Energy Inquiry
I welcome colleagues to the 24th and final meeting in 2008 of the Economy, Energy and Tourism Committee. As usual, I remind all members and witnesses and everyone in the public gallery to switch their mobile phones off rather than just to silent, because they can interfere with the sound system even if they are switched to silent. That would be greatly appreciated.
Agenda item 1 is the third of our round-table discussions as part of our energy inquiry. Today's discussion will focus on the political, economic and environmental imperatives and drivers. Basically, we want to consider how we can balance economic growth, environmental issues and security of supply in energy at a reasonable cost to final consumers. The questions involved are therefore pretty easy. We all recognise that trade-offs will be involved.
I invite members of our panel to introduce themselves briefly and to make some brief opening remarks. There will then be questions and a discussion. Today, we shall go clockwise—that is a random decision.
Jason Ormiston (Scottish Renewables):
Good morning and thank you for the invitation to attend this round-table discussion.
I am the chief executive of Scottish Renewables, which has also been known as the Scottish Renewables Forum. We represent the renewables industry in Scotland, and we have nearly 250 members, all of whom want to make a success of renewables in Scotland. They work at all scales of delivery in all energy sectors with all renewables technologies. Around 80 per cent of our members are small or medium-sized enterprises; as such, they represent high-growth business opportunities in Scotland. Given the current economic climate, we believe that they will help to lead Scotland out of recession in the next five years. We are talking about potentially billions of pounds of investments from the renewables industry.
The 2020 targets that the European Union has articulated and brought forward provide incentives, but we need the Scottish Parliament and the Scottish Government to commit themselves to ambitious targets, which must be delivered by a predictable, clear and stable framework. If we get those things right, we will be able to unleash the potential of renewables in Scotland in all sectors—in heat, transport and electricity.
Keith MacLean (Scottish and Southern Energy):
Good morning. I would like to follow on from what Jason Ormiston has said. In some ways, there are fewer trade-offs than we think, particularly at the moment, because of the imperative to invest in order to replace existing plant and thereby meet the demand for security of supply, and in order to meet renewable energy and low-carbon targets. Over the coming years, many billions of pounds will need to be spent in the United Kingdom in order to satisfy that imperative and, if the right framework is in place, a wonderful opportunity will exist to take full advantage of the economic and employment benefits that can result from such investment.
Even on a pro-rated basis—which probably produces an underestimate—it is estimated that 20,000 or more jobs will be associated with the level of investment that will be required to meet the 2020 targets and the replacement programme. The question is not whether those jobs will be created but where they will be created. Unless we create the framework for the required investment in the supply chain to be made in Scotland, many of those jobs might go elsewhere. We have the opportunity to avoid many trade-offs and we have to take that opportunity. We must focus on delivery and, particularly in the planning environment, we must support that investment in Scotland and the rest of the UK.
Frank Mitchell (Scottish Power):
Thank you for inviting me to the committee this morning. I am the generation director for Scottish Power. I operate approximately 6.5 gigawatts of energy across the UK, much of which is based in Scotland. I will not repeat what has been said, but I think that we are facing some of the biggest decisions about energy that we have faced for some time and we must take a collaborative approach to that.
Scottish Power is the largest wind operator in the UK and we are part of Iberdrola Renovables, which is the largest operator in the world. We see the thermal capacity that is required in the UK, and Scotland should not be marginalised in this debate. We have to realise that the thermal capacity has been the backbone in the UK for keeping the lights on. In facing security of supply issues, it is important that we recognise that thermal needs to be operating well and effectively so that we can manage a huge growth in renewables. Thermal is the only technology that can flex and make the system operate.
It is also important to recognise that, within the thermal debate, going with gas has its long-term perils from the point of view of security of supply and affordability. Coal needs to be part of the portfolio going forward, but we have to address the environmental requirements that it brings with it. That is why we are one of the three companies that are still in the competition on carbon capture and storage, which will establish jobs in Scotland and enable us to use North Sea infrastructure beyond the lifetime of current oil assets to bring economic growth to Scotland.
Mike Thornton (Energy Saving Trust):
The Energy Saving Trust works with a domestic audience in Scotland and the rest of the UK. Through the network of energy saving Scotland advice centres that we manage on behalf of the Scottish Government, we provide energy efficiency advice and support to 130,000 people in Scotland per year, almost all of whom are householders. The key points are that 60 per cent of carbon emissions come from decisions that are made by individual consumers. A successful low-carbon economy and Scottish Government climate change targets simply cannot be achieved without the full engagement and involvement of those people.
I also draw attention to existing homes as a particular area of interest for us and, perhaps, for the committee, because so much carbon and low-carbon economic opportunity is centred around the existing housing stock. That merits more attention.
Duncan McLaren (Friends of the Earth Scotland):
Thank you for the opportunity to speak to the committee today. I am chief executive of Friends of the Earth Scotland, which is an independent member of the Friends of the Earth international federation, which works to enable and support sustainable living. At the moment, we are focusing on climate change and the drivers to get a good climate change bill.
I am wearing two other hats today. In another life, I am a member of the Joint Research Council's scientific advisory committee for its energy programme, so I will bring what I can of that knowledge to the panel. I am also wearing my Stop Climate Chaos Scotland hat. Stop Climate Chaos Scotland is a coalition of more than 40 groups, representing approximately 1.5 million people; Friends of the Earth Scotland is one of its leading members.
In our view, the energy system is key to tackling climate change. We have to consider not only electricity but heat and transport. In all those areas, Stop Climate Chaos Scotland sees the key issue as the implementation of an energy hierarchy that puts energy saving and conservation at the top and works down through less desirable options as necessary, prioritising decentralised renewable energy over centralised energy, and prioritising demand management over deliberate efforts to meet increasing demand. I should also note that Stop Climate Chaos Scotland has taken the position that there should be no unabated new coal-fired capacity, which means that, in practice, we are quite close to the other members of the panel in saying that carbon capture and storage is a critical, forward-looking technology.
I will conclude by saying that the key question for the committee is how to meet the imperatives of tackling climate change while addressing the recession. That is a massive opportunity for a green new deal in which investment in renewables but more so in efficiency in the existing building stock and elsewhere could lead to the generation of significant amounts of economic activity and levels of employment. In Scotland, we have the chance to follow the example of countries such as Germany in making a programmatic investment in energy efficiency.
Finally, and certainly not least—not with a title like company secretary and general counsel of British Energy—we go to Robert Armour.
Robert Armour (British Energy):
I am going last and much has been said, so I will try not to repeat what has been said.
British Energy is the largest generator in the UK and a substantial generator in Scotland from Torness and Hunterston. A lot of statistics are being exchanged today. Last Sunday morning, 75 per cent of the Scottish load came from those two stations. A more typical autumn weekday would see a load of about 50 per cent. Whichever way we look at it, we generate a substantial amount of Scotland's electricity in the current mix.
