Examination of Witnesses (Questions 60-78)
Dr Douglas Parr
25 JUNE 2008
Q60 Chairman: Is that EU-wide?
Dr Parr: That would be EU-wide yes.
Q61 Lord Palmer: So, Viscount Brookeborough's
point of view about milk quotas and potato quotas etcetera is
quite a serious thing.
Dr Parr: Yes. To be honest, I would have
to check that number.
Q62 Lord Brooke of Alverthorpe: It is
probably not far off.
Dr Parr: Twenty per cent is 10 billion
euros, if that figure is right. It is quite a sizeable amount
of money. To come back to what we think should be done with it,
our view is that, of the auctioning revenues, 50 per cent should
be used within the EU and 50 per cent should be used for assisting
developing countries with the transition around climate change
of which about half of that should be towards adaptation because
developing countries are to some extent already experiencing climate
change impacts, but obviously also some of it should be used for
mitigation and to contribute to reducing deforestation degradation
and the emissions that come from that. So, 50 per cent domestically,
50 per cent for developing countries and within that there is
adaptation, mitigation and the deforestation strand. Within the
domestic sphere, those revenues could be used for a variety of
measures and no doubt governments will decide how they want to
do it but our view is that there should be some measure of hypothecation
and that it should contribute to R&D support measures for
particularly renewables and other measures that can help with
energy efficiency and changes in the energy system.
Q63 Lord Palmer: If you could let us
know that figure, that would be helpful.
Dr Parr: Yes, that is fine.
Q64 Chairman: Do you feel that the result
will be that hypothecation will be agreed to?
Dr Parr: Sadly, that does not look very
promising at the moment because I do not think that any of the
Member States are particularly fond of a significant level of
hypothecation, certainly nothing like the level that we would
like to see, and I think it is more likely that the Member States
will see it disappear into their treasury pots and will be used
to decrease taxation elsewhere, which of course is not necessarily
a bad thing but I think that in this case we should see these
revenues being dedicated to the purposes for which they were raised,
which is changing our energy system.
Q65 Chairman: Do you believe that the
ETS is slightly awkwardly balanced within the European Union between
those which are highly-developed countries and those which are
lesser developed because it imposes a bigger strain on those that
are less developed in coming up to the same standard as the other
countries?
Dr Parr: That is a good question. I think
on the question of emissions revenues, the major politics has
been about States which feel that their power system will be penalised
heavily. On the specific point of hypothecation, I am not sure
how the Member States break down in terms of their attitudes towards
it. I would have to check with my Brussels colleagues on that.
Q66 Lord Cameron of Dillington: Did your
organisations ever calculate the cost to the industry of, for
instance, your proposal that there should be a 30 per cent reduction
rather than a 20 per cent reduction or do you just look at it
purely from the greenhouse gas effect and what we are trying to
achieve vis-a"-vis climate change? I am just wondering whether
you balance your approach to sustainability with the economic
leg really.
Dr Parr: I am not aware that we have
done a cost study on that. It is possible that there are figures
kicking around and I am just not familiar with them. I think our
point of view is that we need to speak for the climate at this
point and if we do not, then nobody else will.
Q67 Viscount Brookeborough: Regardless
of the cost to business and the community?
Dr Parr: I think that calculating costs
a long way out like that particularly when part of the point of
the scheme is to unlock knowledge that is contained within industry—
Q68 Viscount Brookeborough: It is not
necessarily financial cost, it is social cost and it is poverty.
Dr Parr: I think that we are mindful
of the social cost because it is easier to identify. I think that
one can make general points about how one can manage that and
also about the costs of not doing so. If we are going to provide
a leadership role across the world, we would expect to become
leaders in the technologies that are going to help the change
across the globe and that in turn means improvements in industrial
competitiveness, jobs and so on. There will be positive economic
aspects to this as well as potential costs and I think that it
is possible to identify those as well by looking at, say, what
has gone on with Germany and their renewables industry where I
think they now have about 250,000 jobs in their renewables industry
and we have 20,000. Yes, sure, there has been a cost to their
proposals within their renewable energy framework and it comes
out at I think around 2 euros 50 per month per household. Equally,
there are now 250,000 people who have jobs who perhaps otherwise
would not have. There are clearly benefits to going down a road
which is fully committed to low carbon technologies and we would
expect that to be the case across the EU.
