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30 March 2015 14:00

The Carbon Brief Interview: Tim Yeo

Leo Hickman

Leo Hickman

Leo Hickman

Leo Hickman

30.03.2015 | 2:00pm
InterviewsThe Carbon Brief Interview: Tim Yeo

Tim Yeo has been the Conservative MP for South Suffolk since 1983 and is the current chair of the Commons’ Energy and Climate Change (ECC) committee. Yeo served as the minister for environment and countryside from 1992-3. Yeo is standing down as an MP at the general election in May after being deselected by his local party members in 2013.

In his final in-depth interview before stepping down as the chair of the ECC select committee, Yeo discusses:

Fracking: “By the late 2030s we won’t need to be fracking in this country, but for the time being, I think it’s better than not doing so.”

The Paris COP: “What I would like to see, it something which facilitates the move towards a global cap and trade.”

The Fifth Carbon Budget: “I’ll be very surprised if there isn’t quite a high penalty on those companies and industries that have not decarbonised by the 2030s. And the fifth carbon budget needs to be challenging, so that people can start making their plans now.”

Beyond the Climate Change Act: “We know that unless we’ve got to that net-zero by mid-century, the danger is that the concentration in the atmosphere will be so great, and for so long, that the cost then will become very expensive, and very disruptive.”

Wind power: “Onshore wind is relatively good value for money, but it’s being blocked at the planning system, which is a mistake. We’ve put, I think, too much into some of the expensive ones, offshore wind, the early CFDs.”

Investing, hypothetically, his own money: “Well, I think I’d put a decent chunk into solar.”

The Green Deal: “It’s been a failure, I’m afraid”

The “older, white male” climate sceptic Tories: “To be brutal, they’re going to die off. Very few people under the age of 40 now, I think, seriously question the science.”

The UK exiting the EU: “Given we have got quite ambitious [carbon] targets set domestically, I don’t think it should have too much of a damaging effect on our own approach.”

Fall in oil prices: “In the short term, it doesn’t help, because there’s less incentive to be more energy efficient…But I think in the long-term, the effect is fairly small.”

Carbon capture and storage: “Without CCS, there is a huge problem and I think that Shell are realistic to acknowledge that.”

Hinkley Point C nuclear plant: “Hinkley by itself, Hinkley as a one-off, is not terribly good value for money.”

Proportion of biomass in the UK’s renewables mix: “We certainly are relying to a significant degree on biomass, and it is true that the net impact of biomass is not always as it seems superficially.”

Compatibility of maximising North Sea oil reserves with UK’s climate targets: “I don’t think extracting a bit more in the next five years, where otherwise we would just be importing, I don’t think it makes any difference really.”

Focus of his career after leaving parliament: “Energy is such an interesting industry and climate change is by far the most important policy issue in the first half of the 21st century.”

CB: I’m going to begin with your most recent, or your final, ECC committee [Energy and Climate Change Select Committee] publication, Fuelling the Debate. You set out three challenges for the next ECC committee to address: maintaining political stability and leadership, supporting and promoting new technologies and building consumer trust. Can you just expand on some of those themes that you raised for the coming committee?

TY: Yes, I think the whole issue of both climate change and energy policy is essentially very long-term, and therefore decisions that are made in the next five years will have an impact way beyond the next parliament, right through to the middle of the century and possibly even beyond. And for that reason, as much stability of policy as possible, is very, very desirable. A bipartisan approach. We’ve got that on a lot of issues, but to attract investment, which we need, particularly in new technology, investors are going to be much happier going to a country where they think there is that stability and continuity. And actually, you know, I talk to quite a lot of people in the investment world as well, actually in the UK it’s probably better than we think it is here, we always naturally are quite self-critical – which is a good thing – but talking to people who look at a variety of different markets, they assume the UK is quite a good market actually, you know the rule of law is respected here, the tax regime is reasonably sympathetic and certainly on a lot of low-carbon technologies, the policy has been quite supportive. We need that to be maintained, that sort of stability is very, very important.

New technology is something we’ve always been good at devising in this country, not always so good as commercialising. You know fantastic science base, great innovation, and one of the jobs I’m going to start after I leave parliament is at Sheffield University where they’ve got a big focus on the energy industry and they’ve got a tremendous engineering research record, and I’m chairing their advisory board. So, we’re good at the innovation, we’re good at devising new technology. We’ve got to find better ways of getting the investment to take it through to commercialisation, so we get an economic benefit from it as well. I mean, much of the solution to climate change is going to depend on new technology – obviously, things like carbon capture and storage, absolutely essential if we can crack that one. But lot’s of other things as well, the whole smart technology, smart grids, smart meters, all that, can transform the way in which we can use energy, and I want Britain to be a leader in that. We have the capacity to do that.

The third one about consumers. I think one of the things that’s become very clear to me in the last five years as chair of the committee is the way in which consumer trust in energy companies has just broken down completely. They’re almost as bad as banks, frankly, in that respect. They haven’t had quite the same bailouts as banks, but people are kind of suspicious, and they’ve unfortunately got some good reasons to be. So re-building that is also a challenge, because I think the market will work better if people have more trust. Probably the competition will improve as well. Switching is one thing, when it’s good, even on switching we’ve found some thing weren’t actually as transparent as they should be.

So I think those three things we do think are really important and I hope that in the next Parliament – first of all, I hope there’s going to be a clear government after May the 7th – but I hope the committee carries forward that sort of focus. I know the staff of the committee are ready to do that, and some of the members, I’m sure, will be the same.

CB: Fracking: you’re supportive. Should we still be fracking in the 2030s and is that compatible with our carbon budget?

