Work Programme
Welcome to the fourth meeting of the Economy, Energy and Tourism Committee. I am in the chair today because our convener has a significant constituency interest in animal welfare and has therefore gone to hear the Cabinet Secretary for Rural Affairs and the Environment talk about foot-and-mouth disease at the Rural Affairs and Environment Committee. He will join us later, at which point I will vacate the chair.
Today for the second time we will hold round-table discussions as we try to work out our work programme for the coming year. We have already held a round-table discussion on tourism, and the format of that meeting was quite successful. It was relatively informal, so rather than have any desperate formality today, I invite participants simply to catch my eye if they wish to contribute.
Today's meeting will be in two parts, with a short break between them. I welcome all our visitors, including Lewis Macdonald MSP, who joins us today. I remind everyone to turn off their mobile phones.
We recently held an interesting away day at which we thrashed a number of issues around. Would any of our guests like to offer their views on how we might make best use of our time, on behalf of the Parliament and the country, on issues affecting energy? Your views will help to inform committee members on how to devote their time over the next few months.
Dr Dan Barlow (WWF Scotland):
I will kick off. From WWF Scotland's perspective, it is fitting that the committee is looking for opportunities to consider energy issues over the next year and that you want to decide which issues should be priorities.
A Scottish climate change bill is proposed, and the target is to cut emissions by 80 per cent by 2050 through year-on-year cuts. The energy sector is the biggest sector in terms of emissions, so it is fitting that work on energy be carried out in the context of how that sector will deliver emissions cuts in line with the proposals in the proposed climate change bill.
As a starter, I urge the committee to consider what recommendations it can make on how to develop an energy policy that not only will be compatible with the climate change bill but will help to deliver it and ensure that we go further than we need to. That bill will set the major framework for climate policy and we cannot address climate policy without addressing energy issues, so there seems to be an ideal opportunity for the committee to ask what the bill means for energy issues in Scotland. That means considering consumption and generation.
If we wanted to be a bit luddite about this, would it be fair to say that the environmental aspects would not necessarily be the first issue in which the committee might want to interest itself? Would they not be more for another committee to examine?
All committees should consider them. Climate change does not stop at one boundary and start somewhere else. It is now globally recognised that we have no option: if we are to avoid dangerous climate change—a rise of 2(C—everyone in society has to play a role in tackling climate change. Therefore, the committee has a role to play by ensuring that the issue is part of its work plan. There are many other issues that will involve environmental and social goals—for example, it is possible to achieve significant cuts in carbon emissions while also cutting the number of people who are affected by fuel poverty. However, the committee must consider climate change as part of the key driver for its shaping of energy policy.
Adam Scorer (Energywatch):
That is right. Energy issues and the promotion of a battle against climate change are necessarily complex. From Energywatch's point of view, two things are crucial. The first is to recognise the centrality of consumption—the way in which consumers relate to and think about their energy consumption. We can get them to associate that with renewables projects and climate change action through better promotion, greater clarity about green tariffs and better access to information about the impacts of their own consumption through smarter metering and better communication.
The second point, which will also touch on other committees' remits but will be central for this committee, is the impact on consumers whose major problem is that they simply cannot afford to keep warm. That is not only an issue of fuel poverty for the Local Government and Communities Committee; it is about the structure of the energy market, pricing within that market and whether the market is delivering value to poorer consumers.
Unfortunately, the committee will have to grapple with the necessary complexity of an industry that has not only economic and sustainability priorities but strong social ones as well.
Duncan McLaren (Friends of the Earth Scotland):
It is incredibly important that we consider the consumption of energy as well as the production side. The single overarching task before the committee is to address the energy system and strategy for Scotland in an era of climate change. That has not been done, which is why we are floundering around a little and see lots of small things that need doing.
I would be so bold as to suggest that we need a strategy for a transition of the energy system to a renewables base. I say that because, in the very long term—whether that is over the next 40 years or the next 100 years—nothing else will be secure, sustainable or affordable. That may be because of the decline in the availability of oil and other fossil fuels, the decline in the availability of uranium or—more pressing, I believe—the impacts of climate change itself, which will mean that we will not even be able to use those resources fully. Therefore, we have to make a transition. It is not a question of whether, but of when and how. Those are the critical issues that are before the committee.
