Examination of Witnesses (Questions 55-59)
MR ANDREW
SIMMS
3 FEBRUARY 2009
Q55 Chairman: Thank you for coming in.
We are very interested obviously in the idea of the Green New
Deal. The report that you produced refers to the "triple
crunch", the financial crisis, climate change and peak oil.
How interlinked are all these problems and, in particular, how
interlinked might the solutions be?
Mr Simms: I would say all are
firmly interwoven. The reason that we did it was that we found
there were a number of us, and this is one of the reasons why
I do feel I have to apologise for the fact that it is only me
today because the point of us coming together and producing this
report as a group was that we brought specialisms ranging from
financial expertise to the understanding of energy issues to the
understanding of climate change issues, and we were all aware
that, separately, each of the issues that we were dealing with
was capable of triggering a fairly substantial threat to the healthy
functioning of the system. Together, the three of them were the
sort of perfect economic and environmental storm, so we saw that
both the trajectory that the global economy was on in terms of
its energy use, the frailty of the system created by the debt
bubble or the credit bubble, depending upon your preferred way
of describing it, and the vulnerability of the system in terms
of the energy shock that it was facing and the scale of the change
implied in how we do business by climate change was so substantial
that, when they came together, they posed this enormous threat,
and we thought that you could not tackle any one of them in isolation.
Thinking about the need to find the resources to tackle the energy
transition problem, we were mindful of the fact that, if you go
not that far back in history, when we made the huge energy transition
from coal to oil, for example, it took about 50 years to achieve
it. We saw, in the face of the deflationary circumstances following
the credit crisis, that we needed to find a way to stabilise the
economy, hopefully to re-inflate the economy, but one which also
dealt with the fact that we have, if we are lucky, perhaps a window
short of eight or so years to make the change in how we use energy
in the face of the climate change problem and in the face of the
global peak, plateau and ultimate long-term decline of oil production
in the global economy, even if we listen to some of the most conservative
voices from the International Energy Agency, for example, who
are predicting a capacity crunch as soon as perhaps 2012-13 and
have finally admitted in public that the year of peak oil may
be as short a time away as 2020, and others will tell you it is
much shorter than that. However, we had to achieve a number of
complicated things in a very short period of time and there was
both an enormous threat and an enormous opportunity in that, if
we respond to the problem of the credit crisis by using a range
of financial resources, both public, private and personal, and
redirect those to achieving the ends that we need to achieve anyway
in terms of tackling our energy security and in terms of tackling
the massive unprecedented change in the economy and in our behaviour
and lifestyles implied by climate change, not only was this perhaps
the biggest threat that we had ever collectively seen, but it
was also perhaps the biggest opportunity to achieve, in a short
period of time, what we needed to achieve.
Q56 Chairman: Has the Treasury been
showing any interest in your sort of analysis?
Mr Simms: We had a very nice letter
from the Prime Minister, thanking us for our efforts and then
outlining everything that the Government was already doing on
the environment, and we had a nice letter from Hilary Benn. I
have to say that we have had relative silence from the Treasury,
perhaps in keeping with that Department's track record of enthusiastic
defence of a habitable planet. We also had a very nice letter
from the Chairman of the Intergovernmental Panel on Climate Change
and a tidal wave of interest from around the world, but, as yet,
relative silence from the Treasury.
Q57 Chairman: Given that you started
all of this before the worst of the credit crunch was apparent,
what is your feeling now about how this recession is going to
develop?