TY: Yes, we looked at fracking very carefully. We looked at it twice. I started with a completely open mind, I knew nothing about it five years ago, and actually hardly anyone in this country did. We were satisfied that is can be done safely. It does need a very rigorous regulatory regime, but we’re good at designing those in this country, we have a good record of that, much better than the Americans actually, probably better that the EU as well.

So, from my point of view, I support fracking because we are increasingly depending on imported gas, we’re buying a lot of LNG [Liquified Natural Gas] from the Middle East, and so on. We’re lucky we’ve got Norway, but Norway can’t meet all our needs. We’re not dependent on Russia at all. So I think if we can get replacement of imports by fracking and using the shale gas that we’ve got here – we don’t know how much there is until we do some more drilling – I think that’s a good thing to do, because I think in the next 20 years we’re going to go on using gas. Gas is, for the time being, very important. Hopefully, we can replace coal completely, and, hopefully, we’ll go on seeing a big build-up in renewables, and I’m also a great supporter of nuclear. But I think unavoidably for heating, and for some electricity generation, we’re going to use some gas, so why not use our own if we can?

By the 2030s, we may not need very much. If we get to what I believe is necessary, which is almost complete decarbonisation of electricity generation, unless we’ve got carbon capture and storage for gas, we won’t be using much gas, but I would say for the next 15 – 20 years we do need it. So I would have thought by the late 2030s we won’t need to be fracking in this country, but for the time being, I think it’s better than not doing so.

CB: But in terms of what the Committee on Climate Change has said about this, it seems to be quite a narrow window, it seems to imply by roundabout the early 2030s we needs to be winding off, or winding down pretty dramatically our use of natural gas, be it fracked or LNG, or whatever. Is that really an attractive investment window, to build all that infrastructure, just to frack for what would be a 15-year period, if you started today even?

TY: Well, I agree with the Climate Change Committee. I think that it is a limited window, unless we’ve got CCS [Carbon Capture and Storage], and so it’ll be for investors to decide whether they think it is worthwhile. I mean already investors are looking at the whole issue about stranded assets, we’ll see what’ll happen to the share prices of the coal-mining companies that have collapsed, and I don’t think the government needs to make that decision. I think what the government should do is make it possible, and if investors want to do it, and if little communities are happy to do it – and I think they should be incentivised to do it – then I think it’s ok.

I mean I just think it’s unrealistic to think we’re not going to use quite a lot of gas in the next 15 years, so the question is where it comes from, and actually I think it was the DECC [Department of Energy and Climate Change] chief scientist pointed out – was it David MacKay? – that the emissions from fracking are slightly less that LNG because of the processing of liquefying and unliquefying and so on does itself consume energy. So it’s marginally better in term of emissions anyway. But you’re right, it is limited window, and if investors think that’s too short a time well so be it, but I don’t think the government needs to express a view either way about that.

CB: But David MacKay also pointed out, in the very final paragraph of that report, was that he said, fracking in the UK would lead to a net global increase of carbon, unless there is global climate policy, ie. a deal in Paris or going forward. That’s often a forgotten point about that report, but he did make that explicit point that without the global deal on carbon emissions, fracking in the UK would actually add to the kind-of global pool.

TY: Well, yes he did make that point, yes. Actually, I happen to think that an awful lot of things will go badly wrong if we don’t have a global carbon deal fairly soon. This is a fairly minor part of that. But, I think in the UK we should be leading the way towards that deal. I think we can make the EU ETS [Emissions Trading Scheme] work better, a carbon price even within the EU actually will produce a similar sort of effect.

So, again, I’d trust the market and the investors on this one. I think fracking rather than not fracking is right for the UK, but I absolutely accept that the overriding importance here is to get that global carbon deal as soon as we can. It may not come out of Paris but let’s at least hope Paris doesn’t make it any harder to get to, because that is so important. And that is going to move. My sense of the way, the build up to Paris is so different from the build- up to Copenhagen, six years ago, and I’m quite encouraged. I’m much more optimistic than I was two years ago, about the direction of travel now. The speed still needs to accelerate, but I think there’s a real chance that we are inching our way to the right answer.

CB: So, in Paris, what does success look like?

TY: I think success looks like some pretty substantial offers from the individual countries about their targets. I do think the announcement by President Obama and President Xi, in November in Beijing, was an absolutely historic moment. I mean people haven’t necessarily accepted that, but if you’ve followed the issues as closely as I have for over 20 years, for America to say that, and even more for China to say that, even three years ago would have been unthinkable.

I’ve travelled to China quite a lot in the last ten years, and they actually are driving it quite a bit, but I mean what’s interesting is that in America, Obama is now showing some leadership as well, which he didn’t do in his first term, but he’s been kind of going for it in the last 18 months. And so think that’s a very, very significant change, and that increases that chances of a proper outcome in Paris considerably.

But what it actually means in tangible terms, beyond the individual countries, I’m not sure. I don’t think there’ll be another kind of Kyoto-type all-singing all-dancing treaty, and I don’t think we even need that really. What I would like to see, it something which facilitates the move towards a global cap and trade. The IPCC [Intergovernmental Panel on Climate Change] have set what they think is the limit of safe emissions globally for all time, that’s also a significant thing, that leads naturally to the idea of a global cap and trade. You set the cap and, of course, if you have that, and it’s enforced properly, all the other policies then become very secondary.

CB: That, of course, has been a holy grail for probably 20 years or so. Realistically, how is a global carbon price or cap and trade system possible?

