Select Committee on Innovation, Universities, Science and Skills Minutes of Evidence

Examination of Witnesses (Questions 343 - 359)



  Q343  Chairman: Good morning to everyone and good morning, Minister, and we welcome you to the Innovation, Universities, Science and Skills Committee, in fact your first visit to the new Committee but an old friend of many of us, and to this the final session of the Renewable Electricity-Generation Technologies Inquiry. We welcome too Simon Virley, the Head of the Renewable Energy and Innovation Unit at BERR, and Kathryn Newell, the Assistant Director, UK Energy Research and Development at BERR. Minister, Warwick Business School told us that "the UK has never taken renewable energy deployment seriously". How would you respond to that criticism?

  Malcolm Wicks: I would ask Warwick University, with all due respect, to do their research more thoroughly. I think we need to understand this partly historically. The UK's energy base ever since the mid-1960s has been the UKCS, the North Sea. We have been blessed with oil and gas offshore and, although now in decline, still some two-thirds, maybe a little more, of our total energy comes from the North Sea. Given that, it is not so surprising that before the era when climate change became the pre-eminent issue we were reliant on that. After earlier oil shocks, others without that resource invested elsewhere—Denmark in wind energy for example and Germany in photovoltaics—but what I would say to Warwick University is look at the momentum now. Yes, as a percentage of all of our energy we are still somewhat under 2%, and that looks very small, but every year now we are seeing major developments, not least in terms of wind farms, particularly offshore, and that the momentum in terms of our total energy coming from renewables is increasing, I would argue, quite dramatically year by year, so I would say look at the momentum.

  Q344  Chairman: Let us look at the momentum then. The target proposed by 2020 is that 20% of energy shall be generated from renewables.

  Malcolm Wicks: That is for the European Union as a whole.

  Q345  Chairman: Yes, for the European Union. You are arguing very strongly that we need to have the 15% UK target lowered. That is not exactly an ambitious approach to renewables, is it?

  Malcolm Wicks: I am happy to go back to the issue of momentum when that is timely but on the European issue let us remember what has been agreed. The heads of state, including our own former Prime Minister, signed up to a target for the whole of the European Union, that 20% of all energy—and of course the crucial word there is "all" energy because previously targets have been talked about in terms of electricity, certainly here in the UK—should come from renewables, as you say, by 2020. There was never any suggestion from the European Commission that every country would have the same target or that we would each have 20%. That is now being negotiated. The Commission have put to us that for the UK our share, as it were, should be 15%. This is a perfectly reasonable negotiation going on. Clearly where you have a country already with a lot of renewable resource, often because of hydro such as Sweden, it is not so surprising that their target will be higher than a country like Britain. They are saying 15% and we are discussing that, but clearly it will be there or thereabouts. The thing to focus on is that it is very, very demanding, it is a huge challenge, and we are going to have to do a great deal to hit the target.

  Q346  Chairman: I think one of the things that has struck the Committee during this particular inquiry is that if we look at the whole of energy from renewables in order to meet the targets, which have been set either by our own Government or indeed by Europe, in terms of electricity generation we need to have somewhere between 30 and 40% of all our electricity generated through renewables by 2020. There is fairly common agreement about that. At the moment we have got roughly 5% of electricity being generated through renewables. You set a target to triple that by 2015 and then between 2015 to 2020 to actually double that again. It is not realistic, is it, Minister?

  Malcolm Wicks: No it is not, but let me explain where we are. We have had a Renewables Strategy, and I return to the Warwick critique, when you look at the momentum, if I can just give you some figures, if you look at all renewables generation as measured on the Renewables Obligation basis, then in 2002 we had something like 5.7 gigawatts of power from renewables. It had gone up to almost 10 gigawatts by 2004 and in 2006 it was about 14.5 gigawatts, and that is what I mean by the momentum. We had a strategy in place that was already delivering against the UK targets, but where I agree with you, Chairman, is that given the goal posts have been changed, if I can use that comparison in advance of the Arsenal Summit between the two heads of state later this week, because of the new European targets, we need to ask are our existing policies adequate? No, they are not. Do we need to review to make sure that we can get to the 15% target, or whatever it is, yes we do, and that is why we are now developing a new Renewable Energy Strategy which we will be putting out for discussion and consultation in the summer.

