PROSPECTS AND POLICIES FOR STEP CHANGES IN THE ENERGY SYSTEM:

DEVELOPING AN AGENDA FOR SOCIAL SCIENCE RESEARCH

FINAL REPORT TO THE ESRC June 2003

By

Professor Paul Ekins

Head, Environment Group, Policy Studies Institute

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CONTENTS SUMMARY 1. INTRODUCTION 2. CONFERENCE OBJECTIVES AND OUTPUTS 3. THE CONTEXT OF UK ENERGY RESEARCH 4. THE ENERGY SYSTEM 5. ENERGY EFFICIENCY 6. RENEWABLES 7. NUCLEAR POWER 8. THE EUROPEAN AND INTERNATIONAL DIMENSIONS 9. CONCLUSIONS

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SUMMARY This is the Final Report to the ESRC of a project the purpose of which was to inform the preparation, research strategy and research agendas of the forthcoming major cross-Council research programme on energy, Towards a Sustainable Energy Economy. The major activity of the project was the ESRC Energy Research Conference held on March 31st 2003. Four expert papers were commissioned for the Conference, and these were reviewed by two discussants each at the Conference itself. The Conference Programme and Participants’ List, and brief biographies of the conference presenters, are appended to this report. The Conference Report, on which this report is partly based, the Conference presentations, and the four papers, with the Discussants’ Notes on each one at the end of it, are available on the PSI website (http://www.psi.org.uk/events/ event.asp?event_id=35). The conclusions of this project are presented under the headings of the four papers, which were commissioned for it, with some generic conclusions following these. The basis for the conclusions, and the conclusions themselves, are presented in more detail in the relevant sections of the report The energy system Research about the possible evolution of the energy system needs to distinguish between the system itself and the context within which it must operate. The energy system is formidably complex and research should be careful to distinguish between different energy vectors, the different infrastructures through which they are delivered and the different services they are intended to provide. At every stage in this energy chain, for each energy vector, there are different options for carbon reduction, but the options are often interdependent temporally or spatially, uncertain in terms of which will ultimately become socially established, and challenging in terms of both analysis and understanding. There is simultaneously a tendency to delay decisions, because of the danger of making the wrong one, and a need to take decisions, in order to allow promising options to become established. Research in this area needs to concentrate on clarifying the options, and the timescale and sequencing of decisions which are necessary for different options to have the best chance of achieving its potential. Modelling of energy systems, in conjunction with scenario development and the generation of different possible energy system ‘roadmaps’ all have an important role to play in such research. So does research into the specific economic, social and environmental impacts of different options and scenarios, and the factors that promote or militate against the social acceptability of different options. The context for the energy system is both national (and sub-national) and international. With the UK’s greater projected dependence on international energy markets, the international dimension will be more important for the UK than in recent years. Research will need to develop understanding of the geopolitics of energy both at a European level and further afield. Another strand of international research will need to focus on international climate policies, both in terms of how policies of mitigation of adaptation to climate change, whether within or outside the Climate Change Convention, might develop, and in relation to the geopolitics of energy. Such research will need to develop

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sophisticated ways of characterizing and handling uncertainty, which will be a pervasive issue in all in this area of energy research especially. Nationally the key issue will be the interaction between government policy and market regulation. Research is still required to give insight into how to manage the tensions between policy and regulation such that consumers/citizens gain the benefits of competitive markets, affordable energy services and environmental security, while energy businesses remain financially viable and investors are prepared to take on the policy, regulatory and market risks to ensure reliability of supply. Energy efficiency Human behaviour in respect of energy efficiency is both complex and still imperfectly understood. Technical analyses routinely reveal large cost-effective technical potential for energy efficiency technologies that remain obstinately unimplemented despite extensive public policy. At the heart of the matter is the interaction between markets, behaviour and technology. People buying energy-using equipment, or using energy, may be seeking services which in their mind may have very little to do with energy consumption. Focused research is necessary to reveal people’s underlying perceptions, motivations, and aspirations when they are making purchases or engaged in activities that consume energy. A number of other aspects of realizing the technical potential of energy efficiency also need further investigation: the costs, what policy packages are likely to be most effective, and the longer-term scope for energy efficiency improvements. Interdisciplinary research is required here, and will need to focus on complementary combinations of instruments, perhaps of very different sorts, on the costs associated with them and the changes they are intended to promote, on technologies, and how they are developed and diffused, and on the motivating factors that could change behaviour. Two important aspects in this last regard are the role of information and the effect of prices. Where the fiscal system is used to provide incentives, more understanding is required of their likely effectiveness, and complementary measures that might increase it, and their revenue, macroeconomic, competitiveness and social implications, as well as how their transaction and compliance costs compare with alternative measures. There would also seem to be a need to investigate why the fiscal system currently seems to give different sectors different financial incentives to increase energy efficiency. Finally, a step-change in energy efficiency will also need greater understanding of the supply side of this market: what businesses will be effective in selling this product, what skills will they need and how can these be developed, and what incentives will they require. Renewables There are a number of current barriers to the development of renewable energy sources: economic, institutional and those related to networks, market-rules and the incentives required for financing. The necessary system change for renewables to comprise a large proportion (25-100%) of renewables is profound. It will only come about on the timescale of the targets envisaged by the Government if the right decisions are taken by the right people in the right order at the right time. Characterising this sequence, the conditions that will need to be met for it to be implemented, and understanding and

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allowing for the inevitable uncertainties, is one of the principal research challenges of decarbonisation. A very important nexus of issues concerns costs, prices, investment and investment. Most renewables will not be fully cost-competitive with the least-cost power sources for some time, although the cost-gap is diminishing and is likely to do so further. Research is needed to gain further understanding of the balance to be struck between giving adequate incentives for investment, to achieve further innovation, economies of scale and lower unit prices, and the overall costs to consumers and taxpayers. Financial incentives will have to be supplemented by limits to regulatory and policy risk. Those providing finance for renewables will only do so if they believe the infrastructure, regulatory structure and policy framework, as well as markets, will permit profits to be made. More understanding is needed about these issues and how they interact. The ways that renewables interact with other elements of the energy policy agenda also need to be explored. They may offer greater security than, for example, gas supplies which need to be imported from distant countries. They are also less likely to be taxed than fossil energy sources, and some can be embedded in local distribution systems, which may involve lower transmission costs. On the other hand they are intermittent (and therefore require back-up capacity), their embedded nature may require network strengthening, and they may be visually intrusive, with this effect magnified if they need to be transmitted over large distances. All these factors have implications for costs and, in the latter case, environmental impacts and public acceptability. None of these aspects of renewables, or the interactions between them, are yet fully understood. There is much scope here for interdisciplinary research involving engineers and technologists, economists, geography, sociology and political science, and policy studies. Nuclear power Despite being a well-established form of power generation that is well adapted to the current grid infrastructure, nuclear power actually raises many of the same research issues as renewables, albeit for different reasons. First, it is generally accepted that any new nuclear programme will employ radically different, and currently unproven, technologies from those now in use. There is still great uncertainty as to the economic and environmental performance of these technologies. As with renewables, these uncertainties can only be resolved by the commitment of significant resources to demonstration programmes, but, given poor performance on cost by nuclear power in the past, there is understandable scepticism about making this commitment. Research will need to more to clarify cost issues, and such issues as nuclear waste and decommissioning liabilities, before a case for a new nuclear programme can be convincingly made. Even so, there is some doubt whether private markets would ever finance new nuclear build on their own. The policy and regulatory uncertainty, and potential liabilities, are likely to remain too great without significant government assurances of cost sharing or liability underwriting, as in the past. Research needs to explore what kinds of public guarantees might be required for private finance to come forward with the scale of investment required. Quite different kinds of assurance are likely to be necessary for public acceptability of a new nuclear programme to be secured. Ways of taking decisions about these issues will need to be very different - more open, transparent and participatory, with more acknowledgement of legitimate differences in values and perceptions - than in the past.

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Yet there is much still to be learned about how to operate these new decision-making processes effectively, especially about such controversial and technologically complex issues. Cross-country comparison about the way such issues have been and are being handled elsewhere might be a fruitful research avenue. Finally there is the issue of the skills base. The ‘nuclear option’ is only effectively open if the human capital exists to implement a new nuclear programme should one be decided to the necessary. To some extent the skills can be imported. But it is difficult to see how a major new programme could be sustained without significant domestic research and industrial capacity in this area. Research needs to clarify what ‘significant’ might mean in this context, and how such capacity might be developed if it does not exist, or might not exist when it is needed. It is now most unlikely that a decision to undertake a new nuclear programme in the UK will be taken within the next ten years. But that is a relatively short space of time in which to answer some of the profound research questions which this technology still presents. Generic research needs Climate change, and the contribution to it of anthropogenic CO2 emissions, are quintessentially global and international issues. Some research on these issues - for example, on geopolitical questions or the possible evolution of the Climate Change Convention - will need to be explicitly international in focus. But all research in this area will need to keep an eye on the international dimension, both to learn from experience elsewhere and to ensure that national and local level questions are being addressed in a manner consistent with the international context, priorities and developments. Learning from experience elsewhere will be important both because many of the technologies being developed to address the climate issue will be developed elsewhere and will be traded in global markets; and because UK-grown technologies will need to find global markets if they are to prosper; and because many industrial face many of the same problems with carbon abatement as the UK. The UK has much to learn from, and much to contribute to, global efforts to address climate change, and internationally aware research will be an important source of this learning and channel for this contribution. Many of the generic research issues in this area have been touched on above under the specific issues addressed by this project, and are elaborated in more detail in both the body of the Report below and in its Conclusions. The key issues for a social science research agenda that is seeking to support a policy objective of radical reductions in carbon emissions may be summarised as: human behaviour; social acceptability; economic costs; stimulation of innovation; network and infrastructure issues; markets and governance; and security and reliability. Significant progress will need to be made in understanding most if not all these issues if these radical reductions are to be achieved.

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1. INTRODUCTION The UK is currently facing the most important sets of decisions relating to energy since it was decided in the 1950s to establish a nuclear power programme. To inform these decisions, a major new research programme, Towards a Sustainable Energy Economy, is being taken forward by the Research Councils. The aim of the project reported on here was to contribute to the development of the social science research agenda that will form a central part of this new interdisciplinary programme. A principal energy challenge today is how to reduce the carbon dioxide emissions that contribute to climate change, in the context of an overall approach to sustainable development that seeks simultaneous progress towards economic and social, as well as environmental, objectives. This challenge cannot be achieved by continuing the current rates of incremental development of present systems. Step-changes are needed in energy efficiency, and the creation, practically from scratch, of whole new industrial sectors devoted to renewable energy sources, and/or very substantial sums spent on new nuclear generating capacity, of a very different design to the stations operating at present, to achieve substantial reductions in carbon, and diversification away from fossil fuels. There is currently very little consensus on what step-changes in decarbonisation of the current energy system are feasible, where the term ‘step-change’ is here used to mean a radical increase in the rate of decarbonisation such that UK carbon emissions may be projected to fall by some 60% by 2050. Feasibility in this context is not primarily a matter of technology. For example, it is known that energy efficiency technologies that can deliver step-changes as defined above already exist, and further technologies in this area could doubtless be developed in the future. The problem is with their diffusion through society. Similarly with renewables technologies like wind power: the UK resource is known to be very large and the technology now exists to exploit it cost effectively, but actual construction of wind turbines remains very slow. Similarly with nuclear power: it is likely that, with enough investment, a new generation of nuclear power stations could maintain the current proportion of nuclear generation (about 25%) as present stations close over the next 20 years. But meeting the costs associated with such a programme, and winning social acceptance for it, would be far from straightforward. In other words, in addition to the need for further technological development, there are key social and economic issues to be addressed and resolved in respect of step-changes in energy efficiency, renewables and nuclear power, and in the energy system as a whole. It is clear that without step-changes in some or all of these areas, the challenges noted above in respect of CO2 emissions cannot be effectively addressed. These issues were the subject of the conference which formed the main activity of this project, the objectives and outputs of which are reported on in the next section. 2. CONFERENCE OBJECTIVES AND OUTPUTS The overall objective of the conference was to scope out the above issues and contribute to the development of the social science research contribution to the new cross-Council Programme that would help to generate answers to the many questions in these areas that remain. The objective was pursued through the generation of high quality documentation in the fields of energy efficiency, renewables and nuclear power, and of the energy

