Energy and Climate Change Committee - Minutes of EvidenceHC 1646

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Oral Evidence

Taken before the Energy and Climate Change Committee

on Tuesday 17 January 2012

Members present:

Mr Tim Yeo (Chair)

Dan Byles

Ian Lavery

Christopher Pincher

John Robertson

Laura Sandys

Sir Robert Smith

Dr Alan Whitehead


Examination of Witnesses

Witnesses: Dr Keith Allott, Head of Climate Change, WWF-UK, Eric Lounsbury, Associate Director, Carbon Trust, Guy Shrubsole, Director, Public Interest Research Centre, and Chris Tuppen, Director, Aldersgate Group, gave evidence.

Q61 Chair: Good morning, and welcome. Thank you for coming in to discuss this subject, which we find very interesting, even if it is somewhat technical for a lot of the outside world. May I start with a general question? Do you think that measuring emissions on a consumption basis is going to show that the UK is responsible for a much larger proportion of global emissions?

Dr Allott: I can start. On a consumption basis, the UK’s share of global emissions is clearly more significant than under the production or territorial approaches. What is interesting is what that tells you, and what you do about it, in terms of policy conclusions. That is a particularly rich area to explore. The UK does have a very significant responsibility for global emissions, and there are different ways of looking at our responsibility, other than by consumption. You could look at our historical emissions, because of which we are probably the biggest contributor to the carbon already in the atmosphere. You could look at the carbon impact of the UK in terms of our investments from the City of London, which would also give you a much bigger figure than our 2%. You could look at the UK’s role in the world, in terms of our cultural, industrial and financial leverage. I think we have a huge responsibility in the UK to show leadership, however you measure the metrics of the UK’s footprint.

Guy Shrubsole: Absolutely. I would just add that, while obviously historical responsibility is vital and an essential part of the measurement, it is also useful that the consumption approach to measuring emissions shows that the UK is continuing to be an important contributor to rising emissions in the world because, as the Committee will have heard in earlier evidence, on a consumption basis, UK emissions have actually risen by 20% since 1990, despite the fact that domestically emissions have dropped by around 14%. That is a very important finding, and it is important that we are honest in the way that we account for emissions, which is why I would wholeheartedly support a consumption-based approach, as a complementary measure to production-based accounting.

Q62 Chair: Would it be helpful if the Government acknowledged this more clearly and publicly?

Guy Shrubsole: Yes, absolutely.

Q63 Chair: Will this also be embarrassing for some other countries? Would the United States’ position look even worse?

Chris Tuppen: I think it would be very helpful for the Government to look at this and report. It is complementary to how the Government encourage businesses and organisations to report their carbon emissions. If you were to consider the UK as a business, UK plc, then companies are being encouraged very much to look at the emissions in their supply chain, as well as at their direct operational emissions. It would be very complementary to the way in which the Government are encouraging business to look at its emissions.

Q64 Chair: Yes, that seems quite a strong point, but you can see why a Government-of whatever party-might be reluctant to go in for too much self-flagellation. Would it therefore help if we were to suggest that other countries should do the same thing? There clearly would be other countries in a similar position to Britain-countries that have been claiming a reasonable, or sometimes not even terribly good, performance, and whose performance would look much worse if measured in this way.

Guy Shrubsole: We should not necessarily feel that we are leading on this. Already there are other countries starting to take a consumption-based approach to looking at emissions; Sweden and Switzerland, I believe, are already beginning to implement this and to create legislation around it. Also, in the Scottish version of the Climate Change Act, there is already an obligation on the Scottish Government at least to account for consumption emissions.

Q65 Chair: Commendable though initiatives from Sweden and Switzerland are, are any big countries doing this?

Guy Shrubsole: I believe that that is the sum total of countries doing it so far, but obviously the UK has always prided itself on being a leader in climate change mitigation efforts.

Q66 Chair: Will the public understand this, anyway?

Dr Allott: I think this needs to be messaged clearly to the public. There is a potential risk in the messaging around this that could reinforce what is actually a very dangerous and frankly misleading narrative that it is not the UK’s fault, that it is all China’s fault. That story is out there in the public mind, and it is being amplified in the media, for instance. It is actually very misleading and dangerous. Presented in the wrong way, there is a danger that this approach could be used to say, "So it’s not worth us doing anything domestically." That is completely the wrong conclusion to draw from this approach. We need to carry on doing what we are doing already on the production side to decarbonise our economy, and do it faster and better, and we need to look clearly at things that we can do here and in other countries to improve the material efficiency of our economy.

Q67 Laura Sandys: May I follow on from that? Would you not say that by looking at consumption, we engage the consumer in a way that you cannot through production? Consumers do not run nuclear power stations, but they can make decisions. Even if it is not a perfect science, and even if we do not get it absolutely right, do you not think that this is a mechanism by which there is communication, a change of behaviour, and potential uplift?

Dr Allott: Absolutely. Done right, I agree. I was just warning that it can also be played in an unconstructive way. It needs to be handled sensitively and well, but it can be used to engage people, to change behaviour, and to have better decisions about how we choose to consume.

Q68 Chair: On behaviour change, what are you expecting? Are you saying that we should stop buying goods that are produced by energy-intensive companies in China that are using electricity produced by coal? Is the solution simply not to trade? Is that what you are suggesting?

Guy Shrubsole: Certainly not. What consumption-based accounting does is exciting, because it opens up a whole new scope of policy looking more comprehensively at demand-side measures, and not simply supply-side measures, as you mentioned. That will engage the consumer far more, and will mean having a proper discussion about green production and green consumption methods.

Laura Sandys: And about waste as well, which is a fundamental issue in our society.

Guy Shrubsole: Yes. These policies are already being pursued by DEFRA, but they are not necessarily being-

Laura Sandys: Incentivised.

Guy Shrubsole: Incentivised. Exactly.

Q69 Chair: I wonder what the practical consumer behaviour change is. If you are talking about demand-side, are you going to say, "Don’t buy these goods"? Is that what you are saying?

Eric Lounsbury: You cannot have quite that direct a message, can you? One of the things that it opens up is adding transparency to decisions, so you can say, "Look, this ingot of aluminium is different from that one. They’ve come from different places, and different emission intensities have gone into them." That is an important part of what the consumption approach could be. At the Carbon Trust, we have had some experience with this on the consumer level, in trying to influence consumer decisions as they see a direct consumer product in the supermarket. It is a powerful differentiator.

Q70 Chair: In the end, what you are saying is: "Don’t buy them."

Eric Lounsbury: No. You can provide the information.

Q71 Chair: What do you then expect the consumer to do with it? Just feel a bit bad about buying something? Or not buy it? It has to be one or the other.

Chris Tuppen: I think one needs to look at the consumer in a broad sense here, and not just as the end consumer buying something in a supermarket. A lot of purchasing decisions, especially international, cross-border ones, are made at a business-and, indeed, sometimes Government-level. Those procurement decisions can be influenced much more strongly by looking at a consumption-based reporting model.

Q72 Chair: So Tesco is going to say, "Okay, chaps, we’ll put up the prices by 5% in order to buy from some country that is a bit more green"? Is that what is going to happen? You are not in the real world, are you?

Chris Tuppen: I am very much in the real world. If I look at what is happening with businesses and things like fair trade and working conditions in the supply chain, companies in this country and internationally have made quite significant changes happen within those supply chains as a result of their procurement activities, not necessarily in terms of spending more, but in terms of longer-term contracts and building partnerships and relationships. The same kind of influence can happen with carbon and energy in the supply chain.

