Examination of Witnesses (Questions 100-119)
DEPARTMENT FOR
ENVIRONMENT, FOOD
AND RURAL
AFFFAIRS & THE
CARBON TRUST
5 DECEMBER 2007
Q100 Mr Davidson: This is a shotgun
approach. You work on the basis that you fire your propaganda
everywhere and then everybody will hear about it and hopefully
some of those from whom you get the greatest hits will come and
see you. That is gross inefficiency, is it not?
Mr Delay: I do not believe it
is. If you look at the businesses with energy bills of over £500,000,
the ones with, broadly speaking, half the carbon footprint of
business in the UK, that is 2,300 businesses in the UK, we work
with a third of those businesses.
Q101 Mr Davidson: Why do you not
work with the other two-thirds then?
Mr Delay: I think you will find
a significant proportion of the remaining two-thirds are not addressing
climate change as an issue and we are very keen to work with everybody
who is willing to work with us.
Q102 Mr Davidson: Why are you not
chasing these 2,300? Because you are not allowed to.
Mr Delay: We can make our offer
available to them. I think it is fair to say if you—
Q103 You cannot go and knock on their
door. They have to knock on your door. This is absurd, is it not.
We would not accept this from anybody else. You are telling us
that because you are tied by EU state aid rules you have to behave
in this absurd fashion. Does that sum it up fairly reasonably?
Mr Delay: It is a constraint on
the way in which we operate.
Mrs Ghosh: There will be all sorts
of other incentives on the other two-thirds. The idea that the
other two-thirds have no incentives I think is false.
Q104 Mr Davidson: I understand that.
The £20,000 maximum that you can spend, as I understand it,
in the business, is that not also absurd? Your maximum for Fred's
Bakery is £20,000 which is the same as presumably the maximum
you can spend on BP and all its subsidiaries and everything else.
Yes? Sorry, the stenographer will not record nods unfortunately,
so that is a yes then. Is that one of these rules that you have
introduced?
Mrs Ghosh: It is the de minimis
block exemption, again as Appendix 4 shows.
Q105 Mr Davidson: That is an EU state
aid rule
Mrs Ghosh: It is another state
aid rule. "The interest free loans scheme and the Carbon
Trust's Incubator Services operate under the state aid de minimis
block exemption which is application to `aid of minor importance'".
Q106 Mr Davidson: It is the EU rules
that force you to treat BP and Fred's Bakery exactly the same
in terms of the maximum amount you can spend on it.
Mr Delay: Right.
Q107 Mr Davidson: Yes, thank you.
Okay.
Mr Delay: No, I am sorry —
that is not right.
Q108 Mr Davidson: The next point,
we were mentioning Manchester United, if Manchester United played
fewer evening games of course they would save. This tension between,
on the one hand, people doing what they like, so to speak, maybe
trying to make it more efficient, and trying to get them to change
their practices, to what extent do you have involvement in explaining
to people that fewer evening games or its equivalent would save
electricity as well? What is the response that you usually get?
Mr Delay: Maybe I could draw attention
to a case I just mentioned in the Report, our work with John Lewis.
We were intrinsically involved in the refurbishment of the Oxford
Street store for John Lewis. Originally the plans included losing
a significant amount of retail floor space in Oxford Street to
provide for significant power requirements for new air conditioning
systems. By working harder on the energy efficiency attributes
of the building as a whole, we found there was not a need for
the new air conditioning systems, for the new power systems and,
therefore, John Lewis were able not to sacrifice retail floor
area in Oxford Street in pursuit of their refurbishment.
Q109 Mr Davidson: That completely
evades the point I was trying to clarify with you. You have just
shown them a better way of doing what they wanted to do anyway.
You did not manage to persuade them to change their behaviour
in a way which saves energy consumption or carbon usage.
Mr Delay: No, no, we were. They
were quite prepared to sacrifice floor space and retail floor
area in pursuit of a greater level of comfort across the building.
They now appreciate, and indeed they have implemented a system
whereby they get the level of comfort they want without sacrificing
retail floor area.
Q110 Mr Davidson: Could I just be
clear, paragraph 2.7 gives us some coverage of your recommendations
and the extent to which they are accepted. A census said, "
... on average, 11 recommendations on how to improve energy efficiency,
but respondents noted that they had only implemented an average
of 4.8 recommendations". Similarly, there was a potential
reduction of between 4.6 and 5.4 million tonnes of carbon dioxide
and only 1.2 and 2 million tonnes was achieved. I appreciate that
some of these things will take long periods of time but when we
look at case example 4, where you are recommending to a hospital
that they could save heat and electricity and so on by measures
which would require closing part of the hospital down, I wonder
to what extent some of your recommendations are unrealistic. Presumably
the hospital could save almost all its electricity consumption
by shutting down altogether, now that is presumably like Manchester
United not having any new games. Anybody can produce recommendations
of that sort but how many of them are practically realisable given
that so many of them, over half of them, appear not to be implemented
by recipients?