The issue is how to move forward and replace the current mix. We are moving into a phase of investment in the nuclear energy sector, with two companies announcing six new stations in England. We are looking at an investment in nuclear of £20 billion over the next 15 to 20 years. As we go forward, we have to balance the three pillars of environment, security and affordability. For Scotland, which has to take into account wider issues such as its connectivity to the rest of the UK and Europe, renewables are a major part of that opportunity. However, you also have to consider what is going to replace conventional plant to provide the balance. It is our contention that nuclear, which plays a major role at the moment and is a large and proven CO2-free means of generating electricity, has a part to play; that Scotland might want to play its part in the investment in a new fleet in due course; and that the Scottish manufacturing base might want to play its part in satisfying the manufacturing demand.
I will start the questions by referring to the Scottish Council for Development and Industry's report "The Future of Electricity Generation in Scotland" and by picking up a point that Duncan McLaren raised. One of the assumptions behind the SCDI's report is that electricity demand is likely to increase by 10 per cent between now and 2020. Is that a realistic assessment of the future demand for electricity, and is it a necessary assumption? Should we be doing things to change it?
I am happy to kick off on that one. Although the SCDI report is generally sound, it has not been very optimistic in its projections of energy demand. There are two clear trends. One is a continued lower intensity of energy use in our economic activity, which means greater efficiency. However, we also expect a trend of increasing electrification of our economy. That trend will probably accelerate rather more beyond 2020 than it will to 2020 as technologies such as electric vehicles penetrate the stock more.
From the available evidence on what is possible in improving energy demand in the economy as a whole, a 10 per cent increase in demand across the picture is unlikely. Such an increase becomes likely only if we are talking about electricity alone. We can do much more to keep efficiency gains greater than increases in demand—that is an unambitious statement. We could look to reduce primary electricity use by 2020 as part of a significant decrease in primary energy use.
We are working on the assumption that the underlying trend in electricity use will be around plus or minus 0.5 per cent per annum, which results in a range of plus or minus 6 or 7 per cent over the piece. However, as Duncan McLaren mentioned, there is a significant probability that electricity, particularly decarbonised electricity, will increasingly be seen as an attractive option for transport and producing heat. Therefore, on top of the underlying trend, we need to consider new uses of electricity.
It is important to stress that the biggest opportunities for making energy efficiency savings are in existing buildings and factories, as Mike Thornton said. The vast majority of the big low-hanging-fruit opportunities are in heat rather than in electricity. The renewables debate has brought heat right up the agenda and, in thinking about overall reductions in energy use, we need to refocus our thoughts particularly on the opportunities that exist in heating and ultimately in transport as vehicles with very inefficient internal combustion engines are replaced by electric vehicles, for example.
A couple of years ago, we published a report entitled "Delivering the New Generation of Energy", which looked towards 2050. At the time, a cut of 50 per cent in carbon emissions was required by 2050. We assessed what energy demand needed to look like going forward and projected a small increase in overall energy demand to 2020. However, we had to project a 36 per cent cut in energy demand from 1990 levels to get to a 50 per cent carbon emissions reduction by 2050. We are now talking about an 80 per cent reduction in carbon emissions so, if we go back and work the figures, we find that an even bigger cut in demand is required. The alternative is business as usual, demand increasing and having to meet that demand through ever-growing numbers of generating stations, all of which would have to be low-carbon or zero-carbon stations. If we do not tackle demand, we will create an even bigger challenge for ourselves by having to get consent for such stations and having to get them built and paid for.
The most disappointing thing about the Wood Mackenzie report is not how it is written but its conclusions. Electricity demand is expected to increase by 10 per cent. With the current framework, one would expect that to continue, but the report must act as a warning signal that options and incentives for energy demand management must exist so that we can reduce demand for electricity and demand in other areas.
Jason Ormiston has covered the points that I wanted to make.
Keith MacLean covered most of the points that I wanted to make. We, too, see switching to electricity use as a factor. Energy use may be contained, and electricity for cars, transport and heating should be considered.
Perhaps we are considering the issue in a Scottish context, but it is a worldwide issue. Worldwide energy demand will almost inevitably rise because of population growth and the development of third world economies, which will put pressure on energy resources wherever people are.
We regard the projected 10 per cent increase in demand as being in the mid-range—it is a reasonable position to take. We acknowledge the importance of energy conservation but, in reality, when we invest in housing stock by installing a lot of insulation, many people take the benefits in comfort rather than in energy savings. Given the weather in Scotland, that will continue to be a factor during the next five to 10 years, so much needs to happen. Energy efficiency is important, but people's need to keep warm is equally important. We must be pragmatic about that.
For the fuel poor in particular, it is true that if a dwelling's energy efficiency is improved, some of the theoretical energy savings will be taken out because people will heat the building to a comfortable level, perhaps for the first time ever. However, that is an excessively pessimistic view. Investment in energy efficiency remains the most cost-effective approach, compared with most if not all forms of investment in generation, and it can happen quickly.
In the context of the climate change targets, we did not mention that carbon reduction must happen fast to meet the curves that have been suggested. Energy efficiency is one of the few things that do not have a long infrastructure-style lead time, so it should remain at least one of the centres of our attention.
The issue of base-load is said to underpin a raft of renewables developments. At the Scottish green energy awards last week, students won an important award for work on advanced management systems for a variety of energy sources. How much of the issue to do with base-load is based on a previous-century model of centralised production and distribution from a few sources? To what extent is that view confusing the public, who support the development of non-thermal energy, which is secure, clean, eminently affordable, infinitely available and can be delivered in small and large packages?
That is a good question. It is worth distinguishing between base-load and back-up capacity, because the terms are often used interchangeably but do not mean the same thing. Base-load is what is going on at the bottom, fairly constantly; we can then add in intermittent generation; and the back-up is what changes that supply curve into one that meets demand. The technologies that we will need when we have an increasing amount of renewables on the system will be about back-up capacity that can be switched on and off quickly, rather than further base-load, which is characterised as running efficiently at a constant rate over a longer time.
That is a big challenge because, as we move towards 50 per cent generation from renewables, we will need significant capacity. That does not mean that that back-up will be running and burning fuel all the time; it will just need to be available to meet peaks. We already take that approach: the oil plant in the UK probably operates for only 5 per cent of the time, but it makes enough money out of doing that to justify its continuing use.
We will need to consider the mix and how we can enable a high-renewables electricity system. As well as thinking about generation, we need to think about demand-side management, because the other way of matching the demand and supply curves is to change the demand curve. The electrification of heat and transport gives us an interesting way of doing that.