TY: Well, it’s not going to happen in the next 5 years, but we could be facilitating it. I think firstly we can get a broader acceptance that it is desirable. It has been the holy grail, but very, very few people have subscribed to it seriously. I think the science is getting more and more compelling, I think more countries are accepting it. So, even if Paris said: we think this is a desirable goal and we’re going to try and work towards it in the future, if we have more COPs, I think that would be a good statement to make.

I think that you can say to the countries that have already started emissions trading, which is a growing number, why don’t you try and design your systems in a way that they might become compatible. If the EU became compatible with a national system in China, which they’re going to announce, I’m sure, in the 13th five-year plan, then you’ve got a third of the world’s population, almost half the world’s GDP already covered by it. Now, implementing an effective system in China is going to take time, because obviously they’ve got more problems than we have. The EU system has at least got a degree of integrity in the way it’s operated. It’ll take a while to achieve that in China. But I think if you saw those countries, I mean California’s got theirs, they’re linking with the Canadian provinces, there’ll be other states in the US that’ll have it soon. I think you’ve kind of got critical mass now. And if there was a clear statement, let us try and make these systems compatible so in due course there could be a joint trading platform. I think that sort of thing, gradually you’ll start to see it all emerge.

CB: So, is India now more of a challenge than China?

TY: Well, India is a huge challenge, of course, for several reasons. One is, in population terms, it’s almost as big as China and catching up. Secondly, it’s got an awfully long way to go, I mean even further go to than China. It doesn’t yet quite have the hideous air pollution that is also driving change in China. That’s very fortunate in a way, I mean it’s ghastly for the people living there, but it’s lucky that most of the solutions on air quality also help climate change. And those problems will start to I think emerge in India as well. I think we’ve got a lot to do in India as well, I mean their transport system is hideously dependent on pretty high emission vehicles, they haven’t got the railway system up and running in China. Well, India is a natural for that, but they’ve still got the using the railways that we put down in the 19th century, and they will industrialise quite quickly now I expect, and urbanise, so India we do need to engage. I think the new Indian government, that’s a hopeful step in the right direction. And again of course, India’s got some states which are much more advanced than others in terms of moving towards a low-carbon infrastructure. But we’ve got a lot to do, and I think it’s very important to engage the Indians, and the UK can play a big part in that because of our historical links.

CB: The fifth carbon budget. Can you explain the challenges that lay ahead given the battle over the fourth carbon budget?

TY: Yes. I mean the first thing will be to get the fifth carbon budget set and accepted. I mean I think one of the legitimate claims that the present government has to being the greenest ever is that fact that it accepted the original fourth carbon budget and then after agreeing it, further endorsed it. That was a really important moment last year, and I think the government genuinely deserves credit for that. The fifth carbon budget – the climate change committee has got a very good record so far in what it’s set and obviously I’ve met the new chief executive and I think he’s excellent. I think that trick will be, whoever the government is, to try and get a broader acceptance that you can have a challenging carbon budget, without inhibiting economic growth. We’re getting a bit closer to that, but there’s still a lot of people who see this as somewhat inimical to growth and GDP. It doesn’t have to be. The fifth carbon budget, what are we talking about 2028-2032, there is time for a whole investment cycle in both industries before then, and if people know that’s what’s going to have to happen.

We’ve seen this in the vehicle industry, I mean cars and lorries, dramatically more fuel-efficient than they were 15 years ago, through a process of gradual change, the whole Euro-standards, 4, 5 and 6 and so on, has actually not damaged the motor industry, it’s still flourishing. In a way, if you have gradually tighter standards it actually helps the industry because people have to change their vehicles for newer more efficient ones. And if that happens across the industry as a whole, you can actually show I think now, that you can have a really challenging carbon budget which is not going to destroy the economy.

CB: The third to the fourth was quite a ratchet. The fourth to the fifth is going to have to be another gear change isn’t it?

TY: It is. But people have got to get used to that. In a lot of businesses, you do accept that every year you’re trying to get more out of less, that happens in productivity, in costs. That’s a natural assumption in many industries, and so it should become the same assumption, through a carbon budget cycle, which is a five-year cycle, I think we should just assume that’s what’s going to happen. We know it has to happen. If we’re going to get anywhere near the targets which we’ve set, which are legally binding, I know they’re difficult to actually punish people who are not, but legally binding by 2050, there has to be a huge change. What people I hope will start to understand, is that if Britain remains a pioneer, if we remain a leader, if we’re one of the first countries to successfully decarbonise our economy, that won’t make us poorer, it’ll make us richer, because we’ll be more competitive. By 2032, there may well be quite a substantial carbon price, that may be through taxation, that may be through emissions trading, but I’ll be very surprised if there isn’t quite a high penalty on those companies and industries that have not decarbonised by the 2030s. And the fifth carbon budget needs to be challenging, so that people can start making their plans now. When that budget’s approved in a couple of years time, then industries will say: gosh, we’re eleven of twelve years away from the start of that budget, we’ve really got to change.

CB: The Lib Dems are saying in the run-up to the election that they would go, not just to the Climate Change Act saying 80% by 2050, but let’s go 100%. And you’ve got other people in the UNFCCC tent talking about net-zero by mid-century. Do you think we can actually go even more ambitious than the current Climate Change Act?

TY: I do, I do. I don’t think politically we’d get that through right now, but I think it’s good to talk about it. I would be perfectly happy with that objective myself, but I think as – hopefully, a political realist as well – we’ve got to move people, but there is some constraint on how fast you can do that. But to start talking about it is a good thing to do because, in reality, given how long emissions stay in the atmosphere, the whole world needs to get there. I’ve got grandchildren and they’re going to be alive at the end of this century, and we know that unless we’ve got to that net-zero by mid-century, the danger is that the concentration in the atmosphere will be so great, and for so long, that the cost then will become very expensive, and very disruptive.

