CONCLUSIONS
AND
RECOMMENDATIONS
THE GREEN
ECONOMY
1. We welcome the Government's green stimulus package put forward in the April 2009 budget and subsequent green initiatives announced in the December 2009 pre-budget report. Building on this, we recommend that the Government progressively increase the proportion of green initiatives in future fiscal packages to a level of 20%, as recommended by the Grantham Institute on Climate Change and the Environment and the Centre for Climate Change Economics and Policy. The Government should also enhance the proportion of public money spent on greening the economy.
(Paragraph 15)
CLEAN FOSSIL
FUELS
2. As we move towards low carbon energy generation, it is vitally important that we continue to maximise economic production of domestic oil and gas to bridge the gap in supply. However within the context of our increasing reliance on imported oil and gas and the continuing risk of disruption to their supply, it is essential that the Government accelerate the deployment of alternative low carbon energy generation technologies.
(Paragraph 26)
3. We are disappointed by the lack of progress on CCS demonstration in comparison to international competitors. Furthermore, whilst we welcome the establishment of the Office of Carbon Capture and Storage, we are disappointed that the Office has yet to undertake any substantial work. It must be provided with the appropriate level of support to drive demonstration projects through urgently. We recommend that the model set by the Office for Nuclear Development (OND) is followed, and that one of its first priorities be the development of a roadmap for carbon capture and storage in the UK, similar to the OND's Integrated Programme Plan and Consultation Maps. This will provide stakeholders with clearly defined timescales and milestones for the CCS demonstration projects.
(Paragraph 32)
4. Whilst future coal supply to power stations in the UK will depend on the extent to which new abated coal fired plant replaces retiring power stations, all other things being equal we are concerned by the prospect of an increased dependence on imported coal due to the extra fuel required for future coal-fired power stations fitted with CCS technology, with the attendant security of supply risk that is entailed. The Government should reconsider whether it could do more to support the UK's own coal industry. Energy security issues should be a prime consideration when the Government is developing policies in support of low carbon technologies.
(Paragraph 34)
5. The UK could benefit from selling space for carbon storage under the North Sea, potentially to the value of £5 billion annually. The Government should consider investing in demonstration units for test injections and infrastructure development.
(Paragraph 38)
6. Transportation and storage of CO2 is generally recognised as being safe. However, if the Government decides to support new-build CCS fitted or retrofitted power plants it is important to engage with the public, at an early stage, on any potential risks. It should develop a public communications strategy which would need to be central to its overall objectives on CCS. The Government should also take a more strategic overview of CO2 transport infrastructure, including assessing the need for oversized pipelines.
(Paragraph 39)
NUCLEAR ENERGY
7. The Government must do more to ensure that proper consultation and good public engagement is carried out on all aspects of nuclear (including siting of new build, decommissioning and waste management) if the public are to accept it as a viable low carbon energy source. We commented in more detail in our recent Report, The proposals for national policy statements on energy; the evidence we received during that inquiry made it abundantly clear that many consider consultation on the draft national policy statements to have been inadequate.
(Paragraph 43)
8. We share the concerns put to us that investment in new nuclear could crowd out investment in renewables and believe that the Government must consider this carefully when developing policies for support of low carbon energy. Whilst it is right to support a diverse energy mix including all low carbon energy generation technologies, we do not think that the Government should directly fund the development of new nuclear technologies—this should be left to the energy generating companies.
(Paragraph 45)
9. There is much debate on the lifecycle emissions of nuclear power compared to other low carbon technologies. The evidence we have received relates predominantly to the experiences of other countries. We believe that it would be beneficial for the Government to commission its own independent, systematic research on the lifecycle analyses of low carbon energy generation technologies in the UK. Data from such research would add value to the debate on the most appropriate UK energy mix.
(Paragraph 47)
RENEWABLE ENERGY:
WIND
10. New renewable energy generation plants are described in terms of their capacity in gigawatts. It would be more meaningful if, alongside this—in reports, strategies, roadmaps, speeches—the Government would systematically define the estimated capacity value of new power plants expressed both as a percentage of installed capacity and in estimated terawatt hours of generation per annum. This would take into account the load factor of different energy generation technologies, and would enable easier analysis of the Government's progress towards meeting its renewable energy targets.