We also need to consider storage as a means of matching the curves. Scottish Power and Scottish and Southern Energy have pump storage facilities that allow that to happen, but there are big opportunities to consider newer technologies for storage. We can also consider opportunities in relation to vehicles and heat to provide energy storage in an overall energy system.
I agree with much of what has just been said. It is important to make the distinction between base-load and flexible sources that can respond quickly to changes in generation from other sources in order to make the whole system work. Typically, base-load will be nuclear—it has been in the UK—supported by coal or gas, depending on what is happening with the nuclear power station fleet.
We also need to recognise the ambition that we all have for renewables, although that brings its own challenges. As the output from renewables changes, which it can do rapidly, and on a wide scale at any one time—for example, during weather events, which will usually coincide with a cold snap—there is a requirement for reserves in capacity to ensure that the lights stay on. We must all face up to that practical consideration and ensure that we get the right mixture in place. Demand-side management is a key aspect as far as renewables are concerned. We must cope with the requirements of a very dynamic output. We require a combination of sources of generation, including flexible thermal with carbon abatement.
The idea that we should try to avoid using the term "base-load" is absolutely right, as it is very misleading. As renewables reach 50 per cent of capacity or even higher, we are clearly in a position where all we need to match it is peaking or load-following plant. We do not need plant that is inflexible and that is on the system all the time. The implication of what the other gentlemen here have said is that the matching plant will have to be fossil fuel fired, with CCS, rather than nuclear.
I want to add something about demand management. Other technologies are emerging. There are storage technologies at the household and vehicle levels. Technologies such as flow batteries and compressed air storage are being tested now, and others are in the pipeline. There are also dynamic demand technologies, as they are called. An example of that would be a fridge that varies the amount of power that it draws from the grid according to the supply of power to the grid. It takes a very cheap and simple gizmo attached to a fridge to do that, but it means that, across millions of households, demand is varied according to the availability of power on the grid, thus helping us to manage the peaks in the future better than we did in the past. A whole set of technologies is available, but the key message is that we need flexibility to match our system both with the variable demand, which we know about, and with the variable supply from a base that primarily comes from renewable sources.
Part of Rob Gibson's question was about the public's perception of the debate. The issue of base-load can be used as a dog whistle to lead the discussion down a path of argument that, as other speakers have demonstrated, can sometimes be a little misleading and exaggerated. I will not add to that point further.
On the question about guaranteeing or ensuring an acceptable level of reliability of supply, we have been missing the point about interconnection between markets and between countries. Over the next 20, 30 or 50 years, there will be an enormous growth in the use of renewables throughout Europe and the world. We anticipate that the various markets will join up and become interconnected. One way to improve the reliability of variable generation from renewable sources is to have a wide range of technologies operating effectively at scale, and in a geographically dispersed way. If we can capture that opportunity over the coming decades, partly in working with Europe, Scotland will have a massive opportunity to deliver from its huge potential, while ensuring that the lights stay on.
I would put it another way. Whether or not we want to call it base-load, we must strike a balance. We will have renewables, which will inevitably show some intermittency; there is a correlation between the wind across Scotland and wind output, although there may be about a three-hour delay between east and west as weather flows move across the country. There is slightly better reliability if we take in the islands, but there are substantial fluctuations in power output across the day—sometimes at very short notice. How do we balance that? Do we do so simply with peaking plant? That tends to be very expensive, because it runs very little and has to charge through the earth when it does. The third part—whether we call it base-load or generation that provides a flat supply by running most of the time, efficiently and cheaply—gives stability to the grid and is part of the balance.
Before I take the next member's question, I welcome John Stocks, who had some transport difficulties this morning. We gave the other panel members an opportunity to say a few words about balancing economic growth against the environment, against security of supply and against cost. You can make some introductory comments.
John Stocks (Carbon Trust):
Thank you. I apologise for arriving late, but I had train problems.
Our future energy pitch is very much a three-dimensional one. On one axis, we must look at the energy intensity of our economy. How many kilowatt hours of energy do we need to run our economy? How much utility and use can we squeeze out of each and every kilowatt hour? We must be as energy efficient as we can. Secondly, when we must purchase supplies for our homes and our businesses, we must buy them from the cleanest and most low-carbon suppliers we can. That raises the question of how we can clean up our energy supplies. One aspect of that is renewables, but we must also consider renewable heat strategies and fuels. Those are the two axes—one is how energy intensive the economy is and the other is how carbon-intensive the fuel supplies are. That second axis repeats itself in three areas. The first fuel that we buy is electricity, which we use for heat and power. It is different from the gas that we use for space heating and it is different again from the petroleum products that we use for transport. A different set of solutions and opportunities present themselves in each of those fuel areas and uses, so we must consider all three.
When we visited the control centre at Kirkintilloch to find out about management of electricity, it was pointed out to us that the controllers were concerned when a large amount of electricity was suddenly switched off but were far less concerned about the manipulation of wind farms and an increasing mix of renewables. Should not one of our concerns be to find a balance in whether the base-load or back-up capacity comes from thermal plant?
Undoubtedly, when a large unit is lost, that can have an effect on the dynamics within the industry. That is why we have in the past ensured that we have reserves and spinning reserves to cope with that. From an engineering point of view, there are ways to manage that system.
I stress that by no means is this an anti-renewables debate—I have not heard anybody here say that they are not pro-renewables. We all want to see the renewables portfolio grow, but it is important that in doing that we recognise the dynamics that can affect the system and security of supply. We must bring in the appropriate supporting technologies alongside renewables to make them operate effectively and make the most of them. That is where the debate lies. It is not about whether we should have renewables; it is about what we do with those renewables to support them and ensure that the system can operate effectively. Please do not take this to be an anti-renewables debate, because it is not. It is anything but that; it is about how we ensure that we get the most out of renewables. Where we are coming from is that we want to ensure that we have other clean technologies that can support renewables and provide flexibility. We want to ensure that the network or system can be supported properly in its use of energy.
Stop Climate Chaos Scotland is keen to see Scotland pursue a decentralised energy perspective. Such a perspective would provide more robustness to the network, which would be at less risk from the sorts of problems that we have recently experienced. As Robert Armour rightly pointed out, over the past couple of years a large share of generation capacity at Hunterston has been offline for substantial periods of time, which is—as Rob Gibson suggested—far worse for the system than temporary or partial loss of wind power in parts of the country.
I am confident that, in the longer term, the entire Scottish power system can be renewables based, given storage and dynamic-demand-type technologies to provide back-up. In the interim, we would be well advised to consider a role for continued use of thermal power, although the driver of climate change does not allow us to consider doing that unabated. Therefore, it is urgent that we either secure the most efficient use of such power—that is, by recovering heat as well through combined heat and power technologies—or, preferably, that we capture the carbon emissions through carbon capture and storage technologies.
