House of COMMONS
MINUTES OF EVIDENCE
WELSH AFFAIRS COMMITTEE
Tuesday 16 January 2007
LORD TRUSCOTT, MR BRIAN MORRIS, MS CLARE HARDING
and MS RACHEL CRISP
USE OF THE TRANSCRIPT
Taken before the Welsh Affairs Committee
on Tuesday 16 January 2007
Dr Hywel Francis, in the Chair
Mr Stephen Crabb
Mr David Jones
Memorandum submitted by the Department of Trade and Industry
Examination of Witnesses
Witnesses: Lord Truscott, a Member of the House of Lords, Parliamentary Under-Secretary of State for Energy, Mr Brian Morris, Head of Carbon Abatement Technologies, Ms Clare Harding, Assistant Director, Energy Technologies Unit, and Ms Rachel Crisp, Assistant Director, Energy Technologies Unit, the Department of Trade and Industry, gave evidence.
Q1 Chairman: Welcome to the Welsh Affairs Committee. This is a follow-up inquiry. We, as you know, had quite an important report published last year on energy in Wales and, because of the significance of the Stern Report and also because we felt that we needed more evidence on coal, particularly in relation to deep mining and surface mining, we felt that we needed a short revisit to that inquiry. Lord Truscott, could you introduce yourselves for the record please and your colleagues.
Lord Truscott: Yes, I am Peter Truscott, Parliamentary Under-Secretary of State for Energy at the DTI and I have with me officials from the DTI, on my left Brian Morris, then Clare Harding and also Rachel Crisp, who are here to answer any questions you might have, Chairman.
Q2 Chairman: Thank you very much. Could I begin then with a question on coal production in Wales. Thank you for your memorandum which we found most helpful. In your memorandum, you state that, given consents and depending on the rates at which the sites are worked, projected opencast output in Wales could be raised to 2 million tonnes a year to 2014, which is the equivalent, we understand, to 50% of the current coal demand in Wales. Would you say then, given all things being equal, that we are looking at a future for opencast that is relatively secure?
Lord Truscott: Well, I would say that does depend very much on what happens over various planning issues which are going through at the moment, particularly with regard to opencast. I think Ffos y Fran, for example, will be a major producer of opencast coal if that goes through the planning process, but I understand that may be appealed to the House of Lords and obviously, were that not to go through the planning process, then that would have a significant impact upon the estimates that we have made. Nevertheless, we do think that overall the prospect for coal in Wales does look good against the background that overall production has gone down in recent years from 2.5 million tonnes in 1997/98 to 1.7 million tonnes in 2005/06. As you know, it is likely that deep mining will continue at Aberpergwm, Unity Pit and possibly Margam but, as I said, to achieve 2 million tonnes does very much depend upon the future of opencast, which is, as you know, controversial in many respects.
Q3 Chairman: We are given the impression, following the Stern Report, that the two big issues obviously are climate change and security of supply. Would you agree with that, and to what extent will those factors influence the future of the Welsh coal industry and, to an extent, other factors as well?
Lord Truscott: Well, Chairman, you are right, that the two primary drivers really for the whole Energy Review process and the forthcoming White Paper are the issues of security of supply and also the impact of climate change, and it is really those two factors which led the Government to look at the whole issue of future energy in the first place, so I think we look at the two as closely interconnected. You cannot have a security of supply without looking at climate change, so the two are interlinked. On the one hand, we do want to ensure that the United Kingdom receives supplies of energy which are affordable and sustainable and, on the other hand, of course we want to ensure through our energy policy that we move to a low-carbon economy, and in the impacts on the climate change developments which we all know about and were covered, for example, by the Stern Review, we have to act in a national sense, but also of course we have to act in the international arena as well because the UK is responsible for something like 2% of carbon emissions globally. We will not achieve everything on our own, but I think it is necessary for us to take a lead and for that we need to be looking at supply issues, security of supply, but also on the demand side as well, so we are taking the two together.
Q4 Mr Crabb: Of the annual coal consumption in Wales, 70% is through the two power stations of Aberthaw and Uskmouth. We understand that 40% of the coal burned at Aberthaw is of Welsh origin, whilst Uskmouth relies almost entirely on imported coal. Of the 60% of coal burned at Aberthaw which is not of Welsh origin, can you tell us how much is actually imported from overseas? Do you have that information?
Lord Truscott: My understanding is that the majority is imported and we are in a situation, I think, if you look at the latest figures from the UK, that over 50% of the UK's coal came from Russia and just over 30% from South Africa, so I suspect the situation is similar. I do not know the exact breakdown, to be frank, at Aberthaw, but certainly the 60%, my understanding is that the great majority of that is imported and it is likely to come from the same source that the rest of the UK gets its supplies from.
Q5 Mr Crabb: In your very helpful memorandum which you submitted, it stated that, "The majority of...coal is imported owing to lack either of local output of the required quantity...or of reliable absolute tonnage from the remaining coal producers", and Uskmouth uses only imported coal, "having been unable to secure local supplies". Do Aberthaw and Uskmouth rely on using imported coal for economic, technical or supply reasons?
Lord Truscott: I think that generators obviously do look at the economics of where they get their supplies from and also there is the question of sulphur and sometimes imported coal is of a lower sulphur content than Welsh coal and this helps them to meet their emission targets and there is the revised Large Combustion Plants Directive in the pipeline, so those are all issues that they bear in mind. I think the other thing that generators often mention is security of supply and reliability, and unfortunately in some circumstances UK coal has not been as reliable and as flexible and as dependable as imported coal, and I think we saw that when we had a tight supply situation last winter when the general mix is that coal accounts for roughly a third of our electricity-producing energy mix, but when we had the tightness of supply last year, that went up to about 50% and it was imported coal that made up the gap. Specifically, to come back to your question, I do not know whether Clare can add anything.
Ms Harding: Very little indeed. The Minister is correct, that it is a mix of economic production and technical reasons. The technical issue is that imported coal can be of a lower sulphur content and even with FGD, flue gas desulphurisation, fitted to burn lower-sulphur coal or a mix with some lower-sulphur coal, in the first instance it reduces the total cost of applying the FGD to the output. Economically, the price of imported coal, the situation there is as I set out in the supplementary memorandum for the previous hearing. On the production side, we have just heard the figures for coal production in Wales, but clearly with demand for the generating sector exceeding the total domestic production in Wales, there is a shortfall and it had to be met by a mix.
Q6 Mr Crabb: Would you agree with me that relying on a diverse supply base of coal with some domestic production, but relying on a range of international suppliers, Russia, South Africa, Australia and other places as well, that is preferable for a variety of reasons than relying solely on indigenous coal stocks?
Lord Truscott: Obviously we do not want to discourage the use of indigenous stocks, but diversity of supply always makes sense so that you are not dependent on one source of supply, and I would certainly agree with that.
Q7 Mr Crabb: So how would you respond to people who say that actually imported coal has environmental disbenefits and a greener option would be to use locally sourced coal?
Lord Truscott: I think we said in the Energy Review that we believe that we should exploit indigenous coal resources, provided it is economically viable and environmentally sustainable. Providing it meets those criteria, then I think we should encourage it. We have set up the Coal Forum to look at these issues and to get the generators talking to the suppliers, to look at these very issues and to see whether they can come to an agreement over the question of indigenous producers.
Ms Harding: There are clear advantages in maintaining a supply from indigenous sources as far as possible. If you rely increasingly on imports, the environmental impacts are, firstly, that that coal may be being produced overseas and not subject to the same controls that are applied in the UK, so you may be in effect exporting the impacts that local communities are objecting to. The coal has to be imported across great distances and, in the case of Russian coal, it is railed substantial distances from the Siberian coalfields to ports and it then has to be shipped. The actual environmental cost of shipping is not as high as you might envisage and, in terms of tonnes delivered per vessel sailings, the carbon cost is not significant. Then that coal has to be brought into the UK ports and the UK ports, with the growth of imports, have been handling substantially higher tonnages of coal and, although every effort is made to make the transfer of coal between ship and railway as clean as possible, there is inherently dust released at that point and it is the port populations who are affected by that. That coal is then railed from the port to the power station. In the case of the south Wales power stations, their feed, I understand, is predominantly railed in, but there are some bottlenecks in the rail system which may need further attention, but the longer the distance that the coal is railed in, the more that populations are affected by the increase in effects, so it is a complex picture and it is by no means straightforward to say that it actually has a greener impact on populations to export it to foreign countries.
Q8 Albert Owen: You will be aware that Carron Energy, the operator of Uskmouth power station, is considering applying to build a gas-fired power station. Do you agree with their assessment that gas-fired, rather than coal-fired, electricity generation is "best placed to meet the challenges of energy delivery in the coming decades"?
Lord Truscott: I think that it is a fact that gas usage is increasing and gas is going to be a big future player, but I think we are not saying at this point that there should be one solution to our future energy needs. What we are trying to develop is a broad strategy to ensure that we have a range of suppliers for the reasons that Mr Crabb mentioned, that we have a diversity of supply, but also that we look at a whole range of different technologies to provide our energy, including coal, gas and renewables increasingly in the future, so I do not think we are saying that there is just one way to produce future energy supplies. Of course we have to look at the environmental impacts of the production of energy and this is one reason obviously that in the past coal has had the image of being quite a dirty fuel, although increasingly we are trying, by encouraging clean-coal technologies and looking at carbon capture and storage, to ensure that electricity produced through coal is cleaner, but certainly on that front gas-fired electricity has an environmental advantage at the moment.
