Examination of Witnesses (Question 180-188)
Mr Allan Asher
28 APRIL 2008
Q180 Lord Ryder of Wensum: Thank
you, Lord Chairman. I am interested in what you say. I wonder
whether you could, as the Chairman said, develop the point that
you have made, because it strikes me that, however desirable these
targets are, they are not going to be achieved unless industry
and the consumer is capable of bearing those additional costs,
particularly during a time of recession, and such planning laws
as are in place are changed to make it easier to achieve those
particular targets.
Mr Asher: Yes. From the position of consumers
and the carbon impact of end consumers, this is domestic consumers,
we know that around 40% of carbon emissions in the UK are from
the domestic sector. That is not all household, that includes
transport, but a huge part comes from domestic space heating and
water heating and it is in that area that the biggest energy efficiency
changes can be made too. Yet I have to say that overall policies
across Europe and in the UK largely treat consumers as a passive
object of either government promotional campaigns, or targets,
or admonitions, or threats, or encouragement, but the actual measures
taken to genuinely equip consumers with the information and the
tools that they need to make a difference are largely absent.
Just in case people fear that that is the sort of rhetoric that
you always hear about people who have a political view but do
not carry it out, could I draw your attention to the growth in
consumer responses to recycling. Over 10 years consumers are recycling,
on average, four times the volume that they were ten years ago
and, apart from a few silly examples, there is no law enforcement,
there are no legal obligations on domestic consumers to perform
in that way but, because consumers have bought into that agenda,
they are being given enough information over a long enough period
and, of course, the tools, whether it is one, two or three green
boxes, or something like that, and people respond. Compare that
with, say, petrol consumption, where in 1998 there was a point
at which a barrel of oil hit $15. Typically it was a bit higher
than that, but in any event you could say in the ten years oil
prices have gone from $15 to $115 and yet UK consumption of petrol
has actually gone up by 30%. So the price mechanism alone is clearly
not the solution to these things and, in any event, given the
relative inelasticities of demand here, you would have to increase
prices by a factor of four or five, and consumers would simply
run out of money—they just would not be able to pay, rather
than their behaviour changing—and so it is absolutely necessary
that consumers are bought in through careful information and being
entrusted to be part of the answer and not perceived as irrelevant
or just part of the problem.
Q181 Lord Ryder of Wensum: Forgive
me for pressing you on this, but simply because a government or
public authorities take consumers into their confidence and persuade
them, at the end of the day it is going to come down to two things:
it is either going to come down to incentives or burdens.
Mr Asher: Both.
Q182 Lord Ryder of Wensum: Okay;
both. So persuasion is dependent upon incentives and burdens.
Mr Asher: I am saying "tools",
not just words.
Q183 Lord Ryder of Wensum: The tools
are either incentives, because you have to give the consumer some
encouragement, or you have to place sufficient burdens on the
consumer that he is going to come on your side irrespective of
what the merits of the argument are.
Mr Asher: Yes, that is so, but there
are some other very practical measures that we have not employed.
There is a big debate at the moment, and I heard the National
Grid refer to this too. Smarter meters, or smarter metering as
I prefer to call it, because smarter metering is about equipping
consumers with real-time information about their consumption,
its price and its consequence; so carbon feedback, time of day
metering and ability to know with precision the amount of energy
you are using. At the moment a third of all energy bills are just
wrong, because they are based on estimated readings, and a third
of consumers do not even have the meter read accurately once a
year, and so as we call on them to behave in much more responsive
ways, how can they? So accurate metering, the development of tariffs
for time of day, the ability for two-way feedback on those things
and to pass through the sort of incentives that you speak of,
I think, are just absolutely important things. The second dimension
to that—perhaps it will come up in another question but
I want to flag it importantly now—is that with the soaring
growth in fuel poverty, we are back up to 4.5 million families
now from one and a half million just four years ago and shooting
for perhaps six million, which takes us back to the late 1990s,
there is going to be, and there already is if you just look at
all of the charities who work in poverty, an increasing degree
of frustration, anger and resentment at what they feel to be either
government indifference or incapacity to tackle that, and that
could actually poison the whole energy efficiency and the whole
renewables debate because people will become just so disenchanted
with the social consequences of this that a very, very sad backlash
might occur.