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system as a whole, which set out what needed to be achieved, and what still needed to be researched, known and understood, in each of these fields for the necessary step-changes in implementation and deployment to be attained. Four review papers were commissioned from eminent experts, one in each of the three fields above, plus one on the energy system as a whole, who were asked to identify what step-changes in these areas could be made, how much they would cost, and what the necessary social and economic changes or policies are, and what still needs to be known, in order for this contribution to be realised. Some 60 people attended the conference, mainly academics and policy makers, but with some representation from the energy industry, energy consultancies, and non-governmental organisations. The four papers were presented to the conference, with two discussants for each paper. The discussants were asked to highlight any divergences of perception or opinion with those expressed in the paper they were addressing, with a view to clarifying the questions that still need to be answered if step-changes in the various areas are to be achieved. Conference discussion then explored in depth the issues raised. The aim of the sessions was to shed light on what still needs to be known, and what research could help to generate the required knowledge, in each of the areas. The Conference Programme, brief biographies of the conference presenters, and the Conference Participants List, are annexed to this report. The four papers, and the Notes from the discussants which follow each, are available on the PSI website (http://www.psi.org.uk/events/event.asp?event_id=35). The principal output from the conference was a Conference Report, on which this report to ESRC, and to the Scientific Advisory Committee for the new cross-Council programme on sustainable energy, is largely based. This sought to identify potential priorities within the new Cross-Council programme for social science research on energy efficiency, renewables, nuclear power and the energy system as a whole. It also sought to highlight some key inter-disciplinary research challenges raised by the need to achieve step changes in the deployment of these technologies in order to address the climate change impacts of energy use, in the context of the broader aims of sustainable development. The Conference Report, and further research carried out under the project, also provided the basis of a paper to be published in the journal Energy Policy, in a Special Issue on Energy System Change. This extra research has also fed into this report to ESRC. In parallel with this project, the ESRC also commissioned Frans Berkhout at SPRU to carry out a project on developing a strategy for future social science research on energy, the Interim Report (Berkhout et al. 2003) on which was published about the same time as the Energy Research Conference took place. The projects collaborated in setting up their events, Paul Ekins took part in the consultation workshop of this other project, but intellectual exchange between the two projects has been limited, so that the ESRC should benefit from two relatively independent sources of advice, rather than be given views that had already significantly converged.

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3. THE CONTEXT OF UK ENERGY RESEARCH John Taylor, Director General of the Research Councils, gave the opening keynote speech at the Conference. He opened by setting out the context of the new investments in energy research: an allocation from the 2002 Spending Review of £28 million (over the Spending Review period: 2003/4 – 2005/6) for a new cross-Research Council initiative on energy research. It was intended that these new research programmes should pick up on the core research themes identified by the review by the Government’s Chief Scientific Adviser (CSAERRG 2001): carbon sequestration, energy efficiency, hydrogen, nuclear, solar photovoltaics and wave/tidal resources. While much of the research would be on the technologies, there was also a need for social science research, in such areas as the importance of economic and social factors, non-technical policy drivers, and the market context. There also a great need for modelling to help policy makers understand and compare the various options. Taylor noted that the Research Councils’ initiative ‘Towards a Sustainable Energy Economy’ was intended to address the many uncertainties that remain in relation to systematic moves towards sustainable energy use, such as supply/demand market interactions, the influence of international as well as national factors, the pace and direction of technological innovation, the environmental impacts associated with new technologies and public attitudes to new energy sources. The initiative was also intended to respond to the three main challenges identified by the Government’s recent Energy White Paper (DTI 2003):

• The need to move the UK onto a low-carbon energy trajectory that, following the recommendation of the Royal Commission on Environmental Pollution (RCEP 2000), would result in a reduction of carbon emissions by 60% by 2050;

• The need for energy reliability as the UK moves out of energy self-sufficiency to perhaps 75% dependence on imports by 2020; and

• The need to ensure that the infrastructure for energy supply and distribution, and for transport, attract the necessary investment to deliver low-carbon energy reliably and efficiently.

Priority in the White Paper was given to renewables and energy efficiency, but there is also a possible role for nuclear power and for carbon sequestration and clean coal technologies (for use overseas if not in the UK). This transformation of the energy system raises many issues for socio-economic research, ranging from the integration of renewables into the energy delivery infrastructure and the necessary regulatory framework, to the affordable installation of renewables and energy efficiency technologies in homes and communities, to the full participation in international policy processes so that the UK could learn from and contribute to best practice elsewhere and argue for similar emissions reductions in other countries. At the heart of the Research Councils’ work on energy would be the new UK Energy Research Centre, which would act as the hub for a proposed National Energy Research Network. This would tie in with other major UK relevant research activities, such as the Tyndall Centre, the SUPERGEN initiative, the Carbon Trust’s Low Carbon Vision, and a number of ESRC programmes such as the Sustainable Technologies Programme, the

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Centre for Social and Economic Research on the Global Environment (CSERGE) and the Environment and Human Behaviour Programme. John Taylor stressed in conclusion that the key questions now for energy research were: • What new knowledge do we need in this area? • What are the key areas of focus, which will help deliver the step change envisaged in

the White Paper? This project is largely addressed to giving answers to these questions. 4. THE ENERGY SYSTEM The energy system of a country like the UK is formidably complex, entailing the extraction or manufacture of energy carriers, their refinement into useful energy products, and their distribution and supply to final users. For electricity there are the additional steps of generation, transmission and distribution of power. These steps, and the infrastructure, networks and institutions required to carry them out, differ radically for different energy carriers, for different sources of electricity, and for the different sectors of final energy use - broadly industry, including the energy industries’ own use of energy, services, including public services and administration, transport (road, rail, sea, air), and households. The approach taken here to analyse various aspects of the energy system is based on decomposition analysis. This is a technique which has been quite often used in the analysis of carbon dioxide (CO2) emissions to distinguish between the energy intensity of the economy and the carbon intensity of energy using the so-called Kaya identity (recent examples of such use include the IPCC Third Assessment Report, Jepma et al. 1996, Darmstadter 2000 and Pearson & Fouquet 2002): C = (C/E) x (E/GDP) x (GDP/P) x P 4.1 where C stands for carbon emissions, E is primary energy use, GDP is Gross Domestic Product and P is population. It may also be noted in passing that the Kaya identity is in itself a special case of the more general Commoner-Ehrlich identity first introduced in the 1970s, and which has been the subject of much environment-economy analysis since (see Ekins 2000, Ch.6, for the derivation and discussion of this identity). The identity is: I = P.A.T 4.2 where I stands for environmental impact, P is population, A stands for affluence, usually measured by GDP/capita, and T, measured as environmental impact per unit of affluence, is a variable that incorporates a wide range of issues including technology, economic structure and consumption behaviour. Energy decomposition analysis has also been used in the analysis of changing industrial energy demand (Ang 1995). Ekins & Barker (2001, p.343) also used it to analyse the potential effects of carbon taxes on producers and consumers, using the following identities:

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For producers, carbon dioxide was related to output (O) through the following decomposition into different ratios: CO2 = (CO2/E) x (E/ES) x (ES/I) x (I/O) x O 4.3 where CO2 is carbon dioxide emissions, E is energy inputs, ES is energy services (useful heat, light, power), and I is inputs to production. For consumers, carbon dioxide was related to consumer expenditure (CE) through the following decomposition into different ratios: CO2 = (CO2/E) x (E/ES) x (ES/EIGS) x (EIGS/CE) x CE 4.4 This latter approach is closer to that adopted in this paper, which starts from the broadly agreed position that energy carriers are not desired for themselves but for the services which are delivered by the heat, light, power and mobility which energy provides. The services themselves may be very complex (see, for example, Miller 2001 for a discussion of the meaning of cars in contemporary culture, which goes well beyond the energy-related delivery of the service of mobility). This paper is concerned with the decarbonisation of the service delivered by energy, which may be analysed using a decomposition as follows: C = ES x (DE/ES) x (UE/DE) x (PE/UE) x (C/PE) 4.5 where C is carbon emissions, ES is energy service, UE is useful energy, DE is delivered energy, and PE is primary energy. Therefore C/PE is the carbon intensity of primary energy. It appears in all the decompositions

above. The ratio is lower for natural gas than for coal and oil, and is zero (at the point of generation) for renewables and nuclear power

PE/UE is the ratio of energy transformation from primary to useful energy (for example, crude oil to energy products, or primary energy to electricity)

UE/DE is the ratio of useful to delivered energy, where the difference between them is the energy lost in transmission or distribution

DE/ES is the ratio of delivered energy input to some energy-using equipment and the energy actually required to deliver the desired service.

PE, UE, DE and ES are all measured in energy units. The ratios PE/UE and UE/DE are greater than unity. Their inverses, UE/PE and DE/UE, may be thought of as the efficiencies of transformation (or generation) and distribution respectively. ES/DE may be thought of as the efficiency of the energy-using equipment in delivering the energy service. What the decomposition conveys is that if the demand for energy services increases, carbon emissions will also increase, unless the increase is offset by reductions in one or more of the four ratios which together offset the increase. A given percentage increase in energy services will therefore need an overall reduction in the four ratios of the same amount if carbon emissions are not to increase. In a context of economic (and energy service) growth, decarbonisation requires that either the carbon intensity of primary

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energy is reduced, or the energy efficiencies of transformation, distribution or energy service delivery are increased. What follows seeks to apply these ideas to specific parts of the energy system, but first it will be helpful to consider them in the context of the energy system as a whole. Figure 4.1 is a stylised representation of the UK energy system, some parts of which are explored in more detail in subsequent sections. Figure 4.1: Stylised Representation of the UK Energy System Figure 4.1 shows that there are five main sources of primary energy: coal, oil, gas (in decreasing order of carbon intensity), nuclear power and renewables (with zero carbon intensity). All these primary fuels are used to generate electricity, which is used in (rail) transport or by other final users. It is hoped that in due course the carbon emissions from coal and gas-fired generation may be able to be captured and stored, but there are a number uncertainties involved in this, which are the subject of considerable research. This area is not explored further in this paper (nor indeed is the whole issue of carbon sequestration from the atmosphere by biomass or the oceans). The generation of electricity by combustion produces considerable amounts of low-grade heat which are commonly wasted, reducing generation efficiency (UE/PE) to 50% or less. The use of this heat in combined heat and power (CHP) plants can increase this efficiency to 80%.

PRIMARY ENERGY

Coal Oil Natural gas Nuclear power Renewables (C/PE)c > (C/PE)o > (C/PE)g (C/PE)np = 0 (C/PE)r = 0

FINAL USERS

Air Road Sea Rail (C/PE) > 0

TRANSPORT Cycling Walking

(C/PE) = 0 Industry Services Households

ELECTRICITY

including CHP Hydrogen

Carbon capture and storage

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Electricity, or natural gas or renewable biomass, may be used to produce hydrogen, which can in turn be used in transport of other final sectors. This is a relatively long-term prospect, which is also the subject of much dedicated research and will not be explored further here. Primary energy (especially oil) may also be refined and used in transport as petrol, diesel, liquid petroleum gas (LPG) or compressed natural gas (CNG). Biomass may be turned into biofuels (biodiesel, bioethanol) for transport. Transport is used by other final users - industry, services and households (as well as by the energy sector itself). Primary energy may also be used directly as heat by other final users. Industry uses coal, oil and gas, as do commerce and households (predominantly gas).