Q9 Albert Owen: How does that fit in with the security of supply? You reminded us of the near crisis last winter with the gas supply, so do you feel comfortable that energy generation is moving towards more gas in the case of Uskmouth?
Lord Truscott: When I talk about energy's security of supply, there are reasons to develop indigenous sources for economic and environmental reasons for the reasons that Clare Harding mentioned about transportation and looking at the real price of carbon, but energy supply is also really about diversity of supply and whether all your energy supplies do not have to be indigenous to achieve security of supply. I think when the Government now talk about security of supply, they are really talking about the diversity of different sources of energy supplied from different parts of the world in addition to our indigenous sources. Of course we want to prolong the life of the UK continental shelf as far as possible, our indigenous supplies of gas and oil, but we will be looking around the world for supplies of, for example, LNG from different countries, so we want to ensure security of supply not only through diverse sources of energy, but in terms of the geographical areas where we receive our energy from and different suppliers, so in that sense we are pursuing security of supply. Every other member of the G8, apart from Canada, is actually dependent on imports from abroad for their energy supply and several have net imports from energy suppliers and that does not impact or it has not impacted so far in terms of their security of supply or their economic development.
Q10 Albert Owen: Currently, Uskmouth is actually taking measures to reduce its station's emissions by mixing biomass with coal, for example. What is your assessment of that? You mentioned desulphurisation which is taking place now, but what is your assessment of the effectiveness of mixing biomass, which is obviously renewable and available, with coal?
Mr Morris: The benefits of mixing biomass with coal are to reduce carbon emissions from burning the coal. One of the problems you have though is that you are limited to how much biomass you can actually mix with the coal. A number of coal-fired power stations in the UK at the moment are mixing in the region of about 5% biomass in with the coal mix. We have been supporting research and development into seeing if we can improve that by as much as up to 20% of the mix and of course there are benefits to power generators through the renewable obligation certificates which they can earn at the moment through that process, so there are distinct benefits to reducing carbon emissions and obviously I think that is the main motivation of why they are looking at that.
Q11 Albert Owen: And you see this as a cleaning up of what was regarded as a dirty industry?
Mr Morris: I would not call it a 'dirty' industry, but I think it is making a contribution towards reducing carbon emissions from coal and it is a first step in the right direction. There are other things we can do to reduce carbon emissions, such as the improved efficiency of power plant and ultimately carbon capture and storage, but it is seen as a first step. It is an economic step which is attractive to the generation industry.
Q12 Albert Owen: If I can move on to the supply of coal for uses other than electricity generation, Tower Colliery, which, as you know, is the only deep-mine production, has an output of 21% going to non-industrial areas, which is 34% of its income. What other steps do you think the Welsh coal industry could take to go into this new area?
Lord Truscott: My understanding is that they already have gone quite extensively into the domestic market and that there is limited scope for further development there. You mentioned Tower and I understand that Tower has perhaps about another year in operation, but, Clare, do you have something to add?
Ms Harding: What I would add to that is that Tower, as a deep-mine facility, only has approximately another year of operation. I understand there is the possibility that the enterprise may continue if they can get consent to opencast their mine site and that, I think, will help to justify the expenditure they have incurred. They did develop a pellet-making plant, mixing coal with biomass, to develop the lower carbon side of generating which has had some success for them, praise God, but Tower Colliery is the last remaining significant deep mine at present. There are possibilities of other deep mines coming along in the future, and Aberpergwm, as we have already mentioned, is receiving support, support which is granted on the basis that it could achieve an output in the vicinity of a quarter of a million tonnes a year, and that may be capable of improvement, but that would replace about half of Tower's output. There is a further project, I understand, what is being described as the 'Unity Pit', its real name being Pentreclwydau, which is probably why it is called 'Unity' these days, but that again has a capacity to become a significant producer of deep-mined coal in the future, and you have already mentioned Margam.
Q13 Albert Owen: So in the first part of your answer you are quite confident that the opencasts can go into this new non-industrial market and it can be profitable?
Ms Harding: I would expect the economics of those projects, Pentreclwydau and Margam ---
Q14 Albert Owen: And possibly Tower.
Ms Harding: Yes, and Tower, they are based on selling the majority of their output into the generating market. They will all be capable of producing a certain amount of sized product which is suitable for premium markets. The problem is that the premium markets are shrinking and they achieve a good level of penetration already into those market, so there probably is not much scope for them to increase the level of penetration they have achieved already.
Lord Truscott: My understanding is though that there is a market for Welsh coal and certainly, if more Welsh coal can be produced, then they will be able to sell it on.
Q15 Mr Jones: Could I refer you please to paragraph 1.7 of your memorandum which contains a table summarising the coal use in Wales. Now, you have noted there that below-national-level data are not readily available for all the categories of use and certainly in some respects the use has been estimated. Can you explain why the data are available for some categories of use and not for others, and do you have any plans to collect data on a below-national level?
Lord Truscott: We are making data available of below-national use, so the DTI, working together with Defra, are committed to collecting and making available data on energy production, emissions and so on at a below-national level to enable local authorities, devolved administrations and regional bodies to monitor and implement energy strategies to reduce CO2 emissions. The DTI does currently publish annual sub-national data which include figures for Wales and its 22 unitary authorities on electricity consumption, the latest statistics for that being 2005, on gas consumption, the latest statistics being 2004, road transport fuel consumption, the latest statistics being 2004, and on the use of renewables, use of coal manufactured, solid fuels, industrial petroleum, et cetera, so we are doing a certain amount. We are also looking at levels below that, looking at data below the local authority level in England and Wales and Defra also do a certain amount of work in this area of publishing estimates of CO2 emissions, so we are doing a fair amount. We are looking at trying to do more both at a sub-national level and at local authority level and currently, as I say, these figures are produced on an experimental basis and we are developing the production of statistics on these matters.
Q16 Mr Jones: Some of these figures are precise figures and some of them are estimated. Can you explain why that is the case and why are some of them estimated?
Ms Harding: This reflects which figures are collected in detail and in some cases the estimated figures are based on ratios from years when we do have detail and applied to this set of statistics, so it has brought it as up to date as possible. For example, we may have detailed breakdowns for, let us say, 2003 and, in producing this table, our statisticians have applied the ratios in 2003 to the 2005 tables.
Q17 Mr Jones: So in a number of respects you have accurate figures for 2005 and that is reflected in your table, I take it?
Ms Harding: Where we have accurate figures, those are shown here.
Q18 Mr Jones: Between 2003 and 2006, according to your memo, a total of just over £61/2 million of coal investment aid was given to Tower Colliery and to Energybuild. I understand that coal investment aid is now closed to new applications. Is it intended to replace that with a new aid programme and, if so, what form would that programme take?
Ms Harding: Coal investment aid is offered under the current EU Regulation, Regulation 1407 of 2002. That required Member State governments to notify the Commission of the aid they intended to offer by the 31 December 2002 and the intention to offer coal investment aid was notified in due course and approved. That was for the availability of up to £60 million worth of support under that product. That money has been predominantly awarded. There is a very, very small amount in excess and it is insufficient to make a further offer of aid. There is no other opening under the current Regulation to propose a further aid package to the Commission, so at present there is no scope under the EU state aid rules for a further offer of aid, and I think it is reasonable to say that it has not been contemplated.
Q19 Mr Jones: It is not intended to replace it?
Lord Truscott: There are no plans currently to replace it.
Q20 Mr Jones: Again in paragraph 2.4 of your memo, you refer to coal prices rising in response to strong demand from expanding economies, such as China. You note in the same paragraph that decisions on projects to recover abandoned reserves are a matter for the site owners. Can you assist the Committee by telling us what you know about any proposals to recover reserves from abandoned sources?
Ms Harding: I would suggest that the Unity Pit is an example of the impact on the economics of coal-mining that is resulting from the recent increase in prices. The Pentreclwydau mine was in operation, I think, until late 2002, but the project to reopen it has come forward predominantly in response to the increase in coal prices. When one is assessing a mine project, one attaches a value to the coal reserves in place and clearly, if you are going to get more per tonne for the coal in place under current prices, then it changes the economics of the potential investment for participants.
Q21 Mr Jones: Those are collieries in south Wales. Do you know of any in the north Wales coalfield?
Ms Harding: I am not aware of any, no.
Lord Truscott: I think a more general point is that, as the price of coal goes up, increasingly businesses will look to areas of former pits to see whether they are viable in terms of reopening them and looking for new prospects. We are at that point where the price has risen to such a point which makes some of these developments economic, whereas they previously were not.
Q22 Chairman: Are you aware that there is any thought of reopening mines in north Wales or Pembrokeshire?
Lord Truscott: I have not had any reports of any commercial interest at this point in those areas unfortunately.