Mr Simms: I have to say, I am
afraid that we have not seen the worst of it yet. We first started
thinking about this when an academic publisher, Macmillan, back
in 2003 published a book called The Real World Economic Outlook
in which were the sort of outline and the contours of the current
credit crisis, and I know it is kind of a bit of a popular sport
these days, saying, "We told you so", but we did actually
fairly accurately describe how things were going to go. I think
that, because of the continuing unknown unknowns, there is still
an enormous amount of potential instability in the system. I think
that perhaps the most important thing to say about it is that,
in the shape of our responses, we think that the biggest mistake
would simply be to try to reboot the economy to where it was before
the crash happened. We think that, and this is one of the reasons
why we used the language in the framework of the Green New Deal,
if we want to achieve the softest landing possible for the economy
and we wish to put some sort of zip back into it, then the way
to do that will be to try and reboot it to a different way of
working. I think the last thing we want to do is to look for signs
of recovery through the return of binge consumerism on the high
street. I think, if we want to look for signs of recovery, that
we want to look for that in the way that we might, for example,
begin the wholesale refurbishment of our building stock along
the lines of energy efficiency and along the lines of re-imagining
the structure and the nature of our energy system, rethinking
grids, rethinking sources of energy. I think we might look for
it through the training of a whole generation of people who are
equipped to implement energy efficiency in homes, implement new
renewable energy systems, a wide range of skill bases from low-skilled,
medium-skilled, high-skilled, retraining a workforce and that
we look to do it in such a way that maximises the social, environmental
and economic value in our own communities. I think there is so
much low-hanging fruit in that area that we have barely even begun
to scratch the surface, and we are in the process of looking at
it in more detail, but, even at a cursory glance, looking at what
we had in the PBR, we were incredibly disappointed at the missed
opportunity. It felt a little bit as if, if I might indulge in
a sporting metaphor, the Chancellor was one of those footballers
who finds himself in the unusual position of being on the goal
line with the ball at his feet and somehow manages to kick it
over the bar because there seemed to be so many opportunities
and, when you peel away the layers of what has been announced,
you are left with, and I would not want to be too definite about
these figures yet because we are going to look at them in more
detail, but what does not look like a very substantial sum of
new and additional spending and the degree to which even that
has been brought forward and offset against cuts in future spending
makes it look even less impressive. If we end up with a sum of
maybe possibly £100 million of new spending and put that
into context, well, at a quick look at the workings of one of
the other committees of this House, the Committee of Public Accounts,
that is about the amount that was lost to the taxpayer through
the handling of the privatisation of QinetiQ or, alternatively,
a slightly more unusual one perhaps, the cost of obesity to the
NHS in Reading on an annual basis, so I feel that we have barely
scratched the surface.
Chairman: Well, if you do any more work
on the figures, let us know if it is before we conclude our Report.
We are probably going to have another look at this whole issue
in broader terms later on in the summer actually, so I guess we
may want to explore this in a lot more detail in due course, but
this is in the context of our annual Pre-Budget Report.
Q58 Mark Lazarowicz: You advocate
in your report a proven investment in new energy supply systems
of about £50 billion per year. What were your main priorities
for that spending and what effects would it have on UK employment
and indeed on carbon emissions?
Mr Simms: I think, without doubt,
two first priorities are, on the one hand, decarbonising the electricity
supply and, on the other hand, improving the energy efficiency
of building stock, both domestic and commercial. If one looks
at the range, and there have been quite a range of assessments
of what it would take to get Britain on a path towards a minimum
of 80% cut by 2050, if we look at the work either of the SDC or
the Centre for Alternative Technology or IPPR and the assessment
that spending upwards of £50 billion a year would be able
to set us on that path, without the need for recourse to some
of the more controversial suggestions for diversifying the electricity
supply, such as nuclear, I think the low-hanging fruit of improving
the energy efficiency of the building stock is one of the ones
which would probably be most employment-intensive in generating
new jobs, and I am also kind of heartened by the fact that the
sort of renewable energy technologies that we are looking to are
also the most employment-rich and that, pound for pound, investment
in renewable technologies does seem to generate significantly
more jobs per buck than the old centralised forms of generation.
Q59 Mark Lazarowicz: Are you able
to give any kind of broad figures of the kinds of employment creation
that could arise from that kind of investment programme? Also,
how do you address the issue of trying to make an impact on the
economy quickly because I take all you have just said about the
need not to return to binge consumer spending as a long-term solution,
but there is a problem of course in that there is a perceived
need to try and re-inflate the economy quickly before the situation
spirals out of control, so how quickly would the employment impacts
be felt because I think it is actually quite important in terms
of recommendations we might make?
Mr Simms: On the first point on
the numbers of jobs, we are also in the process of doing a more
specific piece of work on this which we hope to have completed
in the next two to three months and, as soon as we have those
figures, we will be delighted to send them across. There are some
other figures which I can forward to the Committee after this
session which give ballpark figures for the kinds of jobs per
buck you get in different technologies. Now, obviously where renewables
are concerned, they are incredibly site-specific and they are
incredibly scale-specific as well, so it will be different for
each one, but there are some figures out there and I am very happy
to forward those to you. I think that, if you are looking for
a quick win in terms of benefiting or softening the descent in
the economy at the moment, if you made the resources available,
you could put people to work tomorrow working on the kind of rehabilitation
of the building stock that we are talking about. I think the effects
could be in employment terms and in training terms. Now, where
you are talking about implementing some of the different technologies
and you are talking about developing different types of grids,
that is the sort of short to medium term, but, in terms of the
short term, the easy win and one of the most cost-effective ways
of tackling the energy and the climate problems as well would
be on the building stock, and there is absolutely no reason that
we could not start something like that tomorrow.
|