Eric Lounsbury: It is also dangerous to presume that the more carbon-intensive ones are necessarily the cheaper products. I think it is not always necessary to make that trade-off. That will sometimes be a trade-off, but I do not think it is at all the case that no one is willing to pay a premium-any premium.

Dr Allott: I could give one specific example, which may be useful, to do with food, which I think is a good example of how this could be used well. About 20% of the UK’s GHG consumption footprint comes from food, if you ignore land use change. If you include the indirect impact of the land use change, it could rise to about 30%. A major contributor to that-probably more than half comes from this-is meat and dairy, which is actually a very small part of the sector. Changes in individual consumption, and also procurement decisions and supply chain management by major food companies, can give you a real handle on that, but a lot of those emissions arise outside the UK.

With that sector in particular, you get a whole new approach towards managing the footprint, and you bring together consumer choices and the approach of retailers in the food supply chain very effectively through a consumption approach in that sector. For other sectors, like the power sector, the levers are in a different place, and you need to look at where the levers have the biggest impact on outcomes.

Guy Shrubsole: I might just add that this is really about partly insulating the UK against increased price rises in the future, because as Governments are moving around the world to combat climate change, in countries such as China, there already is an implicit carbon price in production. As China and other countries that manufacture the products that we import come to tackle climate change more effectively, the price will actually rise. To combat that, we should be becoming more resource-efficient as a country. We should be reducing the material throughput of goods that we import to this country, thereby insulating ourselves against those price rises.

Q73 Laura Sandys: This shows my lack of knowledge about who has done the analysis, but has anybody done a full analysis of the amount of carbon we waste-that is, that we use for non-productive purposes? Right across the food system, the amount of waste is unbelievable, but in all sorts of other parts of our lives, waste is endemic. Has anybody put a carbon price on that? You start to value that and then you also get some uplift by people changing behaviour or valuing things in a different way.

Guy Shrubsole: To give one answer, I am not aware of studies that have been done of that sort. It rather comes down to what you mean by and define as waste. One area that I know DEFRA is looking at currently is around longer product lifetimes. Actually, it is a form of waste if a product is disposed of before it is worn out, or if it has a level of inbuilt obsolescence to it. That is clearly a form of waste of energy and resources that should be being discouraged, but as yet there are only tentative moves towards that, whereas a consumption-based approach would help to enable that.

Chris Tuppen: I am not aware of any UK-wide figure that calculates that sort of wasted carbon, although I am aware of some analysis looking at specific product streams, and particularly looking at the end of life or often very rapid obsolescence of a lot of products these days that come in, often from the far east, with a lot of embedded carbon in them. Of course, if we use them for a year or two-take a mobile phone, for example-all that embedded carbon then gets lost from the system if it simply goes to landfill. The opportunity to get the reuse, remanufacture and, ultimately, recycling of materials all happening within the UK would be something that would flow very much out of taking a consumption-based view of carbon accounting.

Q74 Sir Robert Smith: You all seem to agree that a consumption-based approach would give a better picture of the UK’s impact than a territorial one; would it be fair to say that?

Dr Allott: I do not regard it as an either/or proposition. In practical terms, I think we have a very well-established accounting framework based on territorial emissions. We have an EU policy and accounting framework, and a UK Climate Change Act based on that framework. That is robust, and it is helpful in guiding many aspects of the transition to a low or zero-carbon economy in the UK. It works, but the danger in relying on any single metric is that it can lead to perverse consequences. Having the consumption-based approach to reporting alongside the established approach gives additional insights, guards against perverse consequences, and can help to improve policy formulation.

Q75 Sir Robert Smith: Would others have a similar view?

Eric Lounsbury: I agree with that. Some work that we did shows that consumption adds quite a lot to the UK’s responsibility-about a third in 2004. Indeed, that could grow to mean that half of the total consumption emissions of the UK by 2025 are from overseas. The conclusion is not that focusing on production emissions is not worth while; in fact, quite the opposite: we should succeed in reducing our production emissions over that time, which is valid and essential. However, as a complement, the figures tell us, "There’s another problem, by the way. Don’t forget about the fact that you’re going to use more."

Q76 Sir Robert Smith: Yes, because if you are reducing production by increasing consumption-

Eric Lounsbury: Well, it is not necessarily-

Sir Robert Smith: If you were.

Eric Lounsbury: One of the things that we looked at is how much of that is displacing something that would have happened in the UK, and how much of it is just increasing somewhere else. It is not necessarily a trade-off; indeed, the broader effect is that we are just consuming more stuff. If we have tackled one half of the problem, which is producing the stuff that we produce here more carbon-efficiently, that is a huge part of the battle, but we should not forget about the other piece of it.

Guy Shrubsole: I would agree. It is not that there is a direct trade-off, necessarily, between a policy around production and consumption; it is the fact that, although we are becoming more efficient, and technological efficiency is improving, our consumption has, so far, actually outstripped that efficiency. The efficiency gains that have been made have, so far, been outstripped. That is why we have a rising level of consumption emissions.

Q77 Sir Robert Smith: How far do the complexities and uncertainties of calculating consumption limit the usefulness of such a measure?

Eric Lounsbury: I guess it depends what uses you have in mind. One of the key points is that there are absolutely key uncertainties, but, for some things, we can say pretty definitively that consumption, and the import of emissions due to consumption in the UK, do add to the total footprint. Certain countries are a bigger part of that than others. Certain product classes and certain commodities matter more than others. Calculating consumption helps you focus on the problem. Will it be down to such a level that you can establish caps, as is done in current reporting frameworks under the international negotiations? It is probably not there yet, but that is not necessarily the bar you are trying to get to. There are probably some uses that work, and some that it is not quite ready for.

Chris Tuppen: The way in which the consumption-based reporting that DEFRA has commissioned from Leeds University is modelled is good at a national level, and at being able to calculate some of those consumption flows at a macro-economic level, but if one is looking to translate that into action in response to that, at a particular product level, it does not naturally translate.

The economic input/output models that have been used effectively chunked up all products into, I think, 57 categories. That means that each of those categories has a massive array of products lumped into them. If one then wants to move into a more detailed policy-level or purchasing-level response, one needs much more detailed analytical information, which usually comes only directly along the supply chain from the suppliers themselves. Often, that information is not forthcoming and not actually there at the moment, which is why we are encouraging people to see this as a journey.

Ultimately, when there is much more detailed information, and more information flows are coming through the supply chain, one could get to the point of establishing targets and objectives. At this point in time, it is about using these things to influence the overall purchasing behaviours of organisations, as well as encouraging those organisations to interrogate their suppliers and to ask for the information to start flowing through the supply chains. That information could ultimately feed into a more accurate assessment methodology at a national level.

Guy Shrubsole: I think the subject can get very detailed and arcane very quickly. There is a danger that we get too preoccupied with trying to get the nth level of detail. We should not lose sight of the bigger picture, which is that what information we do have shows that the UK’s emissions have increased on a consumption basis and, therefore, that that is something that ultimately needs to be addressed if we are actually to contribute to reducing climate change. I think this is absolutely about the level of detail for a specific level of policy, but there is already an enormous set of uses that this approach could be applied to.