I recommend that the committee consider coming up with some sort of energy hierarchy for Scotland that says which ways of providing energy services are most and least sustainable, secure and affordable. I have my view—energy conservation and efficiency stand at the top of that hierarchy as the best ways of providing energy services, and nuclear power lies at the bottom—but I would not expect the committee to accept my hierarchy without debating it.
However, such a hierarchy will allow us to make the critical choices that must be made because of limited resources in the energy system—I include technically skilled graduates and capital, for example. We cannot just decide to support everything. The choices that we must make include whether to focus on meeting or managing demand through expanding supply; whether to centralise or keep centralised the system, or instead to go for more decentralised energy provision; and whether to rely on imports of gas and uranium or to retain an exporting position, which would probably be based on renewable sources of energy.
That could involve either importing the technology or developing our own technology as part of a renewables economy.
Indeed. We have two major opportunities to develop an export technology: marine renewables and, potentially, carbon capture and storage.
John Stocks (Carbon Trust):
Before moving on to the points that I intended to make, I will pick up on what Duncan McLaren said about an energy hierarchy. I occasionally talk about an energy hierarchy and at the top of my tree is the idea that we should not use energy when we do not need to. That is by far the simplest thing. There are many examples of energy being used when it does not need to be. The second thing is that, when we need to use energy, we must convert gas and electricity into light and heat as efficiently as we possibly can. The third thing is to think about renewables. I completely support Duncan McLaren's comments on that.
I come now to the main point that I wanted to make. It is appropriate that the economy, energy and tourism are grouped together in this one committee. We have an aspiration that our economy should continue to grow. There is an intrinsic link between economic activity and energy use. Our biggest industry is probably tourism. Whenever I hear people talking at events about how to reduce energy demand, there is an assumption that business as usual means a flat level of demand. I do not think that that is the case, however. We want to grow our economy and to create and expand businesses, and that puts upward pressure on energy demand.
The growth in information technology and communications is creating a greater energy intensity in existing businesses. Business as usual means an upward slope, if anything. We need to turn that round and make it a downward slope. What business as usual means, and how that relates to the other issues that the committee covers—the economy and tourism—are relevant questions.
I call Professor Miller—although I remind committee members that they should feel free to participate, too.
Professor Andrew Miller (Royal Society of Edinburgh):
The Royal Society of Edinburgh has been considering this question for a couple of years. The difference between the public's idea of energy now in comparison with what it was two or three years ago is vast. There has been huge progress in public awareness—right down to school level—of the energy problem, climate change and so on. There are an enormous number of reports, with lots of detailed analysis. However, as we in the RSE noted, there is no central body to co-ordinate all that information. The energy question is certainly cross-departmental as far as the Government is concerned. It crosses nearly every industry, interest, type of life and culture. Energy is always essential.
There has been so much analysis, but we feel that there definitely needs to be action now. I totally agree with what Duncan McLaren said about having an energy strategy. Our proposal is to consider having an energy agency for Scotland, perhaps a non-departmental public body with expert advisers who could co-ordinate all the available information that is swimming about, which tends to be dealt with by little groups here and there—often special interest groups, but sometimes groups with a wider interest.
A year after we published our report, the RSE feels that although there has been quite a lot of action, it has mainly been in the form of reports rather than things being done. We think that such action needs to be co-ordinated better.
How would that square with the Government's policy of decluttering the landscape—perhaps not quite a bonfire of the quangos, but something similar? If your solution is to have an overarching body—a non-departmental public body, for example—to co-ordinate action, how would you square the circle? Do you suggest that if we had such a body, we should get rid of all the other bodies because they already do different aspects of the work?
That is absolutely right. There are some bodies—you can call them quangos if you like—
Whatever it is called, it would be an at-arm's-length arrangement. The view expressed by the responsible minister is that he wishes to declutter the landscape. If you were to suggest an overarching energy body, and we were to go along with the idea, we would have to declutter in other areas before going ahead.
I agree. Just to finish my point, I was on the board of the United Kingdom Food Standards Agency, which was very effective. I agree that many other organisations need to be thrown on the bonfire, but we should start again and look at areas where the nature of the problem demands it. If we do not do that, we will end up with silos, with many solutions all muddled up, and it will be difficult to make a proper strategy.
I have some questions for our guests because we have invited you here today for your expertise. One of the biggest questions is: how do we achieve cuts in energy demand?
