The PIU Review
108. The PIU Energy Review represents a major analysis
of energy policy and future strategy. It contains much excellent
background material and presents a sensible overall assessment
of the challenges facing the UK. We fully endorse the broad thrust
of the PIU review—namely that we can make up for the shortfall
left by the decline in nuclear capacity if we can promote sufficiently
renewables and energy efficiency measures. We are, however, concerned
about the extent of Government commitment in view of the size
of this challenge.
109. Among its many recommendations, we would single
out the following as particularly important in the context of
this report:
- the need for a new DTI energy objective which
places an overriding importance on environmental objectives in
any tradeoff with social or economic objectives;
- the need to develop systems for internalising
environmental costs, through shadow pricing and the introduction
of a carbon tax or a more comprehensive emissions trading system;
and
- the need to group together responsibilities for
energy policy within a freestanding Sustainable Energy Policy
Unit.
110. In addition, while generally focussed on longer
term strategy, the Review did make a number of recommendations
to be implemented immediately in response to issues it considered
urgent. Two such recommendations of particular relevance in this
context were the creation of the Sustainable Energy Policy Unit
(to be set up by May 2002 and be fully operational by September
2002), and the preparation by the DTI of possible legislative
measures to assist renewable generators (to be enacted in January
2003, if necessary).
111. On the negative side, we do have some concerns.
The Review does not seem to us to respond adequately to RCEP's
50 year timescale. It fudges, for example, the issue of the extent
to which the UK should lead the way and set longterm targets.
It gives the impression in too many areas that decisions do not
have to be taken now. It pins considerable faith on the effectiveness
of market forces and on the liberalisation of EU energy markets,
and fails to acknowledge explicitly that energy prices will need
to rise.
112. The PIU review also fails to provide an assessment
of current policy instruments, even though this was an aim of
the initial PIU Energy work begun in January 2001. We are therefore
concerned that the PIU review may not adequately reflect the scale
of the challenge, and that there now needs to be a specific process
for translating its recommendations into specific policy commitments,
so that the White Paper forms an action plan.
113. More generally the need to use the PIU to conduct
a variety of ad hoc studies in the environmental and sustainable
development area highlights the failure of departments to work
together in a 'joinedup' way. It also highlights the need
for a central unit on sustainable development - an issue on which
we have commented in previous reports.[153]
The DTI consultation on the PIU
report
114. Following the publication of the PIU report
on 13 February 2002 the DTI issued a consultation document on
14 May inviting responses to a wide range of issues relating to
energy policy.[154]
In the light of our comments above, we find this document disappointing:
- It took three months for the DTI to release this
consultation. Given the summary nature of the document, we find
this extraordinary.
- The consultation document fails to include any
reference to PIU recommendations where urgent action was required.
In particular, it omits any reference to the PIU's conclusion
that the split of departmental responsibilities relating to energy
policy lacks coherence, and its recommendation that a crosscutting
Sustainable Energy Unit should be created as a matter of urgency.
- The conclusions the PIU came to were built on
an excellent series of scoping notes, extensive public consultation,
and considerable analysis. The report is also a complex document
which does not readily lend itself to summarisation. Given the
enormous and thorough consultation process which the PIU engaged
in we fail to understand why the Government cannot come
to its own view on the basis of all the evidence collected by
the PIU, rather than engage in a further round of consultation.
115. We are therefore concerned that the DTI's
consultation on energy may fail to take forward the debate on
the basis of the PIU recommendations, and is in danger of simply
revisiting all the issues which the PIU themselves covered. We
also find it somewhat ironic that the role of the PIU was to adopt
a crossdepartmental perspective and bring fresh thinking
to the debate and yet the consultation on the PIU report and the
preparation of an Energy White Paper is now being managed by the
Department of Trade and Industry.
153 eg. Second Report from the Environmental Audit
Committee, Pre-Budget 2001: a new agenda? Session 2000-01,
HC 363. Back
154
DTI, Energy Policy: Key Issues for Consultation, May 2002. Back