Eric Lounsbury: I would just add that we should not feel too overwhelmed by the task ahead of trying to get to the next level of detail about some of this information. For example, the aluminium sector feels like this big, giant, global sector, and I think there is something in the order of-I cannot remember the exact figure-120 primary aluminium smelters globally. That is something that you can get your hands around, and you can make real detailed assessments of what is going on in that sector and its big share of emissions. Similarly, some of the work that we have done in labelling at the Carbon Trust has shown that as you do more and more specific product labelling, you can do it quite cost-effectively as you build up the databases that underlie each bit of the supply chain. There are no insurmountable problems to get to the next level of detail.

Q78 Sir Robert Smith: Is the labelling making a difference?

Eric Lounsbury: Well, that is one of the key questions. The point came up earlier about willingness to pay for something that is lower-carbon. The jury is still out on how much consumers value that ultimately, but there is an underlying desire. In surveys that we have done in the past, the majority of UK consumers have said that if they knew about a lower-carbon product, they would buy it. Now, can we parse the data that actually show that they are buying lower-carbon products? We have not been able to do that yet.

Sir Robert Smith: Obviously, if there are other factors that are equal-

Eric Lounsbury: Yes.

Dr Allott: On that front, I have some personal scepticism, on some of the products, as to whether it is actually making any impact on individual behaviour and decisions, but the tool, in terms of allowing companies to manage their supply chains and improve the performance of the supply chain, is probably making a genuine difference. It is easy to see just the public output, which is the label on a packet of crisps, and one may have a certain level of scepticism about whether anybody is going to choose a slightly lower-carbon bag of crisps when they might want prawn cocktail instead. However, the company may have been able to do some very significant things all the way along its supply chain to improve the management of the carbon.

Chris Tuppen: And indeed did, in that situation. They discovered that farmers were selling the potatoes by weight. The more water there was in the potato, the more the farmer got paid, but it took more energy to cook the crisp-to dry the water out in the manufacturing process. Actually understanding that full life cycle analysis did reduce the total carbon footprint of the crisps. It had a very practical output.

Q79 Dan Byles: On the supply chain, that is quite an interesting example. Do you think it is perhaps fair to say that individual companies, rather than Government-level initiatives, are going to be driving this? Can the EU ETS ever be subtle enough to capture the supply-chain emissions of products in the way that companies that are interested for what you might call more personal corporate reasons will? It is hard to imagine us setting up a regime that would have made that company do that. Do you see what I mean?

Chris Tuppen: Yes. First of all, it is not just companies. A good example is the NHS. They have set themselves a consumption-based reduction objective. The biggest share of NHS emissions is in the supply chain. They are not from running hospitals or driving ambulances. Drug manufacture is the biggest issue. I do not know too much about the European Emissions Trading Scheme-maybe Keith can answer that-but by setting that objective within the NHS, they are now talking to the drug manufacturers about the carbon intensity of the drugs they are bringing in and what the restrictions are around that and how they can drive that down for their overall consumption-based carbon footprint.

Dr Allott: I would say that, frankly, we need many tools in the toolkit to address this incredibly complicated issue of carbon. We need tools that do direct things, such as decarbonising the power sector, and those may be things like the EU ETS or frankly just a very good framework to drive forward renewable energy. That would be great. Price mechanisms are not very good at reducing consumption of electricity alone, to take just one example. You need to have other complementary policies, such as a targeted energy efficiency programme, product standards or procurement policy by Governments or major corporations. Frankly, you need a whole suite of complementary policies.

Q80 Dan Byles: Does the current EU ETS take that into account? You mentioned that two thirds of the emissions associated with aluminium use in the EU originate outside the EU ETS area. Are they in any way taken into account at present?

Eric Lounsbury: Not at the moment, no. I think you are referring to some of the analysis we did. To build on the idea of complementary approaches, we need different approaches for different kinds of product. Some of the analysis that we did showed that about half the emissions that are embodied in products traded internationally are from commodity-type products, and half are from more finished products. You cannot put an international, border-adjusted carbon price on something that is not priced within the zone into which you are importing. Straight away, if you look at the EU ETS and the mechanisms that exist in Europe, you cannot start talking about putting border-adjustment mechanisms on cars or on computers. You can talk about doing that kind of thing for the things that are covered by the EU ETS, such as steel, aluminium and cement. There are very clear regulatory approaches that could work there, but you are probably going to be left with some of the more voluntary approaches of labelling and communicating the carbon intensity of the more complex goods that you are importing.

Q81 Dan Byles: Are you talking about when we start getting down to the Scope 3 indirect emissions and those sorts of things?

Eric Lounsbury: We will stick with aluminium. About half the aluminium-related emissions that are embodied in imports to the EU do not come into the EU as big things of aluminium; they come in as other stuff. We need to have that full sense of "what is that thing that you are importing?" If it is a PC, for example, what are the range of things that have gone into that supply chain-the Scope 3 emissions that are embodied in that product as it is imported?

Q82 Dan Byles: Would it ever be feasible or valuable to mandate the reporting of Scope 3 emissions on products?

Chris Tuppen: It would certainly be feasible to do it. As I said earlier, the data at the moment are not robust enough coming out of the supply chain to give figures that companies would feel comfortable addressing targets against. Often, on the data that come from things such as life cycle assessments-particularly if one is doing it at a more sectoral level with these economic input/output metrics-there can easily be 30% error. If you are trying to set yourself a company target of a few percent over the next few years, say, and you have errors of 30% and most of your emissions might sit in the supply chain under Scope 3, it is not getting to the point where it would be appropriate to mandate that as part of the formal carbon reporting and targeting that a company may do. However, I think companies should be strongly encouraged to start to bring those data out and start to be transparent-

Q83 Dan Byles: The Aldersgate Group has said that it thinks the UK should be a pioneer in this. What do you mean by that?

Chris Tuppen: I am not sure that necessarily the UK should lead. On the question that was asked earlier, I think we should encourage other companies. Indeed, at a corporate level, the organisation that effectively oversees the corporate reporting guidance out of which Scopes 1, 2 and 3 derived had been doing a huge amount of work on this area around Scope 3 emissions. That has been a very strong international collaboration.

Q84 Dan Byles: In a sense you are saying that at the moment it is too early to be mandating it, because it is not quite that finely tuned yet, but we should all keep going forward at our own speed and encourage people to do it, and at some point further down the line we might find that the granularity is there to start making it more formal. Is that effectively what you are saying?

Chris Tuppen: Yes.

Eric Lounsbury: I think that is broadly right. Not every company is reporting Scopes 1 and 2, as we know, which is why it is being considered whether that kind of approach should be made mandatory. Indeed, many companies, if you asked them to do it, would struggle to make Scopes 1 and 2 happen. That said, we are now at a point where we could imagine mandating that, which probably was not the case 10 years ago. In a few years’ time I do not think it would be unimaginable that we could be in a place to mandate Scope 3, and it would be valuable to do so.

Dan Byles: A bit of evolution, rather than revolution, at the moment, perhaps.

Q85 Christopher Pincher: I was interested by something that Mr Lounsbury said earlier, and I think you have all picked up on it, which is that by 2025 half of British emissions will be embedded in imports from overseas. But DECC has said that it uses the territorial approach to emissions because it believes that Governments have a "greater ability to influence production activities in their own territory than to influence emissions from goods which are consumed in their country but produced overseas." To what extent does Britain have an influence over the very significant amount of emissions that are embedded in overseas products?