CB: The ECC committee website lists, I think, it’s 57 enquiries during this parliament. Which are you most proud of and which do you think has had the most impact?

TY: Well, let me say I’m very proud of the work of the committee as a whole, I think we’ve done a really seriously good job. I think the respect in which we’re held is now pretty wide. Only last week the new commissioner Cañete asked for a private meeting with me. That wasn’t at my request, that was at his request because he really wants to engage. Tomorrow, the French minister Ségolène Royal is coming in for a private meeting at her request, not my request, and I think that shows that we are a really influential committee.

It’s quite hard to pick out an individual report, I think there’s several ones we’ve done really good work on. I think we did very good work on the Energy Bill, which we reported on in draft stage. We then tried to influence it as it went through. We did have some influence, when the final bill was published, the government had changed the bill in some respects, not as many as we wanted, but in some respects, so I think that was quite an achievement.

I think the work that we’ve done on emissions trading is important. We’ve engaged with China quite seriously, we have a close relationship. There’s a picture of me with the governor of Guangdong province there on one of our visits. [Yeo points to a picture on the mantelpiece.] And you know the people who designed the Guangdong provincial carbon trading system, Guangdong, you know, is a province of 100 million people. It would be in the G20 if it was a country. They’ve engaged with us, they’ve been to and fro, we’ve met them several times here, several times there, so I think we’ve had an influence there.

I think the work we did on fracking that we talked about earlier has been important, although, obviously, it’s a controversial subject. I think we’ve done some very important work with consumers on consumer prices. Our recent report on switching and the lack of transparency in the switching sites I think has been important. There’s been quite a serious body of work across several areas of policy and I know from the people I’ve come in to see me – apart from two I’ve mentioned – I get a regular flow of visitors into this office, not just from the UK, but from America, from the Far East, from Africa and so on – they want to talk to us about how their approach to energy and climate change should be evolving, and I think that’s a tribute to the work of the committee. The staff I may say are excellent, but the members have been good, too.

CB: Any regrets?

TY: Well, I’d like us to have done more, obviously. I think that looking back, although we’ve had a high rate of output, maybe we could have driven it even harder at certain stages, because there’s a lot of issues that we haven’t really got into. I mean there’s much more that I’d like to have done on smart technology. The threshold for a lot of work on demand-side response and so on, which I’m a great advocate of. I think it’s hardly exploited at all now. That’s an area we could have done some more on. I think that there are some immediate issues, a variety of things. I think that we probably could have done more just to trumpet what the UK is doing right. I meant the national select committee looks at things that are going wrong. Big increase in investment in low-carbon renewables, for example, I think we could have made a stronger positive case.

What I am interested there, particularly, is about costs. Now we’ve got a whole system of CFDs [Contracts for Difference]. The publication of strike prices is really explaining to people what the costs of different technologies are. Solar will probably be at grid parity, sooner than many will expect. That’s great. Onshore wind is relatively good value for money, but it’s being blocked at the planning system, which is a mistake. We’ve put, I think, too much into some of the expensive ones, offshore wind, the early CFDs – that last bill, the fifth enabling round last year, locked a lot of valuable money from the control framework into quite expensive offshore wind. Now it’s right that we should nurture emerging technologies, and we’ve got natural advantages as a country for offshore wind so it’s good that we’re doing some of it, but we mustn’t use too much of the money. At the same time in the budget, the announcement about tidal lagoons. I want Britain to be a pioneer in researching those kinds of technologies, we just need to be careful about whether it’s actually right to try and commercialise them at scale, if they’re going to cost as much as that seems to. So I think we could have done more on making sure we’re getting good value for money.

CB: It’s well publicised that you’ve got interests in some energy firms. Putting that to one side slightly, if you had – and I asked the same question to Ed Davey a couple of weeks ago –  if you had a nominal £1,000 to invest in a form of domestic energy production – fracking, solar, offshore, onshore, biomass, whatever it might be – what would you put your own money into?

TY: Well, I think I’d put a decent chunk into solar, even now, I mean. Obviously, the strike prices of solar have come down a lot, which is right, but I think solar’s got a terrific future here, and I’ve got no, personally, no financial interests in solar at all. But that’s a great technology and it’s got a lot further to go and will make a very big contribution. I think that’s really good. I think there’s some new ones. One that I have had an interest in – so my committee has never looked at it – is hydrogen fuel cells. I think that’s a really interesting technology because the raw material is a waste product from many businesses. They’re producing hydrogen and they sell it on very cheaply. I think if you convert that cost-effectively into electricity, that’s great, because you can do it completely localised. So, I think I’d back that, well I have backed that anyway, for that reason the committee’s never looked at it. I think, I personally would still look at onshore wind as well. I’d find communities where it is acceptable – I don’t want to put it where people don’t want it – but there are some parts of the UK which are good in terms of their onshore wind resource, where it would be acceptable. And you should say to them: look, we will offer you a really good incentive, if you are happy to have a dozen wind turbines at the end of this village here, we can freeze you electricity prices for the next 25 years, or whatever. So I think that’s a good technology as well.

Most of all I think what I’d want to do is to back two new things. One is the demand-side response, which I think can dramatically alter the pattern of consumption, avoiding the peaks, and the other is storage. I think if we can crack the storage problem, that transforms the market for the intermittent renewables, and that will be such a breakthrough. I think again, one of the areas where there’s been some market failure. We don’t have a system which sufficiently incentivises research into storage, so the government has to push that a bit. But I think those two things, demand-side response and storage would just transform it.

