Alistair Darling MP and other top energy experts discuss the most important issues surrounding energy and how best to solve them

Round table participants

Dr Kevin Anderson Research director, Tyndall Centre for Climate Change Research

Aily Armour Biggs CEO, Global Energy Finance

Alistair Buchanan Chief executive, Ofgem

Ed Crooks Energy editor, FT

Alistair Darling MP Secretary of State for Trade and Industry

Nick Eyre Director of Strategy, Energy Saving Trust

Ian Funnell General Manager, Power Systems UK, ABB

Dr Paul Golby Chief executive, E.ON UK

Richard Hastilow CEO, Royal Institute of British Architects (RIBA)

Dr Catherine Mitchell Centre for Management Under Regulation, Warwick Business School

Keith Parker Chief executive, Nuclear Industry Association

Neil Sinden Policy director, Campaign to Protect Rural England (CPRE)

Prof Lynda Warren Member, Committee on Radioactive Waste Management, Emeritus professor of Environmental Law, University of Wales

 

Ed Crooks (chair) Thank you everyone for coming. I will go to the Secretary of State first to kick us off with some of the crucial issues.

 

Alistair Darling Energy has achieved a degree of political importance that it did not have five or six years ago. As you know, there is a fair amount of speculation at the moment about the Department for Trade and Industry (DTI). The DTI has changed its shape over many years. The Department of Energy was a department in its own right until 1983 or 1984, when it was decided by the then prime minister that it was not of sufficient political importance and could be absorbed into a larger department.

About four or five years ago, people realised things were coming together that meant it was important that the government had an energy policy and also that it was an energy policy in the context of some very pressing problems facing the country.

There are two drivers behind the Energy Review, published last year, and the Energy White Paper, published a few weeks ago. First, the need to do more to reduce the adverse impact of climate change and, in particular, the growing concern about the effect that carbon emissions are having in relation to our environment. Second, there is a growing concern about security of supply. For most of our adult lives, we have depended on there being plenty of oil and gas in the North Sea but, while we have probably 30 years or so of oil and gas left, the field is mature and it will decline. If we do nothing else, we will need to import substantial quantities of oil and gas from different parts of the world, and some of those parts of the world have obvious political difficulties. Those two drivers underpin our approach. They are complementary. In relation to climate change we published the white paper against the background of the Stern Review, published last year, raising far wider issues than simply the question of energy.

Sometimes, in day-to-day media coverage, energy is taken to mean electricity generation. Electricity generation is very important but it is not the whole story. We also have to consider the generation of heat, which currently comes almost exclusively from gas, and the question of transport, which generates very substantial emissions - and not just carbon emissions. The white paper covers all of these, although, inevitably, there has been a lot more attention (especially vis-à-vis nuclear) in relation to the generation of electricity.

Finally, there is an international context. I have just come back from the Gulf States. In the three places I visited, while they produce huge amounts of oil and gas and have massive reserves in place, they too are focusing on the environmental impact of consuming hydrocarbons. It is encouraging that they are prepared to invest very substantial sums in relation to mitigating the effect of that through carbon capture storage. In Abu Dhabi, they are investing a lot of money in solar energy.

Right across the world, the twin issues of security of supply and climate change are big issues. Also security of supply has massive geopolitical implications as well. That is the background.

 

Ed Crooks Paul Golby, you gave a strongly worded speech this week where you said it was "five minutes to midnight" in the race to get the right energy policy. Does the white paper address what you want?

 

Paul Golby I was trying to point out in that speech that we have a window of opportunity in the UK, driven by the fact that somewhere in excess of one-third of our Southern Electric generation production is going to close over the next decade or so. It seems technologies, such as clean coal and nuclear, will take all of the period between now and probably the end of the second decade of this century to get in to place. Unless we start moving quickly on those options, they will disappear because we will inevitably take the easy route out - the energy crunch is going to come at around the turn of the decade - and we will find ourselves with a second dash for gas.

I think that, if we go down that route, our grandchildren are going to look back on this and say, "You got it wrong, first, from a security of supply point of view but also from a carbon point of view." If you go down that route, carbon emissions will continue to go up rather than come down.