Guy Shrubsole: If I might read out something that DECC itself stated in a document released under freedom of information earlier this year. In relation to consumption emissions, they state "we recognise that we do have a certain amount of control over emissions from abroad, as this is where many of our products come from. Consumer demand can be a powerful influence on manufacturers…by purchasing these products, we are contributing to that energy consumption." So, of course, nobody is really suggesting that we have control over what happens in factories in China, for instance, but as a result of our consumption patterns we do have influence-we have consumer choices, purchasing capabilities and government procurement contracts-on these emissions.

Dr Allott: I think that is true. There is a lot more that we could be doing here in terms of our resource efficiency, product policy and approach to consumption across a whole range of economic activities in the UK. There are other aspects where the UK does have real control over elements of the disparity between the territorial emissions and the international emissions.

The first is a decision coming up this year formally to include aviation and shipping emissions within the Climate Change Act. That decision has to be taken by the end of this year and is one significant chunk of the disparity. We sincerely hope that the Government will follow what we expect to be the advice of the Committee on Climate Change by including those emissions in the UK’s carbon budgets. That is one aspect.

Another aspect is that it is important to take a global perspective on these emissions in parallel with the UK perspective. What is the overarching international policy framework to help those producer countries decarbonise? This is partly about moving towards a stronger international agreement, which the UK is quite strong on trying to achieve, and we desperately need that. We cannot solve all this just through a UK approach; it needs to be seen in the context of a global approach. But there is stuff that the UK can do by driving forward existing commitments and provision of international climate finance to countries such as Brazil to help stop deforestation, which will have a direct impact on the emissions from, say, our food chain. Copenhagen has a commitment to provide climate finance of $100 billion a year by 2020. That is actually part of the obligation of consumer countries to help the transition in other countries.

The final aspect of this is that there is also scope for some bilateral approaches between Governments, where there is a particular trade dependency, to look at ways of working to improve carbon efficiency in particularly important lines of trade.

Q86 Christopher Pincher: What I am hearing is that either the Government act bilaterally or internationally to come up with a framework that will mean that Britain is not unnecessarily hampered in its production or consumption of goods and services or it is for individuals to make consumer choices about what they do or do not buy, but you do not think that Britain should act unilaterally to impose consumption tariffs on embedded carbon. Is that correct?

Guy Shrubsole: Tariffs are really only one policy lever.

Christopher Pincher: And that is an example-

Guy Shrubsole: It is obviously a controversial one, because it is often seen as a unilateral measure that would be taken-or often imposed on a developing country. What we are really looking at here is, I think, two things. The first, as Keith has said, is bilateral deals: the potential for integrating environmental standards into bilateral trade deals in the future. There is a whole scope there that should be looked at in much more detail.

Secondly, I do not think it is just about devolving all this to individual consumer choice. I do think that we need some sort of green consumption road map, just as we have a green economy road map, which would bring together experts who are already looking at this, and those within DEFRA and DECC. There is a large number of people in DEFRA looking at this. Unfortunately, I do not think there is sufficient joined-up government between DEFRA and DECC on this as yet. If that was to be done as a cross-Government initiative, we would see a whole host of new policies that could come through, and that would influence consumer choice and encourage greener behaviour.

Q87 Christopher Pincher: What sort of policies would they be? From the quotation that you gave me from the Department of Energy and Climate Change, it is very much a case of "It’s for the consumer to decide"; that was what I inferred from the quote you gave me. What do you think the Government or a Department can proactively do, in terms of policy?

Guy Shrubsole: I am thinking perhaps of some of the policies that were mentioned slightly earlier, such as incentivising longer product life times or working to waste less food; that obviously has an impact on territorial emissions as well as on overseas emissions from the production of that food in the first place. At the moment, that is not being incentivised, because we are looking with only one eye, as it were, at domestic emissions; we are not looking to capture the additional savings that could come from taking a consumption perspective. There are already things that are being done, but I do not think that they are being done or captured in a particularly systematic way, and they are not being applied across Government either.

Dr Allott: You gave the example of the UK unilaterally introducing some sort of border measures across the piece. I think that this needs to be seen in terms of a global effort. The danger of taking that type of approach is that it can come across as very protectionist, and it can undermine the drive for a truly multilateral approach to this issue. You need to be very careful with things. The risk of perverse consequences there is quite serious.

By the way, I think perverse consequences are one of the key things to focus on, in terms of policy formulation. We mentioned the EU ETS before. A really good example would be the fact that bioenergy is currently treated as zero carbon at the point of combustion. That is fine, because you can capture emissions once, and you have to have an agreed convention. The problem with that convention taken blindly is that you could set up a system where we import lots and lots of very, very carbon-intensive biofuels across their life cycle, driven by the fact that they are counted as zero carbon under the EU ETS. Clearly, that is a perverse consequence. There are things you could do to guard against that, to do with setting minimum standards for the life cycle GHG benefits of bioenergy that is used and imported into the UK for power combustion, for instance. There is a real safety-net issue here, as well as a proactive policy, guarding against perverse consequences and showing a new window on just how to improve consumption policy.

Q88 Chair: There is a case for doing what you have just described anyway, isn’t there? Bioenergy is a good example. There is good bioenergy and bad bioenergy. It makes me happy when we draw very clear distinctions like that.

Dr Allott: Exactly, but it still seems to be happening. Anything that increases the intelligence of policy appraisal is a good idea. Frankly, people should see that one anyhow. I would contend that they are not seeing it. If the consumption-based approach helps to increase the rigour of that awareness of a perverse consequence, then I think that is a good thing.

Chair: I should remind the Committee that I have an interest in a biofuels company, which is relevant to what we have just discussed.

Q89 Sir Robert Smith: You were saying how the UK-just a minor point here-probably could not do much on that. It would have to be an EU-wide regulation, wouldn’t it?

Dr Allott: On-

Sir Robert Smith: On imports.

Dr Allott: On sustainability criteria, for instance, for bioenergy, yes. I think they already exist to some extent for liquid biofuels, but biofuels are increasingly being used for many other purposes, and not just as liquid transportation fuels. Potentially, that could be a really important part of a transition to a green economy, but we need to be doing it to a very high standard, so it is a very good example of the need to increasingly look along the supply chains at the product standards. The consumption approach can provide an insight into that problem. The precise policies that you come up with may not be to do with consumption-based reporting; you might take a specific lever to tackle a specific problem, but you have identified the problem and put dimensions on it.

Q90 Ian Lavery: Looking at the carbon leakage, there is a massive difference between the UK emissions calculated on a territorial basis as compared to the emissions calculated on a consumption basis. Why is that the case?

Dr Allott: I think there are two reasons. The overarching reason is globalisation-the historic structural shifts in the economy over the past couple of decades, which have led to a big change. The reason why I think the disparity is possibly bigger for the UK than for some other, say, western European countries, may be because we have also at the same time made relatively good progress in the UK in reducing our production emissions, substantially through the dash for gas, which, arguably, was not really driven by climate change policy. So our production emissions have come down relatively well-nowhere near enough for what they should have done from a climate change perspective, but they have come down relatively well compared to other countries; and at the same time there has been a globalisation shift of manufacturing, and the increasing service sector. If you put those things together, I would say that accounts for almost all of the change.

Eric Lounsbury: I echo that. We did some earlier work on the impact of carbon leakage at different carbon prices, and different carbon production, and while leakage is an important thing for some select sectors, the overriding feature here is increase in trade. The trade balance in the UK increased from less than 1% to about 5% of GDP in the decade before our analysis on carbon flows, which was based on 2004, so in that decade before-from 1994 to 2004-it increased substantially. That is the overriding factor in increasing the contribution of imported emissions, rather than leakage, as a direct effect of climate change policy.