The energy system is driven by a combination of markets and regulation. In energy markets demand and supply are mediated by prices. In the UK, some prices (for example for electricity transmission and distribution), are controlled by the regulator (Ofgem). Costs, both financial and (especially in respect of the environment) external, are generated at each stage in the flow of energy from its primary form to its use by final users. Whether and how these costs are reflected in prices is a major determinant of how the energy system functions and the efficiency of the different stages. This point is the subject of further analysis and discussion in sections 3, 4 and 5, which explore in more detail those areas which are the particular focus of this paper: energy efficiency, nuclear power and renewables. The rest of this section discusses research needs in respect of the energy system as a whole Anderson (2003) has used a slightly different stylized representation of the energy system (Figure 4.2) to illustrate that there are many technological options for the energy system in the future. It is currently uncertain which of these options, in general or in detail, will prove to be viable or cost-effective, yet progress with at least some of them is clearly necessary if CO2 emissions are to be reduced. In this context Anderson (2003, Anderson et al. 2001, ICCEPT 2002) has argued that government support for research and innovation could yield benefits by reducing uncertainty and stimulating innovation, which could potentially reduce the costs of carbon emission reduction.

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Figure 4.2: Energy System Options for the Future Source: Anderson 2003 Anderson (2003) identifies four areas particularly in need of social science research, described as follows:

a) Energy market regulation

The current system of UK energy market regulation has delivered important benefits in terms of transparency, accountability, competition and cost-efficiency. But there is a loss of vision in the current arrangements, with no clear articulation of the desired long-term evolution of the energy system, and persistent price volatility, both of which militate against the stable context that is necessary for investment to achieve that vision. This calls for an evaluation of experience in the UK of the economic premises of current regulatory policies, and a comparison with experiences elsewhere, with a view to adjusting UK practice in the light of the evidence that is found. There is also a need for research into the development of flexible price structures and metering (for example, to facilitate load management, the emergence of decentralised sources of electricity generation, and to encourage the development of storage technologies), which Anderson considers crucial to the emergence of some of the desirable new technological options.

b) Climate change policies at the national and international levels

There is now considerable experience with climate-change related innovation policies in different countries, and in such bodies as the Global Environment Facility of the World Bank, and therefore much scope for comparative evaluation and analysis of this. This experience need to be made available in order to inform the new forms of international

RenewablesNuclear

Coal

Biomass wastes

Gas

Biomass

Oil

Sequestration

PV’sEnd Use

Electricity

CHP

Direct Use

Transport

Heat

TransportFuelCells

+ Fuel cells

Heat

TransportFuelCells

Heat

TransportFuelCells

+ Fuel cells

CO2

+ Carbon Sequestration

CO2CO2CO2

+ Carbon Sequestration

Hydrogen

Storage

H2 CCPlant

+ Hydrogen

Hydrogen

Storage

H2 CCPlant

+ Hydrogen

Hydrogen

Storage

H2 CCPlant

+ Hydrogen

Hydrogen

Storage

H2 CCPlant

+ Hydrogen

Hydrogen

Storage

H2 CCPlant

Hydrogen

Storage

H2 CCPlant

+ Hydrogen

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co-operation that will hopefully emerge in the international negotiations relating to the post-Kyoto period.

c) Modelling of energy systems and the impacts of alternative policies on their development, as a tool for the analysis of (a) and (b).

In many models relating to technological development and climate change, technology and innovation are poorly represented, and little allowance is made for non-linearities and threshold effects. The treatment of developing countries also needs to be improved.

d) The economic, social and environmental impact of new energy technologies and systems

All energy technologies have some environmental impact, and the deployment of many of them would have implications for landscapes, habits and lifestyles. There is a need for research into public perceptions of the different energy options, and how these differ between different communities which have had different exposures to the technologies. Inquiries by the social research community could have a large bearing on how energy systems evolve. Helm (2003a) has stressed the need to continue to focus on the costs of attaining the 60% carbon reduction target, and the need to explore the implications of different targets should they prove to be necessary. The energy system will need substantial investment in the next two decades, with interactions between the kind of supply technologies installed and the kind of network needed to support them. There are major potential problems of sequencing, which will need to be addressed through appropriate regulation. Infrastructure will need to be planned to be appropriate for new generation, an argument that Helm has developed at some length elsewhere (Helm 2003b). The range of potential technologies argues strongly against a premature choice and in favour of economic instruments, but more needs to be known about which instruments (for example, taxes or permit trading) and how these should best relate to each other. One way of trying to get more understanding of these issues would be to bring them together into a major modelling effort. Systems thinking is required in projections of energy futures, and it is important that economy-energy modelling adequately takes systems considerations into account. Work by Ravetz (1994a, 1994b, 2003) has drawn attention to the importance of uncertainty when considering policy relating to complex systems, like the energy system, and especially when undertaking modelling, and has recommended a research strategy for the design of policy-critical knowledge in a context of uncertainty and ignorance. Such a strategy should aim to help policy makers address such crucial issues as the safe concentration of greenhouse gases in the atmosphere and the safety of a long-term nuclear waste depository. A number of important strands should feed into thinking about the evolution of the energy system. One is the geopolitical context. Over the next two decades the UK will come to share the dominant experience of mainland Europe in dependence on external energy supplies. It is possible that energy policy will increasingly need to be articulated at a European level, in order both to ensure access to energy supplies for all the countries in the European Union and to maintain the market frameworks which will be necessary if the supply and distribution of energy is to be both competitive and efficient. Transport considerations will also be important if supplies of energy to Europe are to be secure.

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At a national level regulation will remain of great importance in energy markets. In the 1990s in the UK the main regulatory focus was on breaking up monopoly where appropriate and managing it where it remained. This focus is likely to remain relevant as markets elsewhere in Europe are liberalised. But regulation will also need to evolve to ensure that other objectives of energy policy are also adequately addressed. Most important among these other objectives are the handling of environmental externalities, in particular the emission of greenhouse gases, and ensuring that adequate investment comes forward for the renewal of infrastructure and for new generation capacity, when necessary. It is clear that public policy is required to deal with the former. With regard to the latter, there is still considerable uncertainty as to the conditions under which markets will provide the investment that is required, and the extent to which regulatory intervention will be required. There are market, regulatory and policy risks which investors will seek to take into account. These are discussed more fully below in the section on renewables, but it is clear that research is necessary both to characterize these risks and to gauge investors’ perceptions of them in different contexts. If it is important to think of the production, distribution and use of energy as a system, then it is equally important to distinguish carefully between different aspects of the system, between plant, networks and appliances, and between different manifestations of energy. For example, it is perhaps more helpful to think of electricity more as a manifestation of infrastructure than as a fuel, while solar and wind energy can hardly be characterised as ‘fuel’ at all. More attention should be devoted specifically to heat and how it could be delivered. More generally, while there is clearly a role for government in non-commercial research, thought also needs to be given to the role of public policy in the commercialisation of the research effort. 5. RESEARCH NEEDS IN RESPECT OF ENERGY EFFICIENCY Decomposition analysis is especially useful in thinking about energy efficiency and equation 4.5 is repeated for convenience below: C = ES x (DE/ES) x (UE/DE) x (PE/UE) x (C/PE) 4.5 where C is carbon emissions, ES is energy service, UE is useful energy, DE is delivered energy, and PE is primary energy. As noted in section 4, in respect of electricity UE/PE and DE/UE may be thought of as the efficiencies of generation and distribution respectively, and will be considered further in subsequent sections. ES/DE may be thought of as the efficiency of the electric appliances in delivering the desired energy service, and it is on this ratio as it relates to the household sector that the discussion in this section largely focuses. Chesshire (2003) notes that the UK Government’s Climate Change Programme envisages that gains in household energy efficiency will save 10mtc by 2010 (see Table 3.1 for the household sector component of this), and that the Energy White Paper envisages further cuts in emissions from energy efficiency of about another 10mtc. Of these emission cuts, about half are envisaged to come from the household sector. Studies have shown that 16mtc could be saved in the domestic sector with a payback time of less than five years.

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However, it is proving a major challenge to achieve these savings. It has already been noted that the services comprising ES are of many different sorts, and Shove (2003) stresses that, in the minds of consumers, many of them may have very little to do with the consumption of energy. Seeking to persuade consumers to use energy more efficiently in respect of these services might therefore prove ineffective.

Table 5.1: Potential Carbon Savings to 2010 in the Household Sector Identified in the Climate Change Strategy

Measure Carbon savings MtC Domestic energy efficiency, including the EEC 2.6-3.7 Replacement of community heating schemes 0.9 New HEES (Warm Front) 0.2 Appliance standards & labelling (MTP etc.) 0.2-0.4 Revised Building Regulations in E&W (domestic & business) 1.3*

Source: Climate Change – The UK Programme, Cm. 4913, November 2000, p. 104. Note: * DEFRA’s view is that 0.8 MtC of this is obtainable from the domestic sector; and 0.5 MtC from business. This is one manifestation of the very complex relationship between human behaviour and environmental impacts (Gardner & Stern 1996), which is also the subject of an ESRC research programme. Early results under this programme (EHB 2003) have indicated that influences on human behaviour towards the environment include at least: • Values, attitudes and perceptions • Information, ideas and experiences • Culture, contexts and institutions, including examples from peers and perceived

leaders • Incentives and sanctions

This complexity illustrates the importance of social learning at every level if changes in human behaviour towards the environment are to come about. A major area of research is how such a process of learning may be stimulated. The complexities involved in changing human behaviour are well illustrated in respect of the role of prices in such change. The UK, along with other countries, is currently experiencing a period of relatively low energy prices, with government determination not to raise those prices for households for social reasons. This is unlikely to be helpful for energy efficiency, but if it is true that people consume energy without being aware of the energy consumption involved, that their energy bills or mode of payment (for example, direct debit) obscure rather than clarify the amount of energy they consume and the price they are paying for it, and that they are neither aware of nor interested in energy efficiency technologies, then it is unlikely that increases in energy prices by themselves will have much effect. It is commonplace to refer to the issues above as ‘barriers’ to energy efficiency (see, for example, Sathaye & Bouille, 2001), but Shove (1998, 2003) considers this very terminology to be misleading, noting that the barriers may be “simply features of the ordinary social world that policy makers have failed to take into account when devising their instruments. … an indication not of real obstacles but of failure in policy analysis and of a policy illusion that selected measures will influence practice.” (Shove 2003) Instead of focusing on supposed barriers to energy efficiency, Shove advocates research to understand what actually drives consumption of the services associated with energy use, and the part they play in the lifestyles and aspirations of those who consume them.

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However, it would be a mistake to conclude from the complexities of human behaviour that energy prices are unimportant to energy efficiency. Verbruggen (2003) has presented evidence that electricity prices and electricity intensities (in respect of the economy’s energy use as a whole, and not just that of the household sector) are related as in Figure 5.1, the clear inverse relationship that would be expected by economists. Moreover, Darmstadter (2000, p.8) reports that in OECD countries the average annual rate of change of energy intensity, (E/GDP) in equation 4.1, over 1973-90, a period of generally high energy prices, was more than twice that over 1990-97, a period of relatively low prices. Not only is the inverse relationship clearly apparent, but the implied elasticity of –1.17 indicates that countries with higher energy prices have lower average energy bills, because of the greater installation of cost-effective energy technologies. However, there is a limit to this relationship. At already high energy efficiencies it is unlikely that further price increases would produce corresponding efficiency increases. At this point it may be necessary actually to encourage demand reduction, and this is clearly politically problematic.

