Memorandum by the House of Bishops' Europe
Panel, Church of England
1. The House of Bishops' Europe Panel is
a sub-committee of the House of Bishops. It acts as a point of
reference for items affecting the Church of England's relations
with Europe and the European Union institutions.
2. The Europe Bishops' Panel (EPB) welcomes
the opportunity to contribute to the inquiry on the economics
of renewable energy. The review is an important part of the process
for facilitating the necessary increases in the use of renewable
sources of energy in the UK energy industry and therefore essential
not only to our efforts to protect the environment but also to
mitigate the effects of climate change on the marginal communities
of our world. The EPB therefore welcomes this work as part of
the task shared by humanity to act as careful stewards of God's
creation and to care as a neighbour for those in need.
THE COSTS
OF RENEWABLES
3. Government policy on renewable energy
and in particular the rate at which its uptake should be increased
is currently being shaped by the EU target that 15% of energy
consumed in the UK should come from renewable sources by 2020.
We note that Mr Malcolm Wicks, Minister of State for Energy at
the Department for Business, Enterprise and Regulatory Reform,
has produced initial assessments suggesting that the direct cost
to the UK of meeting a 15% target will be at least £5 billion
per annum by 2020, in addition to indirect costs in the form of
higher energy prices.
4. We recognise that higher energy prices
are likely to have the effect of incentivising reduced levels
of consumption, and will therefore contribute to meeting UK targets.
However, we are concerned at the effect this will have on the
numbers experiencing fuel poverty and on the levels of hardship
experienced by those already in fuel poverty. We recommend that
the inquiry and future policy following on from it should both
calculate and explicitly take into account the effect of meeting
our renewables target on the numbers experiencing fuel poverty
and the economic impact on those already experiencing fuel poverty.
LOCAL AND
GLOBAL COMMUNITIES
5. Meeting the targets set by the EU will
require a fundamental change not only in the structure of our
generation capacity and our energy industry more broadly, but
also in the way we perceive our own energy use and the extent
to which individuals and industries alike are empowered to make
changes to their patterns of consumption and to the sources they
use. We recommend that the government harness the power of local
communities to shape public opinion by removing the existing barriers
to developing microgeneration capacity, in particular by facilitating
the sale of surplus energy into the Grid, and by offering economic
support to renewable microgeneration projects run by churches,
schools and other community organisations.
6. The experience of the difficulties faced
by St Aldhelm's Church, Edmonton, in selling the surplus electricity
generated by their church hall photovoltaic generation project
demonstrates the difficulties faced by small generators. It also
shows that substantial amounts of effort and commitment are available
for community energy projects. St Aldhelm's estimate that they
lost between six and nine months of revenue due to a combination
of: the lack of guidance from Ofgem, even on basic matters such
as how to sell their electricity and the need for an export meter;
difficulties in arranging authorisation of their export meter;
and a bureaucratic system that was clearly designed for very much
larger generators.
7. The fundamental basis for an increase
in our use of renewable sources of energy is the need for the
world's population to live sustainably. Our current use of fossil
fuels is unsustainable in the long term through the ultimately
limited nature of such resources and the increased difficulty
and cost associated with extracting progressive quantities of
such fuels. More urgently, however, we are also now aware of the
short and medium term social and environmental unsustainability
of our current patterns of consumption as a result of climate
change and its effects on marginal communities in the world's
poorest regions.
8. We note with concern the IMF's recent
conclusion that an increased demand for biofuels has been partially
responsible for substantial recent increases in world food prices.
We recognise that the global social and economic costs that could
arise from instability resulting from a sustained level of increased
food prices are substantial. We note that the IMF recommends the
removal of EU and US subsidies and tariffs on imports of biofuels
as of benefit to the environment and to the economic viability
of renewable energy by switching the likely source of biofuels
to lower-cost producers using a different mixture of crops.
9. We therefore recommend that the inquiry
place a high priority on establishing the likely global social
impacts of any particular economic system of support for renewable
production and use within the UK. We recognise that the Church
Commissioners, through their land holdings, have a significant
stake in UK agriculture and may benefit from increased food prices.
Nonetheless, in response to the concerns raised by the IMF, we
also recommend that the inquiry consider the effect that the removal
of EU subsidies and tariffs on biofuels would have on the economics
of renewable energy and the potential for its increased uptake
in areas other than electricity generation.
HARNESSING TECHNOLOGICAL
CREATIVITY
10. We note that within the EU target, there
is the option for UK investments in renewable energy in other
EU member states to be counted towards the UK target under developments
to the Guarantee of Origin Certificates system. We welcome this
development both as an opportunity for the UK to develop a lower-cost
renewables policy than might otherwise have been possible and
also as a source of valuable investment in the economies of lower-cost
member states. Alongside this we recognise the substantial creativity
available within UK research and industry, and the potential it
has to contribute to the global availability of low-cost solutions
to the need for the increased use of renewable energy.
11. We therefore recommend that the inquiry
consider the most effective economic basis for supporting and
promoting such technological development alongside its efforts
to establish an acceptable economic basis for meeting the target
set by the EU within the challenging timeframe associated with
it. We consider that the aim of becoming technological leaders
in renewable energy development would be of value to our own economy
as well as supporting the necessary global challenge of developing
renewable energy sources. We recognise the role of the Carbon
Capture and Storage demonstration project competition as part
of such a technological strategy and recommend that the inquiry
consider the economic framework for extending such support for
innovation.
June 2008
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