think they need to come, but this has to be done in a well managed way with the industry to be sure there are the carbon benefits. Q825 Patrick Hall: Together with the industry would the Department promote a pilot involving several hundred thousand residents, for example, in a particular area? Is that the way we can learn quickly from this and then maybe be a bit more ambitious than ten years? Ian Pearson: We do need to learn from it quickly but I would not want you to think that ten years is particularly unambitious. When we are talking about the scale of activity that we are here, doing something over a ten year timeframe can be quite ambitious when you think we have got 25 million homes that we are talking about installing. Two and a half million homes a year at a flat rate is quite a significant level of effort if we are going to achieve this. Q826 Mr Drew: If we can move on to household energy efficiency. For all the amount of maybes and hopeful aspirations, household energy efficiency is something we are doing now but we could a lot more of. The figure of some 8.5 million households yet to be given cavity wall insulation is mentioned and, of course, many older properties are not suitable. What is the Government's strategy to try and get energy efficiency really at the front end of all that we do in regard to our climate change aspirations? Ian Pearson: As you will be aware there are a number of policy initiatives that we have taken in this area and the Energy Efficiency Commitment is obviously one of the major ones. It is making real improvements. EEC2 has been a big success, it has built on EEC1, and we have had an initial consultation on our proposals for EEC3 after 2008 and will be launching a formal consultation on proposed measures for EEC3 shortly. That is a key policy driver for achieving energy efficiency in homes. The Warm Front Programme, although designed mainly to tackle fuel poverty, is an important measure in terms of improving the energy efficiency in homes. Through Warm Zones we have got the ability to put together EEC and Warm Front and to go round on a house-to-house basis to make improvements to people's homes. There are a number of other areas as well like the Decent Homes Standard which are helping to improve the thermal efficiency of homes. We also have some pilot work, for instance the Green Concierge Service that we are piloting with the Mayor and Greater London Authority. There is a range of activities that are already on the ground at the moment that are helping to improve energy efficiency in existing homes. When it comes to new homes, as you know we have the Code for Sustainable Homes, we have this target of zero carbon homes by 2016, we have the improvement of Building Regulations, and all this will make a big difference to the new housing stock as well as the measures we are taking for the existing stock. Q827 Mr Drew: Are we not still being a bit meek when it comes to how we look at this issue. At the end of the day we are only going to make the dramatic paradigm shift if we aim to have every house as energy efficient as possible. There are two ways of doing that: either Government gets hold of real estate regeneration across the board and says, "There will not be any estates left", individual houses are more difficult, I accept, "but we are going to do real estate regeneration"; and, secondly, put the onus on the householder, use the council tax and other measures to say, "If you cannot prove what your SAP rating is with the Home Improvement Packs" which we could roll out over a period of time, "If you cannot prove your SAP rating is at a certain level you will pay additional tax because you are costing the planet in terms of energy and efficiency". What is wrong with that? Ian Pearson: There is certainly a role for regulatory sticks and there is also a role for carrots and incentives as well. One of the things that have been delivered through the EEC Programme has been encouraging people to make their homes more energy efficient because they can get a council tax rebate. That has been piloted in a number of areas. Getting the right and appropriate mix of policy sticks and carrots is one of the challenges for us as a Government. The key thing in what you say is the level of ambition and you are right to say that we need all homes to be as energy efficient as possible, that is why we have been talking about all cavity walls and lofts being insulated by 2020. That will be a huge task if we can achieve it, and move on from just cavity walls and lofts to look at other energy efficiency measures in households, to look at microgeneration where microgeneration is cost-effective as a measure. All of these have got to be on our future policy agenda. I believe with EEC3, by opening up microgeneration and by the stretching of targets that I want to see set in EEC3, we can start to see even bigger improvements in energy efficiency in homes in the future. Q828 Chairman: Apart from microgeneration, what are the other elements that you will be consulting on in terms of EEC3? Ian Pearson: Certainly all the measures that at the moment are in EEC2 but certainly microgeneration will play an increasing part in EEC3. The most simple and efficient things to do at the moment are cavity wall and loft insulation. Then there is lighting and