Q69 Lord Brooke of Alverthorpe: I would
like to go back to the issue of allowances. Do you oppose in principle
to any free allowances or do you see that there may be a case
|? I can see solutions to the problem that arose with free allowances
not least that, if you get windfall profits, you can have windfall
taxes as well, so there are often other solutions to it and you
have said that, if you have a problem, there is not necessarily
just one solution. Under the scheme, we do have some free allowances
and they are going to run through until 2020. How do you think
that free allowances should be allocated?
Dr Parr: I think that there are free
allowances which should be tied to the proper scrutiny of questions
around carbon leakage as we discussed earlier because there is
an in-principle point about that which we would accept, but I
think we would see them as being at a pretty low level depending
on the outcomes of that detailed scrutiny of the argument.
Q70 Lord Brooke of Alverthorpe: We could
also use the system of benchmarks.
Dr Parr: Yes.
Q71 Chairman: Do you think we could?
Dr Parr: Our preference would be for
auctioning.
Q72 Lord Brooke of Alverthorpe: That
is where we may get to but we are trying to find a way on the
route and to try and have a look at the new system and make sure
that it works better. Picking up on the enforcement point now,
effectively there has not been a requirement to practise much
enforcement during the initial phase whilst it has been established,
but it will clearly become increasingly important to ensure that
we do have effective and successful enforcements. Do you think
that the proposals which are presently being laid are going to
be fully effective or do you think that there are other changes
that could be made to make for even more enforcement?
Dr Parr: We would have two propositions
at this point and I would like to say at the outset that we are
certainly not experts at this. Two propositions would be that
we believe that there should be on-site visits for verification
that the described practices are actually being performed and
the general principle of on-site visits of verification is that
they can be at very short notice or even unannounced. The second
would be that there should be an independent country reviewer
expert appointed within each country to look at the verification
and emissions data across the piece. So, there are a couple of
mechanisms that I think would help on verification enforcement,
but I would be the first to say that this is not in the field
of our expertise.
Q73 Lord Brooke of Alverthorpe: It is
an important area.
Dr Parr: It is absolutely an important
area, yes.
Q74 Lord Brooke of Alverthorpe: Do you
see any role for the Commission itself to be involved with verification
in the centre rather than it being done on a State-by-State basis?
Dr Parr: It would be nice but I think
that there would have to be a lot more relevant Commission staff.
I am aware that delays within the Commission for various policy
propositions actually come about because of shortage of people
in the Commission to actually do the job. That is not an overwhelming
hurdle but I think that there would have to be a considerable
building of institutional capacity there before they were in a
position to do that and my understanding of it again is that for
a lot of the expertise on verification, you would have to sit
quite close to where the emissions were going on rather than being
centrally managed. I think that setting frameworks and standards
and making sure that those frameworks are being adhered to by
the relevant national authorities seems to be about the right
place to be.
Q75 Lord Brooke of Alverthorpe: We have
of course had problems with enforcement in the whole range of
areas of different policies which emanate from Brussels and I
just wondered if you had any ideas on perhaps a novel approach
which may be controversial to individual Nation States but could
in fact ensure that there was some standard and uniform compliance.
Dr Parr: Do you have something in mind?
Q76 Chairman: There is obviously a structure
of compliance with IPC at the moment.
Dr Parr: Yes.
Q77 Chairman: Some of the large combustible
plants are controlled by a directive, so we have a form of that.
Do you feel that is sufficient or that building on that is sufficient
or are carbon dioxide emissions a totally different area of science
which needs different enforcement measures?
Dr Parr: Yes, potentially. I would like
to chat to the Environment Agency before I make any further statements
on that. I am sorry, I just have not thought about that.
Q78 Chairman: There are no further questions
from us. Dr Parr, thank you very much indeed for this morning's
evidence that you have given us. You have been able to answer
most of our questions extremely well, so thank you very much indeed.
As I said, a transcript will be produced and you will have a chance
to look at it and, in the meantime, may I thank you very much
indeed for your appearance here this morning.
Dr Parr: It has been a pleasure.
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