The speakers at our away day stressed our continued reliance on fossil fuels for electricity, and discussed the challenges, barriers and opportunities in driving forward new technologies, particularly offshore and marine. The speakers also emphasised that local planning issues were another barrier to developing some of the new technologies. How should we develop those ideas to inform our debate? How would the overarching agency proposed by Professor Miller help in that regard?
I will let Professor Miller respond to that question, although others may respond too.
I do not want to take up a lot of time on the issue. However, the idea worked effectively in the form of the Food Standards Agency—that is the model that I am thinking of. Such a body would be populated by two types of people—some would be experts in certain energy areas, but others would be laypeople with a much broader background. Through the chair, they would feed advice directly to the cabinet secretary.
Is that the kind of response that Duncan McLaren and Adam Scorer would make, or would they respond differently?
I offer a couple of examples to Marilyn Livingstone. We could talk at great length about her questions and how to achieve cuts in demand. The most important thing to remember is probably that energy is about transport, heat and electricity; we are not talking about electricity alone. Some of the biggest opportunities are in heat, particularly given the quality of our existing building stock.
I commend to the committee the example of what the Germans are doing to meet their target of getting all existing buildings up to modern standards by 2020. That will reduce dramatically the energy use of those buildings. To achieve that, they are ensuring that soft loans and green mortgages are available as part of a targeted programme that goes well beyond what we have achieved so far in this country.
There are other examples. The Organisation for Economic Co-operation and Development has done very good work not just on reducing demand but on how demand can be reduced in a hurry. We can achieve 20 per cent demand reduction in a couple of years if we put all the levers in place.
I agree with Marilyn Livingstone that there are some barriers in the planning system, although I understand that of the major renewables developments that are currently sitting in planning, at least as many are still with the new Scottish Government as are with the local authorities. While I am not saying that absolutely every one of those schemes is good and should be permitted to move from planning into development, a large majority of them probably should be. There are about 4GW of renewables developments; I think that Scotland's 2020 target is equivalent to only 6GW. A massive number of developments are stuck in planning. There are good signs at the other end of the scale. I am aware of proposals to make microgeneration technologies general permitted developments. I commend that approach to removing some of the planning problems.
A member's bill on that is on the way, and the Government might even be willing to pick up on the issue.
As someone in a non-departmental organisation that will be decluttered, or abolished, in September—although it is not quite so clear where we sit on the bonfire, as we will be recluttered into the new Scottish Consumer Council—I would say that an energy agency is a dynamic idea that should be considered. However, as well as bearing in mind the economic interests and welfare of consumers, it is important that we do not lose sight of how consumers can drive forward changes in markets towards making them more sustainable. We must not forget that we have a competitive retail market, rather than a centrally planned one. The impact of consumers demanding things from their suppliers, and choosing to go to different suppliers that offer different combinations of energy services, is key.
On how we can drive down demand from domestic households, we have to start from the position that most domestic households have no useable information on their level of energy consumption, or on the cost of that consumption in pounds or carbon. A third of our bills are estimated and give no guidance on how consumers can validate any behaviour changes in energy use. A key driver would be to provide smarter meters that tell consumers—in real time and in their own homes—about the impact of their consumption changes, the cost in carbon and the savings in carbon and money. Consumers are often seen as the problem: they leave the lights on and consume too much gas to heat their homes. We have to find some way of enabling and empowering consumers to be drivers for change and to be part of the solution rather than part of the problem. It is always easy to lose sight of the role of actual consumption by households when we are looking at problems that are so demanding that there needs to be a huge layer of strategic planning. Economic activity must be a driver for consumers and must be part of the solution.
I will let Elaine Morrison in, and then the MSPs can make their points.
Elaine Morrison (Solar Cities Scotland):
For the purposes of continuing the current theme that is being discussed, it may be more relevant to bring in Mike Thornton at this moment.
Mike Thornton (Energy Saving Trust Scotland):
I think that that is what they call a hospital pass.
The Energy Saving Trust works with the consumer audience, so I totally agree that one of the necessary conditions—although it is perhaps not sufficient on its own—is consumer engagement. Much of total energy demand is drawn down by activities in people's homes or in the transport that they use to get to and from those homes. Without consumer engagement, which is a complicated and long-term process, we will not be able to make the progress that we need to make towards the proposed climate change target for carbon dioxide reductions.