Q184 Lord Mitchell: You will have
heard this question from the previous speakers, but again, how
achievable are both the EU's general 20% and the UK's national
15% renewable energies target? Will other EU energy policies facilitate
the EU achieving its target?
Mr Asher: In my view, the UK 15%, if
that is confirmed, is absolutely unachievable in the timeframe,
and when one looks at the extraordinarily low level now, 2% or
so of achievement, this is after six years' of the Renewables
Obligation. So to get to 2% after six years, I think, one does
need to be a little sober about these things. That is not to say
that a lot more cannot be achieved, and we heard also from National
Grid about the large number of new projects that are queuing up,
but when it comes to the cost of those connections and, remember,
even if all of those projects come on line, that is still only
about 10% of the increase in renewables that would be required
to meet a whole 20, 15% of energy.
Q185 Lord Mitchell: But they were
somewhat more optimistic than you seem to be?
Mr Asher: My views are drawn largely
from extrapolations of what has actually happened and what the
Government is doing and the almost insuperable barriers to getting
through a lot of these things. What is needed is actually a virtual
storm of innovation, new entry, competitive offerings and, sadly,
we have a tightly controlled, vertically integrated sector with
six fairly, I would have to say, recumbent, if not lazy, operators
and they are just incapable of bringing about the results that
are going to be required.
Q186 Lord Powell of Bayswater: This
is a brief addition to that. Why do you think the government signed
up to it? Was it simply badly advised? Was it not paying attention?
Did it have a different agenda?
Mr Asher: I think a rush of blood to
the head, but I think it is a recognition, and rightly so, that
to meet some of the imperatives of science about bringing about,
at least in Europe, a reduction in the growth of carbon dioxide
in the atmosphere that unless we can get to some of those stabilisation
numbers, we will be devastating the earth. Of course, we recognise
that the UK's proportion is pretty low and even the whole of Europe's,
but I think I would agree with the Government that they cannot
with any moral authority persuade China, India or other vast growing
producers to change their systems unless we are seen to as well.
Nonetheless, I would also have to say that by agreeing to such
an unachievable target, I fear it might have the opposite result
than that intended because it will be seen as just the sort of
thing that you say when you know that you are going to be out
of office for 10 or 15 years before anybody comes to measure it.
Q187 Lord Bradshaw: Would you just
reflect on the Renewables Obligation as opposed to feed in tariffs
for a second, please?
Mr Asher: Yes. I give two answers: (1)
if we did not have a Renewables Obligation now, I would argue
stridently that we should not introduce one. It is one of the
most costly ways of achieving the sorts of results that are sought.
The sad thing is that six years in, and with all of the investment
decisions made and the systems in place, something that is even
worse for long-term achievement is no long-term planning and the
stickability of decisions, and so I regret to say that it is probably
necessary, at least through the next 10 to 15 years of these projects,
to allow that to continue but I think it is absolutely time that
we experimented with a range of feed in tariff scenarios, and
this would be particularly if we want to use the approach of microgeneration
at domestic level or combined heat and power at a larger scale
and, most especially, in some areas where it can achieve a number
of objectives, including fuel poverty. I am thinking here of those
vast tracts of the UK where there is no gas and that the use of
renewable sources—biomass and anaerobic sources—for
off-gas areas where these things can be used, and to have feed
in tariffs in those circumstances could achieve two or three of
these goals at once. They are not mega goals, they are not anywhere
near the gigawatts required, but they go some way to dealing with
this problem in areas without large developed grids or without
gas connections.
Q188 Chairman: We are going to have
to move on but thank you very much. If I might say so, the clarity
of your answers and your comments is much appreciated, and I am
going to ask your kindness in perhaps responding in writing to
any questions that we might ask you again.
Mr Asher: Of course.
Chairman: Thank you very much indeed.
|