This is not a debate about nuclear versus windmills and draft excluders. Yes, we will need nuclear; yes, we will need some more gas; yes, we will need some clean coal technology, and I think the scheme that the Chancellor announced is invaluable. My company is investing in a major wind farm off the Thames Estuary, the London Array, which is a billion-pound project but the local authority in Kent, where the cable comes on shore, has stopped us in our tracks by refusing to grant planning permission. Similarly, a competitor at Canvey Island gas storage, which is Centrica, is facing a problem because, according to the local authority, there is no national need for gas storage. We just cannot allow things like this to stop us developing assets of strategic national importance.

We need to see a new planning regime, from 2009 at the latest. If it drifts beyond that, we start to get into serious difficulties. We need some serious moves on nuclear over the next 18 months or so. We want more clarity over whether it is supported by government and other political parties because, when many of these decisions come to account, it will not be the current administration in power, so we need some consensus here that this is the right way forward.

 

Alistair Buchanan Where Paul and I may meet in this debate is on the importance of planning, but my angle is on networks and not on plant. On plant, if we are looking at this scenario in, say 2015, effectively what we are saying is that 2-3 gigawatts (GW) of Magnox and advanced gas-cooled (AGR) nuclear stations will be closed. So, by 2015 you have got, say, 3GW of nuclear out and you have got 7-8GW of coal out. Scottish Power, under its new owner, has said it would like to revisit Cockenzie, so, possibly, you are in the region of 10-15GW being knocked out.

What do we have on the other side of the balance sheet? We have renewables. Having been a little bit cynical here, I tend to agree that the offshore push can take our 2GW up to more than 6GW by 2015. I hear your comments on gas and coal, but it is slightly undermining the power of the energy utilisation factor and the fact that you have got a carbon benefit through the trading mechanisms. So all is not lost if it is through gas and coal. We have also now got a new interconnector being developed to Holland, and I guess there will be more behind that.

Finally, [several power plants are being built]. We have Marchwood and Langage, which is 2GW. We have Ineos Chlor building Weston Point; Conoco doubling Immingham, and we hear that Teesside Partners are looking at a major combined heat and power plant as well. So there is possibly another 2GW there. In the past week, we have heard that RWE is intending to look at Staythorpe. Staythorpe is a huge plant - 1.7GW. The interesting thing about Staythorpe is that, in 1996-1997, Inergie, the company that then owned Staythorpe, got National Grid to build all the gas pipes to it and all the wires to take away the power. That site can be put up very, very quickly. Tees Sport Energy was put in place fantastically fast; Staythorpe was developed very quickly.

We have 5-10GW of economic onshore wind north of Inverness that we need to unlock. What keeps me awake at night is how we get [the] Beauly-Denny [powerline] upgraded, because the idea that we can lose 5-10GW from our security supply and from our renewables target and carbon target concerns me. We broke the five-year cycle in 2005 and said, "We need to put down £560m now to let the companies build Beauly-Denny and three other Scottish projects." The money and goodwill is there. It is just getting these things through planning.

 

Paul Golby Almost every power station Alistair mentioned is gas, and my concern is the second dash for gas. I think that will be the wrong answer.

 

Ed Crooks One of the issues that people are concerned about is not that we are not able to build facilities to import liquified natural gas, but it is that there will be enormous worldwide competition for gas. Merely building a facility does not necessarily mean that the gas will flow. I was also worried about the size of consensus emerging between the government and the industry regulator on planning.

 

Neil Sinden I am not terribly optimistic that we are starting the debate about planning reforms from a suitable starting point. The proposals being brought forward by government in the planning white paper for reforming procedures for major infrastructure projects - not just only major infrastructure projects but a whole range of infrastructure projects - are flawed. This raises some quite serious questions about the feasibility of the government's own objectives - and some other objectives that we have heard about.

There are three flaws. The first is that there is an assumption, which is not helpful, that the local democratic component of the planning system particularly, but also the extent to which planning policies and procedures are subject to national democratic scrutiny, is a problem. I would argue that we need a much more sophisticated political machine to enable government to understand better the implications of what people describe as blockages or barriers in the planning system in terms of local opposition to particular schemes. I do not think it is appropriate simply to write off local democratic opposition as being invidious. I think it is much more significant, widespread and substantial than that.