energy efficiency, energy efficient light bulbs, and the EEC programme has given out hundreds of millions of light bulbs. Jackie will tell you the exact figure on lighting. That has been a significant part of EEC. What is important is to do the most cost-effective measures first and to ensure that we do have all the cavity walls and lofts insulated that can be insulated, to look to tackle some of the tougher problems, like homes that have solid walls and what can be done there, and to move increasingly towards microgeneration playing a part in EEC under EEC3. Then we will have this discussion about what a supplier obligation might look like after 2011 and whether we can find a business model that provides incentives to companies to sell less energy and achieves our objectives in that way rather than through the current model for EEC. There is a big policy agenda for us there at the moment. The overriding thing is, as has been said, the requirement to get all homes as energy efficient as possible. If we can do that we can make a significant impact in terms of contributing to our climate change targets. Q829 Mr Williams: You have already indicated that there are dwellings that are going to be difficult to improve in terms of energy efficiency and after you have done all the loft and cavity wall insulation about 50 per cent of the total stock in the country will still be left. What ideas have you got for improving the energy efficiency of these houses, other than through the Energy Efficiency Commitment? Ian Pearson: I am not sure about the figure that you quote but clearly there is a problem with some properties that are difficult to make energy efficient. If you compare this building here with the House of Commons across the road it is quite clear which is the most energy efficient building. How you deal with the problem of solid wall homes, technically they can be insulated but it is a lot more expensive. There are some people trying new technologies as well that might make it more cost-effective in the future. The situation we face is that some homes will cost significant sums of money to insulate to modern standards and we have to make some pretty tough decisions about whether we are prepared to provide that funding as a Government. Q830 Mr Williams: It is in some of those very old properties that some of the poorest families live. Have you got any ideas to help those people get out of fuel poverty and live in decently warm houses? Ian Pearson: Warm Front, as you know, is our key policy when it comes to tackling fuel poverty and we are going to be spending something in the region of £800 million over the 2005-08 period on Warm Front. It is a highly successful policy. I know that occasionally there are times when performance standards are not as high as they should be but for a massive programme their complaints are running at something like one per cent. There is an issue with Warm Front in terms of the overall size of the Warm Front budget and when some people are having completely new heating systems installed at the moment they are being asked to make a financial contribution because they go over the set limit. We are looking at that as an issue as Government because we recognise that vulnerable households probably do not have that money, although in some cases it can be found from elsewhere. It is an issue that we need to look at. Warm Front does not just do cavity wall and loft insulation, it can do other measures as well. The really tough thing to do if we are going to successfully eliminate fuel poverty and meet our targets will be to tackle these most difficult to treat properties, the ones that have solid walls, the ones that are off the gas network, and that is a big challenge for us and certainly I do not deny that. Q831 Daniel Kawczynski: I was very excited at the announcement by the Australian Government about making compulsory legislation on light bulbs. In October 2006 you said that: "the Government is pressing the European Commission to make light bulbs a priority for regulatory action". What progress has the Government made on that? Ian Pearson: We are making progress at a European level. We need to make progress at a European level because it is not possible to ban the most energy inefficient light bulbs in the United Kingdom, we do need to take that level of action. I hope that through the Energy Using Products Directive we can move to a stage where we reach agreement across Europe on a phase-out of the most energy inefficient light bulbs. We have been discussing with the lighting companies here in the UK what they might be able to do on a voluntary basis and we are continuing to have discussions about that because it would be possible to do it in the United Kingdom. There are clear wins here if we can actually get rid of some of the most energy inefficient light bulbs and there are clear savings. There is a higher cost in terms of purchasing the light bulb but, as we all know, a far longer life and it saves people money over the medium term if they buy the new most energy efficient type light bulbs. We are keen to see what progress we can make on a voluntary basis as well as continuing to push at an EU level. Q832 Lynne Jones: Could I ask you about tenanted properties. We have heard evidence that it is very difficult to persuade