Select Committee on Environmental Audit Minutes of Evidence

Examination of Witnesses (Questions 160 - 166)



  Q160  Jo Swinson: Just going back to something you said on the interest-free loans to SMEs, I was quite struck by the fact that you said that 70% of the cases you dealt with came through suppliers at the point of sale. Is there not a danger, if that is where so much of the loans are being sourced through, as it were, that there is money going to interest-free loans the companies would have bought the product anyway, so they got all the way through the suppliers at the point of sale. How do you audit that and manage it and make sure you are targeting the money where the investment would not otherwise have been made?

  Mr Wilde: That is a really important point. We vet the suppliers and the bits of kit that the loans can qualify for quite strictly, so they would have been more expensive than the convention in the market. Particularly with SMEs, where there are financial constraints, they almost need that sweetener to be able to buy the more expensive bit of kit. The other thing we do is track by talking to customers. For example, the NAO have just audited our activities and they spoke to a large number of our interest-free loan customers and they found that 96% of the users would not have bought the equipment without the loan. We go back and we interview clients to understand whether or not there is that dead weight associated with the list.

  Q161  Joan Walley: I just want to ask a little bit more about the list, if I can, because that came out of our previous inquiry. I am really interested in what the interface is between The Carbon Trust and that part of design and innovation and research and the use of the extra money that there could be to stimulate that innovation, so that the addition of names and companies and processes which are more energy efficient on the list. I am not quite sure where the stimulus for that is coming from, bearing in mind that we have got other evidence to the Committee which basically says that what we really need is a step-change in terms of the technology if we are really going to get the huge shift in terms of reduction of energy consumption or carbon reduction that we are looking for. So what is that interface between companies and their processes that get on to the list and the research and development and innovation that would stimulate it?

  Mr Wilde: Absolutely. At The Carbon Trust we have a two-fold mission: one is to help companies to reduce their emissions today and the other is to develop new low carbon technologies. The ETL, in essence, is trying to highlight the best performing pieces of kit that are available today in the market-place. We were talking about lighting before and LED lighting is a nice example of that. It is the next generation of lighting and it is not available mass market at the moment. We are just reviewing that to see whether we should put that on the ETL list. In our innovations business we focus on developing new low-carbon technology, so we have an applied research programme where I think we have got over 120 low carbon technology projects going through R&D programmes, and some of these for example are in LED lighting, so we help to try and stimulate those early stage technologies helping them develop the technology and its cost and its performance in use. We also have an incubator arm where we help early-stage companies get investment ready and develop their business case. We also help to demonstrate new technologies through our technology acceleration arm.

  Q162  Martin Horwood: Are you saying that no LED lighting is on the ETL list at the moment?

  Mr Wilde: Not at the moment. We are currently reviewing LED lighting.

  Q163  Martin Horwood: There is quite a lot out in the market. You can buy it in B&Q. Plenty of companies are substituting LED lights for halogen lights now.

  Mr Wilde: Yes, and that is why we are reviewing it. It is now time to review it because it is becoming widely available for the types of applications we are looking at in the non-domestic sector, in manufacturing.

  Q164  Joan Walley: Just going back to what you were talking about in terms of research, just looking at it from a constituency point of view, representing an area where there has always been lots of manufacturing and innovation and research, I am interested in what talks you are having with the regional development agencies because often that support for fledgling businesses or fledgling technologies is at the level whereby firms are either aware or not aware of how they can maybe get matching funding from perhaps the regional development agency and maybe yourselves. I do not quite see that interface taking place.

  Mr Wilde: Absolutely. We have got nine regional managers so we have got nine people across the different regions in the UK who are actually based in the RDA offices who act as The Carbon Trust's interface there, both in terms of the innovations business, where they are looking for those kinds of opportunities in working with the RDAs on their innovation work, but also, importantly, in the work the RDAs do in terms of Business Links and working with companies to help them improve and give them business advice where we work with the RDAs and try and find opportunities.

  Joan Walley: It is just that from where I sit there seems to be a huge gap between what should be happening and how it is actually happening on the ground with companies and businesses really benefitting. Maybe that is an opportunity for a future recommendation or discussion.

  Q165  Mrs Riordan: You have concluded that changing the levy to target carbon rather than energy use would not have a huge effect on carbon emissions because the opportunities to switch to other energy supplies are very limited. What if the levy rate on electricity was varied according to the carbon profile of different suppliers, or tariffs?

  Professor Grubb: That is an interesting question. I will start by clarifying that in the studies we did we looked at the average carbon content of electricity and we looked at the effect of changing the weighting between electricity, gas and coal. I confess that I was really quite surprised at the initial results which showed hardly any impact, because you tend to assume that if you switch an energy tax to a carbon tax you are going to save carbon but, as you say, because of substitution between fuels in the end uses, the opportunities for that were actually very limited so, in a sense, the whole debate about whether the CCL should really be a carbon tax is probably yes in principle, but actually in practice it makes very little difference. Your suggestion of weighting CCL on the basis of carbon content of electricity, according to the supplier concerned, I can imagine that would be pretty complicated to implement, but I would think that the impact could be non-trivial, and I honestly do not know until we have looked at it. You would need to be pretty sure about how you were calculating the carbon intensity of the different suppliers and look at how the cost differential of the CCL stacked up against the cost differential between the suppliers. I am sorry I cannot give you a firmer answer.

  Q166  Chairman: As the House is going to prorogue this morning our whole session has to be curtailed and we are going to have to bring this one to an end as well. Thank you very much for coming in. As usual we are very grateful to you.

  Professor Grubb: Thank you very much.

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