The second flaw is the danger that we see climate change and CO2 reduction as synonymous with environmental concerns.

While we fully support the government's endeavours to engage with and grapple with the climate change challenge, the environmental agenda in terms of the interests of communities and public interest charities is much broader than climate change and CO2 reduction. It is concerned with the quality of landscapes and wider life issues.

The third point is that we need to be doing much more to look at the positive role of the planning system to help us move towards low-carbon patterns of development and low-carbon lifestyles.

So far, the planning debate has been cast in terms of it being an obstacle to progressive change, whereas I think there is a hugely positive role that planning can play in helping us move towards low carbon development patterns.

 

Ed Crooks To what extent is planning reform - and planning reform along the lines that the government has proposed - an essentially good solution to effective radioactive waste management?

 

Lynda Warren I do not think it is essential, but it will make life a lot easier. The proposal that the government has accepted is that siting for a radioactive waste repository will be based on community agreement. However, you hit an enormous problem when you try to work out where that community agreement is going to come from. If you have county and district authorities, you could have a situation where you have a local community that is really keen to go ahead but a larger county that simply does not want anything to do with it. So, the major infrastructural approach could make life much easier but that is not to say that I do not think that the local aspects are very important.

With nuclear and radioactive waste, your local opinions are going to be bombarded from all directions with people opposing and that is not a very healthy way of dealing with an issue. You might miss out on things that are locally important, not the political opinions or the NIMBY effect, but just local conditions might not be taken forward. I think there has to be a mechanism to ensure that happens.

 

Alistair Darling The planning proposals came from the Eddington report [into Britain's transport network], which Gordon Brown and I commissioned about three years ago. I asked Eddington to look at planning, mainly because of the Heathrow experience. I cannot believe the situation has improved for local people, or anybody else, by having 35 different planning inquiries over seven years, essentially to decide the same thing: "Do you want a new terminal?" Interestingly, the decision to replace terminals two and three almost went through on the nod when, arguably, the same issues are in play.

What local people think is critical. The point of the Planning Commission is to provide a sensible method by which arguments for and against can be aired in a way we can deal with. Currently, planning consent - no matter where you stand on it - can take years. The only people who can afford to participate in it are those who can afford to bankroll QCs over many years.

 

Ed Crooks The other outstanding example people always refer to is the Sizewell B Inquiry and the planning nightmare that that inquiry turned into.

 

Keith Parker I worked on the Sizewell B Inquiry. Before the Terminal 5 Inquiry, it was the longest running public inquiry in the UK. It sat for something like 340 days over a number of years - only 30 days were dedicated to local issues. There was a long discussion about the need for new nuclear power stations, about the economics and safety as well as the local environmental issues.

The Hinkley Point Inquiry came a couple of years afterwards. That was shorter but it looked at the same issues. I think the proposals to have statements of need, if you like, agreed at the national level are very important, but I agree that we also need to take full account of local concerns. I think, broadly, the planning proposals have it about right. However, planning is only one of the measures that is needed to incentivise investment in new nuclear build. We have to recognise that the government has made it abundantly clear that this has to be done by the private sector.

We need clarity around waste, not only where the legacy waste is going to go but whether that facility will also take the new-build waste. The companies need to be clear about how much responsibility they have for waste management costs. I think they accept that they will have to pay for the decommissioning costs, but a discussion has to be had about the apportionment for costs for the long-term waste.

My final point about the incentive for nuclear is that there needs to be some clarity around a carbon market and the price of carbon because that will have an influence on the relative economics of nuclear. We are seeing encouraging progress on all these fronts. Large companies, such as Ford and others, have said publicly that they would be very interested in investing in nuclear within the right framework.

 

Ed Crooks What about the importance of public support for new nuclear buildings for these power stations to get built, and the level of opposition?