(Paragraph 52)
11. The Government has stimulated the market for wind power through the Renewables Obligation; however, onshore planning is still a huge problem. We commented on the planning process in greater detail in our recent Report, The proposals for national policy statements on energy. There is a need for better dialogue with the general public to promote onshore wind and emphasise the importance of utilising the UK's natural wind resources, thereby preventing reliance on unsustainable fossil fuels. Local government should find ways of encouraging community ownership schemes such as the Westmill Wind Farm Co-op. We believe that the Government should introduce legislation stipulating that a percentage of new wind farms should be offered for sale to local residents, as in Denmark, as a way of increasing public acceptance.
(Paragraph 56)
12. In the future the supply chain for offshore wind could be constrained by a lack of offshore cables, transformers and installation vessels. This poses a risk to the UK's ability to meet its renewables targets. There is huge potential for workers in the oil and gas sector to help overcome this by utilising their skills in emerging renewable industries such as offshore wind. The Government should bring key stakeholders together in these industries to develop a skills transfer strategy to identify specific opportunities and barriers that may be faced. This should complement other skills strategies that are being developed to encourage new entrants into renewable energy industries.
(Paragraph 60)
13. We welcome the announcement in the pre-budget report that all offshore wind projects accredited between April 2010 and March 2014 will qualify for two Renewables Obligation Certificates. However, industry still calls for a longer term commitment from the Government to provide it with the certainty it needs to invest in offshore wind energy and other renewables. The Government needs to do more to provide certainty about the minimum level of support that industry can expect.
(Paragraph 63)
RENEWABLE ENERGY:
WAVE AND
TIDAL
14. We have taken evidence about the Severn Feasibility Study from the Minister of State for Energy and Climate Change, Lord Hunt of Kings Heath OBE. We look forward to receiving details of the findings of the feasibility study later this year. We recognise the potential offered by such a scheme whilst noting the significant economic and environmental barriers involved. We hope this is an area our successor committee will return to in the new Parliament.
(Paragraph 66)
15. Given the substantial wave and tidal energy resources in UK waters, it is important that the UK remains a leader in developing and deploying marine technologies. It is extremely disappointing that five years have been lost whilst the Government and developers in the marine sector came to the slow realisation that support was needed at an earlier stage of development. However, we welcome the recently established Marine Renewables Proving Fund and are pleased that funds are being awarded for the development of commercial scale devices. The Government must undertake more careful assessment of the stage of development of emerging technologies in order to avoid wasting time in the future.
(Paragraph 68)
16. We welcome the establishment of the Office for Renewable Energy Deployment. However, due to the varying stages of development of different renewable energy technologies (for example, wind verses wave), we are concerned that the marine energy sector and other emerging renewable sectors might be neglected in favour of the well established wind sector. Given the prioritisation of marine technologies, the Government should consider whether there are any benefits in establishing a separate Office for Marine Energy Deployment to tailor specifically support towards this emerging sector.
(Paragraph 70)
RENEWABLE ENERGY:
SOLAR
17. We understand that the costs of some solar technologies are still very high. However, the UK has an excellent history of solar technology research and development and if we are to develop cheaper technologies, it is important to send out a positive signal to developers and industry. We are pleased to hear that the Chief Scientific Advisor for the Department of Energy and Climate Change has been scrutinising the lead scenario for renewables, and we hope that work will identify those solar technologies which offer the most cost effective contribution to moving to a low carbon economy in the longer term.
(Paragraph 75)
18. The introduction of a feed-in tariff will provide a much-needed boost to the domestic renewable electricity industry. The Government has taken on board industry feedback and increased the tariff rate for photovoltaic technologies. As details for the Renewable Heat Incentive scheme are developed, we hope that a similarly appropriate level of support will be introduced for solar thermal technologies through better dialogue with industry.
(Paragraph 77)
RENEWABLE ENERGY:
BIOMASS
19. Biomass that is used to produce heat or electricity must be from a sustainable source. The Government must ensure that policies are in place to prevent biomass combustion which results in a relative deterioration of air quality, compared to the combustion of fossil fuels.