Q91 Ian Lavery: Is the difference more due to strong carbon leakage or weak carbon leakage? When I say strong carbon leakage I mean the fact that countries are moving their manufacturing abroad, and when I refer to weak carbon leakage I refer to a general increase in consumption and therefore an increase in imports.

Guy Shrubsole: It is almost entirely down, so far, to weak carbon leakage-that is increasing consumption, rather than being driven by climate policy. If you look at the graphs that show the last 20 years of emissions trends in the UK, strong climate policy has really only come in during the last few years. It would not be at all tenable to claim that climate policy of itself has driven emissions overseas. You can see that actually, in the last 20 years, there has been an increasing trend, and that has been driven by, as Keith says, structural changes in the UK economy. Growing consumption has outstripped efficiency saving.

Q92 Ian Lavery: In the Chancellor’s autumn statement in 2011 he announced about £250 million compensation for energy-intensive industries, to basically compensate for the impact of carbon taxes and climate policies. Do you believe that the energy intensive-industries are justified in claiming that compensation?

Dr Allott: I think we need to be very careful here; that is my starting position on this. There has been quite a long history of, frankly, scaremongering by several major industry groupings, going back several years at European level; also, at the UK level, when Digby Jones was the head of the CBI I think he spoke at a parliamentary inquiry-in 2004, I think-about the first phase of the emissions trading scheme. In fact, it may have been earlier than that, in 2003. He was accusing the then Government of sacrificing British jobs on the altar of its green credentials. That was the cap that led to a carbon price of zero. Having said that, looking forward there is evidence that certain sub-sectors may be facing some genuine issues, but I think it needs to be put very carefully, on sound evidence, rather than a general assertion that all industry is facing a risk. Any support that is given to sectors needs to be based on much clearer evidence and transparency than we have seen so far. The Chancellor has not said who will receive this support.

Secondly, there should be something in return-some clear commitments-from the sectors benefiting either from exemptions to the carbon floor price, or from increased exemption from the climate change levy. I am thinking in terms of increased environmental benefits from energy efficiency improvements, a greater obligation to think about the constructive use of waste heat for combined heat and power, and some serious innovation commitments. Otherwise, we are in danger of giving something for nothing for generalised industry lobbying, rather than looking at the specific problems that certain sectors may face.

Q93 Ian Lavery: Rio Tinto Alcan is in my constituency, and it just announced that it is closing the plant because of the climate policies and the green taxes. That flies in the face of what you are saying. It brings me on to the next question. The written evidence from the WWF suggested that the idea that businesses were being driven overseas by carbon regulation was greatly exaggerated and possibly groundless. You have just touched on that. Do you still believe that that is the case?

Dr Allott: I think that that has been the case to date. I think that we are now at a stage where there are some genuine issues affecting certain subsectors. The one that you touched on is increasingly one of them, potentially. What I am saying is that we need to be careful on transparency, and on the evidence base for the policy design that may be appropriate to tackle this approach. That is not always the case in what I am hearing from certain lobbies.

The other thing that I would say is that there is a real danger of a cascade of inaction. That includes the lack of ambition at European level, where we are stuck on a 20% target for 2020, which is essentially little more than business as usual. The reason why Europe is struggling to show the leadership that we need internationally to move up to at least the promised 30% is substantially because of lobbying by the heavy manufacturing industry within Europe. There is a danger of a cascade of inaction, which leads us not to address the climate problem, which we urgently need to do. We need smart policies to tackle specific real issues, where they are clearly shown to exist.

Guy Shrubsole: Surely the medium to longer-term solution to this is going beyond tax breaks without strings attached to investing in green, clean manufacturing here in the UK. Obviously, the current focus of something such as the Green Investment Bank is rightly on investing in the energy sector and energy efficiency. In the medium term, if we are not to have to keep coming back to this problem as we reduce emissions further, we have to invest in a clean manufacturing sector in the UK and across the EU.

Sir Robert Smith: In light of that question, I remind the Committee of my interest in the Register of Members’ Interests: I have a shareholding in Shell and a shareholding in RTZ.

Q94 Laura Sandys: We have covered some of the issues that I was interested in on border tariffs. May I go down a bit of a different line? When we are talking about carbon emissions, we are talking about a production-based operation. In many ways, it is very much easier to set those limits. As you say, there are only 15, or whatever it was, aluminium smelters in the world. Those are things that are easy.

When we are talking about consumption, we are relating it to demand as well. I would have thought that we could make a more extreme impact on our carbon emissions consumption if we started to understand how consumers respond, whether that is business-to-business consumers or end consumers. Who is doing the work? Who should be doing the work, and where would you like to see the work being done on behavioural science and how we change people’s behaviour? I do not know whether any work has been done on the Fairtrade mechanism and what creates a different response. I am not saying that I am a great advocate of everything that Fairtrade stands for, because it has its own repercussions. Where do you see the blockage, not from a Government point of view but from a societal point of view, and how can we overcome that?

Chris Tuppen: From a business perspective, at the b-to-b consumer level, it is very much around the business case for action. On supply chain, a lot of it has been around the reputational impact of getting it wrong in the supply chain, and the damage that that has on the brand.

Q95 Laura Sandys: But that needs a sensitised consumer. You have to start with a sensitised consumer to create a reputational problem.

Chris Tuppen: Yes, and one might imagine in the future a similar kind of brand impact if companies were getting it wrong on a carbon level within their supply chain. One might imagine that in the future, but as you say, that needs the end consumer to be involved. There are many other aspects of risk management within an organisation, in terms of things such as continuity of supply and resilience in your supply chain, which will also come into play here.

There are also straight cost-efficiency measures, if we can demonstrate that reuse and re-manufacture of items is more cost-effective, and if we can demonstrate to business that the linear economy of "dig it up, use it and throw it in a hole in the ground" is not the most cost-effective way, particularly when one looks at resource constraints in the future. It is clear that in many areas of resource availability we are going to hit limits, and therefore bringing that sort of resource availability agenda alongside the carbon agenda can make quite a convincing case to organisations that they really should start looking at waste flows. That would have a benefit, in terms of reducing the consumption-based carbon figures.

Q96 Laura Sandys: May I pursue that a little? In the agricultural or food production sector, a lot of food is wasted at the farm. It is rejected because it is not beautiful. Could we look at regulations that created a declaration by procurers from those farms to say how much they have rejected on aesthetic lines? How do we create change in that environment?

Guy Shrubsole: Absolutely. There is not enough recognition of the amount of food waste within the supply chain, and there is currently a lot of focus simply on consumer-side food waste. This is something that I have become more aware of recently. Yes, a suggestion such as the one you make that supermarkets, retailers and suppliers become more responsible, perhaps through extensions of the Courtauld commitment or similar mechanisms that the Government have set up, would be a very good step forward.

Chris Tuppen: May I give you the example of washing machines? I know that is not about the food chain. If one looks at washing machines, going back about 10 years or so they were less reliable but much easier to repair. Today, because of the globalisation of the supply chain and the ability to import very cheap washing machines, which have been designed to be built very cheaply but not to last a long time, a lot of the cheaper washing machines have a life cycle of only about 800 to 1,000 wash cycles, which is not a lot of wash cycles. One change that could be made is to say that washing machines should be guaranteed not for a year but for a certain number of wash cycles. That would change consumer behaviour quite a lot, because people would see how many wash cycles each washing machine was designed to run for. Each washing machine would have a counter on it, and you would be able to see exactly how many cycles it had been through.

