Examination of Witnesses (Questions 160
- 166)
TUESDAY 30 OCTOBER 2007
PROFESSOR MICHAEL
GRUBB AND
MR JAMES
WILDE
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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