First, Keith MacLean made the interesting point—which has been reflected by others—that the continued growth in electricity demand that is assumed in, for example, this week's SCDI report is based on the assumption that electricity will continue to provide much the same part of the energy mix as it does at present. Keith MacLean raised the possibility that low-carbon heat or low-carbon transport solutions will significantly increase the level of electricity demand. Has any work been done to identify how much additional demand for electricity will exist in 2020 or beyond because of innovation in heating and transport?
In a word, no. However, that could be done reasonably easily by looking at the big picture of how much energy is used for transport, heat and electricity. One would just need to look at the Scottish Government's Scottish energy study—the study was first published in 2002, but volume 5 was published recently—and at the "Digest of United Kingdom Energy Statistics 2008". Someone who sat down for a day could work out how much might be transferred if electricity was used for both heat and transport. One would need to make some assumptions about the efficiency of the installations but, based on some agreeable assumptions, one could do the numbers.
I think that some preliminary work on that has been done. A lot of recent work has picked up on transport. The estimates that I have heard suggest that the impact of heat and transport together might range from about 15 per cent to 20 per cent or 25 per cent. Quite a lot of the assumptions that underlie those figures would need to be firmed up before we would have a good idea of the situation, but we are certainly not talking about demand doubling. There will be a measurable impact, but it will not be of that order of magnitude.
Essentially, does that mean that the more successful we are in developing low-carbon alternatives for heat and transport, the greater the demands will be on Scotland's electricity generation networks?
Potentially.
Could some of those changes have an impact as early as 2020?
For transport, the initial expectation of meeting the 10 per cent renewables target through the renewable transport fuel obligation has been radically changed. Very few people now believe that we will have a sustainable source of biodiesel or bioethanol with which to achieve that, which is why there has been a sudden transfer of interest to electric and electric hybrid vehicles as a means of indirectly introducing renewability into transport.
I know of no work that has been done on the matter, but I point out that the extra demand is contingent on our becoming much more energy efficient. The point at which electricity becomes the logical and controllable source of heat for houses will be when little external energy is needed to heat them. It is reasonable to assume that, if houses become energy efficient for heating, they will probably have reduced energy demands for other power uses. There should be some trade-off.
The same logic applies to transport. As electricity decarbonises, public transport that uses electricity, such as railways and trams, will be the sensible choice, and battery-driven vehicles will be the sensible choice for personal transport to railheads and so on. Again, however, that will depend on uptake of those technologies, which will influence the base-load demand. If we are successful in some of those developments, the underlying trends for demand should be downwards.
I have three points to make in response to Lewis Macdonald's important question. First, we must recognise that the likely low-carbon technologies, such as electric vehicles, will be massively more efficient than the current models, so the new demand will be proportionately less significant.
Secondly, as Keith MacLean said, those technologies offer us a means of storing electricity, which we would otherwise have to oversupply in the grid. Batteries for cars and home heating systems that use electricity to build up the heat store can be charged at times when there is surplus renewable power on the grid, so the challenge for investment in generation is again reduced. It is not proportionate to the increase in demand.
Thirdly, we can foresee a period when residual domestic electricity demand will increasingly be met by domestic microgeneration installations. I see Keith MacLean smiling. He is less optimistic than I am about that, but that too will reduce the increase in demand. I stand by my earlier remark. I believe that we could offset all that increase, if not more, by improving energy efficiency across the demand base, as John Stocks suggests.
If electricity generation is to increase by 20 per cent to meet the requirements of heat and transport, there is some big thinking to be done about the networks and infrastructure that will be required to deliver that, because the load will increase significantly over time.
Our transmission network in the UK exists to deliver electricity to houses to power lights and appliances. Some of the thinking that has been done on transmission networks is about the traditional use of electricity but not the alternative uses. If we want to deliver some of the stuff by 2020, the thinking now needs to capture our desire for electric transport and heat.
This might be a glib point, but there is no better way to reduce carbon emissions from transport than to have a sustainable public transport system. That point is often missed in these debates.
The point has already been made that a sustainable public transport system would probably run on electricity, so it would not necessarily have a strong effect in ameliorating extra demand for electricity.
There is also a point to be made about microgeneration and the buffering that can occur at household level. If people use both electric transport and microgeneration, they can store the microgenerated power in their car or use it for heating their house at night. On a larger scale, the massed fleets of cars and the massed number of heaters can buffer the grid, so we can get the same benefits at micro and macro levels.
That brings us back to Duncan McLaren's point: the more intelligent the grid, and the more flexible the management of it, the more we are able to manage problems actively and turn them into opportunities. I know that sounds remarkably Panglossian, but it is true.
That is a word that we do not hear often in this committee.
One of the key conclusions in the SCDI report that was published this week is that most of the additional renewable generation between now and 2020 will come from wind on a large or small scale. Do the people around the table share that view?
For the record, there seems to be a lot of nodding going on.
Yes—I think that wind will provide most generation, but I diverge from the SCDI in respect of the absolute preponderance of generation that it would place on wind. I am largely relying on analysis by Scottish Renewables, so I suspect that Jason Ormiston will add more on the greater potential for marine and biomass, to which I would add microgeneration.
One of the oddities of the SCDI report is that it is optimistic about delivery of onshore wind, but pessimistic about delivery of other technologies. It has been written at a time when a lot of research is being done on hydro power, for example, so we can let the SCDI off the hook on things such as the development of the hydro sector in Scotland.
There has also been more thinking on wave and tidal power since the report was drafted, which might give us a bit more confidence about the future, especially in relation to the planning system and the transmission networks in Scotland. You would expect me to be optimistic about the potential delivery of emerging technologies other than wind by 2020: if one considers the figures and what the industry and a variety of reports think could be delivered by 2020, it seems that there could be well over 8GW of installed capacity by 2020.
The UK Government has examined some of the requirements of the renewable energy strategy over the past few months, and it suggests that double-figure gigawatts of capacity will be required in Scotland and offshore to help it to meet its targets and its European obligations. Events have overtaken the SCDI report, but in answer to Lewis Macdonald's question, wind would still be the significant player and the significant deliverer of renewable electricity in Scotland by 2020.
What do the generators make of that?
The report gives a reasonably good mid-case position. There are some elements on which the SCDI is quite conservative but, given the experience of trying to bring renewables through over the past 10 years, I do not think that it has been too conservative. The lessons of the past 10 years and how difficult it has been to get renewables projects up and running should not be forgotten when we are looking forward.
It is important for us to consider the timeframes. Many of the aspects of this morning's discussion go beyond 2020. I do not disagree with the sentiments, but we should not be overambitious from the point of view of putting security of supply at risk, although we should be ambitious in supporting the technologies that are coming through. It is important that we get the balance right. Between now and 2020, we need to consider a picture that is broadly in line with the report.