 

Lynda Warren The Committee on Radioactive Waste Management (CoRWM) has been misquoted on new build. We proposed a repository that could take all of the higher activity waste. It makes sense, if you are going to do that, that it is going to take as much of the waste as you can reasonably foresee might have to go in it. But we have also said that it should be very much a community decision to take that waste.

That presents problems because, on one hand, industry wants to know that there is a solution to the waste before it starts committing a lot of money. On the other hand, the local community is going to want to know quite what it is letting itself in for. So I think a lot of joined-up thinking needs to go ahead there.

 

Keith Parker What we have also found is that, because of public concerns about climate change and security of supply, public attitude towards nuclear being part of the future energy mix has also improved.

 

Paul Golby We operate nuclear plants in Germany and Sweden. In Sweden, during the past decade, public opinion has moved from a massive negative on nuclear to an overwhelming positive. They have done that by being very open and having fact-driven debates. Any member of the public in Sweden can go to nuclear facilities and ask to see the waste and how it is stored. They have been very transparent and that is how public opinion has been changed.

The track record in the UK of our nuclear industry has not been good in that regard. We have got to get that transparency in place if we are going to take the public with us.

 

Alistair Darling I agree. I have said often enough that the industry is its own worst enemy at times.

 

Alistair Buchanan We have been running a series of workshops on what consumers are willing to pay for and what they are willing to believe in. The Channel 4 programme that questioned whether environmental change was more to do with sunspot movement than mankind came out over the period that we were doing our analysis. The sheer power of a media hit, such as the one that came from the Channel 4 programme, should not be underestimated - it made such an impact on our group.

 

Catherine Mitchell I support Alistair Buchanan on the gas side of things, to a degree. The important thing about energy security is having power plants that are flexible. It is the balancing that matters. The debate about energy security is not looking at the right issues. I think it would be helpful if people just looked at the evidence and the requirements in a long-term sense. It is about how all those parts of the energy system come together to move us, in the long-term, to sustainable development, and sustainable energy is just one part of that.

I come very much from the Neil Sinden side of things to do with planning. Although I come from a renewable background, I think I am generally perceived to be pretty conservative about what I think ought to happen to the planning system. To a degree, my view is that the consultation has not happened yet. The extent to which nuclear power is going to come back into the energy system is a problem because it is a very small part of that energy system. By spending the kind of resources and commitment you need to in order to make that happen, it means that you are not concentrating on the other 92 per cent of the energy system, which is really about moving over to low carbon. Practically, nuclear is of no importance in the fight against climate change. I say that looking back to 1978 and 1979, and to the Sizewell Bs that came out of that particular nuclear power programme build.

I want to move on to the bigger and more important issue of this government's attitude to innovation. I think that it is completely on the wrong side of what I call the "innovation fault line". It is a big step in political terms for the government to move over to policies that enable innovation because it is, essentially, outside of our political paradigm. Unless we move over to the right side of the innovation fault line, there is no way we will make sustainable development, never mind sustainable energy.

Not all innovation is good innovation. We only want innovation that is going to help us to move down the road towards sustainable innovation. If you look at the literature that discusses transitions - how you change society from one thing to another or how you change technological regimes - all that literature argues that innovation is not linear or predictable.

If it wants to move to sustainable energy or to have sustainable development, what the government needs to do is to create an environment that encourages and enables innovation to flourish. I think we all agree that moving to a sustainable future is about a lot of innovation.

Government needs to put in place policies that do not shore up the momentum of the systems of the incumbents. It should encourage new entrants, reduce risk, increase certainty and sustain the long-term nature of supportive policies. It should be supporting niches and opening up, not closing down, issues. But it does not do these things. It is on the wrong side of the innovation fault line from the academic literature.

I think the real issue is not to concentrate on nuclear versus renewable but it is about getting the right fundamental attitudes in place that will enable this country to move to a sustainable future.

 

Ed Crooks Kevin Anderson, do you think the government is on the right track?

 

Kevin Anderson No, but I think it is probably on the same track as we are publicly and internationally. There is a global consensus that does not seem to be based on evidence at all. It is completely at odds with the science of climate change. There is no link between the timescales of what we are talking about here today and the timescales that are discussed in scientific literature and within scientific analysis.