I will flag up another point that picks up on some of the points that were made earlier. As regards the economy, the carbon targets imply massive investments. Addressing the issue of where those sources of investment will come from can too easily be postponed for the longer term, and it would be useful if we accepted Duncan McLaren's energy hierarchy. Saving energy is usually the most economic solution, but it requires investment. Where the investment will come from to meet the carbon targets, and which sectors of the economy will make those investments, are issues that need to be sorted out. I do not know whether that is what Elaine Morrison wanted me to say.
We can return to that. Some members of the committee want to ask questions: first Gavin Brown, then Lewis Macdonald and Christopher Harvie. We will then give some of our guests the opportunity to respond.
I will throw out two questions to all the guests and experts who are with us today. First, we have a new target of 80 per cent renewables by 2050. That is a great aspiration and it sounds good in theory, but I am genuinely concerned about whether we can achieve that target. Do our experts have any views on what might comprise that 80 per cent? How much of it might end up being onshore wind power, and how much will be offshore wind, tidal or wave, and how much will be biomass and carbon capture? Do they have any idea of how the percentage might break down? What do we do if that approach does not work? If we get rid of nuclear power, the coal runs out and the oil is running out, what is plan B?
I do not know whether there is an answer to my second question. A number of people have talked about how changing consumer behaviour—such as encouraging people to turn off the lights—can make a difference. I am a little obsessive about that in my house, to the extent that I turn off things at source, much to the annoyance of my wife. That can play a part in reducing energy use, but in percentage terms—and I know that it is not easy to put a figure on it—how big a part? If it is a big part, can we get that message across to consumers? We hear statistics—for example, that turning off the lights for one night saves enough energy to power a car from Glasgow to Bathgate—but they do not really mean anything in the grand scheme of things. Is changing behaviour a serious part of the equation that we can perhaps push a bit more strongly?
Should we also be taking the gas and electric meters out of their boxes and placing them somewhere prominent? I refer to the smart meters that Adam Scorer mentioned.
Lewis Macdonald will put the next question.
As my colleagues will be aware, I am not—or at least, not currently—a member of this committee, and I will have to leave shortly to attend the committee of which I am a member. I am grateful for the opportunity to ask a couple of quick questions.
I was interested in what Andrew Miller said regarding the co-ordination of energy strategy. The Food Standards Agency is a good and interesting model, and I agree that it is an agency that works. One of its key characteristics is that it is a UK agency, with a Scottish arm that operates autonomously but is still part of the wider agency. I know from my previous engagement in that area that co-ordinating energy strategy and policy in Scotland and at a UK level—or making them coherent—is critical and sometimes challenging. I am interested to know whether Andrew Miller has any comments on that.
It would be interesting to hear comments on some of the planning issues that Marilyn Livingstone raised. The nature of the planning system makes it difficult for government to champion particular developments, for obvious—and good—reasons. Do those who are here to advise the committee think that there is a role for the Parliament in looking into what government, widely speaking, can do to champion the big infrastructure development that is required to make the renewables industry successful in the years to come?
I invite Christopher Harvie to pose his question.
My question, which is for Professor Miller, concerns delayering, removing quangos and creating more centralised bodies. About a month ago, I was discussing the various financial service quangos with Bill Keegan from The Observer, who said that delayering can leave behind a lot of discontented retired people and give rise to an organisation that requires several years to run in. As a result, although the ideas might be good, administratively we get the worst of both worlds.
Might one be able to create, for example, an ad hoc authority that would not only take an overview but use the bods in the existing bodies to carry out the executive functions? Decluttering involves a lot of waste that, in our pensions-conscious society, can be very expensive.
We should perhaps not push the Food Standards Agency analogy too far because, after all, it took over from the Ministry of Agriculture, Fisheries and Food, gave its expertise a new direction and livened up the whole place enormously. It is now a key agency.
I do not know how we run these things. I have come into this area only in the past two years, but I already feel that I have heard nearly every suggestion and comment before. We have to find a way of thinking out a strategy and calculating whether, for example, it is possible to meet the 80 per cent renewables target. Some reports have presented a lot of work on how we might meet the target and what it would cost. Costs, in particular, are an essential element of all this. We need a body that can co-ordinate all the activity and get things done, rather than simply hand reports around.
I realise that Dr Anable has not yet had an opportunity to respond.