The only caveat I would offer, having read the report recently, is that I am less confident than the SCDI about the level of reserves that are required. The SCDI feels that reserve levels would be sustained through that period, but my view is that we perhaps need to examine those levels to ensure that we can cope with the growth in renewables in Scotland and the UK. That is one area in which I disagree with the report in relation to what can be achieved, given the current position.
We certainly agree with that, given the sheer time that it takes to bring through new technologies. We are aware of the timescales for wind, and there is no reason to believe that other new technologies will come through any more quickly. It is important to consider the new technologies because things will not stop in 2020. The pace of decarbonisation will increase in order to meet the climate change bill targets, so we have to consider what will come after 2020.
The newer technologies, particularly marine, will come into their own in that period. We will do ourselves a disfavour, however, if we underestimate what needs to be done in other areas at the moment. Most of those initiatives need to be started in the next year or two if they are to have any hope of being ready in 2020.
On Duncan McLaren's points about microgeneration, I am a big fan of domestic and community-scale microsolutions. However, the real opportunities are not in electricity but in heat. Again, we should be looking far more at what can be done in that regard, rather than being distracted by the electricity aspect. Unfortunately, it is a fact that the microsolutions are between five and 10 times more expensive than the methods that involve central generation. With so many other upward pressures on pricing, we need to be careful about trying to push people down that route. Some people will be happy to do that and will be able to afford it, but it is not something that we will be able to put forward as a mass solution, either because of the stage of the development of the technology or because of cost issues.
We need to progress the new technologies. That is true of renewables and it is true of CCS.
Rob Gibson used the phrase "eminently affordable". Wind—especially onshore wind—is closest to commerciality. The other forms are some way away from that point.
We have to be careful. There is huge optimism about delivery of new technology and the capacity that it can produce, either in displacing carbon or in generating electricity, but attention to the historic record shows that those projections might be mistaken.
We are in danger of creating a self-fulfilling prophecy. One of the things about history is that you can learn from your mistakes. Given that the previous Government and this Administration have tried to deal with the planning system and that Ofgem, the National Grid and the Department of Energy and Climate Change are trying to resolve transmission issues, there is no reason why, if the finance comes through to support emerging technologies such as wave and tidal power, we should not be optimistic about the 2020 targets, because the technologies may well end up producing many gigawatts of energy. Furthermore, the economics will improve over time due to factors such as worsening climate change and an increasing oil price.
If we forget our history, we are condemned to repeat it. We can improve what we are doing, based on our knowledge of what has happened in the past 10 years.
I want to get some clarification about CCS. In the past couple of months, we have heard differing views about how close we are to getting the technology to work. Yesterday, I heard a guy on the radio saying that it would be 10 or 20 years until we would be able to get a commercial CCS plant up and running. However, last week or the week before, a witness told us that there is already an operational plant in Germany. What is the actual position? Where is the truth in all this?
I am almost reluctant to invite a comment from Frank Mitchell, as he will make a bid, but I will do so in any case.
The issue relates to the scale of the technology. Carbon capture technology has been operational for some time, but the problem lies in how we can scale it up commercially to cope with the demands of the energy sector. That capacity has been building steadily and, as you say, there is already an operational CCS plant in Germany, which has a capacity of about 30MW.
Our view is that, if we get Government support and there is clarity within the current timetable, the consortium that is currently in place will be able to deliver a 338MW carbon capture and storage solution in Scotland by 2014, using the existing assets in the North Sea. That will be the largest operational carbon capture and storage plant in the world, and will operate from an existing station. The retrofit technology that we will use to do that will be usable globally in other existing stations. We believe that that plant—which will deal with the process from production of carbon to its storage—will address the issue of the commercial scale that is required to make carbon capture a viable technology in the energy sector.
Is that contingent on your winning the competition that is under way, or will you continue with your development even if you do not win that competition?
If we are to make the necessary scale of investment, we will have to win the Government competition. If we do not, we will be unable to invest the funds that are necessary to break through the technology issues that are holding back the process; if we do, we will be able to move forward much more quickly than other European countries.
We will always be examining carbon capture and storage technology because we believe that, in the long run, that is the solution that will help to deliver the necessary thermal capacity in the UK and Scotland, which will be important over the next 20 years, although what will happen after 2030 or 2040 is open to debate.
So 2014 is the earliest you see such a plant being operational. If there were a favourable financial regime—that is, if you were given the necessary cash—could you speed things up? If you heard today that you had won the competition, could you get the plant going within the next two or three years?
That is a good question. The current timetable is based on the competition winner being announced in April or May 2010. That is the lead time. The consortium is already committing tens of millions of pounds, so before we could make substantially more investment, we would need to have the security that governmental support would provide. If that security were provided sooner, it could have an affect on the timescale.
Over several years, as a member of the Engineering and Physical Sciences Research Council's scientific advisory committee on energy research, I have seen research that shows that CCS plants are technically possible because the technology exists, but that the challenge is to make the technology commercial on a large scale. That means that we have to consider the drivers and incentives that will help to make it more commercially viable. Those aspects fall into two broad categories: the available finance and the existing drivers, such as the European emissions trading scheme, which is not currently adequate to drive the carbon capture and storage agenda in a way that will meet the UK's or Scotland's climate change targets, as it is predicated on a much lower trajectory of reductions in climate-changing emissions.
That means that Scotland will have to have additional financial or regulatory measures. Several countries are exploring the use of an emissions performance standard for new and modified power generation as a means of stimulating progressive implementation of carbon capture and storage. That would help us to meet the advice that the UK's Committee on Climate Change issued last week, which was that all coal power plants should have CCS technology at full scale by the early 2020s. That is a little vague, but serves as the latest date by which CCS could be commercially viable—Frank Mitchell has given us an earlier date of 2014 or 2015.
Staying with the core technology issue, a small-scale pilot plant, using carbon capture, will be operating at Longannet from April or May next year.
I find myself agreeing with Duncan McLaren. On the basis of the European Union subsidy for the 12 demonstration plants and so on, we should have a demonstration plant by around 2014 or 2015. We all see CCS as an essential part of the mix, which we have to drive forward. I do not wish to be the opposite of Panglossian about this, but the projections for the deployment of a substantial capacity of carbon capture and storage by 2020, 2025 and 2030 seem optimistic against the background of an industry that has not geared up for the production of what will be necessary to make the system go. I do not see how some of the delivery assumptions are going to be achieved.
Does Dave Thompson want to follow up on that point?
Not on that point; I have another question. Incentives for people to use less energy are mentioned in, I think, the submission from Scottish and Southern Energy. Could you elaborate on how you incentivise people to use less energy?