In relation to Catherine's approach, I am very concerned about the idea that innovation is where the solution lies. Innovation is in the future. What matters are cumulative emissions. We do not have time for wind turbines, nuclear power stations or carbon capture and storage. None of these are prerequisites for a low carbon future - behavioural change and demand changes are [prerequisites]. You can do those things almost instantaneously. You will not have the 20 or 30 new power stations that we will need by 2015-2020 to make any significant dent in the UK's CO2 emissions.

Don't shoot the messenger now, but, if you take the targets in the Climate Change Bill, which is reinforced by the white paper, and look at the cumulative emissions, taking the government's own apportionment approach, you are talking about a 650 parts-per-million to 850 parts-per-million future. In other words, a 50 per cent chance of 4°C. That is basic analysis using basic data from the Met Office Hadley Centre. Is that what we are aiming for? The Climate Change Bill and the Energy White Paper talk about 23m to 33m tonnes of carbon saving if all the targets are achieved - that is a big "if" by 2020. If you factor in aviation and shipping, the principal message for climate in any white paper is that there will be no reduction in any emissions by 2020 because emissions in aviation and shipping will likely exceed the reductions in the bill.

I have no problems with this, but it requires honesty and joined-up thinking. If what we are aiming for is 4°C, which is very hot and we will have to build the infrastructure to adapt to it, we can then talk about the moving of the deckchairs on the Titanic that we are discussing today. If, however, we are only talking about 2°C, this is a completely inappropriate debate that we are having. We can show this quantitatively with the science. As I say, do not shoot the messenger.

 

Nick Eyre I half agree with Kevin. It is worth reflecting how important the demand side and the role of the individual is and has been historically by looking at the improvements there have been in energy efficiency in homes in the UK since the first oil crisis. We have doubled the efficiency of energy use. We use half as much energy as we would have done. That saves about 40m tonnes of carbon. That is about three times the output of the entire nuclear stock. If we tried a bit harder then we certainly could go faster and, perhaps, to where we want to be, which is to continue having economic growth, but to turn down energy use. Government is to be congratulated at least on sharing that vision. That is not to say that we are going fast enough with every policy driver, but it is a big start. Individuals are directly responsible for 50 per cent of carbon emissions in their homes and for transport, and indirectly for the other 50 per cent through various form of demand.

Our market research indicates that the vast majority of people do accept that climate change is a big problem. About 20 per cent of them say they are doing something significant about it themselves. So a large proportion of the population knows it ought to be doing more. We know from behaviour change research that it is complex; it needs government leadership. We need more than just additional information, although the provisions of the white paper on billing and metering are very welcome.

What really changes people's behaviour is what their friends, family and local community does. There is a key role for government in the broadest sense, thinking about the role of local government, about involving community groups and about setting up more comprehensive advice services and awareness-raising campaigns locally, because they stand a much better chance of securing behaviour change.

At the Energy Saving Trust we are not claiming that changes on the supply side are not needed as well but, as with technology change, if we want to get the behaviour change over an extended period, we have to start now.

 

Richard Hastilow I very much back what Nick has just said. Breadth and balance is absolutely right. As an individual I hate to admit that we need big government to tell us what to do. I think that is counter-cultural to many of us in this country.

We have big decisions and big compromises to make. When it comes to energy choices, if gas really can be secured politically and is a transition tool, then there is a hard choice between using that and/or accepting the carbon emissions that come with it while we get to a better future, or not using it. There are the same parallels on the nuclear side. What we really have to grasp are the big infrastructure planning issues. That cannot be ducked.

If we can show that we can make a real contribution from the major renewables, then I think we have to accept that the government is going to have to decide to do it. But, in the meantime, architects and other designers must be doing their very best to facilitate the changes that Nick was talking about. That is exactly what we are trying to do - produce guidance and tool kits so, whether our client is a major company or an individual, they know what the issues are and how to do it, how to make it easy to make those decisions at corporate level, community level, government level and individual level. We are trying very hard to accelerate that so that people can be better advised.

We welcome the Energy Bill and the Planning White Paper provisions but suggest there is further to go. Most emissions come from existing building stock, and that is where we have got to make a really significant difference to energy efficiency.

