Examination of Witnesses (Questions 120-130)
DR NICK
EYRE AND
MR BRIAN
SAMUEL
17 JULY 2007
Q120 Martin Horwood: Can I ask you
about some of the people who may be suffering perhaps from fuel
poverty at the moment, people in the more marginal situations?
On the face of it, they should gain from a scheme like this. They
are more likely to have a low carbon footprint at the moment and
therefore be in credit in terms of their per capita allowance.
Say, they cash that in, as would be the obvious temptation, at
the beginning of the year and then find themselves in exactly
the same kind of budgeting problems that they had with their financial
situation. Do you think that is going to be a problem? Do you
think there is a marginal population that is going to find this
rather an onerous system and psychologically perhaps a financially
difficult one?
Dr Eyre: The system will only
work if it is made easy to work and if there are easy ways to
trade, easy ways to buy. We would expect that most of the energy
suppliers in both the gas and electricity markets and the petrol/diesel
market would want to offer an option whereby they sell you the
credit as they sold you the fuel essentially.
Q121 Martin Horwood: If you make
it easy to trade, surely you will make it easy for someone who
is hard up and struggling to make ends meet to cash it in at the
beginning, are you not?
Dr Eyre: Yes, you are.
Q122 Martin Horwood: Are they not
then going to get into the same problems they get into with credit
and debit on the financial side?
Dr Eyre: That is possible. Of
course, it depends fundamentally on what price is generated in
this market. That has been the subject of relatively little research
and discussion, which is quite surprising because if the price
is, say, £10 per tonne of carbon, this is all trivial to
anybody's budgeting problem. If the price is £1000, then
it is beginning to dwarf the price of energy. That research needs
to be done. People are making hugely different assumptions. The
piece of work that CSE did for Defra mentioned the price of I
think £10 per tonne of carbon but did not have any evidence
on which to base that.
Q123 Martin Horwood: Without making
assumptions about a particular price, there are going to be some
people who are going to suffer under this scheme who are going
to be relatively poor. The classic one would be a pensioner with
a three-bar fire who is using quite a lot of energy and does not
have an easy way of escaping from that carbon footprint. Would
you like a carbon tax credit system to be introduced to compensate
for the unfairnesses of the system?
Mr Samuel: There are always going
to be winners and losers. We need to identify who those winners
and losers are going to be. I suspect the people living in rural
areas, in sole occupancy, in stone buildings will probably be
losers. You then need to put the appropriate polices in place
to provide the support to those people who most need it. That
will be as with any other social policy.
Q124 Martin Horwood: Is there not
a contradiction there? Surely the whole basis of the system is
to try to take those people who have a high carbon footprint and
reduce that. Now you are saying that if you have a high carbon
footprint—
Dr Eyre: We agree with your starting
assumption, which is that broadly speaking this will be progressive.
Broadly speaking, people on lower incomes will benefit and people
on higher incomes will not benefit, at least in the direct financial
sense. You are absolutely right that society is more diverse than
that and a single pensioner who has to drive five miles to shop
and lives off the gas grid in a very inefficient home is probably
going to be a loser. Then it is an issue for social policy as
to how we deal with that. It is not really an area of our expertise
but we recognise that research needs to be done to identify who
these groups are and what social measures need to be put in place
to deal with that.
Q125 Martin Horwood: Can I ask about
one final group which might suffer in this scheme, and I speak
as a parent here. I have two kids; they seem to use quite a lot
of energy in various different ways. Should they have a carbon
allowance—and that would help me enormously as a parent—or
do you think that would then sharply diminish the amount of individual
carbon allowance available to every person if all children had
a carbon allowance as well. How do you think we should approach
that?