CB: So, do you, given you’ve obviously had critics, there’s been a lot of press about it around your own interests, do you regret having those interests during this five-year period when you’ve been the chair? Has it been a help or hindrance?

TY: Well, I certainly don’t regret it in the sense that my understanding of the issues and the industry has been enormously increased by the fact that I’ve had interests, and you know I’ve mixed with business people all the time. My interests actually are confined to a pretty small number of things, but obviously there has been criticism. I know I’ve done the job much better. Now, I don’t think I’m going to win the argument outside. People will say, if you’re chairing the committee, you shouldn’t do that, and if they change the rules, obviously, my interests were all listed when I was elected on the ballot paper. Every MP who voted for me knew exactly what my interests were five years ago. So, I don’t regret it in that sense at all. Actually, I do regret the fact that the… I think the whole sort of context now is going to make is very hard for MPs in any part of all the policy issues to have outside interests which in any way relate to that. That fact is, when I talk to business people I talk to them in a different way and with a better understanding because I’ve had some direct experience of that, and I think that’s really been valuable to me. But, obviously, you know, I regret the fact that some people don’t like it, and I regret the fact that, you know, I’ve been inhibited from doing some things because of that, that’s the way it is.

CB: Was the ‘greenest government ever’ claim a mistake looking back?

TY: Ha [Laughs]. I don’t think it was a mistake. I think it’s good to set goals like that, and actually because there has never been a particularly green government in this country, I think they can say: well, they are the greenest government ever. I mentioned the carbon budget which I think was really significant, if you look at the growth and the investment in low-carbon renewables, that’s good. Nuclear, although the policy is supported, hasn’t got over the line yet, so that’s not yet quite a tick. I think the big failure’s been on energy efficiency, the Green Deal, which was an excellent concept, you know, very sort of lofty aim, an important one, hasn’t really been, it’s been a failure, I’m afraid. And I think that’s – the government can’t avoid some of the responsibility for that. I think it was over complicated, it wasn’t well-promoted. I think we didn’t quite get as much leadership from DECC at the time as we needed, so that’s been the one sort-of, I’m afraid cross, rather than a tick there. I mean we can still put that right, we need to quite urgently.

But I think to say: ‘we’re going to be the greenest government ever’ was the right thing to say. I think David Cameron is genuinely – he understands the science, he accepts that. I think it was made harder by the fact that the recession turned out to be even worse than – even in 2010 we thought the recovery would come sooner, we’re seeing it now. That’s why I think the next five years, is an opportunity, we haven’t quite got that anxiety. The economic data, the jobs data, the inflation data, the GDP data, all going the right way now. So this is a good moment to really push that, so I want an even greener government in the next five years, and I hope that energy efficiency will be right at the top of the agenda.

CB: Looking ahead to the election, what exactly is the Tories’ energy policy, and how will it feature at the general election?

TY: It’s interesting. I suspect that energy policy will not feature very much at on any of the parties’ agendas. I mean Labour have tried to make it an issue, but flopped, that freeze was a serious mistake. It looked good at the time, it’s one of those things that for a few weeks it was great, and wrong-footed the government, but actually on examination it doesn’t really work and now we can see it would have been a bit of a disaster. So, I don’t think it’s going to be a big election issue.

I think as far as the Conservatives are concerned, we should be clear that, first of all we must confirm our acceptance of the science of climate change. We must say that there will have to continue to be very challenging carbon budgets, we won’t flinch from the consequences. That we do believe that it’s important to have an investment climate which really does make Britain an attractive place to invest in new technology and low-carbon technology, and I’d like to hear that reiterated. I think that’s what the government believes, and actually a lot of what George Osborne’s doing with the Northern Powerhouse. I’m taking this job at Sheffield University after I leave here and where their record of research on engineering is actually second-to-none. I think Britain has the potential to continue to be an absolute leader in the move towards low-carbon technology, and I’d like to hear that as a very clear commitment from the government. This is a government that does understand the importance of sciences and investment in science, and that feeds directly into innovation in energy policy, and implementation. So, I think as long as we have that very, very strong statement about their commitment I think that’s what we expect, and I think that’s what the Conservative Party does believe, and I think that’s what they will say, I certainly hope they will.

CB: Yourself, Greg Barker, Laura Sandys, Charles Hendry – why are so few of the green Tories standing at the next election, and who will be promoting the decarbonisation agenda in the next cohort of Tory MPs?

TY: It’s certainly unfortunate that several of the people who’ve been in the forefront of promoting a greener approach are standing down. Another member of my committee Dan Byles who also has a good understanding of the issues is also standing down. I think in each case there are individual reasons for that. It’s just unfortunate. I hope that there will be replacements. But I can’t list another 5 or 6 people in quite the same way. Zac Goldsmith will still be here, assuming he gets re-elected in Richmond. But, I think, obviously there’ll be another 50 or 60 new conservative MPs, and there may have some green champions there. It hasn’t been easy in as much as I think some of the activists, conservative activists at grassroots, are among the less convinced – if I can put it – about the urgency of dealing with climate change, and, therefore, that doesn’t make it easier for people with a very strong green commitment necessarily to, you know, make a big case for it. And maybe there are others who understand it but who are not yet talking about it very much. I think we have to hope that it will be seen more and more as an economic opportunity, because in that way then you might get people championing it. But I couldn’t hand of heart say: here are five people who will take over the sort-of mantle, I don’t know who they are.