(Paragraph 81)
20. We have heard that the process for procuring municipal waste for use in anaerobic digestion plants can take up to five years through negotiations with local authorities. The Government should review procurement regulations and definitions of waste to ensure that they do not create unnecessary barriers to renewable energy generation. If necessary, the Government should be prepared to raise this issue with European counterparts to ensure EU regulations are part of the solution and not the problem.
(Paragraph 83)
21. Renewable gas, such as biomethane, could supply a significant proportion of gas in the UK with little disruptive infrastructure development. We recommend that the Government re-assess the contribution that biogas could make to its 2020 renewable energy targets and ensure that the development of biogas injection into the gas grid is an integral part of any future roadmap.
(Paragraph 85)
RENEWABLE ENERGY:
GEOTHERMAL
22. We are concerned by the evidence we have heard from Tesco that ground source heat pumps are being installed and left not operating. The Government should work with the Environment Agency to ensure that the process for obtaining abstraction licenses and the guidelines for the operating criteria of ground source heat pumps are clarified.
(Paragraph 88)
RENEWABLE ENERGY:
HYDROELECTRIC
23. The Government must ensure that the Environment Agency continues to engage in active dialogue with hydroelectric developers in order to overcome unnecessary administrative barriers to the deployment of hydroelectric power.
(Paragraph 92)
ENERGY STORAGE
24. Energy storage encompasses many of the enabling technologies that will play an extremely important role in underpinning the move towards a green economy. The Government should consider a long-term programme of support for energy storage research, development, demonstration and deployment.
(Paragraph 96)
TRANSMISSION AND
SMART COMMUNICATIONS
25. We are pleased that the Government is producing a detailed smart grid route map in collaboration with Ofgem and industry representatives and look forward to receiving further information. The Government has rightly stated in its recent discussion paper, Smart Grids: the opportunity, that smart meter policy decisions and investment must take into account the goals of a smarter grid system, in particular regarding decisions on smart meter functionality and communications infrastructure. We would like to see a fully integrated smart meter and smart grid implementation plan produced by the Government that takes these issues into account.
(Paragraph 101)
26. In light of the Government's target of rolling out smart meters to every home by the end of 2020 and the wider GHG emissions reduction targets, there is no time to waste in assessing smart grid communications technologies. We recommend that the 872-876 MHz and 917-921 MHz frequency bands be reserved for smart grid and meter communications immediately. The result for UK consumers and energy providers can only be increased choice, greater innovation and lower prices. If, after utility companies have completed pilot projects using sub-GHz wireless mesh technology, they overwhelmingly choose other communications technologies, the radio frequency bands could be reallocated. The UK must not be at a disadvantage compared to countries that are quickly moving forward with smart grid communication technologies.
(Paragraph 108)
TRANSPORT: ROAD
27. The vehicle scrappage scheme has had a positive effect in reducing emissions by accident; any future stimulus for the automotive industry should be designed to stimulate a move towards low carbon vehicles, for example, by requiring that the new vehicles purchased have a CO2 threshold below 130grams per kilometre.
(Paragraph 112)
28. We welcome the Government's Plug-in Grant programme, which provides support for consumers choosing electric vehicles from 2011 onwards. We recommend that the amount invested in subsidies between now and 2020 should be increased substantially, reflecting the ambitious target of 1.7 million electric vehicles set by the Committee on Climate Change.
(Paragraph 115)
29. The long-term benefits of electric vehicles will only be achievable with a smart-grid that has been designed with electric vehicles in mind. The development and implementation of a smart grid and smart meters must be carried out in consultation with developers of electric vehicles.
(Paragraph 117)
30. We are encouraged that the UK appears to be moving in the right direction and making the most of the opportunities to develop an export industry in low carbon vehicles. It is clear that the UK is particularly strong in the automotive supply chain, which should be supported and encouraged by the Government. Improvements to existing technology and the replacement of fossil derived liquid fuels with lower carbon alternatives present the fastest opportunity to reduce emissions. Electrification of road vehicles presents a more sustainable route to total decarbonisation but represents a less mature technology that requires significant support during the demonstration phase. Hydrogen and fuel cells represent a longer-term aspiration, although a significant number of major automotive manufacturers will be ready to offer vehicles within the next few years. We are concerned that the Government, whilst supporting battery electric vehicles, is not offering the same level of support to hydrogen fuel cell powered vehicles.