Dr Jillian Anable (UK Energy Research Centre):
Although I want to respond mainly to Gavin Brown's questions, I should first say that, from my own perspective and given my expertise, I cannot stress enough the importance of including transport in any energy strategy for Scotland. Although that might sound obvious, the national energy white paper that was published this year was the first to include transport. The previous national energy strategy was not bold enough to take a strategic overview of the transport sector.
I stand to be corrected, but I believe that the 80 per cent renewables target that Gavin Brown mentioned applies only to the electricity sector. However, that is a case in point: the target does not apply to the transport sector, which is the largest user of energy. No scenarios or forecasting models that I have seen suggest that the use of alternative fuels in the transport sector will be anywhere near 80 per cent by 2050. Instead, the sector will still be dominated by fossil fuels.
How can we change such behaviour? According to the handy four-pronged model that I often use to illustrate the broad areas in which the transport sector's approach to energy can be changed, energy demand in the sector could be reduced by targeting the total amount of travel demand, the technologies and travel modes that are used to service that demand, and the carbon content of the fuels used in those technologies.
There are many ways of reducing demand in the transport sector through changing behaviour. It is not simply a matter of encouraging people to travel less; we have to encourage them to purchase more energy-efficient vehicles, to drive them more efficiently and, indeed, to make less use of them and more use of other forms of transport.
Although it is difficult to put a figure on how much we can reduce demand either by targeting technologies or by changing behaviour, recent work for the Commission for Integrated Transport that was published last week tried to do just that. It concluded that behaviour-change policies could reduce demand for energy from transport by about one third by 2050. The report also detailed the various kinds of policies. There is quite a lot of scope.
I will get round to some of the people who have indicated that they want to speak, but I invite some of our guests to address Lewis Macdonald's questions, because he has to go. In the question that particularly caught my attention, he suggested that perhaps we should not just confine ourselves to Scotland when addressing these issues; we should be co-operating with our compatriots in these islands, particularly when talking about a body such as the Food Standards Agency. Do any of our guests want to comment on that?
Mike Thornton and I might think about the targets. The EST is a UK-wide body, as is the Carbon Trust, but we tackle very different markets and, as individuals, we have different skill sets. The Carbon Trust works UK-wide on the specialist question of addressing and talking to business, and Scotland gets a lot of value out of my being part of a UK body that focuses on that market. I suspect that Mike Thornton would make the same comment for the consumer market. There is a lot of value in being able to rely on colleagues from a larger part of the UK, south of the border.
Where does that stop? If something is affecting the environment, its effect does not stop within these islands, let alone at the border between Scotland and England.
The Office of Gas and Electricity Markets is still the national body that regulates the energy market throughout Great Britain. The issue might be about ensuring that the regulator's decisions or the processes that it puts in place reflect the priorities for an energy policy in Scotland.
When I opened The Scotsman this morning I was a bit surprised to see a campaign about the impact of one particular Ofgem decision on the promotion and development of the Scottish renewables industry. Energywatch opposed the decision in July, because it might have an impact on the wholesale electricity price, which is already detrimental to consumer interests.
There is dynamism behind the idea of the energy agency, but let us keep a view on the issues that we need to resolve with the current national cross-GB organisations that have responsibility for ensuring that a proper sustainability duty is applied to the regulation of energy markets throughout GB.
There is no doubt that some of Ofgem's decisions have been particularly controversial and have worked against environmental improvements.
I back that up, but I approach Lewis Macdonald's question from a slightly different perspective. How does the Government champion the big infrastructure that is needed for renewables? The answer probably lies in our relationships with the countries around us. You might have come across the supergrid idea for connections across the North Sea, and possibly going as far north as Iceland and through to Ireland. The supergrid would address Gavin Brown's question about how practical it is to have high levels of renewables in the system, because the wider the grid area the less intermittency is a problem.
Other technological issues are relevant, for example the development of more storage capacity in the system using pump storage or redox battery storage, which they are experimenting with in Ireland. There are a number of ways of meeting the 80 to 100 per cent target for electricity by 2050, which is very practical. However, it is not practical to aim to achieve that target throughout the energy system.
The supergrid is attractive, but what do you say to those who say that the greater the supergrid the greater the transmission losses?
