Examination of Witnesses (Questions 320-339)
Ms Magda Stoczkiewicz, Ms Esther Bollendorff and
Ms Frauke Thies
5 JUNE 2008
Q320 Chairman: Would you like to
say something from Greenpeace's standpoint?
Ms Thies: I can only support what Magda
has said. Renewable energy is a big part of the solution to our
climate and energy problems, not only for climate change reasons,
although that is the primary motivation for us, but also for security
of supply reasons. We really see the main solutions to be energy
efficiency and renewable energy sources. We believe that this
will be the major part of our energy supply in the future.
Chairman: I have asked my colleagues
to ask questions about separate topics. If you feel that you have
nothing to comment or it is outside your field of expertise, please
say. Do feel free to amplify or pick up on any point that anyone
has made.
Q321 Lord Powell of Bayswater: I
am going to start on the subject of the target itself, the 20%
by 2020. What do you think the reasoning behind that target was?
It has been said rather unkindly that it appeared to have been
devised on the back of a cigarette packet and it is a pot-shot
at a target. Do you think there is a tight reasoning for setting
this target at 20% by 2020? You could argue, for instance, that
it would make more sense to set 30% by 2030 because that gives
more time for other technologies to be proven and more time for
governments to do things with tidal power and so on. What do you
think about the reasoning and why did they choose this particular
figure?
Ms Thies: There are two questions there,
why 2020 and why 20%? The 2020 number is not just an arbitrary
number, this is the timeframe that the industry tells us they
need in order to have sufficient investment, security and certainty,
but at the same time a sufficiently long timeframe to look ahead.
Anything longer than that could lead to postponing actions. Governments
are not that clearly bound by a 2030 target because they can leave
it to the following administration. The 2020 number seems to be
the right number in that respect. Apart from that, it is also
the urgency of the climate crisis that forces us to do something
to 2020 and wait no longer. We have to start now. The technologies
are there and are available, we have to implement them. We know
that emissions have to peak by 2015 and this is why 2020 is adequate
now. Apart from that, we can look at what has to happen beyond
2020 and should we consider further targets then and that might
be necessary depending on the development of renewable technologies
until then and whether they are competitive or not.
Q322 Lord Powell of Bayswater: You
do not think it risks distorting it slightly? In Britain, if we
are going to have a chance of reaching the target by 2020 we can
only do it with wind power. That may not be the most effective
solution long-term. You do not think this is imposing something
just to get a short-term result which ignores the best long-term
result?
Ms Thies: I do not think so for several
reasons. Even in Britain the target is an overall target, so it
is not only in the electricity sector. The UK will probably not
be able to meet the target with wind only, there will be other
technologies needed, such as biomass.. In the heating sector solar
thermal technology will have a role to play. Hydro energy will
have a role to play to some extent, but probably not that much
in the UK because the potential has already been exploited to
a large extent. Nonetheless, these technologies will play the
most important role and at the same time industry and government
know that climate change will not stop in 2020 and rising fuel
costs will not stop in 2020 and it is up to the government to
design a policy that takes this into account and encourages further
development. A good example is the photovoltaic sector. So far
we have only had 2010 targets and over the last few years there
has constantly been a growth rate of around 50% every year and
this has happened although the technology is still quite far from
the market.
Q323 Lord Powell of Bayswater: From
what you know about the situation in the UK, and clearly you know
quite a lot from what you have said, do you think it is really
feasible for us to achieve that target? Obviously people with
a vested interest in a particular technology say it is feasible
but, on the other hand, our experience has been that independent
observers are much more sceptical as to whether it can really
be done. Do you think it is technically achievable for us?
Ms Thies: Technically it is achievable,
there is no question if you just look at the technical potential.
One thing to bear in mind is the UK does not have a 20% target
but a 15% target and there are several projections on what could
happen technically and also politically. For example, there is
a study by the Technical University of Vienna which estimates
that in the electricity sector alone if the UK was to implement
best practice policy measures they could still get over 30% in
the electricity sector until 2020, although not much has happened
up until now. It is feasible but the question is the political
will, the correct support mechanisms and the removal of barriers.
The barriers is where we have one of the biggest problems in the
UK at the moment regarding administrative procedures and grid
access. If this is not removed fast then there will be a problem
in tackling this issue.