Dr Eyre: That is another equity
issues which you can resolve in a number of different ways, depending
whether you want to benefit people with children or benefit people
without children, roughly speaking. We do not have the research
to tell you what the marginal energy and carbon impact of having
children is. Clearly, there is a positive one. Households with
children use more energy and carbon than similar households without
children, but we do not know by how much. I guess, if you wanted
to be fair, that is the sort of information you would have and
then give children perhaps a lower carbon allowance, but essentially
these are just choices that have to be made which have distributional
effects but very little effect on whether the scheme would be
effective or not.
Q126 Chairman: Can I ask you about
pilot schemes in that case? We have had some mixed views about
the value of pilots. One of the witnesses we had last week said
that if there was a pilot, it might fail for reasons unconnected
with the potential effectiveness or acceptability of the scheme.
What is your instinct? Your own memo is a bit cautious about it.
What do you feel about that?
Mr Samuel: It depends what you
want a pilot scheme to test. If you want a pilot scheme to test
the hardware, then that is completely different from having a
pilot scheme to test how people will be able to respond. The problem
with having a pilot is that in order to test reactions, then you
have to have a mandatory pilot. A voluntary pilot will not attract
those people who are least likely to take action, and so it would
be difficult to come up with any robust conclusions. If you have
a mandatory pilot, then it would be difficult to include transport
within that because of the multi-point purchase opportunities,
the number of petrol stations, et cetera, that you would have.
Therefore, a pilot to test personal responsibility and how people
would respond to their home energy usage only might provide some
useful information. However, you then have the issue: what is
the area that is going to have this mandatory pilot scheme imposed
upon it? That is probably the most difficult question.
Q127 Chairman: Even if it was a virtual
pilot and not actually financial?
Mr Samuel: If it is a virtual
pilot, then you are not necessarily going to get the best results
out of that. In order to get the most accurate, robust results,
you need to have some form of mandatory scheme with penalties
and compliance associated with that.
Q128 Chairman: Is that true in every
respect? I can see in terms of greater changes of behaviour, of
course that is true. If you want to test the acceptability and
the workability of the actual technology, a virtual pilot would
do that all right, would it not?
Mr Samuel: You can certainly test
the technology without having a mandatory scheme. How you test
public reaction without a mandatory scheme, I think would be difficult.
Q129 Chairman: This is a pretty radical
idea and obviously it will generate lots of controversy. How do
you think the Government should proceed now if it wants to try
to gain public support for it?
Mr Samuel: Really, the Government
needs, and has already through Defra, to initiate a detailed research
programme. You need to test the wider strategic fit. You need:
to test the equity and distributional issues and how people, as
we have just mentioned, will respond; the degree of public understanding
now; the degree of public understanding that will be needed to
implement the scheme; to look at the technical and cost issues;
and of course the actual detail of the scheme, the allocation,
the identity of those people who will be participating in the
scheme, et cetera. The only way to progress is through a comprehensive
research programme. Of course (a) that will take time and (b)
will take resources.
Dr Eyre: Politics matters as well.
The idea is not all that new. It has been on the agenda since
David Fleming's work many years ago. It was put on the political
agenda by the last Secretary of State for the Environment and
I think he is to be congratulated for doing that. I hope his successor
will keep it on and I hope that leading politicians in other parties
support that as well. That is the sort of sense that, yes, this
is the direction we are moving; we may not know when we get there
or in detail how we will get there yet, but unless leading influential
people in and outside government say this is the sort of direction
in which we need to go, it will not happen.
Q130 Chairman: Part of the purpose
of this inquiry is for the committee to help keep it on the agenda
and we think it is a positive thing to do. This is the final question.
It is a slightly controversial proposal. Do you think it has the
remotest chance of being implemented, given that at present we
seem to be nervous of saying we cannot fly to Barcelona for £3?
This seems quite a big step further from one we are not even prepared
to take.
Dr Eyre: I will answer the question
the other way round. We should be telling people they are not
going to fly to Barcelona for £3 now and, unless we are prepared
to do that, I agree that we will not get into a position where
this will ever be workable.
Chairman: Thank you very much indeed.
That has been very helpful.
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