Source: Verbruggen 2003 (forthcoming) Chesshire (2003) notes that the net effect of recent changes to the fiscal treatment of domestic energy in the UK would increase rather than lower emissions. Moreover, if it is desired to reduce emissions, there appears to be scope for reassessment of the fiscal regime in relation to energy overall. For example, there are four different categories of fiscal treatment, relating to the supply and demand sides and to the profit and non-profit

Figure 5.1: Demand Curve for Electricity Efficiency (1998)

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sectors. In general the corporate sector can get accelerated tax relief on supply side energy efficiency measures, and at least normal tax relief for demand side investments, while households receive no such relief on capital expenditures (for example, micro-CHP plants) and very limited relief on the demand side. This situation merits detailed research with a view to reform. Energy efficiency has been pursued in the UK and other countries through a wide range of different approaches, including: • Education & moral suasion: e.g. government awareness campaigns on climate change; • Information: e.g. energy labels, home energy ratings and dissemination of best

practice; • Regulation: e.g. framework standards for industrial processes (e.g. IPPC, BATNEEC),

or minimum efficiency standards for appliances; • Voluntary initiatives: e.g. environmental management schemes; • Negotiated agreements: e.g. the Climate Change Agreements; • Subsidies: e.g. the New Home Energy Efficiency (HEES) scheme; • Market transformation: a mix of demand and supply side policies to encourage

diffusion of energy-efficient equipment. • Economic instruments: e.g. energy taxation, emissions trading. Further measures to achieve energy efficiency gains in the UK domestic sector, many of which amount to extensions of initiatives that have already been introduced, might include: tougher building regulations, use of the planning system, development of the Energy Efficiency Commitment after 2005, extending the HEES/Warm Front schemes, extending coverage of the lower rate of VAT for energy efficiency materials, and perhaps the use of various kinds of subsidies. New instruments seem likely to include the inclusion of energy efficiency information in Seller’s Packs at the time of house sales, and the creation of One-Stop Shops for the provision of energy efficiency advice and services, which could include energy service contracts. Market transformation measures could tighten up appliance standards. The supply side of the energy efficiency sector is also important. For example, micro-CHP requires a mixture of skills in water, gas and electricity, and new metering arrangements. There is little sign that the market or the networks are gearing up to make widespread installation of this technology possible. Many of the above measures require more detailed evaluation and understanding of how they might complement each other. There is also a need to integrate these diverse measures and areas of policy action into coherent packages and understand their overall impact, not least so that any undesirable side effects can be avoided. It is clear that, if the carbon reductions from increased household energy efficiency envisaged in the UK’s Energy White Paper are to be achieved, there will need to be very greatly increased implementation activity. Further understanding is required of the role of fiscal incentives in helping to stimulate this, in terms of potential measures’ effectiveness, revenue implications, macroeconomic implications for prices and growth, likely sectoral and distributional impacts, environmental impacts, and administrative and compliance costs. Research is also needed to understand the supply chain needs of this increased activity. Research should not just focus on skills but also on the whole culture of the

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small and medium enterprises (SMEs) through which the services will need to be delivered. More generally, it is still not clearly understood how easy it is to unlock the energy efficiency potential that is technically available, what it would cost, what policy packages are most effective, and what the longer-term scope for energy efficiency improvements might be. The necessary research is interdisciplinary and will need to focus on the most effective combination of policy instruments, on costs, technologies and on motivating factors that could change behaviour, recognizing this to be as complex as noted above. There is some evidence that householders are prepared to have their choices limited (for example, through the removal from the market of the most energy-inefficient products) in support of climate change policy goals, but the level of public awareness about the links between energy use and its climate change impacts remains very low, and there is still a need for research to determine what kind of approach to information could best remedy this. Of course there has already been substantial research in this area, the lessons from which need to be learned, but major uncertainties, and differences in recommended approach, remain. At the heart of the issue is the interaction between markets, behaviour and technology. The energy performance of technology can be affected by regulation on, for example, minimum standards, but it is not clear that this will be sufficient to achieve the large cuts in carbon emissions that are necessary without complementary changes in personal behaviour in both market and non-market choices. Basic approaches in this area are still in some dispute (see, for example, Chesshire 2003 and Shove 2003 for a clear expression of this) and it is clear that much still needs to be understood about the best way to go forward. 6. RESEARCH NEEDS IN RESPECT OF RENEWABLES Renewable energy sources have the potential to substitute for fossil fuels for all the main uses of energy: power generation, biofuels for transport, and the direct provision of heat. As was apparent in the scenarios to 2050 developed by the Royal Commission on Environmental Pollution (RCEP 2000), renewables will have to make a significant contribution in all these ways if radical decarbonisation of an industrial society like the UK is to be achieved. Each of the different uses of renewables is delivered by very different technologies and has very different social and economic implications. This section is only concerned with these implications in respect of renewables being used for power generation. The traditional delivery of electric power in an industrial society is dependent, above all, on infrastructure. The power is generated in large stations, transmitted over long distances at high voltages, and then distributed over a local network at lower voltages. In the terms of equation 4.5, carbon (C) is emitted when the primary energy (PE) is combusted, the useful resulting electric energy (UE) is then transmitted, incurring losses in transmission, further losses are then incurred in distribution as the electricity is delivered to final users (DE), and the electricity is then transformed into low-grade heat in the delivery of the final energy service (ES).

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Nuclear power, discussed in the next section, is well suited to the present infrastructure, and if further nuclear power stations were to be built, the infrastructure would need to be maintained rather than radically altered. This is very much not the case for renewables (as discussed in some detail in Patterson 1999), and some of the principal economic and social (as well as technical) research challenges for renewable electricity is the extent to which the present infrastructure would need to be modified if it were to be able to accommodate a high proportion of renewables. In this connection, Mitchell (2003) stresses the importance of defining timescales for renewables deployment and the corresponding technical requirements. For example, it is clear that 10% deployment by 2010 will not present a major challenge to the system, but 20% or beyond might do so. It is therefore necessary to plan for renewables deployment (both the amounts and the technology mix) so that the system can accommodate the desired amounts at the desired time. Every stage in the chain represented by equation 4.5 is accompanied by costs. The losses in generation, transmission and distribution represented by the ratios (<1) UE/PE and DE/UE differ between different energy sources. ‘Embedded’ renewables (those connected directly into the distribution network) avoid transmission losses, but such losses might be very great, and substantial new infrastructure for transmission might be required, if the sizeable wind and wave energy potential of northern and western Scotland were to be exploited. Moreover, the intermittent and relatively unpredictable nature of some renewables also imposes costs on a system in which there must at all times be balance between supply and demand. There has already been substantial work carried to estimate these relative costs and benefits in a UK context (see for example Ilex 2002), but understanding of these issues is still very far from complete, both in terms of the costs and benefits themselves, and in terms of the regulatory and other institutional structures that could best develop any new infrastructure that might be required and charge appropriately for access to and use of it. This is one of the sets of issues identified by Mitchell (2003) as constituting generally recognised barriers to the deployment of renewable energy sources, which she lists as: • Economic barriers reflecting their current lack of competitiveness • Institutional barriers such as divided responsibilities and lack of coordination in

government, the government-regulator relationship, and planning issues • Network barriers relating to the regulation of transmission and distribution in the

network, including the incentives for and costs of connection and distribution • Market-rule barriers, which can again arise from regulation in relation to such matters

as access to networks, market incentives for back-up capacity, security and infrastructure

• Financing barriers, resulting in the lack of finance for renewables, which arise from uncertainties about profitability and market access.

Mitchell perceives the major issue for research as the extent to which existing UK renewables policy is able to overcome these barriers. With some of the best renewable resources in Europe, there is plenty of potential for UK renewables. However, reaching the target of 10% renewables generation by 2010 will require the installation of 5-10GW of renewables capacity by that date, whereas between 1990 and 2002 total installation amounted to only 550MW. Other countries have much higher installation rates. Table 6.1 shows that Spain and Germany installed more than 550MW in 2002 alone. Clearly the

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UK targets are within the bounds of European capability. But they will need determined policy measures if they are to be achieved. Table 6.1: The Deployment of Wind Energy (MW)

1990 End 1995 End 1999 End 2001 End 2002European countries

Germany 68 1136 4445 8753 12001Spain 7.2 145 1530 3335 4830Denmark 343 619 1742 2556 2880Italy 2.9 25 211 697 785Netherlands 49 236 410 483 688UK 9.9 200 356 485 552Sweden 8 67 220 280 325Greece 1.8 28 87 272 276Portugal 0.5 13 60 127 194France 0.3 7 23 85 145Source: WindStats With regard to the costs of both renewables generation capacity and network strengthening, Mitchell (2003) considers that what is now required is a clearer idea of who will need to bear the costs, by when, and what incentives are required both to ensure that the costs are met when required and that they are kept to a minimum. With regard to the transformation of the energy system that will be required for large-scale renewables deployment, substantial theoretical work already exists on system transformation, but the challenge is now to apply this work to the UK energy system. For example, one requirement for system transformation is that the pricing signals to promote it are ‘powerful, persistent and predictable’. It is clear that the Renewables Obligation does not provide a sufficient price signal for renewables technologies other than landfill gas and onshore wind. Capital grants might bridge the gap for some of the other technologies, but can hardly be described as ‘powerful, persistent and predictable’, and even for onshore wind the price incentive will weaken once the 10% target has been met. The issues that need to be taken into account in the valuation of renewables are not necessarily obvious. For example, markets should note that, because the fuel for solar and wind energy are ‘free’, they represent less of a risk in terms of potential taxation and energy security. Apart from cost, pricing and finance, the other key set of issues relates to the regulation of the energy system, and the handling of new energy technologies by both central government and the planning system. It is not yet clear that Ofgem the energy regulator will act to remove actual or potential barriers relating to network issues or market rules, and ensure that there are incentives to give renewables access to the network and that the market favours them rather than discriminates against them. With regard to planning, it is unlikely that large-scale deployment of renewables will be possible without wide public support, expressed either as individuals purchasing renewable energy directly, or in

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communities. Work is still necessary to understand how such support, which has been forthcoming in other countries, could be fostered in the UK. Hartley (2003) agrees on the importance of defining targets and timescales of deployment. However, it is still unclear as to whether the objective should be to deploy as much renewables capacity as quickly as possible or to promote a broad range of technologies. There is a need to use policy packages rather than a single instrument, but further understanding on how to combine policies is still required. As the central policy, it is particularly important that the Renewables Obligation is got right. Policies should also distinguish clearly between different issues, for example between renewables, which will not need to be connected everywhere and, perhaps, micro-CHP, which could be installed in every household. Laughton (2003) identifies five issues that need research: • In respect of intermittency and required back-up capacity, it is not just a question of

understanding the costs that are associated with this, but also a need to ensure that the necessary incentives are in place to ensure that it would be available.

• Whether renewables really are a cost-effective means of carbon reduction when considered against the opportunities for investing in technologies for energy production and use in developing countries.

• Public attitudes towards onshore renewables remain largely negative. A major priority for study is whether different strategies for deployment (for example, large-scale wind farms or widespread small-scale developments) would meet with different levels of public acceptance.

• It is not just a question of technical issues in respect of transmission and distribution, for example in relation to the transmission of large quantities of renewable power from the North West of Scotland, but also of how to achieve this in an environmentally acceptable way.

• Whether subsidies might be more effective in promoting the uptake of energy technologies than taxes.