Q23 Chairman: Perhaps we could move on to the question of the environmental effect of surface mining and at this point I should declare an interest. I note that in your memorandum there is an appendix referring to Celtic Energy's application for an extension which was withdrawn. That was partly in my constituency and I was associated with local constituents who were opposed to that extension which I note has, as I say, been withdrawn largely on the basis of recognising the issues which they raised in relation to the preservation of the ancient woodland. I am slightly intrigued by the use of the phrase 'surface mining' and I do not know whether it is a slip or whatever, but I note that in your appendix you refer to them as 'opencast' sites. Is there any significance in the difference or do you know if there is any difference?
Lord Truscott: No, I am not aware of that. I think certain descriptions are more fashionable at certain times, but there is no particular reason behind the use of the two forms of terminology.
Q24 Chairman: I note that surface mining has suddenly become the way to describe opencast mining or am I mistaken? Surface mining obviously is the phrase which comes from the United States, whereas those who were opposed to surface mining in the United States called it 'strip mining'.
Lord Truscott: Well, as far as I am concerned, the two terms are interchangeable, so I do not attach any particular significance actually to the use of the two terms.
Q25 Chairman: How do you answer the objections of various environmental and community groups opposed to surface or opencast mining on environmental grounds?
Lord Truscott: Well, obviously there are environmental concerns and that is why we do have a rigorous planning process, but I think what we would say is that obviously, although there are environmental impacts, there are now the new regulations covering opencast mines which have introduced quite strict regulations on noise, dust, et cetera, which should mitigate the potential effects on adjacent populations. All planning applications are assessed against the guidance which ensures that the potential environmental impacts, for example, on sites of ecological value are properly considered. Of course a planning authority can impose any conditions that it sees fit on any consent to reflect the concerns that environmentalists or local populations have.
Q26 Chairman: Could you reconcile your comments in your memorandum relating to surface mining being 'transient' with the comments in the memorandum from the Woodland Trust who do not refer to things being transient, but who say that if there is the destruction of an ancient woodland, that is once and for all and it can never be retrieved? Do you have any observations on that?
Lord Truscott: That would undoubtedly be the case were it allowed. As I said, Chairman, it would have to go through the planning process and that would have to be approved. I think our approach when we mentioned the transient nature is that, if you have an opencast development which is not necessarily affecting ancient woodland or any area of specific environmental importance, then it is possible to return that area more or less to its previous state within about three years. I think that is more or less the position that we have taken on that, so it is possible generally to return to the situation that we were in before in environmental terms. Obviously, if there is greater environmental damage to be done, that is something that the planning authorities will take into account and it may be a reason why the planning process does not come to a conclusion.
Chairman: Well, obviously we can explore this in a bit more detail with our witnesses next week.
Q27 Mr Jones: I turn now to carbon capture and storage. You note in your memorandum that carbon capture and storage is "seen as having the potential to make deep cuts in carbon dioxide emissions on our climate". The invitation to tender detailed costings for a full-scale CCS demonstration plant is intended to establish its cost-effectiveness to enable a decision to be made this year. Against what measures will that cost-effectiveness be judged?
Lord Truscott: Well, first of all, CCS is very effective in removing CO2 emissions from power plants and it has been estimated that it can remove something between 85 and 90% of CO2 from the emissions of a power plant, so, when we look at CCS as a technology, it is itself potentially very effective and very efficient. I think what we have to look at is that no one has yet joined up all the different elements of the technology and put the carbon capture and storage, and particularly the storage, together, so the technology at the moment is unproven. Nobody knows quite how much it will cost and what sort of liabilities it might involve, so the position of the Government is that there was an announcement in the Pre-Budget Statement that we would employ consultants to look at establishing possibly a demonstration project in the UK. That has gone out to tender and we have had three applications for that and they will be looking at this matter in some detail. We hope that we will have more information and be able to come to a decision later in the year.
Q28 Mr Jones: Has the tender period closed now?
Lord Truscott: Yes, it has, and we are hoping that we will be able to make an announcement on the consultants appointed by the end of this month.
Q29 Mr Jones: You refer to the Energy Review. The Energy Review notes that, "Before CCS can happen in the UK, a legal and regulatory framework needs to be established which would enable operators to bring forward CCS projects that are safe, that minimise potential environmental risks and that assign responsibilities appropriately between the public and private sectors". What progress is being made towards establishing that framework both at an international and a domestic level?
Lord Truscott: Well, my brief here says that we are making good progress on the development of a regulatory framework, and at the international level certainly there has been some real development because there has been an amendment to the London Convention permitting the injection of CCS into offshore sub-surface aquifers, and that is expected to enter into force next month. We have also made pretty good progress with OSPAR which prohibits disposal in the North Sea, so both internally, where the Government is having discussions between government departments to establish a regulatory framework, and internationally we making quite good progress. We expect to follow this up later in the year with a formal consultation, so things are progressing, although we are not there yet obviously.
Mr Morris: There is a task force set up within the DTI which is investigating how do we develop a regulatory framework for carbon capture and storage and it is looking at a number of options as to how we can take forward that regulation. There have been two workshops at the end of last year for which we had a good attendance from industry, again providing advice and input into the thinking, but there is going to be a consultation, as the Minister has said, during the early part of this year. I think the bottom line is that we are still not totally clear how we want to develop that regulation and I think that is why the consultation is very important because there is a number of ways you can do it and you actually want to try to get the best way to do it, so that is the whole problem at the moment.
Q30 Mr Crabb: What do you genuinely see as the real value of a CCS demonstration project here in the UK? Is it about demonstrating the technology which could have widespread application in the UK or is it more about something that could be exported to countries like China and India which is where the really serious potential for cutting carbon emissions lies?
Lord Truscott: I think it is both. It is both in terms of the UK's use of it and, Chairman, Mr Crabb is right, that it is also the international application as well because really, if we are going to deal with climate change, we need to ensure that countries like China and India reduce their emissions significantly. When you think that China is producing the equivalent of a new coal-burning power station every five days, then that is a massive challenge, so we are hoping to develop this technology to export its use to countries like China and India, to incorporate it first of all into the European Union's Trading Emissions Scheme and then, on a global level, hopefully to ensure that it is part of a global emissions trading scheme as well, so it has tremendous potential. If we are going to achieve our aims globally in reducing emissions to a significant level, then it seems to me that CCS is one of those technologies which holds the key to it.
Q31 Mr Crabb: Thinking about our domestic coal industry, you are probably aware that the recent Commons Science and Technology Committee's report actually expressed some quite strong doubts about whether CCS can be retrofitted on to our fleet of coal-fired power stations, so that is why I questioned you about the demonstration project here in the UK.
Lord Truscott: Well, there are questions about that and that is why we have not committed to one straightaway because we do not know fully whether the technology at this stage will work, although theoretically all the parts work and it is fitting it all together, and we do not know the cost, although we are not the only ones working on CCS and there are other countries, the United States for example, but I think we do need to look at it seriously. I think it is one of those technologies where we should not just sit back and wait for another country to come up with the answers, but, if we can make a contribution, then I think we should attempt to do so.
Mr Morris: In relation to China and India also, they have made it quite clear to us that they would expect to see Europe and possibly America lead the way in demonstrating these technologies. I think their general feeling is that we have priority over security of supply to feed their economic growth and, "If you want to demonstrate to us that these technologies will work, then we will think about them once you have demonstrated them", so they are expecting us to demonstrate the technologies first. I should also add that there is a project which the UK initiated under its EU Presidency back in 2005 where we are actually looking at the feasibility of a demonstration plant in China. It is being funded by Defra and the DTI and it has been done under the auspices of the European Union, and the Chinese are gradually sort of warming up to that project, but it has taken quite a long time.
Q32 Mr Jones: That is rather disturbing, Mr Morris, because China and India are fast-expanding economies and, as you say, China are opening one new conventionally fired power station every five days. They do not seem to be that enthusiastic about CCS technology.
Lord Truscott: I think that is because to a certain extent they see this problem as a problem that in a sense was created in the industrialised West and they are saying why should they limit their economic growth for a problem which in a way was developed in the West. Before they do anything about it, they want to see that we are not just using it as a way to restrict their growth, some form of international protectionism, but that we are actually serious about these matters. They are also willing to look at it in terms of reducing emissions. I do not think they are very keen on the idea of reducing emissions if that reduces growth, but, if we can sell to them that this is not about reducing, or holding back, their economic growth, this is about energy efficiency and that it will benefit their economies, then I think that is an argument that is a lot easier to sell to countries like China and India.
Q33 Albert Owen: You mentioned the West and you mentioned America. Is there any partnership between Britain and America in developing the technology for this or are we going alone on it?
Mr Morris: We have a memorandum of understanding with the United States which is currently looking at two projects. One is on the necessary materials needed to enable technologies, such as carbon capture, to happen, obviously improved metals to take higher pressures and higher temperatures, that sort of thing. A second project is also looking at a virtual demonstration plant so that you can actually simulate the demonstration on a computer, and those two projects have been in the offing for about three years. We are looking with our American colleagues at also taking forward international workshops between both countries, so we are working together in that way, but we also collaborate in other activities, such as the Carbon Sequestration Leadership Forum and through the International Energy Agency as well, so it is at two levels, one at the international level and one at a sort of bi-partite level.