The transmission losses are generally smaller than the gains from generating electricity in the most environmentally appropriate places where the wave power, wind power or tidal power are greatest. You gain much more efficiency. However, within the grid there has to be a lot of dispersed, decentralised generation—combined heat and power in particular brings heat in to the equation.
I will comment briefly on transport. I back up Jillian Anable's view that transport energy has to be considered as part of any energy strategy. Biofuels merit particularly close attention, because at the moment we are rushing ahead of the reality of sustainability in biofuels. We need to pause the promotion of biofuels for transport, because they are having unforeseen environmental consequences and are not meeting carbon emissions benefits objectives.
The words having been taken out of my mouth, I will give Elaine Morrison the opportunity to contribute.
Thank you. I will keep my spot this time.
Getting embroiled in the nitty-gritty of the delivery of a strategy for Scotland is perhaps a distraction at this point. On the issue that Gavin Brown raised about the percentages of different types of generation, several years ago Garrad Hassan carried out a scoping study that looked at the potential for electricity generation in Scotland. It focused only on electricity generation: it did not look at the potential and demand for heat, it did not look at energy efficiency and it did not look at transport. We need an overarching commitment to a strategy that scopes out demand and supply potential in Scotland in all those sectors. It should take into account the energy efficiency of building stock, transport modes and so forth as a starting point and then consider how best demand can be met in the most environmentally and economically sustainable way.
My particular axe to grind is the need to look at urban energy. Even in Scotland, we are a largely urbanised population. If we want quick hits to reduce demand and generate energy that meets demand appropriately, we must look at how we can do it in our cities. Duncan McLaren has talked on and off about the idea of decentralising the energy systems. It is crucial and entirely feasible for us to do that in each of our main cities as part of an overarching strategy.
Lewis Macdonald mentioned championing big infrastructure projects. The strategy for Scotland could do that. It could earmark where it is appropriate to have large-scale generation capacity in the country and put that infrastructure in place, but it could tie that in with localised generation where it is appropriate and can be delivered. That would iron out some of the problems with wind farm locations in Scotland. There should be clear location guidance, backed by the Scottish Government, stating where we need to put the generation to meet long-term demand in Scotland and to provide for export, whether or not we are part of a supergrid. We could then consider more localised projects that have local and civic buy-in. Public support is extremely important.
Marilyn Livingstone touched on how we reduce demand. We must engage with people. The Energy Saving Trust and various other organisations do that, but we need to think about how to engage with people properly. As Energywatch's representative said, the main drivers have been financial ones and security of supply. We should give local people in our urbanised country a stake in a decentralised energy system that delivers affordability and security of supply, but that also offers community benefits, such as the creation of jobs and local opportunities, which might be related to the biomass sector and the development of technologies and solutions. In that way, we could deliver a true strategy for the country that is sustainable and meets each and every requirement of this committee and probably every other committee in the Scottish Parliament.
You are certainly issuing us with lots of challenges, but we are more than happy to accept them.
The challenges are right, but I have a couple of more basic, dirty points, if you like, relating to how we can achieve the appropriate levels of saving and identify the real levels of saving. The EST and the Carbon Trust have loads of ideas about the percentages that can be saved if people adopt certain behaviours. However, unless people are able to change everyday behaviour, validate the outcomes and see the benefits, there will not be sustained cultural change. That is why people need immediate feedback about how their consumption has changed. I am obsessive about smart meters.
If we install smart meters that are prominently placed so that people know the implications of their behaviour on their personal finances as well as on carbon emissions, will we not create an industry that only measures the problem, rather than change behaviour?
I do not think so. Studies in Canada, Italy and Australia on the sustained value of changes in consumer consumption have revealed figures of between 5 and 20 per cent.
What is the payback time for the capital investment?
The Government is now committed. For the first time, all the six major suppliers in GB are saying that we can achieve smart metering in 10 years. Some obstacles have to be removed: we have to address issues such as how the technology communicates back to the company, the structure of the market and who owns the meters. We have known about smart meters for 30 years, but we have only just got to the stage where there is a consensus that we have to introduce them quickly.
I agree completely with the point about the focus on cities and engaging with people. However, we have to start from where people are. We have to have different, segmented communication strategies if we are to have a hope in hell of getting the message through. We have to remember that 33 per cent of Scotland's homes are off the gas network and are using oil and huge amounts of electricity, and that about a third of houses are solid-wall houses, which require specific measures. We have to understand that not only the demographics but the housing stock in Scotland present different problems from those that are experienced in the south of England. We have to be able to address those problems.