  Q347  Chairman: If we are going to triple the current level of production of electricity from renewables by 2015, in seven years' time, so we are going to triple what we are doing now, and then we are going to double it between 2015 and 2020, what do you envisage is going to be the major breakthrough that is going to enable you to actually achieve that because, quite frankly, we are struggling to see that?

  Malcolm Wicks: You will see it more clearly of course when our strategy is published when we can discuss that. We are doing a great deal of work on this now.

  Q348  Chairman: Can you not give us any insights?

  Malcolm Wicks: Yes I can. You are right to say that the bulk of this almost certainly will come in terms of electricity because in terms of renewables for our cars, renewables for our performance heating in industry et cetera, that will be a smaller but I hope increasing proportion. I do not particularly want to say it is 40%, but I think you are right, it is there or thereabouts. I think one of the major drivers but not the only driver will be offshore wind and wind farms generally. I think that is the technology that is most proven in terms of the British context. We are an island and we are blessed with a huge resource in terms of wind power, and international studies show that we are among the top countries in terms of wind power, and also offshore the seas are relatively shallow, which makes the construction of wind farms rather easier, so we have a huge potential resource. My Secretary of State, John Hutton, has said as a policy statement that we want to see a major expansion of offshore wind. It is not the only thing, by the way, but in answer to your question it would be top of my list of the way in which we are going to hit our target.

  Q349  Chairman: The whole of Britain's coastline would have to be covered with wind turbines to get anywhere near this target and that is not realistic, is it?

  Malcolm Wicks: I do not think the whole of Britain. Obviously there are places which are most advantageous in terms of the sea terrain and wind power, but I think, yes, we will see colossal expansion of offshore wind. I am bound to say, and this will be of interest to your Committee in particular Chairman, there is now a good deal of work going on. My colleague Kathryn Newell may want to say something more about this in terms of the research and development side in terms of wind energy. I think there has been a sense up to now that the wind turbine that has been onshore has more or less been put offshore. I do not think that is quite adequate. In the industry and other sectors we are doing a lot of R&D now on the kinds of wind turbines we might see. I think they are going to be far larger than the ones we are used to at the present time.

  Q350  Chairman: I do not wish to be rude or confrontational because that is not the way we work in this Committee—

  Malcolm Wicks: I have never known you, Chairman, to be confrontational, except on one or two occasions!

  Q351  Chairman: We will miss that out. By March 2010 the UK has to produce and lodge with the European Union an Action Plan in terms of achieving these targets, and in that Action Plan you will have to have a roadmap which indicates not only the direction of travel but the milestones along the way in terms of achieving the European target, whether it is reduced from 15% or not, and whatever proportion from electricity. Clearly you must have at this stage some idea as to what will be the balance between, say, electricity production through onshore wind farms and offshore. Can you share that with the Committee?

  Malcolm Wicks: I think I have, have I not, I have indicated—

  Q352  Chairman: You have indicated you are going to have both.

  Malcolm Wicks: I will tell you what, Chairman, to hit our renewables target—and I am confident we can—and more importantly to hit our targets in terms of the pre-eminent issue of climate change, reducing CO2, you say we are going to do both, but we have got to throw virtually everything at this actually. In terms of carbon there are a dozen things which are important. I am highlighting offshore wind because I think in terms of the suitability for Britain we will see major developments there but there will be other developments too around other forms of renewables. I think micro generation can play an increasingly important part and of course there is the potentiality of the very grand project, but a controversial project and one we need to think through very carefully, of the Severn Barrage where, as you know, the Government in principle is interested in that and will do very careful work, including environmental feasibility work, to see whether that is a starter or not. The Severn Barrage by 2020 or perhaps a year or two after could deliver 4 to 5% of our total electricity requirement.

  Q353  Graham Stringer: Just returning to wind and the percentage of electricity it will produce, have you done any studies or are you concerned about the Danish experience of introducing instability to the grid when you pass a particular point of wind-generated electricity going into the system? Effectively, the Danes have to have a back-up system, do they not, because the wind does not blow all the time?