Q34 Albert Owen: Do you see America's commitment as real?
Mr Morris: They are prepared to put $1 billion into their FutureGen project which is a gasification project, which is coal gasified and then it will generate hydrogen after stripping out the carbon dioxide.
Q35 Mr Jones: Could I turn now to microgeneration. The Government's Microgeneration Strategy which was published in March of last year noted that "a range of constraints is currently affecting the wide-scale deployment of microgeneration", which they identified as cost, information constraints, technical constraints and so on. What action is the Department taking to counter these constraints to encourage the take-up of microgeneration technology?
Lord Truscott: We are active in this field, but perhaps I can pass over to our expert on microgeneration.
Ms Crisp: We are undertaking a number of actions. They are actually laid out in the Microgeneration Strategy in response to tackling those constraints laid out. Perhaps I can just go through them in order and highlight some of the key headline activities that we are undertaking. In relation to tackling costs, of course we have our capital grant programme which now totals £80 million, and we also are taking steps to help microgenerators benefit more easily from access to renewable obligation certificates and monetary benefits associated with those. We are undertaking a programme of work, both following the strategy and also in relation to the distribution/generation work going on following the Energy Review, in relation to ensuring that exported electricity from electricity microgeneration technologies is rewarded appropriately by the energy supply companies. We are also looking at how to incentivise the renewable heat microgeneration technologies under the wider strand of the Renewable Heat and Biomass Strategy which is being developed at the moment following Ben Gill, so there is a number of measures in relation to tackling the upfront costs there. In relation to information constraints, there is a number of areas in which we need to tackle those both about providing better information for the consumers who want to actually go out and purchase one of these technologies so they can make a good purchase, but it is also about working with local authorities and planners, et cetera, to understand these technologies and the impacts in the local environment so that they can appropriately promote them within their local areas and working with the construction industry so that they can start to incorporate technologies as a matter of course rather than as a one-off. I think those are the headline measures, but if you want me to continue going on in more detail throughout the strategy, I am happy to.
Q36 Mr Jones: To what extent is it proposed, possibly in conjunction with the devolved administrations and other departments, to incentivise the take-up of microgeneration through the planning process?
Ms Crisp: As I understand it, both the Welsh Assembly Government and the Scottish Executive are in the process of working up their own microgeneration strategies to work alongside the UK strategy overall, and I would not want to comment on what is included in those documents as they are not yet published.
Q37 Nia Griffith: You talked about the capital grant programme. One of the issues which has been raised to us has been the issue of the manufacturers knowing what the situation is going to be because obviously they want to plan long-term and they do feel very strongly, particularly people like the solar panel manufacturers, that if they know well in advance what the sort of subsidies are likely to be, they can judge what the sort of uptake is going to be, and they do see a very significant difference between what the Government does and does not subsidise. The question really is: in what way can we guarantee a longer-term view, if you like, of where things are going to go in that respect?
Ms Crisp: I think a key announcement in relation to providing that long-term certainty was the Minister of Housing's announcement around a code for sustainable homes and setting out the Government's target of carbon-neutral homes by 2016 which provides that kind of long-term regulatory framework in association with regulations which, from my conversations with the industry, is seen as more certain than perhaps government subsidy programmes. The real key to promoting this industry over the long term is in terms of getting that regulatory framework correct, so I think that announcement set out where we are moving towards and sort of developing further thinking as to how we get towards that zero-carbon home standard, so I think that is quite important. Obviously the support provided for the Renewables Obligation is over the long term as well given the nature of that mechanism.
Lord Truscott: I think also the message from the Government is that, as far as the Microgeneration Strategy is concerned, it is what individuals can do themselves to reduce their emissions, their carbon footprint, so it is also part of the message that we can all play our part in reducing emissions and we do not just have to leave it to business or the Government, but we ourselves can reduce our emissions and make our homes more energy efficient.
Q38 Chairman: We were very impressed when we visited Denver, Colorado with the work that the City Mayor was involved in as part of the wider Green City Alliance. Are you familiar with all of this and have you taken account of the developments in the United States in cities like Seattle, Denver and Chicago?
Lord Truscott: Not personally, although I have heard of it, but I will be open to taking on board these international examples. I have not actually made any visits outside of Europe yet in my role as Parliamentary Under-Secretary of State for Energy, but I will, hopefully during the course of the next few months, be making some visits to actually see how other countries handle these issues. We are doing quite a lot in this country and we have got quite a few initiatives. I was interested to read, when I was reading the brief for this meeting, of groups like Shropshire County Council who are establishing a framework, a roadmap, to ensure that they can reduce carbon emissions by 60% by 2050 and there is Ashton Hayes in Cheshire which, with a population of 1,000 people, is bidding to become the first carbon-neutral village in England with funding from its local authority, so there are things that we are doing and that our communities are doing in the UK, so whilst I am always happy to learn from abroad, I think there are a few lessons for us nearer to home as well.
Q39 Albert Owen: Absolutely, and one of the lessons which has created a model in Wales is the Centre for Alternative Technology, our next witnesses, which this Committee visited last year and saw for itself. One of the new education projects, which you will be aware of, is the WISE Project, the Wales Institute for Sustainable Education, and I hear what you say about local authorities, but what sort of financial support is the DTI giving projects such as WISE so that it can develop these alternatives?
Ms Crisp: I am not aware of any funding the DTI has given directly to the WISE initiative. I understand that, following the hearing of the previous Energy Minister at this Committee, there was perhaps a reference that the Centre for Alternative Technology would write to the DTI setting out some of its initiatives so that we could then look to see where we could work with them and take these projects forward, perhaps in association with ---
Q40 Albert Owen: You are saying that that has not happened, as far as you are concerned?
Lord Truscott: I have just seen it in my notes on the Centre for Alternative Technology. From our capital grant programmes, we have given £77,523 for a PV system, a major PV demonstration programme, and £25,000 for a biomass boiler, so we have provided ----
Q41 Albert Owen: But not for this particular project, WISE, the education aspect of it?
Lord Truscott: Not as far as I am aware.
Ms Crisp: Not as far as I am aware, no, but it is possible that it may have got it from the Department for Education and Skills.
Q42 Albert Owen: Because the directors tell us that they need this investment now so that they can move forward and produce local plans so that the UK can benefit from it. We will obviously put this question to the witnesses later, but what you are saying to us is that they have not made a formal application to you for this project?
Ms Crisp: As far as I am aware, the Department has not received any formal communication from the Centre.
Lord Truscott: If we discover differently, perhaps we can write to members of the Committee following up Mr Owen's question.
Q43 Mr Crabb: The Pre-Budget Report spelled out the important role of the public sector in setting an example for people to improve their energy efficiency and limit their environmental impact and it also spoke about the obligation on all government departments to produce action plans to reduce carbon emissions and to produce them annually. Can you very briefly update us on your own Department's action plan and specifically which proposals within that would you regard as likely to have the most success in reducing the Department's carbon emissions?
Lord Truscott: Looking at the DTI's main strategy to reduce carbon emissions and to reduce substantially the size of the DTI's main HQ estate, and I can give you some figures for the DTI's executive agencies' performance, on carbon emissions from 2003/04 we reduced carbon emissions by 14%, in 2004/05 by 15% and in 2005/06 by 17%, so we have made, I think, quite a lot of progress in terms of, as a department, reducing the estate's footprint. On renewable energy, we bought in in 2005/06 something like 33%, or 33% of our renewable electricity was bought in. Departments overall are hoping to source about 15% of their electricity by 2010 from combined heat and power. The DTI is taking a number of steps to improve its energy efficiency, including staff awareness campaigns, benchmarking the estate with other government departments, the use of energy-control technology, the use of lighting control and building management systems, the introduction of energy-minimising technology within IT systems, and energy generation itself. The Carbon Trust's survey conducted in 2004 ascertained that the renewable energy generated is likely to only be a very small proportion of the total energy consumption of the building. I could go on, but the DTI is working towards achieving a 15% reduction in carbon emissions from road vehicles through government operations by 2010, relative to 2005-06. The general message is that we are doing our bit to reduce energy emissions and to save energy, and I think the DTI is doing quite a lot on that front.
Q44 Mr Jones: You mentioned energy self-generation. As a matter of interest, what form does that self-generation take?
Lord Truscott: I think we are currently looking at energy self-generation. Rachel, do you have any information?
Ms Crisp: We did put some photovoltaic panels on the building of the Insolvency Service Headquarters in Bloomsbury Square, but they produced a small part of the electricity consumption of that building. We have recently been looking in more detail at which technologies could be more appropriate for the government estate, given where our buildings are situated and the constraints around those, particularly within central London. It is possible that solar water heating might be the most appropriate technology for our building, but we are still going through the process of looking at reports provided for us.
Q45 Albert Owen: Do you put the lights off at night? It is a big issue.
Ms Crisp: We do have movement-activated lights that start operating - I am not sure, I think it is after six o'clock at night - so parts of the building will go dark.
Mr Morris: I think there was work going on in the building at the time those lights were left on.
Q46 Albert Owen: I was not trying to trip you up; I was just asking a very genuine question.
Mr Morris: There are more people getting into the building.