There are a number of possible reasons for supporting renewables: in response to the market failure of carbon emissions; because public support for research and development is justified; or as part of industrial policy. The role, if any, of prices and price signals in support of these objectives needs to be clarified, and there is a need to understand the risks involved in financing renewables developments. There is a strong political component to renewables support, as is shown by comparing experience in the UK and Germany, and it would be interesting to understand the reasons behind the differences. There is no pure solution to the complex issue of intermittency and regulation, but it is doubtful whether the UK regulatory system can yet deal with this issue effectively. Finally, there is a need to analyse the whole of the innovation chain, but from an applied perspective that might give insights into how the innovation process could be accelerated. 7. RESEARCH NEEDS IN RESPECT OF NUCLEAR POWER A UK Government review of nuclear power in 1995 (HMG 1995) concluded: • In respect of diversity of energy supply: “There is currently no case for public

financial or equivalent support of new nuclear build on diversity grounds.” (p.38)

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• In respect of possible industrial reasons for public subsidy: “Were the Government to take steps to ensure the construction of any new nuclear power stations it would be making a substantial intervention in the markets for electricity and generating equipment. It is clear from the analysis set out in this chapter that such an intervention could not be justified on grounds of wider industrial benefits. … [The Government] concludes that to support the construction of new nuclear power plant on grounds of a possible boost to economic activity and the generation of higher overall employment would not be in the best interests of either electricity consumers or the taxpayer.” (p.47)

• In respect of possible environmental reasons for new nuclear power stations: “The significant amount of additional capacity provided by new nuclear build is currently too expensive to be justified for CO2 policy purposes alone. … The Government concludes that there is at present no evidence to support the view that new nuclear build is needed on emissions abatement grounds.” (pp.29-30)

However, in respect of both diversity and security of supply, and of CO2 emissions, the Government acknowledged that these conclusions were not necessarily immutable. For example: “In the longer term, if a need arose to make significant substantial reductions in gaseous emissions, there could be a role for new nuclear capacity beyond 2010” (p.30), and: “The Government will, however, examine the emerging fuel mix from time to time, and review the position if developments justify it.” (p.38). At present nuclear power generates about 25% of the UK’s electricity. This proportion will decline over the next 25 years as the first and second generation stations (Magnox and AGRs) come to the end of their design lives and are shut down (though there is some doubt over when this will actually be). It is certainly the case that if these stations were to be replaced by gas, the implications for CO2 emissions and for the enhanced UK dependence on gas, would be profound. In 1999 a joint report of the Royal Academy of Engineering and Royal Society (RAE/RS 1999) argued that there should be a formal presumption that there would be construction of new nuclear plants by 2020, and that this should be decided in principle in the near future if “damaging decline in the role of nuclear is to be avoided”. (RAE/RS 1999, p.49). However, in its subsequent review of these issues, the UK Government’s Performance and Innovation Unit affirmed that there seemed to be “no current case for public support for the existing generation of nuclear technology” (PIU 2002, p. 124), but argued that the nuclear option should be kept open for the future. The Energy White Paper went further, effectively ruling out further new nuclear construction before “the fullest public consultation and the publication of a white paper” (DTI 2003, p.61). At the Conference Grimston characterised the shift over time in the argument for nuclear power as from, in the 1970s-1980s - ‘we know we’re a bit dirty but look how cheap we are’ - to, in the 1990s and 2000s - ‘we know we’re a bit expensive but look how clean we are’. In principle, it is clear that nuclear power has much to offer in the current energy policy context: “The absence of carbon emissions, the sparing use of a plentiful natural resource (uranium), and the capacity to deliver large amounts of power using very small land spaces must all be counted huge potential advantages of nuclear power.” (MacKerron 2003). However, Grimston (2003) notes that nuclear technology is the subject of a high degree of almost theological dispute (the various sides of which are well set out in Grimston & Beck 2000), which is very relevant to its future: since 1978, 21 nuclear power plants with combined capacity of 14GW have been closed down or halted

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in advanced stages of construction in six OECD countries for non-economic reasons. The ‘nuclear issue’ is not primarily a technical issue (even though there are still important technical issues to be addressed), as shown by the fact that France has 80% carbon-free electricity because of its nuclear programme. The key to any nuclear future lies the resolution of the economic and social questions it raises. Traditional nuclear power faces a number of challenges related to: • Economics, and the scepticism about claims of new low cost nuclear technologies.

The scepticism is not without foundation. In his review of its history, Helm (2003b, pp.90,104) concludes that the UK nuclear programme had proved “probably one of the biggest investment mistakes since the Second World War … Not once since the first White Paper in 1955 had the nuclear option delivered what was promised.” The costs keep coming home to roost. In 2002 a DTI White Paper on managing the UK nuclear legacy (DTI 2002a, para.1.14, p.11) made provision for expenditure of over £1 billion per year for 10 years, and £48 billion in total, to cover decommissioning costs. Private capital markets, and/or politicians, are likely to need strong assurances that a future nuclear programme will not lead to such uncertainty, failures in estimation, cost-overruns and liabilities.

• Public perceptions, especially related to the issues of waste, safety and proliferation. These are discussed further below.

• ‘Fit’ with modern society’s new demands for consultation and participation which have obvious implications for planning permission for any new nuclear stations

• A declining skills base in the industry. These challenges largely define the research questions related to nuclear power: • The economic and financial questions - how to resolve the chicken-and-egg problem

that the economics of a new nuclear programme cannot be proven without a new nuclear programme, which will not be embarked on until there is more assurance about its economics? What kinds of energy markets are sustainable? In particular, in what kinds of energy markets will finance come forward for a new nuclear programme?

• Social and political questions - what would make nuclear power more publicly acceptable? What new approaches to decision-making (in contrast to the Decide-Announce-Defend [DAD] model of the past) does nuclear power need?

• Operational questions about two more chicken-and-egg issues - how can the problems of either nuclear waste or declining skills be resolved without commitment to a new nuclear programme, but how can such a commitment be made when these problems are outstanding?

However, MacKerron (2003) considers that, following the Energy White Paper, the UK reality is that new nuclear build will not be commissioned before 2020 at the earliest. This provides time to formulate a coherent research strategy. He identifies four key issues as demanding attention: • The issue of nuclear waste needs to be resolved to public satisfaction • New nuclear technologies need to be available which perform well against other

technologies on a range of issues (economics, safety, acceptability, proliferation-resistance, waste)

• Innovation – a major question is why past innovation has failed to resolve nuclear problems. What are the characteristics of nuclear technology that might prove economically, socially, and politically good enough?

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• The costs of nuclear power need to be worked through in different contexts and under different circumstances (for example, in relation to liberalised markets or in relation to concerns about sustainability). The key issue is that costs depend on context, and a future for nuclear power depends on a new fit between the emerging nuclear technologies and the society into which they would be inserted.

Burgess (2003) has stressed the need for a shift from the Decide-Announce-Defend (DAD) mode of decision-making identified in Grimston (2003) as characteristic of much nuclear decision-making in the past, to one in which more attention is paid to the framing of a problem: who should do it, how the options should be the analysed and assessed, and the types of appraisal and decision-making processes that could provide a context for people to express the kind of energy future they wanted. After framing comes another important set of issues: recognition of the importance of ambiguity and of ways of taking into account incommensurable values and, indeed, of the blurred distinction between issues of fact and value. There is also an issue about the quality of decision-making based on more participatory approaches: what evidence is there that it would be ‘better’ than what had gone before, and on what criteria? While interdisciplinary, or transdisciplinary, work in this area is crucial, its difficulty should not be underestimated, and the conditions that facilitate effective work of this kind are a research topic in its own right. Burgess also cautions against underestimating the degree of public scepticism of nuclear technology. Developing effective public engagement strategies to inform, for example, the debate on nuclear waste disposal will be extremely challenging and fraught with political risk. Yet there is clearly scope for research into national differences on these issues. For example, the recent Finnish decision both to construct a new nuclear station and to commission a long-term waste depository, following extensive public consultation, shows that such decisions can command popular support. Another important issue is the new salience of nuclear proliferation in a world sensitised by terrorism, and the extent to which this has influenced public views of nuclear power. What seems to be required to generate answers to questions such as those above is a research process involving some kind of iterative relationship between the social and physical sciences, the former identifying what is needed, the latter showing what is technologically possible at any given time, and the former evaluating the acceptability of the response. 8. THE EUROPEAN AND INTERNATIONAL DIMENSIONS At the Conference Jochem began by stressing the importance of keeping in focus the whole energy chain, from primary energy to final energy to useful energy to energy services. Particularly in the last two areas behavioral and entrepreneurial issues are lacking attention of socio-economic research (e.g. decision making in small and medium sized companies and public authorities, in private households and regarding material recycling, substitution and material efficiency as well as intensification of product use by renting instead of owning. A recent research project in Switzerland had confirmed the feasibility of a 2 kW/capita society (broadly comparable with a 60% reduction in CO2 emissions by 2050, see Figure 8.1). The opportunities were clearly apparent - for example, building regulations could improve the energy efficiency of new buildings by a factor of 2 or 3 and 4 to 6 of the existing building stock. Against the costs of such investments should be put several co-benefits at the micro-level (less noise, better in-door

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air, reduced health cost), reduced external cost due to less local pollution, and future avoided costs of adaptations to climate change which were already apparent (for example, construction of higher dams, artificial snow, and alternatives to ski tourism when there was no snow), but some of which could be avoided by measures to mitigate climate change.

Figure 8.1: Swiss energy use in 2000 and estimated energy use summarising the

energy/ material efficiency potentials (including behavioural changes and entrepreneurial innovations) in 2050 by sectors and three levels of energy conversion and use.

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Another issue related to exports of used machinery, plants and vehicles and to technology transfer from OECD countries to developing countries. At present there exists a fast increasing market of some $150 billion p.a. in the export of used and often old and energy-inefficient technologies to developing countries. Such exports, driven by lack of capital, knowledge, and life cycle cost analysis in the importing developing countries, were clearly incompatible with the global objective to mitigate greenhouse gas emissions also in these countries. In addition, newly built buildings in subtropical and tropical climates are not sufficiently insulated leading to extremely high electricity use for air conditioning. These international aspects of trade and technology transfer need far more socio-economic research, with the potential to avoid high increases of greenhouse gas emissions exceeding by far the mitigation potentials in Europe and other industrialised countries. Verbruggen at the Conference expressed the view that at present in Europe market priorities were prevailing over sustainable development priorities, and that markets alone could not promote sustainable development. This required a shift from fossil and nuclear energy to renewables, greater energy efficiency and demand reduction. Figure 5.1, presented by him at the Conference, shows the long-term relationship across OECD countries between energy prices and the energy intensity of economies, and was discussed in Section 5. Verbruggen considered that price was a dominant feature, the ‘main tune’. There were fiscal implications. In a situation where energy prices were falling, a tax could keep them at their current level and raise revenue, which would permit tax reductions elsewhere. Structural change could also help to reduce the emission intensity of an economy, and would become increasingly important in this respect as increased energy prices encouraged the take up of existing opportunities for energy efficiency. Verbruggen identified a number of topics for research, and emphasised especially the need for social science research to balance the inputs of engineers and business economists. There also needed to be work on the role of regulatory and public energy agencies, especially involving independent expertise and public dialogue, in relation to market developments. 9. CONCLUSIONS Conference Conclusions Professor Jim Skea gave the concluding address of the Conference, and began his summing up of the day by emphasising the context of the Energy White Paper: the importance of the international dimension, and the need to secure international cooperation on the reduction of carbon emissions; and the importance of assessing energy developments in a broader framework of sustainable development, which includes issues of affordability, reliability and competitiveness, as well as carbon reduction. Addressing such an agenda requires a wide disciplinary perspective, in which engineering-economy modelling had an important, but not exclusive, role to play. An emphasis on evidence was particularly important in this field: much good research in a variety of relevant areas had been carried out in the past, and this needed to be brought together through systematic reviews and through research into the effectiveness of different policy approaches and into the evaluations of policy initiatives that had already

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been implemented. There were many issues that still needed further work, including assessment of the geopolitical situation, the need to invest in strengthening the electricity distribution network, the whole relationship between supply chains and the different interests of the actors they comprised, and the nature and role of public engagement. It should not be forgotten that a lot was already known about these issues. It might be that in this situation an investment in networking existing knowledge might be more cost effective than new projects which sought to add to it. It would be good if the new Research Council programmes could bear this in mind. Project Conclusions The political importance that is now being ascribed to reductions in carbon emissions raises quite new challenges for understanding, and influencing the development of, energy systems. The technologies, and ways of thinking about and using energy, that seem likely to lead to carbon reduction, are very different to those that are current today, and present quite new economic and social challenges. The project that is the subject of this report explored three of the available low-carbon options – energy efficiency, renewable electricity and nuclear power. Together these three options seem to suggest the following generic research agenda: Human behaviour Most people’s awareness of and interest in how they use energy, and the impacts this energy use might have, seem to be very low. In the absence of policy intervention, and provided that energy remains both relatively cheap and available, this situation seems likely to continue. The research agenda in this area seems to entail more work on understanding what drives the behaviours that use energy, how that energy use and its associated impacts can be made more transparent, what constraints there are to people changing their energy-using behaviours and how these constraints might be eased, and what incentives – positive or negative – might encourage people to change. For economists, price incentives are likely still to be perceived as important instruments of change, but these raise a host of questions which have as yet been only incompletely addressed, such as:

• How necessary are price increases to encourage behaviour change (and reduced absolute levels of emissions) in a context of rising incomes?