Q324 Lord Powell of Bayswater: We
will come on to those aspects. Perhaps one other aspect. Do you
think the rather tight national targets set by the Commission
is the right way to go or should governments be left more flexibility
to decide what is best for each country and what is the most cost-effective
solution for each country? I can see our Government is already
beginning to wriggle a bit in saying we have to have flexibility
and maybe we will have to have a credit for projects which will
not necessarily be completed by 2020, for instance the Severn
Barrage. Do you think we should have more flexibility?
Ms Thies: Some flexibility, yes, because
of the way the targets have been defined based on economic potential.
We accept that some flexibility might be beneficial, the question
is how is this flexibility defined and does this flexibility undermine
the overall achievement of the 20% target by 2020. If this was
to happen then the whole target would be put into question, why
do we have the target. The target was a clear commitment, there
is a point to having the EU target. We believe flexibility, yes,
but the Severn Barrage argument if a country has invested before
but does not conclude the project until 2020 we believe that should
not count towards the 2020 target. It can possibly count towards
a future target if there is such a target, which is likely, and
to the future climate commitments, of course, but it should not
count towards the 2020 target. In the same way, flexibility between
Member States should be there to an extent but at the same time
every country should also develop the potential at home to its
own benefit because at the end of the day everybody will profit
from having security of supply at home and having the climate
benefits at home.
Q325 Lord Powell of Bayswater: Do
you think the target can be achieved without having proper renewables
trading between Member States?
Ms Thies: I think it can only be achieved
without having renewables trading.
Q326 Lord Powell of Bayswater: Really.
Ms Thies: The question is what you understand
by trading. We believe that a trading mechanism on a company level
would undermine the achievement of the target for a couple of
reasons. If we have a trading mechanism that runs on top of the
existing national support mechanisms it is quite clear that most
of the support mechanisms would be undermined and destroyed. This
is something that not only the Member States that have support
mechanisms that are under threat have recognised but also the
European Commission has recognised it and tried to integrate it
in the Directive at the very last minute. Other Member States
are recognising it also. This is not the way to go to have a trading
system on top of the national support systems. Having a harmonised
trading system at the moment is quite a theoretical discussion
because it is not going to happen. Even if it was to happen, we
believe this would not be the way forward because with the experience
we have of national support systems for renewable energy we see
that especially the technology specific support systems, at the
moment so-called feed-in systems in Europe where a certain tariff
is paid for each kilowatt hour depending on the technology, have
been much more successful in promoting the uptake of renewable
energy, and at the same time have been much more cost-effective.
For that reason we believe it would be a severe mistake to now
impose a trading system on the whole of Europe which has so far
had a very bad track record, not much has happened in the countries
that have trading systems. Much of that can also be explained
theoretically as to why it cannot happen and why, if at all, it
can only promote certain technologies and not others.
Q327 Chairman: I think we need to
move on. Is there anything that you would like to add at this
stage because Greenpeace has covered quite a number of issues,
which we are going to return to in a minute in greater detail?
Would you like to comment?
Ms Bollendorff: I wanted to add something
on the flexibility of trading.
Chairman: We will come on to that. Lord
James, do you want to ask a supplementary just focusing on targets?
Q328 Lord James of Blackheath: Ms
Thies has said very clearly that she considers it is technically
possible to achieve the target, but I wonder if Ms Thies would
agree that it is only technically possible to achieve the target
if the supply chain of the technical services required to achieve
the installations are available. At the present moment in the
United Kingdom we emphatically do not have that supply chain at
an adequate level for even just the wind farms alone in total
contrast, for example, to the similar point of the development
of the North Sea fields, the conventional oil extractions 30-40
years ago, when there was a huge amount of commercial investment
in the field of creating a supply chain and there has been none
now. Does Europe contemplate any form of subsidy or sponsorship
for the creation of the necessary supply chain, or is it doing
anything to encourage the British Government to provide centralised
subsidy and support for the creation of that chain? Without it,
I cannot see and agree with you that it is technically possible.
Ms Thies: There are two sides to that.
In some Member States we do have this supply chain and there it
has developed almost by itself without government support. This
is because in these countries there has been investment stability,
support systems that have provided this stability and allowed
banks to give credit at quite low interest rates.