Q47 Mr Jones: Minister, I walk past your building on my way to work every morning, and I have noted a fleet of Toyota Prius hybrid cars. Are those to be rolled out throughout government generally?
Lord Truscott: On the specific question I would have to write to you, but I know that the use is being encouraged in government departments. My Ministerial car is certainly a Prius, so we are being encouraged to move down that path. As I mentioned, we do have targets as far as energy efficiency for the vehicle fleet is concerned, so that will inevitably encourage the use of hybrid or low-emission vehicles.
Q48 Chairman: Thank you very much for your evidence, both written and oral. If you wish to add anything further in terms of the Department's contribution to reducing carbon emissions it would be extremely helpful to receive that. We, in turn, could send you the contents we have in relation to the Green Studies Alliance, although I am sure those are quite easily accessible anyway.
Ms Harding: If I might just supplement the last answer the Minister gave in relation to the environmental effects of open cast briefly, he referred to the time taken to restore the sites. If I could just clarify, restoration generally starts within three years of the void moving forward in a site. Actual restoration of the site will take longer, depending on the size of the site and the nature of the restoration work to be done. We would be happy to provide you with some additional information on that if required, but I am sure you will hear a fair amount about that when you take further evidence next week.
Q49 Chairman: Thank you very much. If you could identify any examples of good practice either in Wales or elsewhere, we would be interested to receive it.
Ms Harding: Might I inquire whether the Committee has visited an open cast site?
Q50 Chairman: I have, many times, recently as well, but the Committee has not. Would you encourage us to do so?
Ms Harding: I think it would be worth your while to see the operation in progress.
Chairman: Thank you very much.
Memorandum submitted by The Centre for Alternative Technology
Examination of Witnesses
Witnesses: Mr Peter Harper, Head of Research, and Mr James Cass, Funding and Development Co-ordinator, Centre for Alternative Technology, gave evidence.
Q51 Chairman: Good afternoon. Welcome to the Welsh Affairs Committee and thank you both for coming along, from the country, I take it. For the record, could you please introduce yourselves?
Mr Cass: I am James Cass. I am the Funding and Development Co-ordinator, Centre for Alternative Technology.
Mr Harper: I am Peter Harper. I am the Head of Research at the Centre for Alternative Technology.
Chairman: Thank you. We will begin with climate change.
Q52 Nia Griffith: I think it is 38 years of crying in the wilderness and, at long last, it seems somebody is actually listening to you. What we are, obviously, particularly interested in now is the timescale we have got in which to face up to the problems and the crisis. You mention in your memorandum that to minimise the risk of crossing the threshold for really dangerous climate change by 2015 the world would need to be cutting carbon emissions by 4-5% annually. Is that achievable?
Mr Harper: Yes, it is. It is not that easy but I think the publication of the Stern Review has made quite a big difference. I think we can say that is a watershed. In referring to us crying in the wilderness for 30 years, essentially we are saying the same things and have been saying them for a long time, but these things do take time to get through into the body politic. If you look at the Stern Review, it actually lays it out in fairly clear terms that we could achieve this and without too terrible a penalty in terms of economic growth. Some, but it is possible. We think we could do it, but the window is quite short - that is one of the troubles - and there are delays in the system all the time. One of the delays is to do with research, because a lot of research takes many years to come into fruition. So you might well have the funding to do things and be determined to do it, but if you have not got the data to make the correct choices then you make wrong choices. I really feel that is a very important and neglected aspect and that we have to be putting a lot of effort into research now for the technologies that we might be starting to deploy, maybe, from 2015, 2020 onwards.
Q53 Nia Griffith: Do you feel there has been much progress in terms of developing technologies over the last 10 years?
Mr Harper: Yes, there has, but nowhere near fast enough. If you are going to make changes of 4-5% a year then you have to work much, much harder. I do not know what is going to happen with the outcome of the energy review, the Stern Review. I do not whether the Government is really sitting up and paying attention. I certainly hope so.
Q54 Nia Griffith: Which particular technologies would you think would be most advantageous in helping us to combat climate change?
Mr Harper: We have to look at it on two levels. There is a certain degree of first aid, we might say. If somebody is knocked over in the street and lying there bleeding you do not say: "Eat your vegetables and take more exercise"; you have got to do something very quickly. We are sort of in that situation. So we need to do lots of things quite quickly. At the same time we need to build fundamentals; obviously, a sustainable society. These things are not necessarily exactly the same thing. If we had more time we would probably have a slightly different strategy but we do have to throw quite a lot of technology at it in order to keep the thing from getting out of control. There is no surprise about it, it is a combination of reducing demand for energy, using low-carbon technologies and on a technological basis from the top down but, also, of course, encouraging good behaviour in all parts of society, from households, individuals, businesses, government, of course - all the different parts of society have to play their part in this. I should mention the carbon capture and storage because that was something that came up at the last session. That is an example of a kind of first aid technology that we really should be pressing very hard, I think, to bring that forward. We do not know how small this window is; it might be 20 or 30 years, but it might actually be getting smaller, so we do need to look at all the possible options, and carbon capture and storage is obviously going to be an important one.
Q55 Nia Griffith: Essentially, are you saying that given the right resources we would be able to develop technologies that could actually, if you like, save us?
Mr Cass: We are saying that, but we are saying that we need to really decide which tipping point we are at as well. We are approaching, almost everybody would accept now, a climate change-style tipping point. Things like the Stern Review do make a tipping point because they tip the economists in the right direction as well. Really what we need, alongside the technologies, is, if you like, a political tipping point as well; we need now to have massive resources put behind huge public engagement problems so that people out there in the world, and the world outside these buildings, and outside organisations like CAT get a really clear appreciation of what climate change is, what it means, the effects it is going to have on us and the things that they do in their everyday life, and how that impacts upon these issues. For instance, at the moment, when people use electricity in their homes they have no real concept, for the most part, of how much electricity a radio uses in comparison to a power shower, or a kettle or a hairdryer. What we need to do is to make these issues very real for people; both the effects of climate change and what people can do in the home and the amounts of energy that people are using, both within their homes and then through transport issues, and that kind of thing. At the moment, I think, people are poorly prepared to understand those issues. Yes, we need technologies, but we need two other things as well: we need massive public engagement programmes and we need to work very, very hard to bring our power consumption down as well. We use five times as much energy now as we did in 1950 and 13 times as much as we did back in 1900. That is extraordinarily significant, and something we need to work on very, very hard.
Q56 Albert Owen: Just on something that Mr Harper was talking about, some low-carbon action (this is not to trip you up), I was reading when we were doing our review on the new international centre (?), no less, that the founder members of the Centre are actually pro-nuclear; they believe that nuclear generation, because of its low carbon, is actually better. It is in the context that with nuclear disaster and climate change disasters, we could do more about limiting that carbon climate change. What is the position of the Centre on nuclear energy now?
Mr Cass: We do not support nuclear energy. There was a bit of a problem a few years ago with a feeling that, maybe, people at CAT did support nuclear energy. Basically, nuclear energy ----
Q57 Albert Owen: But it is true that founder members did ----
Mr Cass: No, not necessarily.
Q58 Albert Owen: It is quoted.
Mr Harper: I think that was just a mistake. They did not check it out, really. It was a series of Chinese whispers, I am afraid. It was a good story.
Mr Cass: Nuclear power falls into that bracket that we are in at the moment of being, if you like, energy obese. We are using huge and extraordinary amounts of energy now, and what we really need to do, where we really need to engage with the public, is to power down; hugely reduce the amount of power that we are using whilst still maintaining levels of well-being at a satisfactory level. Right at the end, once we have worked through all those reductions and looked at much better options, like a much larger share of local regeneration of energy, then we can look at the large-scale, big coal-fired power station with appropriate CCS technology in order to plug the gaps that might be left by renewable technologies from time to time. There are lots of intelligent ways we can work with energy in order to really reduce it and then to keep the National Grid going in order to plug any gaps there might be from time to time.
Q59 Mr Jones: Speaking of Chinese whispers, the departmental witnesses, of course, mentioned the impact of expanding economies, such as China and India, on carbon emissions. To what extent do you feel that the development and take-up of new energy technologies can deliver sufficiently to counter-balance the effect that economies such as China and India are having upon carbon emissions?
Mr Harper: Of course, in a sense, it makes no difference because, as we all know, from the Prime Minister's recent remarks, Britain is only 2%, or so, of the total carbon emissions, so even if we reduced it to zero that is only 2%, and it is a global problem. We cannot save the planet on our own; we have to have international agreements. That is the only thing that is going to do it. It seems to me that international agreements are often difficult to achieve and it is very important for, let us say, privileged economies, like Britain, a take a lead here. I really think that it is very, very important that we should take the lead, and that we should demonstrate that we are aiming for a sustainable level that would be sustainable if everybody else did it. What if everybody did it? That is what we should always ask ourselves. That applies to China and India too, but you have to remember that their carbon emissions per capita are way below ours. It seems a bit of a cheek to ask them to do anything before we have done it ourselves. We have to set a good example. Yes, there could be lots of economic advantages to it; if we can see ahead and develop these new technologies that would create fantastic export opportunities. I am particularly thinking about Wales, and I think Wales is the kind of place where we ought to be able to develop these things. Also, in terms of lifestyle and aspirations. That is beginning to sound a bit ideological, but that is an important part of the message that we are sending; that there are different patterns of development that just do not involve simple, economic growth. There is qualitative growth which is actually more important than quantitative growth, and this is the important message that countries like Britain ought to be able to send.