• What influences the political feasibility of introducing price increases to encourage changed behaviour?

• How can the elasticity of response to price changes be increased? Whether or not price changes are necessary to change energy-consuming behaviour, it seems unlikely that they would be sufficient. Research in psychology, sociology and education, as well as economics, will all be important to explore this behaviour, its social contexts, how it is learned, how its impacts are perceived and how it might be changed. An important area of investigation in this regard will be the potential role of information (about climate change, about energy consumption, about the price of energy) in changing consumption behaviour and how that information should be delivered to have the maximum desired effect. This is one example of the need better to understand and

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encourage processes of social learning, especially about new social challenges or at times of rapid change. Social acceptability Related to the issues of perception and awareness that influence individual human behaviour are attitudes and values that help to determine whether different technologies are socially acceptable and on what terms. This applies as much to onshore wind farms as to nuclear power stations. The issues are formidably complex and reach deep into people’s most deeply held convictions – about risk, security, landscape and economic and political power. It is unlikely that either politicians or financial markets will seriously contemplate a new nuclear programme, or that local planners will allow land-based renewables to play their potential role in carbon reduction, until these issues have been explored and understood to the extent required for a new social contract on the deployment of these technologies to be struck. Economic costs Efficient energy use and low-carbon energy supplies must be affordable to producers in competitive markets, and to consumers for socially necessary consumption. What is considered socially necessary consumption again relates back to issues of social aspiration and behaviour, and doubtless business and industry can continue to increase their energy productivity in the future as they have in the past. But the cost parameters of the transition to a low-carbon economy nevertheless remain of fundamental importance, especially in a context where individual countries are acting to some extent unilaterally. There is little agreement internationally on whether a low-carbon transition will be necessarily expensive or not (although there is quite a lot of agreement that inappropriate policy could make it so). Recent intensive research on this issue in the UK, in connection with the Energy White Paper1, has yielded relatively reassuring results, but they do not yet command consensus, and there is certainly scope for further work to explore more fully the very complex economic issues involved, with an emphasis on seeking to identify and reduce the key uncertainties, such as the extent of achievable negative cost opportunities for energy efficiency and the place of renewables in the carbon abatement cost curve. Energy-environment-economy modelling which effectively integrates engineering insights with macroeconomic analysis has a large role to play in such further work. Network and infrastructure issues It has already been noted that different options for future energy supply and demand will require different networks and infrastructures to deliver them. While a new nuclear programme would require minimum change to the existing UK grid, substantial deployment of renewables could require significant back up or storage capacity to compensate for their intermittence; new transmission infrastructure if they are located far away from current networks (for example, offshore northern Scotland); and strengthening of local distribution networks (if they are connected to the system at that level).

1 See DTI 2002b, as well as http://www.dti.gov.uk/energy/whitepaper/ and http://www.cabinet-office.gov.uk/innovation/2002/energy/workingpapers.shtml for a range of UK Government publications on the costs of a low-carbon transition

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Household energy provision (for example, through micro-CHP or photovoltaics) will also need special provisions for connection and metering at the local level. In the longer term, any moves to deploy hydrogen or carbon sequestration technologies will have further far-reaching infrastructure implications. The wide range of options and technologies available, and uncertainty about which ones will eventually become most attractive, argue for the desirability of keeping options open as long as possible. But options will not become attractive to investors unless it is clear that the policy decisions have been taken to support them and that the infrastructure will be there to allow them to operate effectively. Still not enough is known about what decisions will need to be taken by when to ensure that desirable technologies can develop and be deployed at a socially desirable rate. On the demand side, more understanding is needed to ensure that the requisite skills are available to deploy new technologies, especially in households, as they become viable in markets. Stimulation of innovation There is now a substantial literature, which is referred to briefly above, on the processes of technological innovation, of the diffusion of these innovations through society, and on how both these processes can be stimulated by public policy. But there is still no consensus on these issues as they apply particularly to the energy sector in the current context. Even such fundamental questions as whether the direction of innovation is best guided by price incentives or regulation, or the appropriate mix between the two, do not have clear answers. Similarly, while it is generally accepted that public policy has a role in basic research to stimulate innovation, the extent and nature of its role, in different contexts, in assisting innovation to become commercially applied, is less clear. There is clearly an important research agenda here, seeking to understand better both relevant innovation processes of the past and the kinds of incentives, contexts and policy frameworks that can stimulate and guide them in the desired direction in the future. Security and reliability The UK’s decision to embark on the transition to a low-carbon economy comes at a challenging time, when over the next two decades it will again become a major importer of energy. The imperative of maintaining adequate supplies of energy (‘Keeping the Lights On’ as it is referred to in Patterson 2003, but it applies as much to fuels for transport and heating as to electric power) adds an extra dimension, and more complexity and uncertainty, to the low-carbon transition. In liberalised energy markets it throws into relief the need for adequate incentives to invest in infrastructure and maintain surplus and back-up capacity, despite the different risks presented by government policy, market regulation and the market itself. It also highlights the importance for the UK of European energy markets and European energy security. And it reinforces the need for understanding of international and geopolitical forces that shape perceptions and situations in those parts of the world the UK will look to for energy supplies. There is now a political science and international relations component of the UK energy research agenda that over the last two decades has received relatively little attention. Markets and governance There are three interlocking, complex institutional structures the relationship between which still needs to be better understood: the structures of energy markets themselves,

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with their mixture of competition and monopoly, and horizontal and vertical integration; the structure of regulation, as carried out in the UK through an arms-length regulator, though this is not the only possible model, part of the task of which is to take due account of government policy; and the institutions of government itself, the energy interests of which inevitably spread into departments of trade and industry, environment, transport, planning, and the Treasury, and engage the attention of the Prime Minister. The policy packages emerging from such diverse institutional interests will need to be carefully crafted to achieve coherence and complementarity. There have been many attempts in different countries to articulate and coordinate these interests in order to improve the delivery of overall policy objectives. No optimal model has emerged, and probably none will do so in contexts that are so shaped by different histories and cultures. But there is enormous scope for further analysis and comparison of different experiences in order to inform in any particular context how this improved delivery may be achieved. Human behaviour; social acceptability; economic costs; stimulating innovation; network and infrastructure issues; markets and governance; and security and reliability - these are the key issues for a social science research agenda that is seeking to support a policy objective of radical reductions in carbon emissions. Progress will need to be made in understanding most if not all these issues if these radical reductions are to be achieved.

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REFERENCES Anderson, D. 2003 ‘Technology Development and Substitution in Energy Systems’, paper presented to the ESRC Energy Research Conference, March, Policy Studies Institute, London, http://www.psi.org.uk Anderson, D., Clark, C., Foxon, T., Gross, R., & Jacobs, M. 2001 Innovation and the Environment: Challenges and Policy Options for the UK, January, Imperial College Centre for Energy Policy and Technology and Fabian Society, Imperial College, London Ang, B. 1995 ‘Decomposition Methodology in Industrial Energy Demand Analysis’, Energy – The International Journal, Vol.20 No.11, pp.1081-1095 Berkhout, F., Harris, M., Sorrell, S. and Watson, J. 2003 ‘Developing an ESRC Energy Research Strategy Interim Report: Review of energy research’, Environment and Energy Programme SPRU (Science & Technology Policy Research) University of Sussex http://www.sussex.ac.uk/spru/environment/energyconsultation/docs/report.pdf Burgess, J. 2003 Discussant’s comments on Grimston 2003, presented at the ESRC Energy Research Conference, March, Policy Studies Institute, London, http://psi.org.uk Chesshire, J. 2003 ‘Energy Efficiency (with an emphasis on the household sector)’, paper presented to the ESRC Energy Research Conference, March, Policy Studies Institute, London, http://www.psi.org.uk CSAERRG (Chief Scientific Adviser’s Energy Research Review Group) 2001 Report of the Group: Recommendation to Inform the Performance and Innovation Unit’s Energy Policy Review, Office of Science and Technology, London, http://www.ost.gov.uk/policy/issues/csa_errg/main_rep.pdf Darmstadter, J. 2000 ‘The Energy-CO2 Connection: a Review of Trends and Challenges’, Background Paper, May, Resources for the Future, Washington DC DTI (Department for Trade and Industry) 2003 Our Energy Future – Creating a Low Carbon Economy, Cm 5761, The Stationery Office, London, www.dti.gov.uk/energy/whitepaper/index.html DTI (Department for Trade and Industry) 2002a Managing the Nuclear Legacy: a Strategy for Action, Cm 5552, July, DTI, London, http://www.dti.gov.uk/energy/nuclear/announce_pubs/conspubs/nuclear_legacy/whitepaper.pdf DTI (Department for Trade and Industry) 2002b Long-Term Reduction in Greenhouse Gas Emissions in the UK, Report of an Inter-departmental Analysts Group (IAG), DTI, London, http://www.dti.gov.uk/energy/greenhousegas/index.shtml EHB (Environment and Human Behaviour) Programme 2003 Report of the First Programme Workshop, February, http://www.psi.org.uk/ehb Ekins, P. 2000 Economic Growth and Environmental Sustainability: the Prospects for Green Growth, Routledge, London/New York