Q329 Lord Mitchell: Could you say
which countries because I think that is quite important.
Ms Thies: Yes. The main countries are
Spain and Germany. Denmark started it but has moved away and changed
its system. At the moment, the clear examples are Germany and
Spain. Germany started in the early 1990s introducing a stable
support system, the system of feed-in tariffs, where investors
know what return on their investment they are going to get. This
is the investment climate in which industry comes to the country
and starts to develop the production chain to install the renewable
energy projects.
Q330 Lord James of Blackheath: That
happened 40 years ago with the Norwegians coming across with their
own developments to do the development of the North Sea for us.
Do you see any situation now under which we can develop or sponsor
a relationship with other European states which will come across
and do the development of the wind farms for us because we have
not got the infrastructure to do it ourselves?
Ms Thies: If the UK had a support system
that attracted investors then this would happen by itself. This
is what has happened in other countries. In Spain initially there
was no industry but Spain has a very favourable support system,
which by the way is one of the cheapest in Europe.
Q331 Lord James of Blackheath: The
short answer is we do not have that environment, so what are you
going to do in Europe to create it or help us to sponsor it?
Ms Stoczkiewicz: One area that you can
explore, especially given the fact that Great Britain is very
powerful in the institution, is to explore the European Investment
Bank as a European bank giving loans on quite favourable terms.
They now have a very strong role in combating climate change and
giving money to renewables. That is one of the areas to explore
for additional funding.
Q332 Lord James of Blackheath: We
should make a note that we should take that up with the Department
on Monday.
Ms Thies: May I add one point to this.
Apart from creating a stable investment framework, there is another
point which is the infrastructure and the facilities we need there.
There I think Europe can add a lot of benefit in facilitating
the creation of a grid system that connects especially the North
Sea countries in the beginning. This is something where Europe
can play a co-ordinating role at least, if not more than that.
This is something that we should be encouraged to do.
Lord James of Blackheath: I finish off
on this point to put it in context. At the present moment we have
two boats capable of doing the development of wind farms in Britain;
at the comparable stage of development of the North Sea we had
78.
Q333 Lord Walpole: What I want to
ask you about, or discuss with you, is the relevance of the renewable
targets to the EU energy policy, and two particular things. You
have touched on it already but, frankly, people we have been discussing
this topic with have not really told us how we can be more efficient
in our use of energy. I do not mean gas or electricity, but energy
generally. How are we going to be more efficient in its use?
Ms Bollendorff: There are legislative
frameworks in place already which need to be implemented correctly.
On efficiency specifically there is the Energy Performance of
Buildings Directive which has enormous potential to reduce energy
consumption. There are other examples of existing legislation
which need proper implementation, such as the legislation on appliances,
the Eco-Design Directive and so on. These are sectors which have
big potential which need to be exploited fully. In terms of the
more general question on what is the scope of the Renewables Directive
or the potential of that Directive in the larger picture of emissions
that need to be reduced, the potential is of 600-900 million tonnes
of CO2 per year. Those are the official figures from the Commission.
If you compare this with the emission reductions that need to
be achieved in the Effort Sharing Decision, which is a part of
the Energy Package, by 2020 this figure amounts to 240 million
tonnes of CO2 equivalent. There is enormous potential in the Renewables
Directive which needs to be exploited and which is complementary
to other elements of the Energy Package, such as the Effort Sharing.
Ms Stoczkiewicz: We believe that for
the European economy in the current situation the only way to
go is to aim at reducing the energy use, the resource use. These
are the areas where, with the technology, we can become more competitive.
If you want to be competitive in the global market that is not
going to be through the heavy use of energy and heavy use of resources,
that has become very clear in the last few years.
Q334 Lord Walpole: The other thing
I was going to ask you was what about security of supply from
renewables particularly?
Ms Stoczkiewicz: That is a connected
question. I do not think that we can fully secure the energy demand
through renewables, but that can be a big part that helps the
security of supply. One of the areas when we discuss renewables
is this is heavy investment and we do not have the funds or infrastructure
for it at the moment. No-one really looks at the cost of the imported
energy sources and how much it costs not only for buying it but
also for securing the supply in the long-term. For us, it would
be difficult to give you a figure that would reduce the supply
by this amount. It is very clear that it will help the security
of supply.
