Select Committee on Environmental Audit Fifth Report

The PIU Review and White Paper

The PIU Review

108. The PIU Energy Review represents a major analysis of energy policy and future strategy. It contains much excellent background material and presents a sensible overall assessment of the challenges facing the UK. We fully endorse the broad thrust of the PIU review—namely that we can make up for the shortfall left by the decline in nuclear capacity if we can promote sufficiently renewables and energy efficiency measures. We are, however, concerned about the extent of Government commitment in view of the size of this challenge.

109. Among its many recommendations, we would single out the following as particularly important in the context of this report:

  • the need to develop systems for internalising environmental costs, through shadow pricing and the introduction of a carbon tax or a more comprehensive emissions trading system; and

  • the need to group together responsibilities for energy policy within a free­standing Sustainable Energy Policy Unit.

110. In addition, while generally focussed on longer term strategy, the Review did make a number of recommendations to be implemented immediately in response to issues it considered urgent. Two such recommendations of particular relevance in this context were the creation of the Sustainable Energy Policy Unit (to be set up by May 2002 and be fully operational by September 2002), and the preparation by the DTI of possible legislative measures to assist renewable generators (to be enacted in January 2003, if necessary).

111. On the negative side, we do have some concerns. The Review does not seem to us to respond adequately to RCEP's 50 year timescale. It fudges, for example, the issue of the extent to which the UK should lead the way and set long­term targets. It gives the impression in too many areas that decisions do not have to be taken now. It pins considerable faith on the effectiveness of market forces and on the liberalisation of EU energy markets, and fails to acknowledge explicitly that energy prices will need to rise.

112. The PIU review also fails to provide an assessment of current policy instruments, even though this was an aim of the initial PIU Energy work begun in January 2001. We are therefore concerned that the PIU review may not adequately reflect the scale of the challenge, and that there now needs to be a specific process for translating its recommendations into specific policy commitments, so that the White Paper forms an action plan.

113. More generally the need to use the PIU to conduct a variety of ad hoc studies in the environmental and sustainable development area highlights the failure of departments to work together in a 'joined­up' way. It also highlights the need for a central unit on sustainable development - an issue on which we have commented in previous reports.[153]

The DTI consultation on the PIU report

114. Following the publication of the PIU report on 13 February 2002 the DTI issued a consultation document on 14 May inviting responses to a wide range of issues relating to energy policy.[154] In the light of our comments above, we find this document disappointing:

  • It took three months for the DTI to release this consultation. Given the summary nature of the document, we find this extraordinary.

  • The consultation document fails to include any reference to PIU recommendations where urgent action was required. In particular, it omits any reference to the PIU's conclusion that the split of departmental responsibilities relating to energy policy lacks coherence, and its recommendation that a cross­cutting Sustainable Energy Unit should be created as a matter of urgency.

  • The conclusions the PIU came to were built on an excellent series of scoping notes, extensive public consultation, and considerable analysis. The report is also a complex document which does not readily lend itself to summarisation. Given the enormous and thorough consultation process which the PIU engaged in we fail to understand why the Government cannot come to its own view on the basis of all the evidence collected by the PIU, rather than engage in a further round of consultation.

115. We are therefore concerned that the DTI's consultation on energy may fail to take forward the debate on the basis of the PIU recommendations, and is in danger of simply revisiting all the issues which the PIU themselves covered. We also find it somewhat ironic that the role of the PIU was to adopt a cross­departmental perspective and bring fresh thinking to the debate and yet the consultation on the PIU report and the preparation of an Energy White Paper is now being managed by the Department of Trade and Industry.

153   eg. Second Report from the Environmental Audit Committee, Pre-Budget 2001: a new agenda? Session 2000-01, HC 363. Back

154   DTI, Energy Policy: Key Issues for Consultation, May 2002. Back

previous page contents next page

House of Commons home page Parliament home page House of Lords home page search page enquiries index

© Parliamentary copyright 2002
Prepared 22 July 2002