 

Paul Golby This has to be an "and" debate, not an "or" debate. Energy efficiency and customer behaviour is really key here. I have been lobbying the DTI, and in particular DEFRA, on the energy efficiency commitment, which is currently very much an input-based mechanism, whereas we need to move to a more output-based mechanism, where we can innovate, test, learn and really try the things that work.

Behaviour change is important but we have to look at this in the global context. China and India want to improve the lives of their citizens to the same standard as ours. So we cannot tell them to use less energy. The only thing I know that squares that circle is technology. What we have done recently in the UK with the Energy Research Partnership and, more recently, with the Energy Technologies Institute, is starting to put back what, frankly, was destroyed at privatisation when we lost the thread of a lot of that research. Getting new technologies into deployment is key and we have to drive very hard because while we might deal with the UK issue through behaviour change, we are not going to deal with it globally in that way.

 

Ian Funnell There are two aspects of providing a service here. One is energy efficiency - is it low carbon or is it energy efficiency? The other is the infrastructure impact from an energy-efficiency point of view.

I do not think I would get overly hung up on innovation per se. Technology exists today that can be implemented that would have a huge impact on energy efficiency in industry and homes. As a provider of electric motors, for example, 40 per cent of all energy consumed in industry is consumed by electric motors. Very little has got drive technology - an energy efficiency device. That can save about 50 per cent of the energy consumption of running an electric motor. The commercial payback for that industry is phenomenal - six or eight months. So why does The Netherlands, Germany, Italy or Spain buy significant quantities of electric drives when UK industry does not seem to want to do that?

I think a government lead is required in terms of energy efficiency. Regulation would clearly support and help that drive.

From an innovation point of view, as a company that spends about a billion dollars a year on new technology and research and development (R&D), we are looking at blue-sky stuff, but what can we do with equipment that is on the shelf and can be implemented today? It is not quite the draught excluder technology. Nevertheless, there is an element of implementing that today and the incentives that follow.

On security of supply, we see a number of issues, particularly with major infrastructure. Beauly-Denny was mentioned. The interconnector across the North Sea was also mentioned. Today I am working on nine high-voltage DC links in the UK. Three years ago there was probably one. So, whether it is a merchant link or an embedded transmission network operators and distribution network operators link, there are nine links today that are proposed to bolster the security of electricity supply within the UK. If you believe those who are promoting these things, they will all deliver in 2012/2013. That is simply not practical. The technology and the infrastructure exist, but the manufacturing capacity is such that, because we are competing with every other country in the world in that regard, we have to invest our dollars, wherever the real projects are going to be. If that is in Indonesia, Latin America or in Scandinavia, that is where it will happen. There has to be some clear policy from government in the form of regulation to give certainty to those projects.

 

Ed Crooks Given that there are investments people can make in energy saving technology, why don't those investments get made?

 

Nick Eyre The smaller the potential investor, the bigger the problem. Most aluminium smelters probably get their energy efficiency not far off right. People, perfectly reasonably, know more about the capital cost of what they buy than the running costs, especially if they are not told what the running costs are. People do not like having builders in their home and they do not, usually, care that much about saving £10 a year. People would rather spend money on a holiday than spend money on cavity-wall insulation. That is why the government needs to incentivise. That is what the Energy Efficiency Commitment is about - trying to change the incentives within the domestic energy market to encourage people to do what they ought to be doing.

We also need to talk to people, to encourage them to understand the issue and the link to climate change. I think this is going to be an even more pressing problem when looking at the potential of microgeneration technologies. We did some work for the DTI a couple of years ago, which showed that, by 2050, these technologies could supply all household electricity. They are potentially big news but they are going to need individuals to be the alternative investors or the E.ONs of this world to invest in power stations in people's homes. Both of those are huge innovations but they require a huge change in the way we think of the energy system as a whole.