The tariffs that we offer—our better plan package—are unique, in that they give customers a financial reward for using less electricity. The overall package covers the installation of energy efficiency measures and low-energy equipment that can be used in properties. That approach can work. Other suppliers have similar tariffs that encourage people to use less. Such incentives move us towards the principle of energy service companies whose role is to provide heat, light, comfort and power for people to use, and to do so in the most efficient way. Instead of making their money out of selling lots and lots of kilowatt hours, or therms, companies would make their money from managing the service and providing the equipment. That does not need to be a contradictory aim.
I invite the witnesses to comment on the discussion that the committee will have immediately after their departure, which will be about what we say in our report on energy. If the committee tries to be strategic, over the next three months we could produce something helpful that will be very different from the report that we might have written a year ago. At that time, the need was for something big and visionary, with a view to what was going to be needed in 2020 or 2050. There seems to have been a surfeit of visionary documents regarding energy and climate change over the past 12 to 18 months, which is a positive thing.
Perhaps the most useful contribution that the committee could make—so that we do not produce just another report that sits on a shelf—is to determine what needs to be done over the next two years, before the end of the parliamentary session. One of the problems with the whole debate is the misalignment of the four-year cycle of political timetables with the delivery of strategies 12 years hence, in 2020, or indeed in 40 years' time, around 2050. That leads me to think about four areas where some things need to be done now. If the committee produces a report with, say, the five things that need to be done over the next two years, that could be our contribution to the debate.
I was struck by the response to the introduction of the Climate Change (Scotland) Bill last week. People said, "This is great," but then asked questions about missing pieces and about what will happen over the next two to three years. If our report on Scotland's energy future comes out during parliamentary consideration of the bill, we will have the opportunity to achieve some helpful movement on some of the issues.
The first area that I have in mind is planning. The national planning framework comes out tomorrow, and the Planning etc (Scotland) Act 2006, in its entirety, remains to be implemented—it will be implemented through secondary legislation over the next four months. As others know better than I, the drivers of the 2006 act were a Government that sought change and an Opposition that, at that stage, wanted more third-party rights of appeal and so on. Therefore, the environment in which the legislation was drafted was not always sympathetic to anything like the uplift in onshore wind that we seek. That is reflected in the fact that, despite political sympathy for giving consents to such projects, we refuse consent as often as we give it. That does not seem to be sufficient, given where we need to get to very quickly.
Planning reform was driven not by the demands of the energy industry but by the frustration of large-scale developers that their developments were taking four or five years—it was driven by business organisations rather than by energy considerations. How do we lever the concerns of the energy industry into what gets done in the Parliament in the next few months with secondary legislation and the national planning framework? That is our core business, and we owe it to the witnesses to get that bit right. I would appreciate their thoughts.
Secondly, as the Government and everyone else admit, the missing piece is energy efficiency. If we want to make progress quickly, there are huge opportunities in that regard that we have not grasped. The carbon emissions reduction target is not enough. A fundamental choice must be made between whether we attempt to retrofit and drive programmes nationally and whether we strengthen the incentive framework. We probably need to do both, but last week we brought forward £260 million of capital investment, none of which was dedicated to retrofitting. A huge amount could be done quickly in the next two years, and some guidance on that would be helpful.
I will not dwell on the third issue because I am running out of time, but we need to say the right things about the grid. Decisions about that need to be taken within the two-year time horizon.
The fourth area is heat. Although microgeneration, as far as electricity is concerned, may be on a longer-term horizon, what can and should be done in the next two years on a short-term heat strategy? Carbon abatement may be another area that can be addressed, but that may be further away.
Is it helpful if we say that our job is to decide what needs to be done in the next two years around the Climate Change (Scotland) Bill? What can we say on planning, energy efficiency and heat within a two-year—rather than a 10-year—time horizon for decision making?
I ask panel members to keep their responses fairly brief. If they want to respond in more detail in writing to any of those points, that would also be helpful. We are getting a bit short of time.
Wendy Alexander asked good questions. We have heard a lot about strategy this morning and there has been a lot of consensus. I have seen many people nodding during the discussion, which indicates that a consensus exists.
There is a question about what commerciality is. Commerciality, be it in relation to wave generators, tidal stream generators or carbon capture and storage plants, means that companies such as Scottish Power and Scottish and Southern Energy can buy a device, install it and switch it on three years later, and it does the business. However, those technologies are nowhere near that point. Three or four wave generators that have made electricity exist in the world. Perhaps one or two tidal stream generators have made electricity, and there is a 30MW CCS demonstration plant that has captured carbon. There is a world of difference between that position and power generators being able to buy devices for a wave farm and or to retrofit them to their power stations. Many barriers must be overcome and people need a lot of help to develop those technologies to commerciality. The pressing issue is to tackle those barriers.
Energy efficiency is pertinent to the discussion. Energy efficient technologies exist today, they are proven and they have rapid payback. While we try to take new technologies forward, we ought to press on as hard as we can, and as fast as we can, to take energy demand out of the system through energy efficient technologies.
There are 13 key actions in our response to the renewable energy framework, but I will focus on three of them.
First, the committee should scrutinise the renewable energy framework closely and examine what the Scottish Government can do to promote heat efficiency in Scotland. To set the context for that, the committee should call on the Scottish Government to publish its microgeneration and energy efficiency action plan quickly. It has now been 18 months in the making.
Secondly, improving the planning system is not a panacea, but the Government should invest in it and get planners to make decisions quickly. Statutory consultees such as Scottish Natural Heritage should be properly resourced to deal with planning applications quickly and effectively.
Thirdly, the committee should encourage the Scottish Government to consent to the Beauly to Denny transmission line upgrade next year so that we can get going. That is the most important thing for the electricity sector in Scotland.
I will not be quite as brief as Jason Ormiston was.
First, energy efficiency is important. As I said at the beginning, we need a green new deal. We should emulate Germany and invest in five or 10 per cent of the buildings every year, with a minimum investment of £100 million per annum. We should get that rolling from next year's budget.
Secondly, ministers have in front of them draft guidance under section 36 of the Electricity Act 1989, under which they can set both emissions performance standards for new thermal plant and waste heat recovery standards. They can start to build the foundations of a heat strategy that is not just about generating new renewable heat but which makes use of the vast amount of energy that heats the Forth at present. I am sure that Frank Mitchell would admit that that is what happens.
Thirdly, the Parliament should swiftly back the Government's position on ruling out nuclear power in Scotland. Failure to do so would undermine the promotion of energy efficiency and renewables, distract us financially and politically, and, as I know with my other hat on, distract graduates and quality staff and researchers away from the fields in which we need them.
Finally, I will comment on planning. No one has said that we should take away communities' rights to engage, but the committee must scrutinise the national planning framework carefully. You should be particularly cautious about an approach that says, "Let's put these national priorities in a framework and deem them to have outline planning permission already", because that will not be legally compatible with certain European rules and, worse, it will lead to a lack of democratic support for the measures. If we lose the public on the first tranche of investment in the grid and the next tranche of investment in onshore wind, it will be impossible to keep them with us for the next phase of the decarbonisation of the Scottish energy system.