landlords to invest in their properties, there is no incentive for them to do so beyond the Landlord's Energy Saving Allowance which is only a maximum of £1,500. Have you got any ideas what other measures could be taken to overcome this problem? Ian Pearson: The Landlord's Energy Saving Allowance is actually quite a recent initiative and we need to see whether that does bring about a significant change and more landlords agreeing to their properties having energy efficient measures put into them. I am optimistic that it will. It is a reasonably significant level of assistance. I think we need to keep that under review to see whether it is at the right level. In terms of other policy instruments, if somebody who owns a property does not want something done to it, it is difficult to make progress. The Landlord's Energy Saving Allowance is at least one way of trying to encourage landlords to make sure that their properties are more thermally efficient. If the Committee is going to come up with ideas and suggestions about what more we can do in this area I would be very interest to hear those. Q833 Lynne Jones: It is going to be mandatory when you are selling a house to have an energy efficiency rating, is it going to be mandatory for landlords letting their properties? Ian Pearson: Yes, it is, that is my understanding. Q834 Lynne Jones: So that will come in this year. Certainly where there is a market for vulnerable households who have little choice it is going to be difficult. Ian Pearson: The Energy Performance Certificate will make that information available for people who are letting as well as people who are buying. This provides more information in the marketplace. Q835 Lynne Jones: Has there been any publicity that landlords will have to have an Energy Performance Certificate on letting? Ian Pearson: Certainly there has been information put into the public domain on that, whether it has been as widely publicised I do not know. Q836 Lynne Jones: On microgeneration, are you satisfied that the resources allocated to the implementation of the Microgeneration Strategy are sufficient? Ian Pearson: Certainly we have been seeing stories in the press over the last couple of months with respect to the Low Carbon Buildings Programme and it is my understanding that its monthly allocation was sold out in two hours for March. Q837 Lynne Jones: We were told 75 minutes. Ian Pearson: Less than two hours then. That stimulates a number of questions, does it not? If as a matter of government policy you are trying to encourage uptake and there is that high level of demand already, is there additionality for government spending here or is this spending that would have taken place anyway? I think this is something that probably needs to be looked at. I am aware that DTI ministers are looking at the Low Carbon Buildings Programme and I also have to question as to the fact that it does not have any relation to the benefit system, it is just a grant for any household that wants to take microgeneration measures, so David Cameron can qualify for a grant and I do not really think he needs the money. Mr Drew: Hear, hear! Q838 Lynne Jones: The DTI in answer to parliamentary questions has told me that the market may have matured to a point where householder grants are no longer necessary and they are talking about by June 2008. Do you think there is no need for any incentives for the UK to play its role in increasing microgeneration to the level we need to if we are going to meet our targets on renewable energy? Ian Pearson: There is certainly a strong demand at the moment, as evidenced by the fact that the grant applications were sold out within 75 minutes, as you say. I think there are capacity constraints within the microgeneration sector at the moment and that is one of the reasons why the DTI has been having this monthly allocation process because if it was to make its whole budget available straight away and allocated all the microgeneration projects I think there would be real capacity issues in terms of those different projects being able to take place. I have not concluded yet that we have reached a stage where the market is sufficiently mature that we do not need government intervention in terms of grants, but I do think we need to have a hard look at the policy and see whether it is delivering the objectives that we want it to. Q839 Lynne Jones: Many of our witnesses have told us that micro-wind is a waste of space basically if you have not got the right location. You are still giving money for micro-wind generation when perhaps other measures, such as solar water heating, could be much more effective. Should there be some distinction not just on perhaps the means of the person applying for the grant but the type of installation that is being proposed and how effective it is? Ian Pearson: Certainly I believe that we need to make sure that if microgeneration measures are going to be installed in a household they are going to work and be effective, that is absolutely vital. We need to make sure that if we are spending government money subsidising the installing of microgeneration then it is microgeneration that is appropriate to a particular home. In some cases houses will not be in a situation where they will be benefit from wind-turbines, they might however be in a position