Q60 Mr Jones: What is your assessment of the willingness of these expanding and developing economies to take on board new technologies?
Mr Harper: New technologies, yes. Most people in developing countries are rather (that is my feeling) techno-centric. Certainly the earlier doctors, the wealthy parts of society are very technical - they like that sort of thing - but they are not so keen on the lifestyle changes. Yes, they will be very receptive to these things.
Q61 Mr Crabb: Would the Centre for Alternative Technologies endorse the view of some environmental groups who believe in zero economic growth?
Mr Harper: Absolutely not. No, I would say that was a sort of mistake, but it depends what you mean. It is usually a question of definition what we mean by "zero economic growth". If the economy is to a very large extent dematerialised, so there is lots of added value going on but the material flows and the energy flows are entirely without damage, they do not accumulate or they do not deplete, you can say that was a kind of steady state economy in a certain sense, but it still might grow in terms of added value. There might be a question of definition here, so people might be arguing from two different premises.
Q62 Mr Crabb: It was Friends of the Earth.
Mr Harper: All right, it could be that economic growth is, in some sense, socially irrational, given the evidence that we do not seem to be any happier than we were, say, in the 1950s. The economy is three times bigger but we do not seem to be that much happier, so all that activity was irrational, whereas in India and China growth is very important to them.
Q63 Mr Crabb: Life expectancy has gone up.
Mr Harper: Yes, there are some things that have improved but other things, perhaps, have not. In poor countries economic growth is an absolute necessity; you just cannot deliver the basic quality of life without a certain measure of economic growth. Personally, I would say we have gone past the point where it really makes sense to bust a gut to try to make the economy grow, but perhaps that is an argument for another time.
Q64 Albert Owen: You have set out the background very clearly there, but what sort of actual measures do you think can persuade people to break away from their addiction to fossil fuels? Just to add to that, is pricing alone the answer, because I note a paper from one of the directors suggesting that it is.
Mr Cass: Pricing is one of a portfolio of answers to this. What we need to establish is: do we accept that climate change is possibly the most damaging thing that has ever faced our society? When we get to that stage at all levels, we then move on to a completely different situation where we start looking at completely different ways of powering our society, the way that we live and the way we assess wealth. Is wealth just an economic construct or is it a mock construct? Is the concept of well-being a more sophisticated way of measuring wealth?
Q65 Albert Owen: We all agree that is the case, but what are we going to do to induce people to change their habits and reduce their reliance on fossil fuel? We know it but what do you think should be done?
Mr Cass: My gut feeling is that the public is ready for quite important political action. In fact, I think a recent MORI poll found that 70% of the UK population understands climate change is serious and wants change, but does not know what to do. The vast majority of those people, I feel, will look to national scale initiatives in order to make a real difference. So there are all sorts of things we need to do; we really need to gear up and power up the technologies that people want, because that is quite often the first thing that people want when they want to engage with this huge issue, but we need as well to have this massive public engagement programme that I talked about as well. We need to engage with the public in all sorts of different ways: public information broadcasts, TV, newspapers, initiatives from government - there needs to be a lot of money put behind making really big differences. There need to be big grant programmes in order to get the kinds of technologies into people's communities that are absolutely necessary and far more efficient than the kind of central energy generation that we use at the moment as well. It has to be that combination of the public being ready - which I think we are at that tipping point - the public are there and receptive, and it needs massive political action now. In Wales we are very lucky that part of the constitution commits us to sustainable development and that is a really positive move, and we need to do hundreds of things we could do. For instance, if all civil servants were tasked with not just specific economic targets and budgetary targets; if there were specific sections in every single target for every civil servant to deliver sustainable development and then places like the Wales Institute for Sustainable Education were up and running and ready to receive those civil servants in order to make sure that they have a really clear understanding of what climate change is, how it is going to affect us and what we need to do in order to change our society so that it is climate change compliant for the future - the list is quite endless but the point is we really need to start moving on it as soon as possible.
Q66 Albert Owen: I hear what you say about grants because for somebody who has gas as their main - every household has basically and a lot of industry is reliant on it - you feel there should be grants, and I can understand that, and under the "Powerdown" part of your paper and "Renewables" you refer to this. Apart from the grant - I understand about awareness - is there something more practicable?
Mr Harper: We do need to be helped by price signals. There has to be gradually increasing prices on all sorts of carbon-intensive activities. You probably know about the rebound effect that happens when people save energy: they save money and then they can, very often, spend it on something even more carbon-intensive - it does not really help very much - but if there are carbon taxes of the right kind then, of course, they cannot do that because the taxes are coming in. We are going to need something of that kind, just to give people an idea to help target the things which we ought to do less of. Of course, that would immediately start to trigger all sorts of other technological effects, but that would particularly give households a better idea. It should come in very slowly, of course, and it should be signalled well in advance as to what is going to happen so people can plan for the future.
Q67 Albert Owen: What is available now? I am not promoting assets (?) in any way but there is micro-generation for individual households, and the expense is there. People know there is about a 7 or 8-year payback on those devices. Do we accelerate that and get the costs down or do we invest in new technology?
Mr Harper: Personally, I would say, and we have a debate about this amongst ourselves, that retrofitted renewable generation - micro-generation - is probably a mistake. At this stage it is probably too low a priority. For old, existing buildings we should concentrate on bringing them all up to the present Building Regulations standard. This is what is happening in Germany; they have committed themselves to bring everything up to a certain level. Most people live in old houses. We know we can build nice, zero- energy new houses but most people live in old houses. So we commit ourselves to bringing that side of it. At the household level, householders, on the whole, should be concentrating on energy saving and energy efficiency. We can deliver that. When it comes to new houses, all right, we can design them properly and introduce 10%, or much more, on-site generation, but retrofitting is probably not something that should occupy too much of our minds at the moment.
Mr Cass: Also, we have to be ready, because there is the low-hanging fruit but what we need to be doing now is gearing up for the next stage of these 4-5% reductions year-on-year. Once houses are retrofitted and far more efficient we have to be ready to look at far more efficient local generation at community scale, whether it is community scale wind farms and wind turbines, community combined heat and power systems or using local biomass resources, because most of the UK is still powered by fossil fuels when, in many ways - we only have to think about it - we have energy shining on us, blowing past us and flowing past us all the time. The major shift there has to be in the long term - we have dealt with the low-hanging fruit - is to think about energy in those terms, really bring the levels down and then the energy that is available to us most of the time plus some intelligent-led management will mean that we would be able to deal with our energy needs locally.
Q68 Albert Owen: A couple of points specifically on this "Powerdown plus Renewables" strategy that you are talking about. First of all, you are talking about organics that are locally produced and we have seen the debate in the media over the past few weeks about your local versus imported and the fact that maybe locally-produced products cannot be grown organically to meet the demand, so there is an increase in fertilisers used locally. Did you take that into your equation, that we might have to rely on transportation from other areas?
Mr Harper: We might, but that remains to be seen. I think we should certainly give it a try, we should work on that basis. There should be a presumption on local, on organic and on reducing the amount of stock, that is another thing we probably have got to do. There are all sorts of things the statistics show us quite clearly, directions in which we ought to go, so we ought to go there, and if we cannot do it for various reasons, all right, we will need to look again, but, yes, certainly the food and agriculture sector is a big sector. A quarter of all carbon emissions comes broadly from the food and agriculture sector, so that is very important.
Q69 Albert Owen: So you believe it is achievable and cost competitive, but would it deliver equal levels of well-being for people?
Mr Cass: Yes. I think in the end we have to make this switch to people seeing wealth in terms of well-being rather than salary over a long period of time and intelligently, but, yes, I think it is achievable and in many ways we have a good choice as well.
Mr Harper: Are you saying, "Does it redistribute?" when you say "equal"?
Q70 Albert Owen: My colleague, Mr Crabb, mentioned zero economies. Are you saying that our lifestyles have to change that drastically to achieve what you are proposing?
Mr Harper: Some things, because some things are not fixable. We can fix houses and probably cars, there are all sorts of these technical fixes we can do. There are two things we probably cannot fix: one is aviation. There is no prospective way in which we can do things, it does not matter, alternative fuels, it does not matter, we can use biofuels in aeroplanes, they still produce stratospheric problems, so I do not see a way around that. The other one is the high level of meat consumption. This is a real hot potato, I know. There is no way around that because that is a large chunk of it. If we have got to reduce emissions down to 80% then it will make it difficult, and it is very difficult to see how we can do that without reducing that. Those two will impact, people will notice that, whereas other things we might be able to do by being very clever. That is my reading of it.
Q71 Mr Crabb: The second strand of CAT's proposed strategy to combat climate change is to further develop renewable forms of energy generation. How would the problem of intermittent supply be overcome? Wind power?