The business model would need to change. The business model today is designed to accept that a certain percentage will go wrong in guarantee-that is built into the cost modelling. That modelling is not designed to lengthen the life of washing machines. While the up-front cost of washing machines would go up, their total life costing would come down quite significantly.

Chair: As we have another panel to see, I think that we will have to call a halt there, but thank you very much for the ground that you have covered. There may be one or two points that we would like to pursue in correspondence with you, if that is okay. Thank you for your help.

Examination of Witnesses

Witnesses: Dr Wendy Benson, Principal Adviser, West Sussex county council, Michael Berners-Lee, Director, Small World Consulting, Richard Leafe, Chief Executive, Lake District national park, and Richard Sharland, Head of Environmental Strategy, Manchester city council, gave evidence.

Q97 Chair: Good morning and welcome. I think you heard the previous evidence, so you will know what our approach is, although we are now looking at a slightly different aspect. May I start by asking all of you, but perhaps particularly the local authorities, how the model of Small World Consulting has helped you in what you do?

Richard Leafe: I am Richard, from the Lake District. We were the first local authority, if you can call a national park authority that, to use this consumption-based approach. In a nutshell, it has been a really helpful way of accurately defining where the carbon comes from and how it is consumed in the Lake District. It has been a very useful tool in working out which sectors we most need to engage with and talk to about their emissions, as well as in explaining to those sectors-those partners whom we work with-and to the general public at large what is important about carbon in the Lake District, where that carbon is spent and, importantly, what can be done about it. It has given us much more clarity and a better understanding of the actions that we can take to tackle this issue in the national park.

Dr Benson: I agree with Richard. I work at West Sussex county council, and we have used the footprint to introduce a local carbon budget for the county and an operational carbon budget for the council. We have found that it is a much clearer way of engaging with people. As yet, we have not done much work with the general public, but in terms of our own service heads, we have been out talking to all our directorate leads. They are very engaged, and they find the framework we are proposing to them very clear and easy to understand. It is a little like being able to tell a story, in that the production emissions give you a bit of the introduction to the story, while the consumption-based emissions give you much more of the body of the story to understand.

Richard Sharland: I am Richard Sharland, from Manchester. It is a similar story for us. It is very early days, and we only have the work that has been done over a few months. The really key thing for us is that these metrics create the opportunity for a different kind of dialogue between sectors and interest groups right across the city and Greater Manchester. In the city’s climate change strategy and the Greater Manchester climate change strategy, we see changing the culture as being as important as meeting emission targets. There is an opportunity for consumption-based metrics to create a quite different set of dialogues, particularly with consumers, but also to make stronger connections between consumers and businesses, and between consumers and public sector organisations.

Michael Berners-Lee: The wider context of this is that organisations and people on every scale are seeking more and more to understand the climate change impacts of the things that they do, and more and more organisations and people are realising that that involves indirect carbon, as well as direct carbon, which takes you straight away into consumption-based metrics. Actually, for a lot of people it is instinctive. When you ask people about the carbon impact of something, they instinctively think about the indirect stuff as well as the direct stuff.

Q98 Chair: How much are you constrained in terms of getting real value from this by the many complexities and uncertainties? I dare say that you are refining the model anyway, but is there a danger of some scepticism about the work because there is so much uncertainty?

Michael Berners-Lee: There is uncertainty, so it is an exercise in developing management information in order to see the impacts so that you can put them into the decision-making mix. That needs to be good enough. So it needs to be done in a practical and robust way while finding a balance between recognising the uncertainties and mitigating them as much as possible. It is important to face how much uncertainty there is, and there is a lot, but that does not negate the exercise at all. We are always very clear, and our clients understand that there is uncertainty, but you still can create a good enough model that allows you, at least in broad terms, to get a much better handle on the impacts and issues you should be managing. It is possible over time to refine that somewhat. Even in the long term, consumption-based metrics will always have a degree of uncertainty. That will never negate the exercise, but it is always important that we are clear about that.

Q99 Chair: Can data availability be improved to try to reduce the uncertainties?

Michael Berners-Lee: Yes, it can always be improved. Let us look at all three of the organisations here, for example. When you start going down into a more local scale than the national level-our approach was to use an environmental input/output analysis and then scale it down to look at how it translates to a local level-we are asking questions about what we know about the local level that will allow us to modify our results compared with what might be a UK per capita average. Yes, better data would have helped. One very simple example is that car travel information from, say, the DVLA coming through MOTs about car usage would be very useful in understanding how residents travel.

Q100 Sir Robert Smith: Looking at the Lake District analysis, what did you find from the consumption-based approach that a production-based approach would not have achieved?

Richard Leafe: A couple of things, really. I think what stood out with the data is that, when we looked at the picture as a whole, we were quite surprised to find the proportion from foreign flights used by visitors to the Lake District was large-it was a third of the total carbon budget-yet of our 16 million visitors a year, only 10% come from abroad, so it was quite interesting to see how that was skewed. When you take flights out of the picture and just look at what is happening within the park itself, we were quite surprised to see the significance of the accommodation, food and drink sector, particularly the size for drink that is consumed in the park itself.

Q101 Sir Robert Smith: Soft drinks?

Richard Leafe: All kinds, bottled water and bottled beers in particular, so it was music to my ears to hear that we needed to promote more the consumption of locally produced beer in the national park as a critical way of tackling our carbon footprint. The analysis gave a real focus on that sector, which obviously then led into a number of projects with the tourism sector to engage with suppliers and to talk to them about the importance of carbon usage and what they can do about it.

Q102 Sir Robert Smith: Did you look at reducing the impact of the flights?

Richard Leafe: Flights are a difficult area for us. Our attention instead has gone on making sure that we market the Lake District to a domestic audience and encourage more people from the UK to visit, and when they visit, to travel, if they can, by sustainable means, or to use sustainable means of transport when they are in the national park, and ideally, to stay longer and get more value out of the carbon that is consumed in their travel there. So no, we are not attempting to do anything directly with the proportion who arrive by air, but of course, if we can encourage more people domestically to holiday at home in the Lake District, perhaps we are saving some carbon by displacing journeys that they may have made overseas themselves.

Q103 Sir Robert Smith: Would that show up at all?

Richard Leafe: I don’t know whether it would show up in the stats, but it is a good thing to do.

Michael Berners-Lee: It is clear that the longer people stay, the lower the carbon footprint per day.

Q104 Sir Robert Smith: No, it was the other calculation, that if they had not gone to the Lake District, they might have gone to the south of France.

Michael Berners-Lee: If they are making a choice, it does not show up. If they make a choice to do something else that is equally high carbon, no, it doesn’t show up.

Q105 Sir Robert Smith: Only 10% was the flight though, so you have a big part of the carbon footprint that you cannot do an awful lot about. Was that fairly allocated? If a tourist comes and spends a couple of days in London, then goes up to the Lake District, perhaps goes somewhere else, and then leaves, do the flights all go to the Lake District?

Michael Berners-Lee: No, we did our best with that. It is always a question of working with the data, but we tried to allocate pro rata. So, if somebody flew from Australia for three weeks, and they spent three days in the Lake District, that is one seventh.