That brings me on to the point that I wanted to make. At the committee's away day, one of the people who gave a presentation raised the issue of energy efficiency in the Scottish building stock, which is the case in point. Duncan McLaren will correct me if I am wrong, but I think that they said that we could achieve a 20 per cent reduction in emissions just by improving the building stock. We were told that not enough is being done to police new building and that there are not enough building control inspectors to ensure that houses are being built to spec. A lot of new houses are being built near where I stay. When I look at the shell of those houses when they are going up, it always strikes me that one could shoot peas through the walls—it does not seem that energy conservation is being built into them.
We could achieve a quicker hit on energy conservation by making more effort to do things that we can already do, such as being tougher on the inspection regime. I was intrigued by Duncan McLaren's comments about what Germany is doing to improve the quality of its current building stock. Is it providing soft loans for double glazing and triple glazing? We should be talking about triple glazing now; we need to remember that we are a northern, not a southern, European country. Even our friends in Plymouth have markedly different demands from ours.
Some countries have simply stopped selling normal light bulbs and sell only energy efficient ones. Over a period of time, we could phase out one lot and phase in the other lot. Energy efficient light bulbs have changed in shape over time. People would not use them when they were those long, cylindrical shapes, but they will use them now. We should make more effort to maximise the things that we can do while we are working behind the scenes on other measures.
I agree absolutely with all your suggestions. Although we are making progress with the building standards for new builds, there are far too many cases where enforcement is weak. We have heard discussion about making all new houses zero-carbon buildings, and it is right that we should move in that direction fairly quickly. Westminster has committed to implementing that target by 2016. It would be excellent to hear this committee recommend that Scotland should do so sooner.
It is important that we tackle new build, because if we do not we will store up a problem for the future. However, we must also look at existing stock. We could start to do a couple of things right now. We could end up having a lengthy discussion about measures that are still 10 or 15 years away, but many of the steps that we have discussed could be taken in the next couple of years. We could say that, within a couple of years, all new build should be zero carbon. There are Scottish builders who are championing that right now, so we could just make a decision to do it. We could direct all funding in a more strategic way towards retrofitting existing properties.
Decentralised energy sounds technical, but in 2006 we carried out a study with the City of Edinburgh Council and Greenpeace that looked at what Edinburgh could achieve through a more decentralised approach, using existing technologies—not just renewables, but also combined heat and power based on gas. The study suggested that, even on conservative estimates, by 2025 Edinburgh could cut its carbon dioxide emissions by 28 per cent.
Decentralised energy can be implemented on a range of scales. Microgeneration is a key component of a more decentralised system. We have talked about energy use. Work that the Sustainable Development Commission did a few years ago showed that, when members of the public—all of us, as consumers—understand how and where their energy is generated, they are more likely to use it efficiently. At the moment, we have a centralised system, with a small number of huge energy production facilities that tend to be situated a long way from population centres, so it is all too easy for people to turn on a light and not think twice about where the electricity is being generated. If they saw it being generated in their house and knew that the more they turned their lights on the less electricity they would feed back to the grid—because we had designed an appropriate tariff that gave people real incentives—it is likely that they would start saving energy from the day that the system was introduced.
Microgeneration both acts as a huge incentive to individuals to use energy efficiently and avoids the wastage that is associated with the current centralised system, in which we lose two thirds of the energy that is generated up the chimney, in the form of heat, before we even start. We do not capture that heat, but we could start to do so.
In the years ahead, we could take a number of opportunities in Scotland. Recently, huge development proposals for Leith were published. It could be a requirement that a decentralised system and combined heat and power be used in that development. We have an ideal opportunity to put Scotland ahead of the pack by making the Commonwealth games village an exemplary development that is committed to a decentralised system. The massive development at Ravenscraig also presents a number of opportunities.
We could start doing things now. We must not get too caught up in discussing measures that are 10, 15 or 20 years away. It would be great for the committee to recommend some steps that could be taken within a couple of years and that would make a big difference to Scotland's emissions. The committee could suggest that the proposed climate change bill signposts an energy strategy that includes both a consumption dimension and a production dimension and that delivers carbon savings. That would be an excellent way for the committee to say that it recognises that its role is partly to help to deliver the aspirations in the bill.