where they can benefit from solar panels, although in some cases houses will not benefit substantially from that either. Q840 Lynne Jones: When you say "solar panels", what do you mean? Ian Pearson: Putting solar panels on roofs as a means of microgeneration. Q841 Lynne Jones: Photovoltaics you mean? Ian Pearson: Yes. Q842 Lynne Jones: They are very expensive, are they not? Ian Pearson: They are very expensive. One of the issues with microgeneration is that it has been very expensive and that is why there has been this grant regime in the first place. Typically, as in other areas of government policy, what we try and do is stimulate new technologies by providing grant assistance, get the technologies to a stage where hopefully the costs come down, there is widespread take-up, there is lift-off so the market becomes more mature, and then the Government's role is more to provide information, advice and guidance. It might be that we have reached that stage with some microgeneration technologies at the moment but I still think there is significant potential in the sector at the moment. There is a big challenge on microgeneration to scale-up. That is why I think we need to be very careful and to work with the industry when we decide what the most appropriate policy mix is because making sure we have effective advice and support for households who are making microgeneration decisions is one of the key issues. Q843 Lynne Jones: B&Q have said that they would like the Government to issue some kind of standard. Is that something you have thought of? They have had difficulty, for example, in working out the carbon footprint of the actual manufacturer of the microgenerators compared to the CO2 savings from the generation itself. Ian Pearson: I think it is a good point that B&Q make and we are looking at that at the moment. Trying to find a way of ensuring that households have the advice and support that they need so that they can get a microgeneration solution that is most appropriate to them I think is one of the key things. When I was saying about Warm Zones, the household approach of picking a particular area, looking at how you can make homes in that area more energy efficient and then moving on and talking about renewable energy as well for those who actually want to go for microgeneration measures ---- Q844 Lynne Jones: Would you be looking at more community-based district heating schemes? Ian Pearson: That is certainly one option. Through Energy Service Companies, ESCOs, local authorities are already taking a number of actions. We have seen some ESCOs that have been in existence for 20 or more years and we have started to see the formation of new ESCOs recently. We have seen the publication of a guidance report on setting up ESCOs that was launched by the Deputy Mayor of London. Some of our biggest cities are actively taking forward ESCOs as an approach. It is a question of getting the right blend here and in some districts heating systems will be a cost-effective solution that can be delivered through an ESCO or some other route. In other cases it might be more appropriate to have a range of microgeneration technologies installed in addition to energy efficiency measures. It depends on what works best from area to area. Q845 Mr Drew: Has Defra carried out an evaluation of whether it would be better to replace the grant regime with a system of targeted loans with fiscal incentives as they have got in Germany? As you said earlier, surely it is ridiculous that we are giving subsidies to people who would be undertaking this work anyway. Is that not something that would make a much greater difference based on payback periods to get this whole area moving much more quickly? Ian Pearson: We do have to look at what is the best way to actually stimulate the growth of the microgeneration market. Microgeneration is important and I think people are increasingly accepting that it is an important part of a future energy mix. The challenge that I have put out to officials is what I call the "sofa test". Let me explain: if I wanted to buy a new sofa, I cannot but fail to see lots of advertisements on the television telling me I can have this sofa or that sofa and nothing to pay for 12 months and then three years interest-free credit and I think to myself why can it not be the same when it comes to microgeneration and making it easier for people to install microgeneration if it is appropriate ---- Q846 Chairman: Have they got the right sofa? Ian Pearson: Making it easier for people to install microgeneration if it is the right thing for their house, whether it be through simplifying the planning regulations, where we are making progress, or making sure that there is an easy service, which is important. There is also an issue about finance and affordability and making it easier for people to buy or even rent microgeneration measures. I can see ways in which we can try and encourage the formation of either loans or low-cost finance, green finance packages, or maybe even find ways of encouraging companies, whether they be energy suppliers or others, to be able to say, "As part of my energy bill I can pay an extra £15 or £20 a week", or whatever it is, "and I can have a wind turbine fitted". I think that should be doable. We need to consider how we might encourage companies to