Richard Leafe: I would not want to give you the impression that because a third of the overall carbon budget is to do with international flights, that means we have given up on the other two thirds of what can happen there. A lot can go on. I have a better little diagram that describes the pie chart in colour when you take the flights out, if you would like to have a look at that. It is just a bit better than the one we put in the paper.

You can see that when we take the flight element out of it, the transport and accommodation of the visitors in the Lake District, and buildings for resident populations and local authorities become very significant. They are things obviously that we, as a park authority and the partnership in which we work, can do things about. For instance, we have used those figures to support a bid that we made successfully to the Department for Transport’s sustainable transport fund for £5 million of investment in sustainable transport in the Lake District. That is just an example of the kind of initiative we can pursue as a result of having this evidence base.

Q106 Sir Robert Smith: What sort of challenges did you encounter in trying to meet the consumption-based reduction target?

Richard Leafe: We have set ourselves a target of a 1% reduction. The Lake District is responsible for 2.3 million tonnes of carbon, and we are assuming that, to be in line with the national reduction targets, we need to reduce that by 2% a year. We assume that 1% comes from national action, so we need to be responsible for a 1% reduction, or 23,000 tonnes a year.

For a start, it gives us a nice little framework to go at, and then, what we have attempted to do is identify, on a consumption basis, the projects that we know we have in the pipeline to tackle the various sectors in the project, and add up the carbon savings that we roughly estimate we think we will get out of them. At best, we are about halfway-last year, we were about halfway to that 1% target-so we have about 0.5% of savings from projects that we know about in the Lake District. The challenge, therefore, is to increase the amount of activity and projects that we are aware of that are tackling carbon across the full range of sectors in that pie chart. Obviously, we will get the greatest bang for our buck if we concentrate those on the biggest chunks of accommodation, tourism, transport and so on.

Q107 Laura Sandys: I really wanted to focus on Manchester. From your submission, we are really talking about some of the biggest emissions being in food and waste. As you probably heard from the previous panel, it is something that interests me a lot. How have you been able to tackle this? What sort of measures do you believe that you need to put in place to change behaviour, whether in labelling or in incentives or penalties? How do you see your assessment being driven forward into positive outcomes?

Richard Sharland: It is very early days, but on the food side in Greater Manchester we are setting up a food panel, and that will take the consumption work, but also connect it with work on health and on diet. It will try to bring together those who are leading on those areas of the agenda to say that we now have completely different data, because, as you were hearing from the previous panel, food production and consumption in direct emissions is virtually negligible, so it has been regarded as being a junior partner and as an issue of low importance in climate change. Consumption figures turn that on its head. So we are setting up a panel, and they are going to look at how we-that is not just local authorities, but also the NHS, universities and others-start to take that forward.

There is another driver as well. We set out two objectives for climate change in the city’s strategy. One is reducing emissions, and the other is changing behaviour. We have set up a carbon literacy initiative, and the thinking behind that is to create a shared framework across the city for progressing an understanding of carbon, so that means working both with schools and universities, but also with specific client groups. Taxi drivers are an example. The opportunity in the carbon literacy project of bringing food and waste directly into that programme is going to be very important, partly because the personal calculators that a lot of people are using and a lot of the programmes in schools are focused on food and waste as really important issues. We can now connect all of that to the outcome of the city. That is our initial thinking at this stage.

Michael Berners-Lee: I would add that this carbon literacy angle is very important. You talked about how we can develop the sensitised consumer-

Q108 Laura Sandys: For example, have you ever spoken to WeightWatchers?

Richard Sharland: As far as I am aware, we have not.

Q109 Laura Sandys: To be frank, it is the same sort of issue. People are counting calories. Carbon is different, but how do people respond to this accounting or assessment process? I just feel sometimes that the whole issue about both energy and carbon can be quite geeky if you actually start to look at this from a consumer point of view. One should consider WeightWatchers or people who look at calories as part of how they assess things and start to bring things back into consumer language.

Also, I do not know to what extent anyone has done the cost per unit of carbon to me, the consumer. We are looking at carbon taxes right across the board. How much is it costing me to waste or to not utilise things in the most efficient way? We have a very sophisticated consumer out there. Are we using them effectively?

Michael Berners-Lee: This question about how best to engage people is being asked hard in a lot of circles, and no one really knows the answers for sure. But some analysis of where the cost lines up with the carbon has been done, and if you do that around food, one of the things that is clear is that arguably one of the simplest ways in which households can save money is to adjust their diet. Food waste, on the face of it at least, is a very simple example. There is a lot more money tied up with the carbon in your food than with your energy bill, for most people. With this whole area of how best to engage people, some people are engaged by geeky, numerical stuff-relatively few of us-but to send out much more palatable broad messages to consumers so that they understand in broad terms what the issues are, somewhere along the line that geeky numerical stuff needs to be done and needs to be out there.

Q110 Laura Sandys: But who is doing this behavioural analysis? In some ways you could be working in your county council and there is absolutely no connectivity to the person on the street. But there are people who are making difficult arguments with consumers, who are then responding and changing their behaviour.

Dr Benson: We have been looking at behaviour change at West Sussex, working with a consultant who has been advising us on a framework for just that sort of work, and looking at how best we can engage. It is the sorts of things that Mike was talking about, the different languages that you have. It does not necessarily need to be a consumption narrative around some of the issues, of food waste for example. It could be around convincing people that rather than needing to waste less food because of the emissions we save from putting waste in the ground, it is all around the issue of having fun using up leftovers. So we are looking at that currently, and are developing a framework to help us apply the information from the footprint.

Richard Leafe: My contribution to that is that when the consumer is on holiday, they are in a space that allows them to experiment with doing things differently. We have a campaign called "Fair and Local", which is about fair trade and local, seasonal food that we try to get the accommodation providers, restaurants and cafés to promote to the visitor. That has economic benefits for the national park itself, as well as carbon saving benefits, and perhaps it is something different for the consumer. So, we start to play around with that behaviour change, by what people experience when they are relaxing, on holiday.

Richard Sharland: For us in Manchester, our whole approach to climate change is a collective one, so all the organisations in the city work together and build a vision of what the Manchester brand and its future look like. As Mike has said, you need lots of different messages for different audiences. One of the things about our city is that there is a passion for the city, so we can plug into that and engage businesses and residents in the city’s future. The opportunity for a low-carbon economy will be realised more quickly if more people and businesses get engaged. Promoting the virtuous cycle of consuming and buying locally, particular in the food sector, is really important.

Q111 Dr Whitehead: I would like to go a little further with your points, Wendy Benson, on West Sussex. How much easier do you think it has been to engage with residents, with the information gained in a consumption-based approach? You mentioned some initiatives, but are they initiatives that are hoping to engage residents, or is there greater engagement under way?

Dr Benson: It is much more at those early stages. We are just looking at how we engage, but we also have an environment and climate change board within the county, made up of local authority, public, private and third sector organisations. They certainly have found the footprint, Mike has presented that work to them, again, they really do get it-they find it very simple to understand. Similarly, with our heads of departments at the councils, we really were not sure how people would accept and be comfortable with the framework, but having presented to these senior decision makers, they really do find it very simple and easy to understand.

Q112 Dr Whitehead: You have concentrated your analysis on consumption by residents. Like the Lake District, there is a large national park in West Sussex-I am not saying exactly the same as the Lake District, heaven forfend-and do you have a sense that residents might say, "Well, actually, this is about us, but what about those people who are coming to the area?"? Should they not be included in the analysis, in the same way that it has been done as far as the Lake District is concerned, bearing in mind that there are significant numbers of visitors to West Sussex?

