Select Committee on Trade and Industry Appendices to the Minutes of Evidence


Memorandum by the Environmental Services Association


  1.  A secure and diverse renewable infrastructure is necessary to form the future basis of sustainable energy supply for the United Kingdom. The Government needs to place heavy emphasis on accelerating the development of the large available resource capacity of renewable energy.

  2.  The Government needs to guard against placing the UK at a competitive disadvantage.

  3.  The Government should introduce further generic support mechanisms for technologies that derive little or no benefit from the RO in order to encourage the development of the maximum possible capacity of diverse and secure renewable energy supply for the future.


  4.  The Environmental Services Association ("ESA") welcomes the opportunity to comment on the above titled inquiry as the sectoral trade association representing the United Kingdom's waste and secondary resource management industry, a sector which usually contributes £5.0 billion to the UK economy (about 0.5 per cent of GDP). Our Members provide integrated solutions to waste across the full spectrum of thermal, biological, mechanical and physico-chemical treatment and processing options, and are consistently achieving more sustainable waste management practices. The UK has over 500MW of electricity generating capacity from non hazardous waste. These facilities are operated to the highest EU-based legislative standards and are tightly regulated by the Environment Agency, Scottish Environmental Protection Agency or Northern Ireland Environment and Heritage Service, as appropriate.

  5.  We welcome the Committee's forward looking approach at UK energy policy over the next 50 years and its recognition of the need to diversify energy supplies. Current over-reliance on fossil fuels is unsustainable in terms of the depletion of irreplaceable natural resources and the growing evidence of negative environmental impacts. Recent developments have emphasised the importance of security of supply and have demonstrated the urgent need for developing alternative arrangements.

  6.  In its study on energy and the environment[44] the Royal Commission on Environmental Pollution warned of catastrophic consequences if the UK did not adopt a strategy to reduce carbon dioxide emissions by 60 per cent from present levels by 2050. Achieving this would require both a zero carbon electricity system and substantial improvements in efficiency. ESA therefore believes that the development of new and renewable energy sources has an important role to play in securing energy supply for the future and mitigating global warming.

  7.  The increasing use of renewable technologies to replace electricity generated by conventional fossil fuel fired power stations has an ever-important role to play in mitigating the effects of climate change. The progress made to date by the renewables industry should be welcomed. However, in order to accelerate the rate of progress and avoid losing momentum, it is imperative that maximum support and encouragement for the continued contribution by, and future development of, all proven and evolving renewable technologies be provided, rather than discriminating between sources and seeming to pick winners.

How can the UK maintain a secure energy supply and what mix of fuels would maximise security?

  8.  ESA believes that in order to maintain a secure energy supply within the UK, cognisance needs to be taken of the following:

    —  a clear framework, with financial and legislative support, needs to be developed to allow maximum supply from indigenous energy sources;

    —  the long-term and high risk nature of investment in new and emerging technologies necessary to achieve sustainable internal supplies needs to be recognised;

    —  maximum support and encouragement for the continued contribution by and future development of all proven and evolving renewable technologies needs to be provided;

    —  the fair and efficient functioning of markets for all energy generators needs to be ensured to stimulate wider supplies at competitive prices and in particular, the problems relating to the effects of the New Electricity Trading Arrangements (NETA) on smaller generators need to be resolved;

    —  network issues including embedded generation and grid accessibility need to be addressed;

    —  serious positive consideration will have to be given to the negotiation of long-term gas contracts with overseas suppliers; and

    —  it must be recognised that energy policy can no longer be considered independently of other sectors and the entire energy system needs to be scrutinised.

  9.  It is likely that gas will dominate in the medium to long term, particularly if coal reserves, once mined, are gasified and used in existing hydrocarbon infrastructure. This will require long-term contracts, a diversity of gas supplies and an increase in storage facilities. Although there is a current move towards reducing nuclear power capacity, increase in gas dependence is likely to be alleviated in the medium-term by nuclear power. It is likely that oil products will continue to dominate the transport sector for some time.

  10.  However, the potential resource capacity of renewable energy in the UK is very large and ESA believes that in order to maximise security of energy supply, heavy emphasis needs to be placed on the accelerated development of both zero and low carbon renewable technologies. A secure and widespread renewable infrastructure is necessary to form the basis of a sustainable energy future for the UK.