Mr Cass: It is very important, first of all, that we remember once again that we vastly increased the amount of power that we have used in a relatively short period of time without increasing our well-being, so we need, first of all, to look at reducing as much as possible our demand and then, after that, renewables start to play a very important and significant part of our energy generation strategy. We would say that there are all sorts of measures you can have: intelligent metering systems or different kinds of billing structures with your energy company. For instance, there are lots of storage heaters in Wales and the storage heaters could be turned off at certain times when there are peaks and the energy needs to be used elsewhere. If we had intelligent metering systems in people's houses you could have a contract with an electricity generator that would say, "Okay, put your washing machine on overnight", but the signal comes through the line, in order to turn the washing machine on at the right time you ought to make sure that everything does not peak in a way which would undermine the supply of energy at that particular time. There are all sorts of different things. Research into that kind of technology that really sorts out load management would be very important.
Mr Harper: I think the intermittency problem is hammed up a lot by opponents and at small levels of penetration it is not really a problem. The electricity system - of course not all energy is electricity - in particular has to deal with enormous fluctuations anyway and so small levels of penetration it can easily cope with, that is not a problem. Of course, we are asking for a huge amount, maybe 40 or 50% of the total energy input that is going to be renewable of one kind or another. Some of the renewables, of course, are dispatchable, they are reliable, and a lot of them are variable, but if you put them altogether they are not so variable. Even on one particular technology, let us say wind, it is very unlikely there will be no wind anywhere if it is all going into the grid. A distinctive feature of our approach at the CAT is to say we believe very much in local generation as far as possible but also we believe very strongly in the importance of the grids, not just the electricity grid but the gas grid. The gas grid and the electricity grid can back each other up and also we should have links to other parts of Europe of course, which we do now but we think they should be strengthened and we should have very strong grids. With the combination of trying to invest in local generation but having very strong grids, I think then we would be able to reconcile the high level of renewables and security of supply. We should be able to do that, especially with measures, like James is mentioning, much stronger measures of load management at all levels which at the moment we really have not explored. For lots of households, lots of the loads are not needed most of the time, they can be cut in and out without you noticing them, but, of course, things like lights you want on all the time and you want the TV to go on all the time, that is fine, but lots of loads can be managed and I think that can be done remotely.
Q72 Mr Crabb: You say in conclusion that: "... more resources must be made available for the technical and social development of renewable energy sources". What do you mean by the "social development" of renewable energy resources? Could you explain that phrase?
Mr Cass: I think that gets back to a governmental-sized job now of making sure that everybody understands climate change and the impacts it is going to have on them and, therefore, is in the right frame of mind to accept the kinds of measures that are going to be necessary in order to solve this huge problem that we have. The other side of it, I suppose, would be when you re-localise your power and energy grids then it must be done in a way that benefits those local communities as well so they see themselves not only as part of the problem but can see the solutions in their local area.
Mr Harper: We might well be heading for a more localised future. There has been this long process of globalisation and that has largely been driven by very cheap fossil fuels, particularly cheap oil, and the likelihood is, I think pretty well everybody is agreed, oil is going to become quite expensive one way or another and that will force a re-localisation. It will just mean it will be more expensive to move stuff around, so there will be a presumption on generating it and using it locally as far as possible. We like that and we think that is really good. If people had a better sense of their own area, did things for each other and were more hands-on, the internal links in an area were stronger than the links between that area and the outside world rather than the other way around, we think that makes for healthy local communities, so we really like that idea. Lots of things have happened in our area to try and promote local initiatives, local people getting together to pursue these activities, and it is heart-warming, it is good. Regeneration of that sense of local community I think can come, and with links between householders, generators and farmers you can get much more personal relationships going, everybody knows where everybody is and where the stuff is coming from and flowing to. That is good for a local community.
Q73 Mr Crabb: In terms of your call for more resources to be made available for the development of renewable resources, what kind of order of magnitude step change in terms of increasing resources do you have in mind? If the Minister was to ask you to put a figure on it, what are we talking about here?
Mr Harper: On a national scale?
Q74 Mr Crabb: Yes.
Mr Cass: On a Welsh national scale, I suppose, the Stern Report would have put it at about a third of a billion pounds a year from now on in. I would suspect that we might need to spend a bit more than that, so I would put it higher than that, at least half a billion pounds a year, because it is something that we cannot possibly afford to get wrong. We have to make it an absolute national priority, whether that "national" is UK or Wales.
Q75 Mr Crabb: Half a billion pounds?
Mr Cass: At least per year. It might cost more than that.
Q76 Mr Crabb: Out of a total government budget of £580 billion, it is nothing.
Mr Harper: Yes. It does not all have to come from the Government, it is not just the Government that hands this thing out. Just thinking in terms of the GDP of Wales, which is somewhat under £40 billion, or something like that, Stern is talking about 1% or something like that.
Q77 Mr Crabb: Your half a billion figure was just for Wales?
Mr Cass: Just for Wales, yes. On a UK-wide scale it moves up to significantly more money, well over £10 billion a year.
Q78 Mr Jones: Could we turn to microgeneration, please, and you will recall we asked the departmental witnesses about the constraints on the development of microgeneration. You have referred in your paper to the advantages of renewable energy working on a national, regional, community and domestic scale. Could we deal with the domestic scale first. My understanding from earlier answers you gave is that you are somewhat sceptical as to the benefit of microgeneration on existing homes, is that correct and really you felt that the place for microgeneration was in new build? Is that a fair summary of what you said?
Mr Cass: I think we may have given a slightly wrong impression there. What we believe is that if you have a list of priorities, there is some lower hanging fruit and higher hanging fruit and what we need to do is to pick off the low hanging fruit to get our 4 to 5% reductions as soon as possible, whilst at the same time looking into what is going to make the much more difficult reductions later on. Retrofitting things like really good, solid insulation to existing houses that are going to be around potentially for hundreds of years is very important, but then on the domestic scale there are certain technologies which would really eat into the energy budget. There is plenty of energy around locally to be harvested and probably the best kinds of technology to start off with would be solar heating technologies on people's roofs. After that, it gets a little bit more debatable but, as part of an engagement programme, if we can bring people's power consumption right down, then technologies, like solar technologies, for creating electricity start becoming more significant. If, as part of a national engagement programme, the Government was putting a lot of money behind solar technologies then what it would do is it would give the kinds of scales that industry needs in order to bring the prices down from the quite expensive prices at the moment to the kinds of prices that would be far more easily dealt with.
Q79 Mr Jones: Do you regard the price at the moment as being prohibitive, for example, for the installation of solar or PV panels?
Mr Cass: I think it depends on which parts of the population. For the 5 to 10% of the population which is willing to take personal responsibility when they see a problem, then they are possibly willing to pay up to £5,000 to put solar water heating on to their roofs and they baulk a bit more when it comes to paying the £10,000 to £20,000 to put solar PV on to their roofs, so it definitely does make a difference and this is where the Government, on a national scale, can start making a real difference. There are huge amounts of energy out there to be harvested and at the moment we are doing it very centrally using fossil fuels from increasingly long distances away.
Q80 Mr Jones: What can the Government do to make that difference? You say they could make a difference.
Mr Cass: I think as part of the commitment if we set out a programme that says that there would be retrofit to existing houses as well as new houses, but over a timescale that allows the necessary R&D to happen and for industry to scale up to create the new technologies that we need for the new environmental century, that would be the most important thing that Government could do as far as industry in creating the market and bringing prices down.
Q81 Mr Jones: In terms of new build, do you think that the planning process could be used here?
Mr Harper: The strongest thing is the building regulations and, as far as the industry is concerned, that is very important because the manufacturers generate products that just comply with the building regulations and so they will just build to that level, but I think we need to bring them on quicker and stronger, send stronger signals and tell them when these new standards are going to come in so that the industry can gear up. There is something else that is very important which is research has shown new buildings are not performing according to the building regulations. When they are checked out it is found that nobody has inspected them, nobody has checked them out, ostensibly they have been built to the regulation standards but they are not performing at that standard, so we need a much tougher inspectorate in order to make sure these things are happening. It is again something that only the Government can do, but we have really got to have a bigger corps of inspectors to make sure this happens.
Q82 Mr Jones: Of course, there has been a fairly recent relaxation of the inspection regime, has there not?
Mr Harper: That is not joined-up government. If you say one thing you should follow it up.
Q83 Mr Jones: You expressed some reservations about micro-wind power in your note, which came as a surprise to me, and, according to newspaper reports, these things are flying off the shelves of B&Q at the moment. Do you discount micro-turbines? Which micro-source of generation would you say is the most appropriate for the average householder?
Mr Harper: I would say that wind is at the bottom of the pile. Under certain special circumstances, yes, it is okay but, generally speaking, any kind of townscape, any kind of structures, trees or buildings, just break up the flow of the wind, so the amount of energy you have got left for generating is very small. People have been measuring and found the output of the wind machine is only a few per cent of its potential. It does something, but it is just a lot of money for very little effect. If you want to generate electricity, it has got to be photovoltaics really, I think, at this stage, even though on paper it looks much more expensive.
Q84 Mr Jones: It is still not very developed.