think about doing that so it is not necessarily through B&Q and others in retail. Q847 Sir Peter Soulsby: My question follows from that. Here is an idea: the majority of EU States have feed-in tariff support, premium rates, for renewable technologies, why not the UK? Ian Pearson: We have gone down a different route in the United Kingdom in terms of having a Renewables Obligation rather than the feed-in tariff route. As you know, we have consulted on banding the Renewables Obligation and in essence what banding the Renewables Obligation is doing is providing incentives in the way that a feed-in tariff would be. I have been very interested to read some of the research on feed-in tariffs in Germany ---- Q848 Chairman: Have you not read it yet? Ian Pearson: Pardon? Q849 Chairman: Have you not read it yet? Ian Pearson: I have read it. I said I have been very interested to read some of the research on feed-in tariffs in Germany. One of the conclusions coming from it is that it looks quite an expensive option itself as well. Germany has made great ---- Chairman: What, €2 per household, that is what it costs in Germany per month, do you think that is an expensive option? Sir Peter Soulsby: Expensive it may be but it works. It is certainly producing results there that we are not getting in the UK. Q850 Lynne Jones: £12 to £7 is the cost, the difference. Ian Pearson: Germany certainly has had great success in encouraging growth in photovoltaics but it has come at a price and I would be happy to provide the Committee with some information about it. Q851 Sir Peter Soulsby: The fact is that Germany is already exceeding its 2010 targets and we are not. Ian Pearson: That is one of the reasons why we have been consulting on banding the Renewables Obligation as a way of stimulating renewable technologies that are further from the market at the moment. Q852 Sir Peter Soulsby: Minister, if it is demonstrably working in Germany and producing results there, do you not think it ought not to be lightly dismissed as something that is appropriate for the UK? Ian Pearson: It is certainly not being lightly dismissed. Feed-in tariffs is one of the policy options that is being considered as part of the Energy Review because we have been looking at all policy options. At the moment the approach that we have been adopting has been to suggest that banding the Renewables Obligation does look to be a better and more cost-effective way of achieving our policy objectives given where we are in the UK at the moment with the Renewables Obligation. Q853 Lynne Jones: The Secretary of State told the Globe Conference in February: "We are looking at how to enable citizens to sell energy back to the grid at a fair price and removing all the barriers to distributed energy generation". What did he mean by that? Ian Pearson: He meant that we are actively looking at that and you should expect some answers to that as part of the Energy White Paper. Q854 Lynne Jones: But you are still committed to Renewables Obligation as a mechanism for doing that rather than feed-in tariffs? Ian Pearson: You will have to wait for the Energy White Paper for the conclusions of Government. The point about selling energy back into the grid and making it easier for people to be able to do that I think is a very important one, it has a symbolic importance as well as a financial one and we need to get this sorted out. Q855 Chairman: This Energy White Paper is going to be the sum total of parts of lots of government, so what does Defra want? What do you think would work? What does your Department recommend because you are going to have to battle it out with the DTI, the Treasury and everybody else? What do you say? What is the analysis from Defra? Ian Pearson: Firstly, we are a Government that produces policy as a result of ---- Q856 Chairman: You are the department that is responsible for this programme. In terms of the feed-in tariff, the banding of the Renewables Obligation or the present system, which do you think is going to work best in the future to encourage the uptake of these microgeneration facilities? What is Defra's recommendation? Not what is in the White Paper, what does your Department evaluate as best buy? Ian Pearson: I am currently having discussions with officials on this. The view emerging from officials has been that a banded Renewables Obligation looks the best way forward, it looks the most cost-effective policy solution. Chairman: Why? Q857 Lynne Jones: How is an ordinary person ---- Ian Pearson: Hang on, can I finish? I have been actively challenging this because I am certainly aware of feed-in tariffs elsewhere and we have been looking very long and hard at the cost-effectiveness of different policy options here. What I can say in conclusion, given the vote, is I am sure what will come out of the Energy White Paper will be a thorough assessment of what the most cost-effective approach in the UK is if we are going to help achieve the policy objectives. Chairman: Minister, you have been saved by the bell from our probings on Personal Carbon Allowances and many other issues. Thank you very much for your point of view. There may well be some further questions that we put to you in writing. Also may I thank Ms Janes for her very clear contribution at the start of our proceedings. Thank you both very much. |