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Ekins, P. & Barker, T. 2001 ‘Carbon Taxes and Carbon Emissions Trading’, Journal of Economic Surveys, Vol.15 No.3, pp.325-376 Gardner, G. & Stern, P. 1996 Environmental Problems and Human Behavior, Allyn & Bacon, Boston/London Grimston, M. 2003 ‘Nuclear Power’, paper presented to the ESRC Energy Research Conference, March, Policy Studies Institute, London, http://www.psi.org.uk Grimston, M. & Beck, P. 2000 Civil Nuclear Energy: Fuel of the Future or Relic of the Past?, Royal Institute of International Affairs, London Hartley, N. 2003 Discussant’s Comments on Mitchell 2003, presented at the ESRC Energy Research Conference, March, Policy Studies Institute, London, http://psi.org.uk Helm, D. 2003a ‘The Energy System’, Discussant’s Notes on Anderson 2003, presented at the ESRC Energy Research Conference, March, Policy Studies Institute, London, http://psi.org.uk Helm, D. 2003b Energy, the State and the Market: British Energy Policy Since 1979, Oxford University Press, Oxford HMG (Her Majesty’s Government) 1995 The Prospects for Nuclear Power in the UK: Conclusions of the Government’s Nuclear Review, May, Cm2860, HMSO, London ICCEPT (Imperial College Centre for Energy Policy and Technology) 2002 Assessment of the Technological Options to Address Climate Change: a Report for the Prime Minister’s Strategy Unit, ICCEPT, Imperial College, London, http://www.cabinet-office.gov.uk/innovation/papers/iccept.pdf Ilex 2002 ‘Quantifying the System Costs of Additional Renewables in 2020’, a Report to the Department of Trade and Industry, http://www.dti.gov.uk/energy/developep/080scar_report_v2_0.pdf Jepma, C., Asaduzzaman, M., Mintzer, I., Maya, R. & Al-Moneef, M. 1996 ‘A Generic Assessment of Response Options’, Ch.7 in Bruce, J., Lee, H. & Haites, E. Eds. 1996 Climate Change 1995: Economic and Social Dimensions of Climate Change, contribution of Working Group III to the Second Assessment Report of the Intergovernmental Panel on Climate Change (IPCC), Cambridge University Press, Cambridge, pp.225-262 Laughton, M. 2003 Discussant’s Comments on Mitchell 2003, presented at the ESRC Energy Research Conference, March, Policy Studies Institute, London, http://psi.org.uk MacKerron, G. 2003 ‘Social Science Research and Nuclear Power’, comments on Grimston 2003, presented at the ESRC Energy Research Conference, March, Policy Studies Institute, London, http://psi.org.uk Miller, D. Ed. 2001 Car Cultures: Materializing Culture, Berg Publishers, Oxford

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Mitchell, C. 2003 ‘Renewable Energy: Step Change in Theory and Practice’, paper presented to the ESRC Energy Research Conference, March, Policy Studies Institute, London, http://www.psi.org.uk Patterson, W. 1999 Transforming Electricity: the Coming Generation of Change, Earthscan, London Patterson, W. 2003 ‘Keeping the Lights On’, Working Paper No.1, Royal Institute of International Affairs, London, http://www.riia.org Pearson, P. & Fouquet, R. 2003 (forthcoming) ‘Long Run Carbon Dioxide Emissions and Environmental Kuznets Curves: Different Pathways to Development?’ in Hunt, L. Ed. 2003 (forthcoming) Energy in a Competitive Market (Essays in Honour of Colin Robinson), Edward Elgar, Cheltenham PIU (Performance and Innovation Unit) 2002 The Energy Review, February, Cabinet Office, London RAE/RS (The Royal Academy of Engineering/The Royal Society) 1999 Nuclear Energy: The Future Climate, June, RAC/RS, London Ravetz, J. 1994a ‘Emergent Complex Systems’, Futures, Vol.26 No.6, pp.568-582 Ravetz, J. 1994b ‘Economics as an Elite Folk Science: the Suppression of Uncertainty’, Journal of Post-Keynesian Economics, Winter 1994-95, Vol.17 No.2, pp.165-184 Ravetz, J. 2003 Discussant’s Notes on Anderson 2003, presented at the ESRC Energy Research Conference, March, Policy Studies Institute, London, http://psi.org.uk RCEP (Royal Commission on Environmental Pollution) 2000 Energy – The Change Climate, 22nd Report, The Stationery Office, London Sathaye, J. & Bouille, D. ‘Barriers, Opportunities and Market Potential of Technologies and Practices’, Ch.5 in Metz, B., Davidson, O., Swart, R. & Pan, J. Eds. 2001 Climate Change 2001: Mitigation, contribution of Working Group III to the Third Assessment Report of the Intergovernmental Panel on Climate Change (IPCC), Cambridge University Press, Cambridge, pp.345-398 Shove, E. 1998 ‘Gaps, Barriers and Conceptual Chasms: Theories of Technology Transfer and Energy in Buildings’, Energy Policy, Vol.26 No.15, pp.1105-1112 Shove, E. 2003 Comments on Chesshire 2003, presented at the ESRC Energy Research Conference, March, Policy Studies Institute, London, http://psi.org.uk Verbruggen, A. 2003 Presentation at the ESRC Energy Research Conference, March, Policy Studies Institute, London, Conference Report available on http://psi.org.uk Verbruggen, A. 2003 (forthcoming) ‘Stalemate in Energy Markets: Supply Extension versus Demand Reduction’, Energy Policy, Vol.31 No.14 (forthcoming)

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ANNEX 1: CONFERENCE PROGRAMME 10.00 Coffee and Registration Morning Chairman Professor Jim Skea, PSI 10.30 Welcome Professor Jim Skea, PSI Introduction to the Conference Professor Paul Ekins, PSI 10.45 The Context of UK Energy Research Dr John Taylor OBE, FRS, FREng Director General, Research Councils Knowledge Needs for Step Changes Towards Decarbonisation: 11.15 The Energy System Professor Dennis Anderson, Imperial College Discussants: Dr Dieter Helm, New College, Oxford Jerry Ravetz, freelance 12.10 Energy Efficiency Professor John Chesshire, SPRU Discussants: Jeremy Eppel, DEFRA Dr Elizabeth Shove, University of Lancaster 13.05 Lunch Afternoon Chairman Professor Paul Ekins, PSI 14.15 Renewables Dr Catherine Mitchell, University of Warwick Discussants: Nick Hartley, OXERA Consulting Ltd. Professor Michael Laughton, Imperial College 15.10 Nuclear Power Malcolm Grimston, Royal Institute of International Affairs Discussants: Gordon MacKerron, NERA Professor Jacquie Burgess, University College London 16.05 The European and International Professor Eberhard Jochem, Dimensions Fraunhofer Institute and CEPE/ETHZ Professor Aviel Verbruggen, University of Antwerp 17.00 Summing Up Professor Jim Skea, PSI

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ANNEX 2: BRIEF BIOGRAPHIES OF CONFERENCE PRESENTERS

Morning Chairman Welcome – Professor Jim Skea, PSI Jim Skea has been Director of the Policy Studies Institute since November 1998. He was previously Director of the Economic and Social Research Council's Global Environmental Change Programme and a Professorial Fellow at SPRU (Science and Technology Policy Research), University of Sussex. His main research interests are: energy/environmental policies; sustainable development; climate change; environmental regulation and technical change; and business and environment issues more generally. Introduction to the Conference – Professor Paul Ekins, PSI Paul Ekins is Head of the Environment Group at the Policy Studies Institute. He is also Professor of Sustainable Development in the School of Politics, International Relations and the Environment at Keele University; a Founder and Associate Director of the sustainable development charity Forum for the Future; Senior Consultant to Cambridge Econometrics; and a specialist adviser to the Environmental Audit Committee of the House of Commons. In 2002 he was appointed to the Royal Commission on Environmental Pollution. Paul Ekins’ academic work focuses on the conditions and policies for achieving an environmentally sustainable economy, and he has extensive experience consulting for business, government and international organisations. He is the author of numerous papers, book-chapters and articles, and has written or edited six books, the most recent of which is Economic Growth and Environmental Sustainability: the Prospects for Green Growth (Routledge, London, 2000). In 1994 Paul Ekins received a Global 500 Award ‘for outstanding environmental achievement’ from the United Nations Environment Programme. UK Energy research context – Dr John Taylor OBE, Director General Research Councils John Taylor is Director General of Research Councils in the UK Office of Science and Technology, responsible for the seven Research Councils funding research across the whole spectrum of science and technology in the UK science and engineering base. He was formerly director of Hewlett Packard Laboratories Bristol, the European arm of Hewlett Packard 's world-wide long range research laboratories, where he developed

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major programs of research in the areas of information utilities, information appliances and mathematics, including internet security, wireless communications, telecomms and personal digital imaging. Earlier, he led various research groups at RSRE and ASWE in areas including secure computing and communications, and command and control. He was President of the Institution of Electrical Engineers in 1998-9, and chaired the UK Technology Foresight Panel in IT Electronics and Communications until December 1998. He is an honorary fellow of Emmanuel College and sometime visiting industrial professor at Bristol University and a visiting professor at Imperial College, London. The Energy System Speaker – Professor Dennis Anderson, Imperial College London Dennis Anderson is Director of the Imperial College Centre for Energy Policy and Technology (ICCEPT) and is Professor of Energy and Environmental Studies at the College. He holds degrees in engineering and economics and is a member of the Insitutes of Electrical and Mechanical Engineers and the Institute of Physics. He was previously the Energy Advisor to the World Bank, Chief Economist of Shell and an engineer in the electricity supply industry. He has published extensively on development economics, energy and the environment. Discussants - • Dr Dieter Helm, New College Oxford Dr Dieter Helm is a Fellow in Economics at New College, Oxford, and founding director of Oxford Economic Research Associates Ltd (OXERA). He is also a Fellow of the Institute of Energy, Fellow of the Royal Society of Arts, and Fellow of Winchester College. Dr Helm has been a Member of the DTI’s Energy Advisory Panel (1993-2003) and is Chairman of the DEFRA Academic Panel. He is Editor of The Utilities Journal and Associate Editor of the Oxford Review of Economic Policy, and has written extensively on energy matters, and recent publications include: ‘The Assessment: European Networks—Competition, Interconnection and Regulation’, Oxford Review of Economic Policy, 17:3, 2001; ‘A Critique of Renewables Policy in the UK’, Viewpoint, Energy Policy, 30:3, 2002; and ‘Security of Supply, Sustainability and Competition’, Energy Policy, 30:3, 2002. Other articles include ‘Designing Energy Policy’ (forthcoming in Energy Focus, 2002) and ‘Investment in Energy Networks: Auctions, Regulation and Planning’ published in Towards an Energy Policy, OXERA Press, (2002). He has just completed Energy, the State and the Market: British Energy Policy since 1979 published by Oxford University Press in 2003 and has advised governments, regulators, and major companies, in the UK and internationally.

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• Jerry Ravetz, Freelance Jerry Ravetz was born in Philadelphia in 1929; He went to Swarthmore College and then to Trinity College, Cambridge, where he got his Ph.D. in Pure Mathematics. In 1957 he went to Leeds University to work in the History & Philosophy of Science, and stayed there nearly thirty years. He was the first Executive Secretary of the Council for Science and Society (1973-6). He wrote Scientific Knowledge and its Social Problems (1971, republished 1996), and (with Silvio Funtowicz) Uncertainty and Quality in Science for Policy, where the NUSAP notational system is developed. He has also collaborated with Zia Sardar (Cyberfutures, Introducing Mathematics). He is the Director of the Research Methods Consultancy Ltd. He writes and consults on issues related to Post-Normal Science, where typically 'facts are uncertain, values in dispute, stakes high and decisions urgent' Details on his work can be found at: www.nusap.net. Energy Efficiency Speaker - Professor John Chesshire, SPRU Now Honorary Professor at SPRU, Sussex University, where he worked for 27 years. From 1986-97, he led the SPRU Energy Programme and co-directed the ESRC Centre for Science, Technology, Energy and Environment Policy (STEEP). He is an Associate Fellow, Environmental Change Institute, Oxford University; and Visiting Professor, City University. He co-edits the EU’s Annual Energy Review and advises the European Commission, OECD, the National Audit Office and several European governments. For 22 years he advised several House of Commons select committees. He is now a member of the Government’s Energy Advisory Panel; Chairman of the Energy Efficiency Partnership for Homes; Deputy Chairman of the Government’s Fuel Poverty Advisory Group; Chairman of Eaga Partnership Charitable Trust; and Chairman of the National Energy Foundation. He is a past President of the Institute of Energy. Discussants - • Jeremy Eppel, DEFRA Jeremy Eppel is Head of the DEFRA’s Sustainable Energy Policy Division (SEP), responsible for policy on household, business and public sector energy efficiency, CHP, fuel poverty, the climate change levy agreements and sponsorship of the Carbon Trust and Energy Saving Trust. From October 1992 to November 2000 he was Counsellor to the Environment Director of the Organisation for Economic Co-operation and Development (OECD) in Paris, where he was responsible for advising on the strategic direction of the OECD’s Environment Programme and its relations with other international organisations and business, NGO and trade union stakeholders. He also played a major role in the development of the OECD’s programme on sustainable development, and was in charge of its work on sustainable consumption and production for five years.