Ms Thies: In the short-term we cannot
give a figure because 20% renewables means there is 80% other
energy which needs to be imported or generated in Europe, but
the likelihood it is going to be imported is high. The further
we get into the future, the more renewable energy can replace
imported fuel sources. We have produced a study on this. Unfortunately,
I have only one copy with me. You may have heard of the energy
[r]evolution scenario that Greenpeace has produced, together with
the European Renewable Energy Council, where we outline in a realistic
way how the development of renewable energy could go forward globally.
We also have a European scenario, and a new edition will come
out in September. We have done an investment report for this scenario.
In the electricity sector alone, until 2050 the investment costs
for renewable energy will be a tenth of the saved fuel costs that
we have from this investment in renewable energy. That means in
the electricity sector until 2050 the investment in renewables
pays ten times just through replacing fuel imports.
Chairman: You referred to trading and
I am going to ask Lord Paul to ask his question now.
Q335 Lord Paul: What role do you
think the Guarantees of Origin schemes have to play in helping
the EU and Member States to meet the targets?
Ms Thies: To be frank, I do not think
they will have a role. They will have a role as a disclosure mechanism,
as they used to have in the past, but what we are hearing now
from the Council and the European Parliament is target accounting
Guarantees of Origin will probably not have a role to play for
the reasons I touched on briefly before, that they would undermine
existing support systems, especially the most successful one.
Other ways of flexibility have to be found. There are good possibilities
on the table. For example, one would be that a Member State goes
to another Member State and makes an agreement to invest in a
wind farm. For example, Luxembourg could come to the UK and say,
"Can I invest in a wind farm in the UK, in your territory?
You will have the benefits of industrial development, climate
benefits and so on, and I will get the credits to count towards
my renewable energy target in Luxembourg". This kind of model
would be possible and deals could be made in this way. It could
even go as far as Member States deciding to share their systems.
For example, the Benelux countries could say, "We will join
up our electricity markets or whole energy markets and we could
introduce a joint support system and join up our targets".
Q336 Lord James of Blackheath: I
am confused. Why is that not a contradiction of what you said
earlier about effectively no cross-border support from renewable
energy?
Ms Thies: It is not a contradiction.
We believe an obligatory trading system on a company level across
the EU would be a problem because that would undermine national
support systems. If, however, certain Member States decide to
join up their systems and even create a joint system, like if
these three countries, Belgium, Luxembourg and the Netherlands,
decided to create a joint system, there would not be a threat
of support schemes being undermined.
Q337 Lord James of Blackheath: With
respect, it sounds like a complete reversal of the answer you
gave to the Lord Chairman earlier.
Ms Bollendorff: This kind of flexibility
scheme would be dependent on achieving intermediate targets from
the country that would sell, for instance. This is in the Directive
anyway, but just to clarify there are some conditions that need
to be met in order to be able to exchange credits or to put in
place a certain trading mechanism.
Q338 Lord Paul: If you can just go
on because it makes a bit of sense to me. Please, go ahead.
Ms Thies: The main difference is do we
create a trading system between companies that runs on top of
the national support systems or do we leave the control over the
support systems to Member States. If Member States decide to change
their systems completely and harmonise with their neighbour countries,
for example, they remain in full control and there is one single
support system. The problem is if every Member State has a support
system and on top of that there is a trading system running where
investors can choose, "I will invest here, but I will sell
my Guarantee of Origin there and take the support from that country",
that is where we see the biggest problem, leaving it to investors
and to the market to decide where they want to invest and where
they want to take the benefit. That will only work if we have
a harmonised support system.
Chairman: That is a very clear answer.
We will move on now to questions on the grid with Lord Bradshaw
and if we could broaden it out to international transmission.
Q339 Lord Bradshaw: I believe the
grid is an essential part of any developed energy system. I am
very concerned about what you said on connection, that is you
must have a feed-in tariff if you are going to encourage investment.
I want to know what the incentives are, both in Europe and in
the UK, to your knowledge, which actually would cause this to
happen.
Ms Thies: I am not quite sure I understand
the question. Do you mean what would create the grid connection?
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