Mr Harper: Yes. What do we do? We know it is very expensive and the payback time is very long and so you would say, "All right, let's go for lower hanging fruit and not do that", but if the market is not stimulated the price will not come down, so I think this is another role for Government to think ahead to try to create markets, encourage people and encourage rich people to do it - you would not want poor people to be spending this kind of money, there are much lower hanging bits of fruit that they could have - especially ones who like to show off a bit, if a new roof has got to go on, why not, if you have got the money, do it, great, bring the market forward.
Q85 Mr Jones: Could we turn to community-scale microgeneration. Which renewable initiatives would you say are best suited to community level microgeneration and what is the scale of their likely benefits?
Mr Cass: Similarly to the domestic scale, the two types of solar technologies would be useful. You can then move on to log, pellet or woodchip generation for heat to community scale, but then probably the most significant area that could be developed would be community wind power. If all these people who would like to put a micro-wind power generator on their house were to get together and produce a community-scale wind turbine instead, the amounts of energy they would generate would be far greater, so that is very important. The other kinds of technologies are the new combined heat and power technologies which are being developed at the moment and that is a technology that we are putting in very soon at the centre in order to help provide the energy needed for the WISE project, which was being discussed earlier. As to the scale of difference that they would make, I defer to Peter.
Mr Harper: It depends what kind of level you are talking about when you are talking about communities, but certainly district heating systems could be very advantageous, especially if they are combined with combined heat and power and, of course, if they are run on biofuels then that is terrific, you are winning all round. You might even use some of that electricity to power heat pumps at ground source or, if there is a local river, water source heat pumps that you could use. Of course, every case is different and you have to sit down and do the sums properly, but lots of these show a lot of promise but they will only work usually at a reasonable scale.
Q86 Mr Jones: What barriers do you see to the adoption of community-scale projects?
Mr Harper: They are just as much social as financial, but I think once you have got a few successful ones going then you will start to see movement. A good example in our area is the role of the renewable energy company. We have set up our own company in there, it has got about 200 members, people put money into the pot and we buy big second-hand windmills. We get planning permission, we get them up, we do all the engineering ourselves and so we are the developers and the owners. It is our electricity and we sell it to the grid and we get money for electricity and we get ROCs and so on, it is all ours and we have done it. The investment is really pretty cheap and we get far, far more electricity out of that than out of 200 tiny wind machines on roofs.
Q87 Mr Jones: What could the Government do to encourage projects of that sort?
Mr Harper: I suppose there are already lots of grants and sweeteners and things like that going on, there could be more of that, but of course in terms of planning I think there is a public education process going on with respect not just to windmills, windmills are the most obvious example, but there might be lots of quite big visual changes that will take place in the country if we really were to go forward with this big 4 to 5% reduction. There would be lots of changes and people do not like that very often, they just do not like change at all, but somehow we have got to have the public debate. It is almost as if there is a war on. It is a bit like the situation in the late 1930s, everybody vaguely knew that things could change very rapidly, but nobody wanted to change and suddenly the moment when the Nazis invaded Poland, then everybody said, "Okay, there is a war on, now the rules are different, we accept that, and when the war is over it can all come back again". It is a rather similar thing, that people will say, "All right, we do not want these horrible things all over the countryside, but there is a war on, that is fine, we will do that, we will have biofuels all over the countryside", it will look completely different but then we have to get through this difficult process. I think the Government can help a lot there in setting the tone and saying to everybody, "Look, this is the way it is, do not try and duck it".
Mr Cass: Of course, the other part of the equation is that we need to have the skilled professional technicians in order to design and install these community-level machines rather than the larger, huge regional-level machines that have been available and creating our power before now. That is where an investment programme in places like the WISE project and other projects like that around the UK would make a really big difference. Recently, CAT has found itself responding quite often to grant programmes. There was money that was made available to householders to have solar water technologies put onto their roofs, but what they found was that although the householders wanted to put these on their roofs and there were plumbers out there who wanted to do it, there were structural problems with that. For instance, plumbers are not used to going on roofs for the most part; they are used to going under sinks, behind baths and below floorboards. Certainly their professional indemnity insurance would not cover them either. That is where places like the WISE project, or CAT in general with our adult education programme, can really make a difference because very quickly we were able to design a solar water heating course for professionals that allowed them to come, learn about the new technologies and different types of roof tiles, how to drill through them and how to be a roofer as well as a plumber in order to put solar panels onto a roof. That has been one of the most popular courses which we have run. It has grown from being run once five years ago to being run five or six times a year now and it is oversubscribed. There is that kind of need for skilled professionals to be trained. The other part of the need is to train people at all levels, whether they are skilled professionals or at degree level or MSc level and then on to PhD level to look into the really finer aspects of how we are going to make these enormous changes and weave them into the fabric of our society. That is where something like the WISE project and other projects like it would come in as well. We run an MSc project in conjunction with the University of East London. It started many years ago at the University of East London and it had between ten and 12 students doing the course year on year for a number of years, but then they decided to make a change, to bring the course up to CAT and teach architecture and advanced energy studies in a setting that embodied all of the principles that were being taught on the course and that has made an absolutely enormous difference. It has gone from being ten to 12 students up to over 350 students now on the course. That, of course, for us has meant that we have had a massive influx of people wanting to do adult courses. In the early days, we were very much orientated towards the visitor centre and engaging a large number of people in a relatively small way; these days the whole way that the public thinks about these things has turned around and nobody asks any more, "Why should we be environmental?", everybody asks, "How can we be?" That is our experience anyway and it has meant that there is a massive growth in our courses programme and we need to be able to service that need and that is why we have got this big expansion, the Wales Institute for Sustainable Education. That kind of thing, the professionals to make sure that the building regulations are being adhered to, the plumbers, the solar electrical technicians as well and the MSc courses are needed.
Q88 Albert Owen: You mentioned the Wales Institute of Sustainable Education, the WISE project. You will have heard the previous evidence from the Department of Trade and Industry. Before I come to that specific question, the Committee visited you in April. How is the construction of the project going, and what is the schedule, subject to the finance, to have it ready for completion?
Mr Cass: Yes, you visited in April. Since then we have become a huge building site. In June, the turf was being cut for the first time and now the WISE project is going ahead, all the foundations have been laid down now and we are expecting the timber frame to arrive in the next couple of months, but the huge and ongoing worry that we have is it is a £6.2 million project and we have raised just over £5 million so far in order to complete it. We are relying on the increased public awareness of the project in the next year to 15 months, which is the rest of the construction period, in order to cover that shortfall.
Q89 Albert Owen: Could you deal specifically with your applications to the DTI. Have you made a formal application?
Mr Cass: No. I was delighted to hear they were expecting to hear from us and I will certainly be on the phone to them tomorrow, I would expect. In relation to the grants that they talked about, we are talking about a £6.2 million project and the support that we have had so far has been great from all sectors but with the notable exception of the UK Government so the ministries Defra, DTI.
Q90 Albert Owen: You have received it from the devolved administration, the Welsh Assembly?
Mr Cass: Yes, the Welsh Assembly Government has recognised the value of the project and has invested in it, but there is Lottery funding in there, European funding, some trust funding and our individual supporters have been fantastic with the amounts of money that they have provided for the project, but there is still this £1 million gap and the UK Government would be the obvious ----
Q91 Albert Owen: We raised it in evidence in the previous session with the Minister, the Minister's predecessor. What are the aims and objectives, for the record, of the Institute?
Mr Cass: First of all, all these people who now want to know how to be environmental, whether it is solar plumbers or doing things at degree level, MSc level or PhD level, what it will allow us to do is to get at least 1,300 green champions through CAT's doors every year, people who will then be able to go out into their communities and act as catalysts of enthusiasm within those communities and create that essential number of people that is necessary within any community, company or department of work in order to create the changes that are necessary to get people to think about things from a sustainable development perspective.
Q92 Chairman: I think you have anticipated all the other questions we were due to ask you, including the very last one which I was going to ask about green champions. It just occurs to me finally, you have close proximity to that great educational institution, Coleg Harlech which is very near to you. Do you have any relationship with it or any partnership with it, because it has served the people of Wales and the adults of Wales for a very long time?
Mr Cass: It has struck us as a little absurd for quite some time that the University of East London is the university which we have a relationship with. We would be delighted though to have relationships with all of our local universities and all of our local colleges, but what is holding us back at the moment is sheer space. For those people who have been to CAT, this week is MSc week and suddenly you have got 150 students up at the Centre and we literally have not got the space to be able to run the lectures, many lectures have to be run two and three times, but we would be absolutely delighted to be able to service the needs of all our local universities. There have been contacts made with local universities and a number of local universities are now interested in working with us, but what we need to have is the space resources in order to be able to do that.
Chairman: Coleg Harlech, of course, is not a university, it is the adult residential college and it occurred to me that you seemed to have very similar objectives in serving the adult population. To pursue that one final point, you may wish to consider developing a relationship with the adult advocacy body in Wales, which is NIACE Dysgu Cymru in Montgomeryshire, whose director is a product of the adult residential college. Thank you very much for your oral and written evidence. Without wishing to be too committed to you, we are very concerned about your work and we wish you well in your specific application to the DTI and, more generally, and we hope your work will prosper. Thank you very much.