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Before moving to OECD, Jeremy Eppel occupied a number of posts in the Departments of the Environment and Transport, dealing with policy on: business and the environment (as secretary of the first Advisory Committee on Business and the Environment, ACBE); local authority housing and local government finance; waste management; marine pollution; and railways. • Dr Elizabeth Shove, University of Lancaster Elizabeth Shove is a Senior Lecturer in Sociology at Lancaster University. She has written about energy use in buildings, A Sociology of Energy, Buildings and the Environment, with Simon Guy and has recently completed a book on Comfort, Cleanliness and Convenience: the social organisation of normality. Through this work, and as co-ordinator of a five-year programme of events on consumption, everyday life and sustainability (funded by the European Science Foundation), Elizabeth has brought theoretical approaches from the sociology of consumption and from science and technology studies to bear upon a range of energy-related issues. Such a strategy has generated new ways of thinking about demand and the social organisation of energy consumption. Renewable Energy Speaker – Dr Catherine Mitchell, University of Warwick Dr. Catherine Mitchell is a Principal Research Fellow at the Centre for Management Under Regulation in the Warwick Business School of the University of Warwick. Prior to this she worked in the Energy Group of the Science Policy Research Unit at Sussex University and undertook a Visiting Fellowship and Lectureship at the Energy and Resources Group at the University of California, Berkeley. She was a member of the Government's Energy Advisory Panel from 1998-2003 and has sat on numerous other energy policy advisory boards, both in a domestic and international context.

Discussants - • Nick Hartley, OXERA Consulting Ltd Nick Hartley is a Senior Adviser at OXERA Consulting Ltd. He joined OXERA in 1996 after a career in the UK Government Economic Service. From 1984-89 he was the Chief Economist at OFTEL, responsible for developing the early stages of the economic regulation of the telecommunications industry. He then went on to head teams of energy and environmental economists at the Department of the Environment and the Department of Trade and Industry. At OXERA he advises companies and governments on regulatory issues in general, drawing on the UK experience with the regulation of all the privatised utilities. In 2002 he was seconded from OXERA to head the team which prepared the UK Cabinet Office (Performance and Innovation Unit) report on Energy Policy. This report laid the foundations for the UK Government Energy White Paper published in February 2003. • Professor Michael Laughton, Imperial College Professor Michael Laughton is Emeritus Professor of Electrical Engineering in the University of London where he was formerly Pro-Principal of Queen Mary and Westfield College and subsequently Dean of Engineering of the University of London. He is

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currently a Visiting Professor in the Department of Environmental Science and Technology at Imperial College. He has been involved in renewable energy matters for over twenty years, from involvement with the SERC on an early wind energy panel, the Working Group Chairman and Editor of the 1990 Report on "Renewable Energy Sources" of the Watt Committee, a contributor to the Open University programme on renewables as well as discussing the subject in many seminars and papers. He is currently a member of energy policy advisory groups of the Royal Society, the Royal Academy of Engineering, the Institution of Mechanical Engineers and the Institution of Electrical Engineers. He has also acted as Specialist Adviser to different Parliamentary Committees on inquiries into alternative energy sources and efficiency of electricity use. Nuclear Energy Speaker – Malcolm Grimston, Royal Institute of International affairs Malcolm Grimston was Educated at Scarborough College and Magdalene, Cambridge, graduating in 1979 having read Natural Sciences and specialised in psychology. He went on to do a PGCE 1980, Open University BA (Hons) (First Class) 1993 after which he taught chemistry from 1980 to 1987 at Stowe and then Millfield. In July 1987 appointed Director of Talks for the UK Atomic Energy Authority and in April 1992 joined British Nuclear Industry Forum as Energy Issues Adviser. In October 1995 Malcolm joined Imperial College, London as a Senior Research Fellow (retain Honorary status) in the IC Centre for Environmental Technology Environmental Policy and Management Group. More recently Malcolm was appointed Senior Research Fellow at the Royal Institute of International Affairs, Chatham House in September 1999 (now Associate Fellow) and is conducting an investigation into the future of civil nuclear energy. Selected recent publications include: 1. Double or Quits - the global future of civil nuclear energy (with Peter Beck) (2002)

Earthscan: London. 237 pp 2. 'The Potential and Role of Carbon Dioxide Sequestration in Tackling Global Climate

Change' (lead author) (2001) Climate Policy 1(2), 155-171. 3. Civil nuclear energy - fuel of the future or relic of the past? (with Peter Beck) (2000)

Royal Institute of International Affairs: London (with Peter Beck), 126 pp. 4. 'New nuclear investment - an unmanageable risk?', in Proceedings, Conference,

'Meeting the Competitive Challenge', BNES, London (December1999) Discussants - • Gordon MacKerron, NERA Gordon MacKerron is an economist working mainly on the economic and policy issues in energy and the environment. His particular specialisation has been in nuclear power. For over 20 years he was an academic at SPRU, University of Sussex, where he headed the Energy Programme from 1997 to 2000. Since January 2001 he has been at NERA (an economic consultancy) and was seconded for six months as a senior team member of the

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Cabinet Office PIU team that produced the 'Energy Review' in February 2002. He has undertaken a wide variety of consulting and advisory work, including Specialist Adviser and invited witness to a number of energy inquiries of the House of Commons Trade and Industry Committee, being Chairman of the Energy Panel, DTI/OST Foresight Programme from 1995 to 1998, and membership of the UKAEA QQR Steering Board in 1999/2000. • Professor Jacquie Burgess, University College London Jacquie is Professor of Geography and director of the Environment and Society Research Unit. Her expertise lies in the field of environmental decision-making. In particular, she specialises in the development and application of deliberative and inclusive processes that bring specialists, stakeholders and citizens together to resolve what to do about complex and difficult problems. Jacquie recently led a specialist workshop for DEFRA which brought together a range of people to scope a public engagement process to support the New Body designated by government to resolve what should be done to dispose of the legacy of intermediate and high level radio-active waste. The European and International Dimensions • Professor Eberhard Jochem, Fraunhofer Institute Eberhard Jochem, is a Professor at the Center of Energy Policy and Economics at the ETH Zurich, founded with his colleagues Massimo Filippini and Daniel Spreng the Centre for Energy Policy and Economics (CEPE) in 1999. He gives courses and seminars in energy economics, technology and policy at the ETH Zürich and Lausanne. Eberhard Jochem, born in Essen in 1942, received degrees in chemical engineering in Aachen (1967), in economics (Munich, 1971), and PhD in technical chemistry (Munich, 1971). He was research fellow in Munich and at the Harvard University, Boston (1971-1972). In 1973 he joined the Fraunhofer Institute of Systems and Innovation Research (ISI), Karlsruhe where he served as deputy director between 1983 and 1999. He lectured at the universities of Munich, Karlsruhe and Kassel. He is member of several national and international scientific advisory committees, among others of the Helmholtz Society and the Council for Sustainable Development appointed by the German Government, the Tyndall Center, U.K. and the Wuppertal Institute. He is member of the editorial boards of the scientific journals Energy & Environment, Climate Policy, and Ecological Economics. • Professor Aviel Verbruggen, University of Antwerp Aviel Verbruggen has a training in engineering as well as economics from Louvain in Antwerp and Stanford University respectively. Aviel’s energy research covers electricity economics (co-generation, planning, costing and pricing in power systems, distributed generation and grid access) and energy efficiency. Aviel is the co-founder of research and consultant units STEM, CENERGIE and FINES. Also Aviel conceived, supervised and edited the State of the Environment Reports in Flanders as well as being president of the Environmental Advisory Council between 1991 and 1995 and principal advisor to the Minister of the Environment (1999-01). Aviel also co-authored the IPCC Third Assessment Report WGIII, Ch. 5 (Barriers and Opportunities).

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ANNEX 3

ESRC Energy Research Conference Monday 31st March 2003

Chairs

Prof. Paul Ekins Policy Studies Institute Prof. Jim Skea Policy Studies Institute

Speakers and Discussants

Dr John Taylor Keynote Speaker, Research Councils Prof. Dennis Anderson Imperial College Prof. Jacquie Burgess University College London Prof. John Chesshire SPRU, University of Sussex Jeremy Eppel Department for Environment Food Rural AffairsMalcolm Grimston Royal Institute of International Affairs Nick Hartley OXERA, Oxford Dr Dieter Helm Oxford New College Prof. Eberhard Jochem Fraunhofer Institute Prof. Michael Laughton Imperial College Gordon MacKerron NERA Dr Catherine Mitchell University of Warwick Jerry Ravetz Freelance Consultant Dr Elizabeth Shove University of Lancaster Prof. Aviel Verbruggen University of Antwerp

Delegate List

Alan Apling Department of Transport Paolo Agnolucci Policy Studies Institute Peter Bamford Price Waterhouse Coopers Peter Beck Royal Institute of International Affairs

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Robert Bell AEA Technology John F Benson University of Newcastle David Brown Natural Environment Research Council Adam Brown Future Energy Solutions Stephen Brown RICS Foundation Peter Brunt Department of Trade & Industry Peter Connor Philip Dale UK Sustainable Development Commission Prof. Trevor Davis University of East Anglia Cedric De Meeus Society of Motor Manufactures & Traders Prof. David Elliott Open University Sara Eppel Energy Saving Trust Duncan Eggar Sustainable Development Commission Neil Evans Energy for Sustainable Development Richard Farrant Gas and Electricity Markets Authority J C Frost Johnson Matthey Fuelcells Adrian Gault Department of Trade & Industry Simon Gerrard University of East Anglia Robert Gross Imperial College London Michael Grubb Carbon Trust Gary Grubb Economic & Social Research Council Jim Halliday CCLRC Rutherford Appleton Laboratory

Neil Hornsby UK Sustainable Development Commission Prof. Lester C Hunt University of Surrey Adrian Hyde Department of Trade & Industry Prof. Tim Jackson University of Surrey Michael Jefferson Global Energy & Environment Ltd Jonathan Köhler Tyndall Centre for Climate Change Research David Lindley Ocean Power Delivery Ltd Richard Mayson British Nuclear Fuels PLC Merylyn McKensie Environment Agency Graham Meeks Combined Heat & Power Association David Milborrow DM Energy Colin Moody Future Energy Solutions Prof. David Newbury Cambridge University David Odling United Kingdom Oil Operators Association Fiona Oloo Office of Science & Technology Gill Owen Centre for Management under Regulation Sara Parkin Forum for the Future Walt Patterson Royal Institute of International Affairs Peter Pearson Imperial College London Jacky Pett Association for the Conservation of Energy Simon Roberts Centre fro Sustainable Energy Fabien Roque Parliamentary Office of Science & Technology Simon Shackley Tyndall Centre for Climate Change Research Les Shorrock Building Research Establishment Steve Sorrell SPRU, University of Sussex Derek Spooner University of Hull Rob Tinch University of East Anglia

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Keith Tovey University of East Anglia Robin Vanner Policy Studies Institute David Vincent Carbon Trust Jim Watson SPRU, University of Sussex Stuart Woodings British Energy