(Paragraph 123)
31. In addition to investing in new low carbon vehicles, the Government should engage with the public on the issue of reducing CO2 emissions and reducing the cost of journeys by driving slower. In future campaigns, the Government should articulate the need for adhering to the national speed limit by reference to reducing emissions and cost to drivers as well as for reasons of road safety.
(Paragraph 124)
TRANSPORT: RAIL
32. We welcome the announcement of a £1.1 billion programme for Network Rail to electrify the Great Western Mainline (London to Swansea) and the shorter line connecting Liverpool and Manchester. However, we hope to see a more strategic long-term approach to rail electrification from the Government. We would also like the Government to assure us that steps are being taken to ensure the effective transfer of technology from the automotive industry to the rail industry through the Intelligent Transport Systems Knowledge Transfer Network, or other appropriate knowledge transfer networks.
(Paragraph 129)
33. The average carbon dioxide emissions per passenger kilometre for a passenger rail journey are about one-quarter of an equivalent journey by air. Domestic air travel is generally faster than the equivalent rail journey, encouraging more people onto a form of transport with a larger carbon footprint. The Government must do more to address this if it is serious about reducing UK carbon emissions. We recommend the Government introduce regulations designed to ensure the introduction of fairer transport pricing structures that reflect the climate impact of various modes. We also hope to see firm commitments and timetables for delivering more high-speed rail.
(Paragraph 132)
TRANSPORT: SHIPPING
34. We note that technologies such as wind, hydrogen fuel cells and electric propulsion are at prototype or early commercialisation stage on land. The Government should ensure that knowledge transfer networks working in the transport sector are active in transferring technologies from land-based transport sectors to the shipping sector.
(Paragraph 137)
35. The shipping industry has shown a commitment towards reducing carbon dioxide emissions despite the fact that their emissions are not included in the UK carbon budgets, or governed by any international agreement. They have determined that an international cap-and-trade scheme is the best way of achieving emissions reduction. The Government must push for an international binding emissions reduction target for shipping with a clear timetable for delivering policies to meet it.
(Paragraph 139)
TRANSPORT: AVIATION
36. We note the work of the UK aviation industry in developing new technologies and systems to reduce carbon dioxide emissions. The Government should acknowledge this and continue to support the industry through developing and maintaining the right legal and fiscal frameworks. Furthermore, the Government should facilitate the export of these technologies and systems to other countries.
(Paragraph 145)
37. It is fundamentally important to have a globally agreed deal on aviation emissions as regional emissions schemes may lead to carbon leakage. The Government must push for a legally binding global deal based on global aviation emissions reduction targets.
(Paragraph 148)
INDUSTRIAL ENERGY
USE
38. We welcome the progress made by the chemical industry in identifying its impact on greenhouse gas emissions and congratulate the food and drink industry on its reduction in carbon dioxide emissions. The Government should encourage the sharing of best practice between industries so that others may follow.
(Paragraph 153)
39. We are concerned by the Mineral Product Association's claims that EU financing of cement CCS is for plants at full scale rather than demonstration scale in the UK. The Government should assess whether financing for CCS demonstration in the cement and steel industries can be achieved at a more realistic scale.
(Paragraph 157)
INDUSTRIAL ENERGY
EFFICIENCY
40. Energy efficiency technologies for non-domestic buildings include smart metering, advanced heating controls, building automation and control systems, and lighting controls. Most of these technologies have already been developed and are ready for widespread deployment. We have heard that whilst energy efficiency is good for business profitability, a reduction in energy bills is often not enough of an incentive for companies to invest. Government should introduce more effective policies to encourage businesses to become energy efficient. Existing systems such as the Display Energy Certificates (DECs) provide an excellent means of measuring the energy efficiency of a building. DECs should be rolled out to all medium to large private sector buildings and the Government should investigate the feasibility of reducing business rates for businesses that improve their energy efficiency rating.