CB: You’ve kind of alluded to it, but what is the problem with climate science, with certain proportion or section of the Conservative Party. You’ve alluded to the grassroots issue, but obviously there’s certain people within your own committee that have pretty firm questions around the science etc. Looking at the Conservative Party as a whole there is a percentage there – I don’t know whether you’d describe it as a significant one or just a minority – but there are people who are openly sceptical about the science?

TY: Yes, there are. But it is a minority. I think the majority accept it and will support further and more urgent action. I think it’s partly about the age profile. I think in the Conservative Party, perhaps slightly more than the other main parties, UKIP as well, but more than either the Labour or Liberal Democrat ones, there’s a very strong representation of older people, of, I have to say it, of older, white males, actually. Because that’s the group who seem to have the most difficulty in understanding the science and accepting the urgency of the case. So, it’s just that that group is a bit more strongly represented. But I think, I mean you know, to be brutal, they’re going to die off. Very few people under the age of 40 now, I think, seriously question the science, and that group is gradually taking over. So, although it’s a frustration, I’m not too alarmed about it, I think it will deal with itself naturally.

CB: That may be a link into the next question – you can decide that. The enquiry into the IPCC’s Fifth Assessment Report AR5: why did it only focus on Working Group 1? At the time, it seemed odd not to have waited until working group 2, 3 and the Synthesis Report were finished. Why did it sort of jump the gun and go straight at Working Group 1 like that?

TY: Well, I think we wanted to do something about the Fifth Assessment Report quickly and so that was the material that was available when we did the enquiry. But, you’re right, we could have gone back to it, and, in an ideal world, I think we would have gone back to it, although it was probably the subject on which the committee was most deeply divided. I think we had longer debates about that report and more divisions – most of our reports have been agreed pretty much by consensus. But we, obviously, had two members who felt very strongly about that..

CB: That was [Peter] Lilley and [Graham] Stringer?

TY: Exactly, yeah. And that’s all public record because we published the votes. Which I guess was a slight disincentive to go back and have another look. But, you’re right, I mean it would have been logical once the whole 5AR was completely in the public domain for us to have gone back to it. I would liked to have done so, because I think it’s terrifically important, and that offer is the kind of source document for the next few years…

CB: From memory, you weren’t chair at the time when that was decided upon. What is the story about why, do you know, the nuts and bolts of whether you were away from that decision-making, presumably you weren’t chairing it at that point?

TY: I was, but that wouldn’t stop us going back. We review our forward program on a fairly regular basis, at least once every three months we look ahead and decide. Of course, it’s possible, I mean preparatory work is done by the staff, you can change the priorities quite easily and quickly. I mean I work very closely with the staff and then with the committee as a whole about what our forward-program has been at all times. So, I think you’re right, the decision at the time was when I was away from the committee. I still take responsibility for our programme over the last 12 months and looking back perhaps we should have given that great priority, because it is very important.

One of the things we tried to do when we were setting the committee’s agenda is look at areas where we thought we might have an impact. Although, intellectually, it’s sometimes interesting to look at a subject, the purpose of doing so is a bit less, if we judge in advance that what we say is not going to change things very much. If there’s something you can change and something you can’t change, I think it’s natural to say: well, let’s go for the one that we can change. And I think we maybe thought we’d had such a – not exactly a blazing row – but we had a pretty long and deep and sometimes rather divisive internal debate about that report. And I think some us thought, well, if we go back and do another one we’re going to have to go around the same track again. We could have said some useful stuff. I think the good thing about the Fifth Assessment Report is that is was quite widely debated, people did discuss it, and I think the people in government, business, thinktanks, and the academic world, obviously, there was a pretty strong consensus about it anyway.

CB: What would exiting the EU mean for the UK’s decarbonisation? Would a UK outside the EU be more or less ambitious on climate? And, equally, would the EU without the UK be more or less ambitious on climate?

TY: Well, that’s a very interesting question. Personally, I hope that the situation won’t arise. I’m a very strong believer that we’re better off in than out and I think that our influence on the EU, on this and many other matters, is a benign one. A lot of my friends in the other EU countries say that they’d be really alarmed if Britain wasn’t part of it. Given we have got quite ambitious targets set domestically, I don’t think it should have too much of a damaging effect on our own approach. I think that, indeed, in some respects, we might even go further and faster. We could have our own – first of all we might chose to remain a member of the EU ETS even if we’re outside the EU. You don’t have to be a member to be part of the EU ETS. I think it would be a pity if we exited that as well. But I do think on most issues we’ve been an influence for good inside the EU. In the latest, they’ve set a 40% target for 2030. Undoubtedly, we’ve been one the voices which was on the side of the angels there, and I think other people recognise that. So, I think it might weaken the EU’s commitment a bit, not much, I think they’d be able to get there. There’s quite a strong understanding there, I was really encouraged by the conversation I had about ten days ago with commissioner Cañete who I’d not met before, but seemed to have a very good understanding of the issues, and has really engaged with them. I think there was a bit of a hiccup when he was nominated and Parliament made bit of a fuss, but, actually, on the evidence I had, which was a long, private meeting, I was pleased about that. But I think even so, it would help people like him and others in the commission if Britain remained a member and was arguing for faster progress, tougher targets, more effective ETS and so on. So, I think the EU might be slightly weakened, I don’t think the UK necessarily would but we have got this very strong science base. We were one of the countries that understand the issues sooner than any other. I mean when I was first involved in this debate back in 1993, at that time we were undoubtedly up we were right up there among the leader in the whole world and we’re still pretty near there, because of our strong scientific base.

CB: Falling oil prices. What will be the impact of that on decarbonisation, globally?