I back Jason Ormiston's view that we must invest in the planning system so that it can make quick, good decisions rather than trying to override public opposition so that it can simply make quick decisions.
I say yes to all four of the things on Wendy Alexander's list. Practical decisions and recommendations that companies can implement are indeed welcome, as is the much-needed investment in the sector, but you should not rule out considering the longer term. The decisions that we make today, particularly on generation, will lock in the mix that we will have for the next 60 years. In what we do now, we must have an eye on the future and the longer term.
I reiterate that energy efficiency measures are cost effective for the economy and Scotland plc because they rely on existing technologies and not on novel ones—I would say that, wouldn't I?
If the committee is to pick out a sector on which it can do something in the next two years, hard-to-treat homes that are off the gas grid should be the target. They are not served as well as they could be by existing arrangements, and they need more investment in measures such as external insulation. If you said, "We can't do everything, so how would you to narrow it down a bit further?" I would be tempted to think about private sector rented homes, which tend to be the least energy efficient. For example, energy performance certificates—which will, in effect, rate the energy efficiency of homes for letting purposes—can be used as opportunities to bring in regulation and to say that the homes must be upgraded in order to be fully fit for letting, and fully fit in relation to carbon efficiency.
Like Jason Ormiston, we have many other recommendations and suggestions in our submission to the committee, but those are the ones that I would pick out.
With regard to planning, our clear advice is to support people who make decisions to ensure that those decisions come through the system. The public discomfort with the planning process reflects a lack of understanding about what is good and what is bad. The best way to show people is to make judgments and decisions, and we need to support those who make the decisions. I would say this, of course, but the Beauly to Denny line will be a key element: none of the things that relate to the use of renewables or achieving carbon reduction and on which there is consensus will be possible unless the line is a key part of the solution.
It is important that the Scottish Parliament focuses on what it can do and what it can influence. With regard to building standards and the approach that Mike Thornton is talking about, there are opportunities to intervene and to ensure that appropriate measures are taken when it would be least inconvenient and most economic for people to take them. We need to ensure that people are encouraged or even required to upgrade their properties when they are for sale or when planning permission or a building warrant for renovation work is requested.
We should consider opportunities to work with local authorities in Scotland on a regional or zone basis to roll out energy efficiency measures at the same time as greener generation technologies are rolled out—for instance, to ensure that an insulation programme goes on at the same time as a heat pump installation. That will reduce the mobilisation and installation costs and help to build up the supply chain by instilling confidence that a programme is in place. It will also lead to SME investment in the supply chain, which will provide job opportunities, as I said earlier.
I will try not to repeat what has been said. I ask the committee to look at other aspects, such as inequality in transmission charging. That is a key area in which what we are trying to do in Scotland is being undermined, and I ask the committee to consider what it can do to influence that debate. It is a key aspect for us all in relation to investments in Scotland: we have to acknowledge that and ensure that we get nothing less than a level playing field in the UK for what we are trying to achieve.
Secondly, as I look out over the next five to 10 years, I need greater clarity around investment decisions. That is related to the question of what is going to happen over the next year or two. Because of the lead times for investments and what we need to do to set those up, we are trying to contend right now with the issues that people are talking about with regard to 2013 and 2015. Anything that the committee can do to help us clear up the uncertainty around the future—what will be happening in 2015 or 2020—will be a great support in ensuring that we can bring investments forward in Scotland. It would be helpful if the committee could influence that debate.
We all have huge aspirations and ambitions for the future, and a lot of today's debate has been great. I am, however, a pragmatic Glasgow engineer, and I think that we need to set out a pragmatic and practical framework for what the next five or 10 years will bring, what that means for investment decisions and what we have to do jointly in Scotland. There are still security of supply issues—ensuring that we can keep the lights on—on which we seek the committee's support.
We have a maximum of 10 minutes to complete this session, so I ask Marilyn Livingstone and Chris Harvie to keep their questions brief.
I will be brief, convener. I just want to follow up what Wendy Alexander said. I, too, would like the committee to consider research and development skills because, as Duncan McLaren said, if we do not have proper R and D skills, new and emergent technologies will not be supported. Any submission that we make must put skills and technology at the top of the agenda. If Scotland does not have the relevant skills and technology, we will lag behind other countries. I would like to hear the witnesses' views on how we in Scotland support R and D and how we support delivery, not just at the graduate end but all the way through. What do we need to do to be successful?
As oil and gas reserves in the North Sea diminish, how can we diversify the skills in that sector? That is an important issue. Any strategy that does not include the areas of R and D, skills and development will not work. Duncan McLaren raised the issue, but I would like to hear other witnesses' views on it.
We surveyed our members last year and asked them what the challenges were for the future and what they were most concerned about. The committee will not be surprised to hear that they put planning high up the agenda. However, we were surprised to hear that they were concerned about recruitment. They felt that one of the factors that will drag back their potential high growth will be a problem in recruiting the right people. I think that that will be a serious problem for the entire energy sector, let alone the renewables sector.
On R and D, our members tell us that they would like a better connect between the industry and academia so that academia produces what the industry needs to get going. Some of the intitiatives that the current Administration has introduced, such as the proposed green energy centre in Aberdeen, might help, and the work of the SuperGen marine consortium—the wave and tidal group—will also help. However, we probably need to think a bit more about how we can better connect industry and academia to get the R and D that we need.
I back Marilyn Livingstone's view that the oil and gas sector needs a just transition, with support for retraining and the redeployment of facilities and vessels. Similarly, at the other end of the scale, we need training programmes for our plumbers and electricians so that they can work with heat pumps, solar panels and so on. In addition, I am concerned about the supply of people at the very skilled end of the market. I am pleased that the Engineering and Physical Sciences Research Council has agreed to fund a doctoral training centre in wind at the University of Strathclyde. However, there was no support in the announcement about that for doctoral training in marine technologies. In order to provide a flow of trained graduates into the sector, the Scottish Government would be well advised to match the investment that is needed to provide a Scotland-oriented centre that focuses on marine technologies.
We have received a copy of a report from the Government's Council of Economic Advisers, which states that the current economic slump is the worst since 1914. It is interesting to hear from that source how grim the situation is. I do not think that we face just a blip of the 1973 or 1980 sort; I think that the slump will be very severe indeed. However, in fuel terms, that surely means making a commitment to analyse the likely impact of the slump on particular sorts of demand. How well prepared are we to do that? The possible upside is that there will have to be European or even global initiatives to gain particular goals. Are we prepared for those, too? Finally, we will also have to analyse which aspects of our power use are absolutely essential and which aspects are discardable. In 1960, we had one car per 10 people, and Richard Layard tells us that we were much happier then than we are now. Is there any need to put the rescue of the ethos of motoring before supplying fuel for more important uses, such as heating?