(Paragraph 163)
INDUSTRIAL COMBINED
HEAT AND
POWER
41. Combined heat and power can be an effective low carbon technology in particular sectors where there is easy access to sustainable fuel, for example, biomass or gas from anaerobic digestion in the food and drink industry. In these circumstances, the Government should actively encourage industry by providing an appropriate level of support. This should be kept under review and determined in consultation with industry. However, the use of CHP technology fuelled by unabated fossil fuels has no place in a green economy driven by the need to address emissions reduction targets.
(Paragraph 167)
DISTRICT HEATING
42. District heating provides efficiency savings through the large scale generation of energy and is best suited to densely populated urban areas or large buildings (such as hospitals and schools). We support the Government's call for wider uptake of district heating in these areas. However, the Government must ensure that every effort is made to source low carbon fuel for district heating projects if it is serious about meeting emissions reduction targets.
(Paragraph 169)
DOMESTIC ENERGY
EFFICIENCY
43. Energy efficiency is described as low hanging fruit when discussing ways of reducing emissions. However, despite Government initiatives, consumers are often slow to take advantage of support for insulation and other energy efficiency measures. To date, Government initiatives on energy efficiency have not been nearly ambitious enough. However, we welcome the proposals within the strategy on household energy management, Warm Homes, Greener Homes. We hope the Government will pay particular attention to introducing new regulations to tackle the energy efficiency of existing housing stock, such as requiring properties to achieve a minimum energy efficiency standard before sale or lease is permitted. We would also like the Government to investigate the feasibility of encouraging households to improve their energy efficiency rating, as defined in the Home Information Packs (HIPs), in exchange for lower council tax rates.
(Paragraph 178)
44. It is important to tailor specific policies to specific technologies to overcome barriers unique to the deployment of those technologies. Light emitting diodes (LEDs) are a good example of one technology that will benefit from this approach over the next four years. We hope the Government will work closely with technology developers and industry to determine potential barriers to the widespread commercialisation of LEDs (and other new technologies) and address these ahead of their deployment. Where there are specific challenges that need to be addressed, such as solid wall insulation, the Government should fund research and development of technologies that will overcome these.
(Paragraph 182)
45. We encourage the Government to take a more detailed look at the 'whole-house' approach to energy efficiency. We welcome its proposals to introduce a one stop shop energy helpline; however, the Government should consider a more ambitious 'Green Concierge' scheme, which would involve on-site consumer advice on energy efficient home improvements. Our forthcoming report on fuel poverty will also look at some of the options available for increasing energy efficiency.
(Paragraph 185)
46. Most particularly, it is vital as a matter of urgency to introduce a national programme to retrofit existing housing stock. A major street by street, house by house scheme needs to be introduced. This could run alongside the current proposal to install smart meters.
(Paragraph 186)
MICROGENERATION
47. Microgeneration technologies are often expensive to install. We welcome the Government's Feed-in Tariff, which will commence in April 2010. We hope the Government will consult the relevant industries to the same extent in developing the right level of support for various technologies through the Renewable Heat Incentive.
(Paragraph 191)
SMART TECHNOLOGIES
48. The Government should work in closer partnership with the utility companies, the electrotechnical industry and other stakeholders to ensure that an open two-way dialogue is achieved between them and consumer groups about the potential benefits of smart meters and a smarter energy network.
(Paragraph 195)
INTERNATIONAL ACTION
49. Companies interested in low carbon technologies need a robust and high price of carbon to drive investment. The Government must push for a tighter cap in the third phase of the EU Emissions Trading Scheme in order to encourage investment in low carbon technologies. Failure to achieve this will inevitably lead to a growing demand for the Government to introduce, at a domestic level, a floor on the price of carbon.
(Paragraph 202)
50. The move towards a low carbon economy is in the UK's strategic and economic interest. The Government must push ahead with the deployment of low carbon technologies in the UK regardless of how other countries are choosing to deal with climate change. It is important for the Government to continue to lead by example whilst continuing to work towards securing a legally binding international agreement.
(Paragraph 206)
GREEN INVESTMENT
51. The Government must maintain and continue to improve the research and development tax credit scheme, in order to encourage private sector investment in low carbon technologies. However, given the scale of the challenge we face, especially after the failure of Copenhagen, the Government must expand its green fiscal policy toolbox.