You have made a number of suggestions that should probably more appropriately be directed at the Transport, Infrastructure and Climate Change Committee. It might not be the best use of our time for us to duplicate the work that the Government is doing on its proposed bill. I do not deny the importance of what you say, but our role is to inform future policy requirements. We must be careful not to duplicate work that someone else has done.
I will let Dave Thompson ask his question, as he has not yet had a chance to speak and his voice is probably in as bad a state as mine.
I have a bad cough, but I will do my best.
David Whitton covered a number of the issues that I wanted to raise. My question relates to existing buildings. It is much more expensive to deal with existing buildings than with new buildings. I wonder how they cope with that in Germany, which Duncan McLaren referred to earlier. New build is a small percentage of the total housing stock. To have a real impact, it is necessary to pull in existing housing stock, but the issue is how that can be done. Removing VAT from house improvements, for example, would make it cheaper for people to make them.
First, smart metering is an extremely interesting technique. We talk about the difficulty of communicating with the consumer and so on—smart metering is how to do it. If the right smart meters are put in, they can be fed information. For example, a house with a smart meter can be inspected and a target can be set. The householder can be shown that, by inspecting the meter, they can assess whether they are meeting the target or are over or under it. Smart metering has many aspects, but using it for communicating with the public is important, because it allows them to buy in to the process. It is good if householders feel that they understand the target and can perhaps influence it.
Secondly, there is a detail that nobody has mentioned. Lord Oxburgh spoke at the Royal Society of Edinburgh at our final meeting on energy and said that we should exploit solid waste in Scotland much more than we do. Our committee went up to Lerwick and we were extremely impressed by the system there, which heats not only hundreds of homes but schools, a hospital and so on. To repeat my original point, it is easy to talk about such examples, but we must try to ensure that they happen more generally.
Thank you for dropping us into the incineration difficulty—that is just a throwaway line.
I apologise for not dealing with the question directly, but I want to bring up two small points. First, there has been much discussion of smart metering, and I endorse everything that has been said about it. However, using feedback on energy consumption to alter consumers' behaviour is not confined just to the domestic sector. For example, there has been a lot of work on in-car meters, such as fuel economy meters and gear shift indicators, which shows that feedback can have an immediate and long-lasting effect on driver behaviour that can reduce fuel consumption by between 5 and 20 per cent. Quick hits could therefore be gained in that area.
My second point, on which others have touched, is on cost effectiveness. Perhaps the committee's work programme could concentrate on policies that try to affect energy consumption, as distinct from those that aim at the technical and production side, and compare their cost effectiveness and make cross-sector comparisons. My understanding is that there is a dearth of information on those softer policies, if you like. It would be worth examining that area.
Is in-car feedback work done to highlight, for example, the difference between a car's published miles per gallon and the miles per gallon that are actually achieved, which reflects how people really drive?
Much work needs to be done in that area.
I understand that Duncan McLaren can answer Mr Thompson's question. We will end this session after that.
I offer some brief thoughts on what happens in Germany. The Germans are making a considerable financial investment, but they mobilise it from the financial sector through enabling legislation that allows the offer of green mortgages. The consumer borrows more in order to improve their home, but pays less in energy bills. They pay the difference to the mortgage lender to pay back the mortgage. That means that, rather than pay for improvements up front, the consumer pays for them over 20 to 25 years. That allows investment in microgeneration technologies in German homes—Germany leads in that area. The Germans have also sorted out the tariff regime to provide a financial incentive for consumers to use such technologies. For example, the German consumer who buys solar panels for their roof gets paid the feed-in tariff at a guaranteed rate.
Those sorts of things are part of the transition to which I referred earlier. It is apposite for this committee to consider the transition for the energy industries in Scotland and how it can be made just and socially fair, given that, over the next decade, we will see substantial changes in the ways in which we supply and use our energy.
On that note, I thank our witnesses for their contributions to the discussion. Perhaps you would consider dropping us a note about the key issues that you want us to consider in any inquiry that we might hold in the coming year. You have issued a range of challenges to us. We will have to consider how well we can address them, or whether it is appropriate for us to address them. If there is anything that you wanted to say but did not get the opportunity to say today, you may put it in writing and we will consider it. Thank you very much.
Meeting suspended.
On resuming—