TY: Well, in the short term, it doesn’t help, because there’s less incentive to be more energy efficient. Consumption of oil will slightly increase and there’s an economic benefit from that, also in the short-term, growth will probably be a bit faster. But I think in the long-term, the effect is fairly small. I think even the oil industry, most of it understands what’s going to happen. Oil will remain an important transport fuel for quite some time to come. We don’t use it any longer to generate electricity in any meaningful amounts. But it’s hard we’re nowhere near not having aeroplanes that are powered by oil. I think that’s a long way off. Surface transport can decarbonise, will do so. But you’ve got to remember electricity, if we’ve got electric vehicles, there’s a slight benefit in terms of air quality in cities, but unless the electricity itself is generated from a low-carbon source it does nothing for global emissions. It can actually make them worse. If you switch to electric cars, and you’re burning more coal, that actually is not a good thing to do. So, it’s not a given. I think there will be a move, and countries like China which is very worried about their import dependency for oil, I think will be in the lead about the switch to electric vehicles, so that’s also enough for air quality reasons. But I think oil has still got, a bit like gas, has got an important role to play in the next 20 years. I think the oil companies themselves are now looking at – Shell have got this very impressive look ahead programme, it’s not called look ahead, but you know their scenarios…

CB: [ New Lens] scenarios? “Land”, “Ocean”?

TY: Yes. It’s quite impressive that. And BP have got quite an impressive programme, too. And I think if you talk to people, I mean Nick Butler, for example, who used to be at BP has a very good understanding of what the long-term things are.

CB: But saying that, they noticeably don’t, or can’t, or won’t produce a sub-2C scenario. Shell certainly don’t.

TY: No. But, nevertheless, they’re not sub-two degrees, but they are aiming for two degrees. I think that their assumption is, well, they recognise, like anyone else, who’s looked ahead, it’s going to be quite hard to get to two degrees. Already we’re on a pathway to much more than two degrees.

CB: Well, they bet the house on CCS, basically, don’t they? If you look at their scenarios, they say, without CCS, we’re cooked, is pretty much their message.

TY: Yes. Well, I mean, if we don’t have CCS we’ve got to do some pretty extraordinary things with the rest of the industrial world. So, a lot depends on that, and one of the things I’m disappointed by, is that the private sector’s not doing more in terms of research. The British government’s put some money in, I mean not as much as we hoped it was going to be five years ago, we have got quite a big commitment. The Chinese are doing a lot on CCS, I’ve got a self-interest. My committee has worked on it, I’ve visited some of the CCS projects in China. And other countries, as well. But, it’s true, without CCS, there is a huge problem and I think that Shell are realistic to acknowledge that.

CB: Hinkley. Is it value for money?

TY: Um. Well, it is only if it leads on to some lower costs in the future. Hinkley by itself, Hinkley as a one-off, is not terribly good value for money and we know that because the price is quite high. But if you haven’t built a nuclear power station for over 20 years, and you’re insisting it’s done by the private sector, you’ve got to pay. And if Hinkley is the first of  a series then it could become value for money and, therefore, maybe an essential step. I do think nuclear, like the renewables, is an area where we need to focus on costs much more, because if the world has a revival of nuclear power, which in some places looks very likely, the Chinese are building, the Koreans are building, and not just in Korea, and several EU countries including us are also keen to build, I mean some of the Eastern Central European countries are quite far advanced. If you can get volume then you should be able to reduce costs significantly, and I think, because of our strong history of innovation in this country, we’ve often gone for first-of-a-kind technologies, which is exciting and can be beneficial. But in the short-term, it’s going to be expensive. Maybe, if we want to get better value for money, we should say: we won’t be proud, we don’t have to the first, let’s look at a technology which has been tried and tested somewhere else and buy it in volume. That may be one thing.

The other thing I’ve suggested recently, and I believe this very strongly, is because the UK has this fantastic credit rating, you we can borrow more GB than almost any other borrower in the world, and because the construction period is so long in a nuclear power station the cost of capital during that five or six years is a significant part of the final cost of the power. And if we said, OK, if the government can find a way with the bankers of deciding how to share the risk, if we said if the government would fund the construction, and so during the period until it becomes operational the government would be the borrower, and then hand it over, it’s kind of a turnkey thing, well, here you are, let’s sell it to EDF for £10 billion quid or something, actually you can reduce the cost that way as well simply by using the credit rating, that we can borrow so much more cheaply than any commercial company can.

CB: Consumption-based emissions reporting. Is the UK’s success around decarbonisation, as some people describe it, is that due to outsourcing of emissions?

TY: Well, part of is clearly is. I mean we did a report on this a couple of years ago and there was another one last week, it came out and got all the publicity. Yes. I mean I think that we must be completely transparent about this. Compared with 1990 a lot of the high-emitting industries are now in other countries. We’ve done a bit on our own as well, but a significant part of our reduction since then has been due to that. And we are quite open about it. The government argued with the committee at the time and I think I understand this, to try and shift to a new international basis, when the new international negotiations are all predicated on the other basis, would not be a smart thing to do, and I can see that.

But I think we should go on making the measurement and being very transparent about what impact it has, there’s nothing wrong with industries moving around the world to where they can be most efficient, and it’s created a lot of jobs in Asia and so on, which is good. A lot of the wealth of poorer people in China is the direct result of industries moving from western Europe to China, and we shouldn’t regret that, but we should be honest about what it actually means, and I’d like to see as much attention in this country paid to the consumption measurement as to the production measurement.

CB: Are we too reliant on biomass in our renewables mix, and do we know enough about its climate impact and sustainability criteria?