(Paragraph 208)
52. Public funding is limited and therefore it is right that the Government prioritises its investment in low carbon technologies towards specific technology families where the UK has real strengths or where there is an overwhelming need for public investment. However, the Government must be careful of the way it portrays this message. Prioritisation of funding should not result in other technology families being completely disregarded. The Government's policy toolbox should provide flexible support for all low carbon technologies in addition to more specific policy mechanisms that address the technical barriers unique to individual technologies. These should be developed in consultation with the specific industry as and when they are needed. Today's emerging technologies might then develop to a stage where they could be prioritised in the future for more significant levels of public investment.
(Paragraph 211)
53. We recommend that, as a matter of urgency, the Treasury and the Department of Energy and Climate Change work together to develop a set of environmental taxation options and assess other green fiscal measures that could be used to drive forward investment in low carbon technologies. These should include auctioning carbon permits, issuing green bonds, increasing the public and community ownership of energy-related assets, or establishing a green infrastructure bank. In particular, we would like the Government to encourage the use of green bonds by establishing guidance to the market on the design and development of green bonds.
(Paragraph 215)
54. There is potentially an enormous role for public procurement in the move towards a green economy that will allow the Government to lead by example. This is especially the case for public buildings. In order to achieve zero carbon buildings, we believe that the Government's procurement documents for building materials and technologies should specifically mention whole life costing/life cycle costs.
(Paragraph 218)
RESEARCH AND
INNOVATION
55. Pushing technology through the demonstration phase remains a major barrier to commercial deployment. We welcome the introduction of the Marine Renewables Proving Fund, which has bridged the gap between research and development funding and funding for pre-commercial deployment in the marine sector. However, the stage between proven concept and full scale commercialisation remains a problem in other sectors. We recommend that DECC set up a science and innovation advisory group to bring together energy innovation stakeholders (including the Carbon Trust, Technology Strategy Board, Energy Technologies Institute and others), with a view to overcoming barriers to innovation. The advisory group's first task should be to conduct a review of the effectiveness of the Environmental Transformation Fund and funding programmes within it. The advisory group should also consider whether it would be advantageous for DECC to set up a funding programme that is open to direct funding requests, rather than specific calls for projects.
(Paragraph 223)
JOBS AND
SKILLS
56. As we move from old technologies to new low carbon technologies, old jobs will be replaced by new green jobs. The Government should develop methodology for reporting the number of net jobs created, taking into account jobs lost through displacement of old industry.
(Paragraph 226)
57. We have already expressed our support for the Government's prioritisation of certain low carbon technology families. As a matter of principle, when deciding which technology family to support, the Government should take into account not just the possible contribution of those technologies to reducing carbon emissions, but also their employment and economic potential. There is no reason why supporting low carbon technologies cannot be combined with the UK's economic self-interest.
(Paragraph 227)
58. The Train-to-Gain programme is of no use in providing the incremental skills training that is necessary to re-skill workers transferring from old industry jobs to new green jobs. We recommend that the Government reassess the efficacy of the Train-to-Gain programme, as it is currently not appropriate for the needs of the green economy.
(Paragraph 231)
PUBLIC ENGAGEMENT
AND BEHAVIOURAL
CHANGE
59. Public cynicism about the evidence for human responsibility for climate change has the potential to destroy the Government's chances of meeting its carbon budgets. However, the use of low carbon technologies and the move towards a green economy is not just good for the environment, it also makes good economic sense. Energy efficiency reduces consumer bills and low carbon industries have the potential to create new green jobs to help pull the country out of recession. Public attitudes can change, but only if the public sees a direct benefit. The Department of Energy and Climate Change should commission a study through the Economic and Social Research Council to investigate the best way to achieve long-term behavioural change in energy efficiency.
(Paragraph 235)
LONG-TERM
FRAMEWORK FOR
CHANGE
60. We look forward to seeing the Government's 'Roadmap to 2050', which should take an overview of milestones between now and 2050 that will help the country meet its carbon budgets. The Government must develop technical roadmaps in collaboration with industry for all major low carbon technology initiatives, for example, the deployment of CCS or the development of marine energy. The move to a green economy will be a long-term transition. The Government must continue to seek cross-party support for low carbon initiatives to avoid letting party politics get in the way of achieving emissions targets.
(Paragraph 237)
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