Is there a conflict between achieving security of supply and environmental policy? What is the role for renewables and Combined Heat and Power schemes?

  11.  There is a sensitive balance that needs to be struck between economic activity, the environment and security of energy supply. The environmental impact of renewable technologies is significantly lower than for nuclear power and fossil fuel technologies. The renewables industry is not problem-free, however, with financial and planning difficulties presenting the greatest challenges. The Government has made some attempt to alleviate financial difficulties through the provision of a financial support mechanism in the form of the proposed Renewables Obligation (RO), together with various capital grants, however ESA views these measures as too prescriptive about technologies. The planning regime in the UK demands urgent attention as it is an obstacle to deployment of new renewable capacity and threatens long-term security of supply.

  12.  There is an increasingly important role for renewables and Combined Heat and Power (CHP) schemes. CHP significantly increases the overall thermal efficiency of energy generation schemes. ESA advises that CHP should be employed only where there are specific requirements for heat capacity and the infrastructure either already exists or can be installed without prohibitive cost and difficulty.

What scope is there for further energy conservation?

  13.  There is enormous scope for energy conservation through improved energy efficiency. Dramatic energy efficiency improvements could be realised through the construction of energy efficient buildings and homes, and the installation of efficient electrical equipment and light bulbs. The Government must also fully embrace the tremendous energy efficiency opportunities associated with integrating CHP and district heating, where feasible, as part of planned house building programmes, some of which could utilise household waste.

  14.  Improvements in energy efficiency in the transport sector would also play an important role through the manufacture of highly efficient vehicles. Security of supply would be enhanced by accelerated development of vehicles that are fuelled by non-fossil sources.

What impact would any changes have on industrial competitiveness and on efforts to tackle fuel poverty?

  15.  ESA is concerned that the Government's proposals for RO (which restrict biomass, exclude incineration of mixed wastes and are insufficient for the development of emerging technologies) will place the UK at a competitive disadvantage in comparison with other EU Member States. This is exacerbated by the fact that the Renewable Energies ("RES") Directive defines the incineration of the biogenic fraction of mixed waste as a renewable source of energy and endorses financial support by Member States where the waste hierarchy is not undermined.

  16.  Environmental taxes such as the recently introduced Climate Change Levy (CCL) can present an effective tool for encouraging progress towards a low carbon economy, since they are universal and the costs can be internalised, but they must be seen to be fair across the board. ESA is not unsympathetic to increasing environmental taxation to achieve environmental objectives. However, it is imperative that the overall burden on the productive economy must not, particularly when sterling is relatively highly valued, exceed that on the UK's competitors both within the EU and elsewhere.

Is any change of Government policy necessary? How could/should Government influence commercial decisions in order to achieve a secure and diverse supply energy?

  17.  Financial incentives such as the RO are helpful, however current proposals over stimulate some sectors such as onshore wind, landfill gas and large hydro, although each of these technologies have limited scope to provide new capacity. We strongly believe that the RO should better stimulate other sectors such as biomass and energy crops through an adequate buyout price and sufficient capital grants and should also provide a stimulus, where none is currently proposed, to the incineration of mixed waste by conventional thermal technologies.

  18.  The exclusion of the incineration of mixed waste from the RO appears to be inconsistent with the Renewable Energies ("RES") Directive, which recognises the incineration of the biogenic fraction of mixed waste as a renewable source of energy and endorses financial support thereof, with certain pre-conditions. This exclusion is also inconsistent with the Government's own policy on the CCL of exempting energy generated from the incineration of the biogenic fraction of mixed waste.

  19.  The proposals for the RO are therefore restrictive, signal a missed opportunity to expand renewables and are fundamentally flawed, pointing to policy failure.

  20.  ESA urges the Government to introduce further support mechanisms for the technologies that derive little or no benefit from the RO. We encourage the Government to ensure that any new support schemes are inclusive, rather than exclusive, thereby encouraging the development of the maximum possible capacity of diverse and secure renewable energy supply for the future.

44   Royal Commission on Environmental Pollution. (2000). Energy-The Changing Climate. London. The Stationery Office. Back

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