I will start with the last point and pick up on something that I think Keith MacLean said earlier. In a way, people do not buy power or energy; rather, they buy what they get from it—heat, light, comfort, travel and so on. We are anxious that people should not think that they must suffer in order to cut carbon emissions. I see some echoes of that in the way that Chris Harvie described the situation. There are always low-carbon ways for people to maintain the things that they want to have. People probably would not mind having fewer cars and using public transport more if that public transport was fantastic, world class and consumer centred. However, they would probably mind very much if they had to walk instead. We need to be careful about choices.
That last option might be the best possible choice, given our problems of obesity and so on.
Yes—I accept that there is a wider policy environment.
I wish to restate the importance of using an energy hierarchy to help us through what is almost an impasse. Such a hierarchy recognises that the best unit of energy is one that we do not have to generate at all—that is, the conservation of energy. The next best, and next most efficient, way of improving the situation is to use the energy that is being generated in the most efficient way. Then, we get to the question of generation technologies. We have made some positive decisions to promote renewables. Lower down the energy hierarchy comes plant, which is matched with the use of carbon capture and storage—the equivalent, in the transport sector, is continuing to use a certain amount of fossil fuels. That is the way to proceed, rather than picking and choosing across the economy and suggesting that the use of energy matters in some areas but not in others. Decisions should all follow such a hierarchy.
I return to Marilyn Livingstone's point about the reuse of North Sea assets. Carbon capture and storage provides us with an opportunity to make a real difference and to help an industry that will slowly decline re-emerge. It could provide re-employment for a lot of staff. That is not just an opportunity from a UK point of view; because of the infrastructure in the North Sea, there are Europe-wide possibilities. A whole new economy could be created, and we should not overlook that opportunity, which could bring a long-term benefit to Scotland and the UK.
On R and D, I want to ensure that the committee is aware of one aspect in particular. The UK energy industry probably has its largest investment profile ever—some people are talking about £100 billion of investment being made over the next 10 to 20 years. In relation to incentivisation, R and D, technologies and working with academics, how all the frameworks are brought together will be vital if we are to build the solutions that we will be investing in over the next 10 or 20 years, and if they are going to be right for the next 30 to 40 years.
Investor-owned companies—such as ours—need to ensure that their gearing does not go too far, given the current concern around the credit markets. Regarding our capital plans, we are under intense pressure to make the right investments. Anything to do with areas that are not fundamental will suffer over the next two or three years. You need to help us get round some of those issues.
Our expectation is that, once we get beyond the current credit crisis, the cost of credit will get much higher. Therefore, the cost of capital will increase. Our industry is faced with a larger investment profile than we have ever faced in the UK, and we will need your help to overcome the current circumstances.
I have two highly specific points, and one general one. My first specific point is about energy efficiency. Household electronics require a lot of energy. I sometimes feel that we are running uphill in that regard. Over a 10-year period, we might get fridges that are more environmentally friendly but, in a matter of months, we will get televisions that use more power and that we cannot ever switch off. Do you have any thoughts about how we might turn that around?
The second specific point is about carbon capture. Is the obstacle purely one of commercial viability, as I think Duncan McLaren suggested? Are there also technology issues, in particular with power stations larger than 30MW? I want to be clear about what the obstacles are.
My last question is for anyone to answer. Unusually for politics, we have had a lot more light than heat today. Indeed, the issue of heat has taken up a tiny fraction of today's discussion. However, this committee has to address the issue of heat more than most organisations have done. Are there any specific issues that we have to delve into in that regard as we move into the next stage of the inquiry?
You make a good point about appliances. As we reduce the energy requirement for space and water heating in houses and, at the same time, increase the number of televisions, computers, chargers for mobile phones and so on—particularly bearing in mind the standby issues—the proportion of household energy use that is accounted for by appliances will rise. If you want to see what a zero-carbon or low-carbon household looks like, you will need to deal with the issue of appliances.
The good news is that tools are available to help in that regard. One is what you might call choice editing. You can use regulation to enhance the efficiency of products by, for example, reducing the energy consumption of standby mechanisms. In addition, because most appliances run on electricity, the decarbonisation of the grid has some traction in this area. Finally, if you have microgeneration in your house, it could be argued that, on a household scale, you are powering your own appliances.
The issue can be solved with appropriate will and the application of appropriate strategies. It needs to be addressed, but it is a long way from being insurmountable.
As I said in my opening statement, electricity is only one of the three forms of end-use energy. I do not know whether each of those sources accounts for exactly a third of our usage, but we need to address them all: electrical appliances; the quality of our buildings and the amount of heat that we need to keep them warm; and transport.
Marilyn Livingstone talked about skills. We should not overlook that issue. I work closely with Scottish local authorities and know that there are vacancies for energy managers to take on practical projects. A skills gap already exists, and it is tremendously important that that be tackled.
I will address the specific issue of carbon capture and storage. We recognise that the process involves a chain of events, starting with the carbon capture itself, then transport, and ending with storage. Each of those links in the chain has its own technical challenges. To get to the scale that we have been talking about, we will have to address many challenges, but we do not think that they are insurmountable, given the appropriate investment and focus. We believe that the technology bottlenecks can be overcome in line with the timescales that we have set out. We are working on that with companies that have the leading global experience in those areas.
I thank Gavin Brown for raising the heat issue. You have to understand that the issue is affected by both devolved and reserved matters. For example, at a UK level, the financial support incentives that have been discussed will have an impact, but there are other things that the Scottish Government can do.
In the new year, we expect the Scottish Government to consult on a draft renewable heat action plan. This committee should scrutinise that carefully, and should perhaps have an evidence-taking session on that issue alone. You should get the Scottish Government to explain what it is trying to do and identify any gaps that there might be. We will be looking at the plan closely, and I would love to come back to the committee with a report on it.
We would welcome your comments.
I want to make a quick point of clarification. There is an inverse proportionality in relation to how much we talk about a form of end-use energy and how much of the total end-use energy that accounts for. Electricity accounts for about 20 per cent, transport accounts for about 30 per cent and heat accounts for abut 50 per cent. The biggest efficiency gains can be made in space heating, and some of the best opportunities for displacing gas and fossil fuel use involve heat technologies such as heat pumps and solar thermal energy. We have to examine those.
That is a good point on which to finish. I think that most of the heating in my house actually heats outer space. I hope to do something about that, however.
I thank the members of the panel for taking part in today's wide-ranging discussion, which will help to inform the next stage of our inquiry.
I suggest to members that we defer item 2 on the agenda until after our discussion with the Council of Economic Advisers, as we are running slightly late.
I suspend the meeting for five minutes to allow our panels to change over.
Meeting suspended.
On resuming—