Dr Benson: We have not really encountered that issue yet, or we have not encountered that as an issue thus far. I am trying to think how we would deal with that-

Michael Berners-Lee: For all three-the Lake District, West Sussex and Manchester-there was a discussion about the best boundary to choose and the kind of information we particularly needed for this particular area. For the Lake District, we took the view that-because we knew that, on average, there are as many visitors as residents within that boundary-we had better put visitors in, but for West Sussex that was not anything like as obvious a decision, and it is quite a considerable chunk of effort to go and look up what on earth was going on with visitors. Not to say that it would not be a valuable exercise, but it is not quite as staringly an obvious thing to do as it is for the Lake District.

Q113 Dr Whitehead: Conversely, West Sussex certainly appears to have domination of aviation in the consumption-based carbon footprint of the residents. Is that because West Sussex residents happen to fly to a lot of places, or is it because there is an airport right on the boundary of the county and, therefore, people are getting free flights as a result of working at the airport?

Dr Benson: Certainly what the data showed is that having an airport located within the county is a significant issue. The data showed, when we looked at the district and borough levels, that the ones surrounding the airport had a higher percentage of people flying from them than the outlying districts and boroughs.

Q114 Dr Whitehead: How might you factor that into the points you made about what transpired as far as the discussion on how different areas would treat consumption-based analysis? That appears to be a particularly distorting factor, doesn’t it?

Michael Berners-Lee: The first thing to say about aviation is that we included in all three analyses a mark-up factor of 1.9 for high-altitude emissions-that is throughout all of the analyses-because there is reasonably good evidence that that gives you a better surrogate for the climate change impact of activities. That is one reason why, when you look at the aviation stuff, you might see it higher than in some analyses, but I think there is good evidence for doing that, and DEFRA supports that as well.

It is also worth emphasising on aviation, but also on all the other information that comes out of this kind of analysis, that it is not telling you what to do. The analysis is not telling Carlisle that it should not expand its airport, or Manchester or Gatwick. All it is doing is simply presenting some information to go into the decision-making mix. We hope that all decisions will take that into account. Whatever the arguments about airports and travel habits, that will be part of the information mix.

Q115 Dr Whitehead: What I am thinking about, though, is the extent to which the exercise is, and has to be, rather more than just saying, "Well, that’s interesting. Look at what the residents of this area are getting through on a consumption basis." I assume this approach is capable of generating policies at national level, so issues about how different factors come into play in different places are relevant to that overall approach.

Michael Berners-Lee: Yes. My answer to that would be that, in the first instance, you just have to see the information and you have to make sure that all this stuff is commonly understood. The next stage is understanding exactly how that feeds into policy. There may not, in all cases, be an immediate route, but at least the information is there in the equation. Richard picked out food for the national park; in fact, both Richards picked out things that stood out, that came out from the facts and that looked actionable, so off everyone went. Not everything that comes out of all analysis always necessarily translates into action.

Richard Sharland: For us, one of the issues about aviation is that we had set out as a city to have a collective approach that embraces the full spectrum of passion-from sceptics through to activists-because we believe that is the right way for our city to engage all parties. Aviation was one of the most difficult issues in terms of progressing and keeping that collective together. As I have said a couple of times, it is still early days, but the data have created an opportunity to have a completely different dialogue about whose emissions the aviation emissions are and what approaches we might want to take as a city to improve the emission quotient at the same time as maintaining our economic position. The city has been clear that the whole climate change challenge is actually an economic opportunity, but we have to maintain the energy in the local economy to meet it. This approach is enabling us to have a much more integrated and different dialogue about that complex and thorny issue. It would be great to come back in a couple of years’ time and tell you where that dialogue has gone.

Q116 Ian Lavery: On supply chain emissions, how successful has the consumption-based approach been in identifying carbon hot spots in the supply chain, and particularly those associated with procurement?

Michael Berners-Lee: The analyses that looked at businesses-of the three groups here, only West Sussex and Manchester looked at businesses-take a very broad-brush approach, but they suggest some broad issues. For example, in Manchester, where the information is more fine-grained, you will see some industries in the mix where the vast majority of emissions are in the supply chains, and the energy consumption plays only a small part, whereas there are other industries where it is the other way round. So, straight away, that puts a perspective out there in <?oasys [pc10p0] ?>terms of how those things are managed. I can talk about bit more about some of the businesses that Small World is working with-of every size from a bed and breakfast up to a couple of multi-billion pound businesses-that are looking at the carbon in their supply chains.

Environmental input/output analysis on its own does not get you all the way, but it suggests where you might look more carefully. When you start opening up supply chains, you always get a lot of uncertainty. We are back to that question of trying to get practical management information that is good enough. You always have trade-offs about how hard you dig until you get to the point at which you are confident that you have got a good enough understanding to start managing the issues. It is always an opportunity-focused agenda, whether that opportunity be a cost-saving thing, or-more likely at the moment-a reputational thing.

Q117 Ian Lavery: You mention small businesses. Would increased consumption-based information enable many of the small businesses that you have just mentioned, in particular, to identify these carbon hot spots?

Michael Berners-Lee: Yes.

Q118 Ian Lavery: Listening to what has been said and reading the briefs, it seems to me terribly complex-how you will actually obtain the necessary correct, accurate data. How difficult is it?

Michael Berners-Lee: It does not need to be always as difficult. I am back to this phrase of practical management information that is good enough and sound enough to let you take much better decisions. It does not need to be all that difficult. We have worked with bed and breakfasts, microbreweries and other very small companies, where at most they might be able to afford one day of a consultant’s time to go and get the whole picture. You have to be clear about the uncertainties, and you can base a lot of it around environmental input/output analysis and direct them to where the likely issues are. Sometimes you have to dig further and do a bit of more process-based analysis. It is not, in my experience, usually useful in those businesses to do a very detailed process-based life cycle analysis of a product, which is a very costly exercise that very often has as much uncertainty wrapped up in it as top-down approaches have, albeit that that is not always made clear.

Q119 Sir Robert Smith: Do you have a view on the debate about whether our emphasis to date on just the production side has led to offshoring of our emissions?

Michael Berners-Lee: I am not sure whether to date it has so far led to that offshoring, but I do think that there is a perverse incentive. To the extent that the UK is incentivised to cut its production-based emissions, as it goes further down that route the perverse incentive to offshore will get stronger and stronger. There is an obvious clash going on, and the picture is importantly incomplete without consumption based metrics.

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Q120 Sir Robert Smith: Presumably, in a sense, the wider issues of globalisation have led to an offshoring anyway of production, maybe for labour costs or for reasons other than emissions. Do you think in the longer run there could be concerns if you just focused on production?

Michael Berners-Lee: Yes, very definitely. The cleaner and lower the UK’s direct production-based emissions become, the greater the incentive will probably be to sidestep that by offshoring.

Q121 Sir Robert Smith: If we went to purely consumption and you were an exporter, there would be no incentive to make an efficient production side.

Michael Berners-Lee: Yes, and a message that you have probably already heard quite strongly is that actually both production-based and consumption-based approaches are useful in their way.

Chair: Right, I think that brings it to a close. Thank you very much indeed for your evidence. It has been very helpful to us.

Prepared 16th April 2012