Select Committee on Environmental Audit Appendices to the Minutes of Evidence


Memorandum from The Royal Society for the Protection of Birds (RSPB)


  The RSPB recommends that:

  1.1  The Government should capitalise on the momentum provided by the PIU by bringing forward a tightly-defined White Paper and moving fast to implementation.

  1.2  The White Paper should build on the foundations laid by the PIU review, and endorse or amplify its key recommendations, namely:

    —  Environmental objectives will tend to take precedence where energy policy decisions involve trade-offs with other objectives.

    —  To introduce a firm target for renewable energy of 20 per cent by 2020.

    —  To introduce a firm target for domestic energy efficiency improvements of 20 per cent by 2010 and 40 per cent by 2020.

  1.3  The White Paper should strengthen the PIU's recommendations and set a higher target for renewable energy for 2030 and beyond, introduce firm targets for energy efficiency in the commercial and industrial sectors, and focus on demand reduction.

  1.4  The PIU review focuses largely on the medium term (to 2020). To provide a clear framework for long-term energy policy, the Government should respond to the Royal Commission on Environmental Pollution report on climate change by acknowledging the need for a 60 per cent carbon reduction target by 2050, and setting interim indicative targets beyond 2010. These domestic targets could form the basis for UK leadership in international negotiations and would provide a strong rationale for introducing measures to price carbon sooner rather than later.

  1.5  In the short term, and as a matter of priority, the Government should issue strong, clear social and environmental guidance to OFGEM, based on the PIU's recommendation to prioritise environmental objectives in energy policy, and should ensure that problems caused for intermittent generators by NETA are overcome.


  The RSPB is Europe's largest wildlife charity with over one million members. We work on a range of policy areas and manage one of the largest conservation estates in the UK, with more than 150 nature reserves covering more than 100,000 hectares. The RSPB is part of BirdLife International, a global partnership of independent national conservation organisations working in more than 100 countries worldwide.


  3.1  Climate change poses the biggest long-term threat to global biodiversity. Plants and animals are already changing their annual cycles and geographical distributions in response to changing climate. Some may move but others will fail to cope and will become extinct. The warming caused by the activities of people will probably affect all 1.4 million documented species on earth. Although birds' mobility will make them better able to respond than some other organisms, they will not escape the consequences of climate change—their position near the top of the food chain makes them vulnerable to changes anywhere else. We are taking a major gamble with the future of life on Earth, including that of our species, and that is why the RSPB places so much emphasis on trying to prevent such change happening in the first place.

  3.2  National and international energy policy has direct consequences for the climate which is why we believe this inquiry to be so important. Sustainable energy policy in the UK not only has important implications in itself for climate change, but also has the potential to serve as an example and catalyse political and practical leadership for the rest of the world, in both developed and developing countries.


  4.1  There have been several important changes to UK energy policy in the past 18 months. These have followed two principal paths: one towards increased competition within liberalised energy markets (eg NETA) and the other environmental protection and, specifically, carbon reduction (eg introduction of the Climate Change Levy, Renewables Obligation, and the emissions trading scheme).

  4.2  Partly because recent policy changes have pursued economic, environmental and social objectives, overall energy policy appears to lack coherence. Particular policies have either pursued objectives incompletely or in ways that mutually conflict, thereby neutralising or reducing their effects. These tendencies have been especially true of policies directed at environmental objectives, including carbon reduction.

  4.3  An example of a policy that pursues environmental goals incompletely is the Climate Change Levy (CCL). Although its goal is carbon reduction, it is based on downstream energy (rather than carbon) use, restricted to business and not applied to the energy intensive sectors with exemption agreements. Another example is the emissions trading scheme, which is voluntary, in which participants are paid to take part and in which electricity generators do not participate. Although we strongly support both these policies in principle, in practice their environmental efficacy has been reduced in order to avoid compromising social or economic objectives.

  4.4  An example of where policies conflict is the interaction between the Renewables Obligation and the New Electricity Trading Arrangements (NETA). The Renewables Obligation is an efficient, market-based policy for increasing the contribution of renewable energy. However, because NETA systematically discriminates against intermittent generators, it either raises the cost of the obligation, or reduces the amount of renewable energy it will deliver. This effect was entirely predictable.

  4.5  Under certain circumstances, an economically efficient energy system can deliver environmental benefits. Resource consumption and pollution will be reduced where price signals lead to generation and transmission infrastructure that provides the right amount of energy in the right place at the right time. NETA and new transmission pricing proposals will have these effects. However, environmental impacts will only be reduced to economically efficient levels if environmental costs and benefits are captured in prices—this is currently not the case. It is also unclear whether the economic costs currently attributed and charged to intermittent generators under NETA are an accurate reflection of the true costs they incur. In cases where there is doubt about economic cost, and as long as environmental costs are not priced, policy could be made more coherent by favouring environmentally benign options—or at least by avoiding placing them at an economic disadvantage.


  Current policies comprise the Renewables Obligation, capital grants for renewables and a budget for R&D. Some funds recycled from the CCL through the Carbon Trust will also be available to support renewable energy development. All this bodes well, though targets and funding could both reasonably be higher. However, apart from the difficulties intermittent generators face under NETA, there are also intractable problems with the planning system. Unless both NETA and the planning system can be made more compatible with the needs of renewables, at the same time as preserving economic efficiency and appropriate land use restrictions, it will be extremely difficult even to meet the existing target of 10 per cent renewables by 2010.