 

Lynda Warren There is a big difference between energy efficiency and energy saving. In industry the two may go together but, as Nick has pointed out, when it comes to homeowners or people living in rented accommodation, what they care about is their lifestyle. Money is part of that lifestyle but not all of it. Just because, for whatever reason, they have finished up with something that is more efficient, it does not mean that they are going to use less energy, necessarily. The latest report by the Royal Commission on Environmental Pollution on the Urban Environment shows quite clearly that improving the energy efficiency in some households, following on from the 1970s oil problem, merely meant that they kept themselves warmer.

 

Alistair Darling So what do you do about that?

 

Lynda Warren People have to want to do it. I think we have moved a long way since then but it is about attitudes, what people want and getting across the understanding that you can do something worthwhile.

 

Nick Eyre If the government can meet its challenging targets for fuel poverty, we will do that and people will not go to warmer and warmer homes because they will be overheated. They will then take the energy efficiency improvement as an energy saving.

 

Alistair Darling Cars have become more fuel efficient over the past 20 years and it is undoubtedly the case that a number of people who have backed that approach have simply driven further. They are still better off because they have saved more money than they have spent on their additional mileage.

I said at the start that it would be a great pity if the debate on energy simply turned on how we generate our electricity. The white paper makes the point that there are actually two things that we need to do before we get to the question of generation of electricity. First, we need to consume less energy and, second, the energy we use must come from lower carbon sources. Part of persuading people to use less energy than they do at the moment will be an appeal to people's pockets or, in the case of industry, increased profits.

We want to change the regulatory regime so far as the suppliers of energy are concerned. At the moment we incentivise people to sell as much gas and electricity as we can at the lowest price. What we want to do is incentivise the electricity companies and so on to provide people with insulation to enable you end up using less of the stuff. That can be done, although it needs a bit of work. My view is that it is probably easier to persuade six large energy suppliers than it is to persuade 27 million householders.

In relation to transport, in particular, the use of regulation is sometimes overlooked. I suspect that catalytic converters would never have been fitted to cars if someone had not said, "If you do not do this in ten years, you cannot run a car". Similarly, we are having a debate at the moment about the regulations that face car manufacturers in Europe. We need to do more there.

In relation to international matters, you can go to China or India and say, "you can have economic growth but you do need to attend to the environmental consequences of it." If they deal with it now at their stage of economic development, perhaps they can avoid making the mistakes that we have made.

 

Aily Armour Biggs As a representative from a specialist independent energy think tank, I am probably the most uptight person in the room as far as security of supply is concerned. We have just had the International Energy Agency start to look at it. They use phrases like "gas being vulnerable" and "inexpensive". I think that is something that lots of people should be looking at.

Paul Golby talked about the plant that is being invested in, both nuclear and gas. We have also got people shortages and these are added difficulties for the energy companies to deal with. I am pleased with what the secretary of state said because I think it is not only government but also communities and regulators that need to support these companies. The worst thing would be if the companies put the plant where we need it, using the commodity that we need at the time and it gets knocked back for some reason. I think all of us should take our responsibilities seriously, not only our carbon footprints, energy efficiency and energy saving but in supporting these companies - they are the ones who are doing the job.

 

Kevin Anderson Ultimately, none of us are really concerned about security of supply. What we are concerned about is security of services. The best way to maintain your security of service is to reduce the amount of energy you require.

 

Alistair Darling I am with you on reducing the amount of energy demand but, at some point you have to make a decision about how you generate the supply of energy that you need.

 

Kevin Anderson If you look at the curves that match the commitment on 2°C or even 3°C, what you require are changes in the next ten years. If you do not get the changes in the next ten years, it does not matter about your nuclear power stations or your offshore wind turbines because you have wedded the climate to the CO2 that you have actually put in it - it is the cumulative emissions that matter.

We are not talking just about changes but significant reductions in that period. We have to look to ourselves, our own lifestyles, to bring those types of changes about.

 

Catherine Mitchell Just looking at energy services and people being able to go in to reduce energy use in the homes, at the moment it is through the large incumbents. If you want to cause people to be able to come into service companies and create new entrants, give opportunities for new companies, allow new ways of doing things. Then I can start targeting things when innovation happens. If you continue to have everything going through large companies because of reasons to do with economies of scale then you will continue to carry on shoring up the momentum of the system that we currently have. You won't, be able to do much other than take slow incremental steps that will not meet the country's requirements, unless you start dealing with these questions.