Mr Delay: Commercial buildings
are subject to quite regular refurbishment on a refurbishment
cycle. Hospitals would be no different in that regard. I would
take that recommendation as a recommendation that would be taken
up by the hospital at the time of its next major refurbishment
when the hospital would be shut down for that period. It is an
example of why it is so important to hold on to that relationship
with that customer for a long period of time so that recommendation
which is impractical in the short term becomes viable at the point
of refurbishment.
Q111 Mr Davidson: I understand some
of that but, again in paragraph 2.7, there is a mention of people
who have dealt with you. Roughly 60% said, " ... that their
energy use at site level had fallen since dealing with the Carbon
Trust ... ", they did not say how much; 20% did not know
and presumably the other 20% had none. It just seems to me that
the figures that have been put here do not tell us sufficiently
adequately how many of the recommendations you make are implemented
in the longer period in order to be able to measure exactly how
successful or otherwise you are. I think you can see from our
perspective some difficulty in working out to what extent it is
value for money. Anybody can make recommendations, I have made
lots myself to the Government, unfortunately they are not adopted
and the same can be true of yourselves.
Mr Delay: The first point I would
like to make is that the value for money of the recommendations
are the recommendations implemented not the recommendations identified.
We have stripped out all the recommendations we have identified
as opportunities and we have only counted the recommendations
implemented as part of that value for money calculation. I think
the very positive value for money calculation which suggests we
can deliver a tonne of carbon saved at a policy cost of between
£4 and £7 with a net benefit to the business of £33
a tonne stands on the basis of the implemented carbon savings.
The challenge, absolutely, is to find ways of increasing the uptake
of the identified opportunities and we need to be continually
looking at ways of tackling the barriers of lack of senior management
commitment, lack of resource within companies, lack of financial
incentives in some cases to be able to take measures forward.
The 21% quoted is an interesting figure. The reality is that many
businesses, small, medium and large, find it very hard to tell
you exactly what their energy consumption is as a baseline. We
can work on recommendations and measures that will reduce the
energy consumption and, indeed, the emissions from that business
but an alarmingly large number of businesses simply do not know
from the sub-metering they have what exactly is their current
energy consumption. Many smaller businesses work on the basis
of estimated figures from the suppliers.
Q112 Mr Davidson: They must be paying
for it. That is an indication of how much energy they are consuming
because they get bills, at least I do, and therefore you work
on whether or not your bill has gone down. It is fairly related,
I would have thought, to your reduction in consumption.
Mrs Ghosh: Indeed, but they do
not necessarily know in refined enough ways where their major
energy consumption is. I think this again links across to another—
Q113 Mr Davidson: Surely they have
got bills though.
Mrs Ghosh: They get bills but
it does not necessarily show the management impact of the cost.
That is why things like the smart metering, advanced metering
initiative, which the Carbon Trust was absolutely key to developing
as part of its innovations programme, which the Government is
now supporting through the Energy White Paper is crucial because
it will get that kind of advanced metering, much better information
into SMEs so they can make those sorts of judgments that Tom is
describing. That is where the innovation and the advice go alongside.
Mr Delay: We find that many smaller
businesses work on estimated figures and estimated bills. That
is simply not the basis for measuring a starting point for an
emissions reduction programme.
Q114 Mr Davidson: Two final points
I want to seek your views on. The first is this: I am concerned
about the inability you have to focus on those companies that
give you the biggest bang, as it were, for the least under these
absurd state aid rules. What have you done to raise this as a
Department?
Mrs Ghosh: Clearly the state aid
rules are there -
Q115 Mr Davidson: No, I do not want
that, I am asking you what you have done about this particular
difficulty.
Mrs Ghosh: Can I go back to my
opening remarks?
Q116 Mr Davidson: No, can you just
answer what you have done. The difficulty we have is people come
here and talk about something they want to talk about and not
answer the questions that we put.
Mrs Ghosh: Fine.
Q117 Mr Davidson: What have you done?
Mrs Ghosh: I will go back to the
Department to discover if we have made any representations about
this.[3]
The reason I am linking it back to my earlier comments is—
Q118 Mr Davidson: I do not want to hear
that.
Mrs Ghosh: It is not necessarily
a problem, given the level of take-up, the extent of focus which
Tom has already described in terms of hitting the highest energy
users, and therefore targeting as they do on those areas, and
therefore it is not necessarily the case that we would have perceived
this as a problem. I will find out the information and let you
have it.
Q119 Mr Davidson: You just sat there
and told me that if you were allowed to you would focus more on
businesses where you could make bigger gains more quickly.
Mrs Ghosh: As Tom has described,
in practice they are able to do that by focusing on the largest
energy consumers.
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