  6.1  To some extent, the neutralising tensions and conflicts described above are inherent in an approach which attempts both to balance economic, social and environmental objectives within energy policy, and to prioritise economic goals at the same time. However, in most situations, the tensions manifest themselves through the activities of departments and the agencies or regulators. Whilst DEFRA and the Environment Agency tend to favour environmentally focused policy options, the emphasis of the DTI and OFGEM is principally on enterprise and competition. OFGEM, whose consumer-centred remit is defined through statute, is strongly focused on economic efficiency and price reduction, and currently await social and environmental guidance from government.

  6.2  For these reasons, clarifying and unifying changes in energy policy and its objectives must come from the highest political levels in order to be able to effect coherent and comprehensive positive change. It is therefore encouraging that the PIU review of energy was commissioned by the Prime Minister, and it is especially encouraging that one of their principal recommendations was that "Where energy policy decisions involve trade-offs between environmental and other objectives, then environmental objectives will tend to take precedence" (PIU Review, p. 5). This is a recommendation strongly supported by the RSPB and one which, if endorsed by government, would have far-reaching and positive implications for the environment and, ultimately for the economy and society as a whole. It would, for example, imply a radical re-ordering of OFGEM's priorities and give concrete expression to their existing statutory duty to future, as well as current consumers.


  7.1  The report can be viewed in two ways. Within the limits of what is currently politically and pragmatically feasible, it is arguably a radical set of proposals. A target of 20 per cent renewables by 2020 is quite ambitious, and a 40 per cent improvement in domestic energy efficiency by 2020 will not occur automatically. The RSPB strongly supports the report as a whole and these recommendations in particular.

  7.2  On the other hand, even within pragmatic constraints, two aspects of the report are not especially forward-looking, and suggest internal tensions and discrepancies:

    (i)  The recommendation that the nuclear option be kept open is highly questionable and at odds with an energy policy that prioritises environmental goals. Although it is carbon free, nuclear power has various other serious and unresolved environmental (and health and safety) impacts, including radioactive leaks, catastrophic failure and high level waste disposal. It is also likely to be expensive and face strong public opposition. Moreover, a programme combining renewables and efficiency improvements could more than compensate for the closure of existing nuclear plant. For this reason, if a decision is made to keep the nuclear option open, it will be vitally important that this does not deflect funds, expertise, time or effort from truly sustainable options. Clearly, granting an exemption to nuclear power from the climate change levy would seriously risk making such options less likely to succeed.

    (ii)  The report places repeated emphasis on the need to avoid compromising international economic competitiveness for environmental reasons. This is another example of the way in which the report implicitly undermines its own recommendation to prioritise environmental objectives in energy policy.

  7.3  It is also disappointing that the scope of the PIU review did not include transport since, as the fastest growing source of carbon emissions, it is clearly an important and intrinsically linked issue. This meant that the PIU did not look at future interactions between transport and energy. This was a missed opportunity given that the growth of new technologies, such as biofuels and fuel cells, will lead to increasing synergies.

  7.4  Therefore, although the report represents a radical step in the right direction, there is some evidence of a continuing tendency to serve several objectives simultaneously and a continuing failure to completely eliminate incoherence.

  7.5  From another perspective, the report is arguably not radical enough. There is already compelling scientific evidence of a practical imperative to move towards a carbon-free economy much more quickly than supposed in the PIU report—the pace of climate change is faster than previously thought, even quite recently. If true, political constraints on the available options will change, perhaps drastically—both domestically and internationally. Indeed, decisions on whether or not to adopt significant long-term carbon reduction targets of the kind recommended by the RCEP and IPCC rest with the Government. The PIU therefore focused mainly on short- to medium-term policies (up to 2020) for creating options that would enable us to meet significant low carbon targets, should they prove necessary in the future. However, it is not clear that these measures will create sufficient options to respond fast or flexibly enough to potentially rapid and significant climate change.

  7.6  Nor is it clear that the mixture of fiscal, regulatory and voluntary measures recommended in the report would be as economically efficient as a single, comprehensive, economic instrument focused tightly on the principal environmental objective—carbon reduction. The report makes passing reference to the need to consider pricing carbon in the future, either through a comprehensive upstream carbon tax, or a carbon cap and trading. However, a 50-year review with carbon reduction as a primary goal could arguably have made carbon pricing its central policy recommendation. This has the potential not only to reduce carbon use progressively to safe levels, but also to do so in a way that maximises economic efficiency, by avoiding the need for a wide array of relatively inefficient and sometimes mutually contradictory micro-policies. The report's apparent reluctance to emphasise the carbon pricing option represents a significant missed opportunity.

  7.7  The PIU report is only a beginning. It will be important for the Government to consult as soon as possible, in order to maintain momentum and capitalise on the immense interest the report has already generated. In order to be effective, the consultation should reach as wide a range of stakeholders, including the general public, as possible. It should be also as tightly focused as possible on the few absolutely crucial issues at stake, as identified above. An open-ended consultation would be difficult to translate into practical policy. Actual policy change and implementation in the direction of a sustainable energy system are what is needed. The RSPB hopes that, at the very least, the forthcoming White Paper will endorse the PIU recommendations as they stand. The Government should build on the foundation laid by the PIU by strengthening the targets it proposes and announcing its intention to introduce measures specifically to price carbon. To do this, and to win public acceptance of the need for such measures, will require strong political leadership. The RSPB is fully committed to lending every support to this effort.

March 2002

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