 

Alistair Buchanan I spent 20 years in capital markets. There is a sense of denial that the capital markets exist here and that innovation and R&D is separate from capital markets. The markets can value R&D in the pharmaceutical sector very well. The oil and gas sectors have done so similarly. In the 1990s, the stock markets understood how to value fuel cells and wind. The performance of technology funds over the past couple of years has been staggering.

What are the stumbling blocks here? One could be Ofgem and regulation on networks. We have tried to unlock that by breaking the philosophy of retail price index minus X regulation.

We have put in our R&D funding. We have also taken out the volume driver from our gas price review that we are doing this year.

What has the government done? If you look at the 1.5 time ticker for offshore, that is a real jump lead on the car for companies to invest in that area. Are companies too fearful of taking the R&D message to the capital markets and, if they are, why? Is R&D being squeezed? If we are so confident that we are moving forward into an environment where innovation is valued and admired, will the capital markets not reward you for that?

 

Alistair Darling I agree that encouraging innovation right across the piece is a good thing but, in practical terms, if I want to achieve change in behaviour on the part of every household in this country, it is easier to persuade a small number of providers to bring that process about than it is for millions of individuals. I just do not accept the argument that somehow large companies, almost by their nature, cannot innovate.

 

Catherine Mitchell The millions of individuals are hugely important to the decision. It is not that you are choosing one or the other but that they are very important together.

 

Paul Golby Cathy, I have an energy services division currently employing 3,000 people doing exactly what you are saying. I want the flexibility to try all sorts of different things and that is what is going to drive this forward. If that means I have to compete for those funds with other people, that is great.

 

Kevin Anderson It is policy innovation, not technical innovation.

 

Paul Golby Let me make another point on R&D. We are not focused on it, Alistair. My own company is spending about £100m a year on our own institute in Aachen in Germany and we are contributing £5m a year into the Energies Technology Institute in the UK. So I think the capital markets do understand and are supporting innovation and R&D.

 

Ed Crooks I would like to go round the table and give everyone the chance to make one point for Mr Darling to go away with this afternoon.

 

Aily Armour Biggs Everything that has been said here today is thoroughly important but, at the end of the day, we are a group of people who are well financed and well supported, which I think is 20GW by 2020.

 

Catherine Mitchell We must think of things on a system basis that is not "small is beautiful" or "large is beautiful", but has a balance, with long-term sustainability.

 

Nick Eyre Energy policy is about electricity, heat, transport fuels and demand as well as supply. Within that, I think Stern got it right on price, encouraging innovation and changing behaviour.

 

Richard Hastilow I ask government to keep its foot on the pedal on both of those sides.

 

Ian Funnell The greenest energy is energy saved. Government should make that a priority in every project that they fund. Others will follow that lead.

 

Neil Sinden We should move away from debating planning obstacles and supply-side measures and move towards planning opportunities and towards demand reduction and less carbon-intensive lifestyles.

 

Paul Golby Both white papers and the consultation on nuclear are steps in the right direction but keep the momentum going because the clock is ticking.

 

Alistair Buchanan Encourage the abolition of fuel poverty in the white paper. However strong the words, this is something where the government will be judged on its actions and funding.

 

Keith Parker Government must maintain momentum in creating the policy framework to deliver the energy strategy it has set out. It must encourage investment from a range of generating technologies, not just nuclear, and provide encouragement and the leadership regarding energy efficiency.

 

Lynda Warren We need the momentum to continue and we need some clarity. Things like nuclear are going to take a long time in the making and there needs to be a certainty so that people know that they can plan.

 

Kevin Anderson Address the climate change issue from the perspective of cumulative emissions, not from unscientific trajectories. This means we have to address the concept of time, which means we have time for policy innovation, not technical innovation. This requires courage and honesty, which are partially included in the Climate Change Bill and the Energy White Paper.

 

Alistair Darling I think we are all agreed that we need to get a move on and make some decisions. It is the job of government to reach a decision and get on with it. I am afraid that this is something where time is not on our side.

 

Ed Crooks Thank you very much.