  Malcolm Wicks: Absolutely.

  Q354  Graham Stringer: What studies have you done about that instability in the grid?

  Malcolm Wicks: The National Grid—and I might ask Simon Virley to add to my answer here—and indeed ourselves are doing a lot of thinking about this because as the years pass and over the next few decades I think the existing grid system, which is very heavily reliant on fossil-fuelled power stations, is going to change very much in two directions. One will be nuclear electricity and it is difficult to predict but we would rather hope that in the future more of our electricity will come from nuclear and more will come from renewables, both of them clean energy sources. Therefore I have discussed this with the National Grid and so have my officials and the National Grid are thinking very hard about the very critical issues you are raising about how such a grid system would operate. Would it be helpful if my colleague Mr Virley comes in on this one?

  Chairman: I am quite happy for Simon to have a quick word here but I want to come back to the grid later.

  Q355  Graham Stringer: I am particularly interested in the problem of wind power and how it brings instability into the grid.

  Malcolm Wicks: It is why you need a base load of course, by definition.

  Mr Virley: We are doing modelling work with the National Grid on that in terms of what it would mean for the Grid to have 35-40% renewable electricity on the grid. We are working with them and Ofgem in the context of the Transmission Access Review and also trying to define what is put in the Directive about what priority access for renewables would mean in terms of access to the grid, so that work is underway and will form part of the Renewable Energy Strategy when it comes out.

  Q356  Graham Stringer: Just one last question on wind, I do not know how you compare Oxford University to Warwick University, Minister, but Professor Dieter Helm estimates that for every tonne of carbon dioxide avoided by wind it costs £510 sterling. Do you think that is a reasonable estimate by Professor Helm?

  Malcolm Wicks: I have great respect for all universities as a matter of fact.

  Q357  Graham Stringer: Except Warwick!

  Malcolm Wicks: Warwick too but I like to chivvy them to do their research more thoroughly than they have done on that particular study. The serious point here is that renewable energy—and this is a generalisation but it holds true—is more expensive at the moment than conventional sources of electricity generation; it is more expensive than coal and gas and so on, and that is one of the reasons why societies, including our own, have chosen to effectively subsidise it, our main vehicle being the Renewables Obligation, but I am very mindful of the issue of costs.

  Q358  Graham Stringer: But I am asking a very specific question. I know renewables cost money and they are subsidised by the taxpayer and by the consumer at the end of the day, but you must have done estimates of the cost of avoiding each tonne of carbon dioxide. Is £510 a reasonable estimate, because that is what is estimated to be the cost of avoiding a tonne of CO2 via wind farms, and that is at the bottom of any strategy that moves on to such a large percentage of wind farms.

  Mr Virley: There will be significant costs here. We have published a preliminary impact assessment which shows the provisional impact of costs in our estimates that we currently have. I am not able to substantiate that particular figure but there are some estimates that we have published now of what the costs of implementing a Renewable Energy Directive would look like and those are now available.

  Malcolm Wicks: If there is any data we have not given you already, Chairman, we will send it to you, but we are certainly mindful of the fact that to move towards the UK share of the European target is going to be very expensive and we already seeing—and Mr Stringer knows this—that as a proportion of the bills that we pay for our electricity as householders, and it is true for industry too, an increasing proportion now are the costs of running the Renewable Obligation, the Emission Trading Scheme and one or two other projects. I think that will increase in the future and at a time of rising energy costs we have to be very mindful about the cost-effectiveness of the strategy we are developing.

  Q359  Dr Turner: Malcolm, perhaps the attitude of Warwick University is tempered by the fact that not an awful lot has really changed either in the background factors, the recognition of the importance of climate change, the decline of the North Sea, et cetera, since the 2003 Energy Review which put forward the same aspirations for renewable energy as held good until very recently, and the Energy White Paper last year was virtually a rewrite of the 2003 Energy Review and subsequent Energy White Paper.

  Malcolm Wicks: I think it mentioned nuclear this time. Was there not a new element to it this time?

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