TY: Well, we certainly are relying to a significant degree on biomass, and it is true that the net impact of biomass is not always as it seems superficially, and I think the government’s recognised that. I mean there’s that other power station that was going to – Eggborough. I think, wasn’t it? – was going to get support and then it didn’t in the end. So, I think we’ve started to understand, the important thing in my view is to look, holistically, at what he impact of different technologies are and if you’re importing woodchip from America or something like that, you’ve got to look at what that means through the whole supply chain. It may not be quite as big a benefit as some people think. There is an important role for biomass, but we need to be absolutely objective about what the effects are, and only support it where there is a clear benefit.

CB: The Treasury and other departments talk about “maximising the economic recovery of the North Sea”. Is that compatible with our climate targets?

TY: I think it is. I think, again, it’s about where you source your oil and gas from. Whether we help the North Sea by cutting the tax rates, I think will have absolutely zero impact on the amount of petrol people keep using in their cars. We’re going to go on driving our cars, no matter what. Even though we’ve got very high taxes, we still do it. We must go on driving towards making cars more efficient and so on. So, I think it’s right. I’m a great believer in the UK using its own resources, and the North Sea companies have had a tax regime which is, I mean, it’s not penal, but we’ve taken a lot of tax out of it. I mean the tragedy is 40 years ago, we didn’t say, we’ll set up a sovereign wealth fund in the way that the Norwegians did, we could have built up quite a valuable reserve in that way. But I think now it is right to try and help those companies get the most that they can out of the available reserves in the UK waters. So, I support that. And you know, as we’ve said earlier, it will not be – if we want to achieve the targets by mid-century – the consumption of oil and gas is going to fall dramatically. But I don’t think extracting a bit more in the next five years, where otherwise we would just be importing, I don’t think it makes any difference really.

CB: Is the so-called so-called “Green crap” narrative over now?

TY: I think it was always a bit sort of overblown really. It was a phrase – well, I’ve got a shrewd idea where it originated, it wasn’t the Prime Minister personally – but, I think there was, perhaps, a misplaced emphasis on what savings for consumers could be made, by cutting out some of the support we’ve given. A lot of it actually was for energy efficiency, and for the fuel-poor. The actual cost to consumers of supporting low-carbon is now capped anyway through the levy-control framework. It’s not that great. I mean what you can do in terms of improving competition, particularly in transmission and distribution, would have a much bigger beneficial impact on prices than eliminating the so-called “Green Crap”. But I think it was a phrase which caught the mood at the time a couple of years ago, and I don’t think it’s on the agenda now. I mean look at what the Treasury’s done, what Matt Hancock’s done at DECC and so on. Matt gave a speech at policy exchange three or four weeks ago, he was absolutely unequivocal in his acceptance of the need for continued and rapid transition towards low-carbon technology, and recognised that has to have some support from consumers, as well as from taxpayers. So, I’m not concerned about that in the way that, briefly, I was a couple of years ago.

CB: And, finally, what next for you after the election? You’ve mentioned your role at Sheffield University, and you’ve got other interests, or it is more time on the golf course, or what?

TY: Interestingly, well, if I’d retired 15 years ago it would have been much more time golf course. When I was in my 50s I was quite a good golfer, for a long time I was the only single-figure handicapper in the House of Commons and I used to win a lot of competitions, I am a member of the Royal and Ancient in Scotland, I belong to two very nice clubs near London, so then I would have done. As you get older I find, first of all I can’t play as well as I used to which is frustrating. Secondly, I’m a much more fair-weather golfer, you know muscles don’t recover quite well to bitterly cold and wet days. So, it’ll mean a bit more time of the golf course – I’m hoping to work probably about a four-day week. I wouldn’t mind taking Fridays off most weeks.

CB: So, what is the role at Sheffield? Will that take up the bulk of the time?

TY: No, it doesn’t. No, it’s a part-time role. I’m chairing their advisory board for – they call it Energy 2050. It’s a very good initiative. But that’ll be a day a month, really. I’ve got two board jobs, really. I’m on the board of Eurotunnel, which is now a very successful company, and it’s a low-carbon transport company, trains. So, I’m continuing with that. Most of my meeting are in Paris. I chair fuel-cell company. I’ve done that for quite a long time, and will continue to do that. We’re, I think, quite close to a breakthrough there, we’ve just published the report so there’s no insider information there, we’ve got the AGM in a couple of weeks time. And I want to do some work on things like demand-side response, that’s really interesting. I shall do some consultancy, people are keen, I’ll help them with their investment and so on. So, that will take up the rest of the time between those jobs. I’ve got about four or five things I want to do. And I’m talking to one or two other people as well, so we’ll see what comes along, I think. I’m kind of relaxed about it really, but it’s so interesting. I want to stay in the policy space if I can. One of the things I’m trying to do, pro bono, is help to promote global emissions trading. I think that’s really important and I’ve talked to one or two people at the World Bank and IETA [International Emissions Trading Association] and so on, and some of the big companies that are interested. I think a sort-of roving ambassadorial role promoting a move towards global cap and trade is something that could be quite important. So, I’d like to do that. So, that’s the kind of spread of things. But I mean energy is such an interesting industry and climate change is by far the most important policy issue in the first half of the 21st century. I’ve been lucky to have been closely involved for quite a long time. I know I have such a good network, it’s difficult to see how I’m going to disengage from that suddenly. But obviously, you know, the nature of the role will change.

CB: OK, thank you very much.

TY: Great, great.

Main image: Film camera.

(The interview was conducted by Leo Hickman on 23 March 2015 at 1 Parliament Street, London.)

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