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Appendix A
Environment Committee
28 February 2006
Item 4 – London Climate Change Agency
Darren Johnson (Chair): Okay. On to the main item of business, which is the
London Climate Change Agency (LCCA). We are going to start, I believe, with a
brief presentation. Nicky (Gavron), are you going to start?
Nicky Gavron (Deputy Mayor and London-wide AM): Yes. Is that all right?
Darren Johnson (Chair): That is fine.
Nicky Gavron (Deputy Mayor and London-wide AM): I have just a short piece
about why we set up a climate change agency just to give a bit of context. You all
have a very detailed paper. I am just going to outline some of the background.
Clearly, climate change is the biggest challenge facing us, and time is very short. I
am not going to go into all the detail; there has been plenty of scientific evidence to
show you that. Cities have a very special responsibility, partly managing who lives in
cities – soon about 80% of people are going to live in cities – and they consume a
huge amount of energy; London, for instance, consumes as much energy as a
country like Portugal or Greece. Cities are very vulnerable to climate change. They
also have the opportunity to act, and, to give a couple of reasons why: because of
the concentration of transport and because of the concentration of buildings.
The Government has set us some very high targets, with 20% by 2010 and 60% by
2050. The Mayor has agreed these Government targets in the Energy Strategy.
They are particularly daunting for London because we have population increase and
a services economy. Transport is 20% of carbon dioxide (CO2) emissions, and there
has been some progress with modal shift; Congestion Charging has done a lot to
bring down CO2, but just within the zone; and we are looking at low-carbon
technologies in terms of public transport vehicles. However, the power, heating and
cooling of buildings is responsible for 70% of London’s total CO2, so the scale of the
task in London is huge.
Public investment alone could not deliver this, and we need to accelerate delivery.
The market will drive low-carbon technologies, but we cannot afford to wait. They
are market failures, and business has told us – and this is part of all the research
going into forming the LCCA and the model that we have – business tells us that if
we want to give them the confidence to accelerate the process, we have to come in
with public action and political leadership, which is why our approach to the model of
the Agency we have chosen is one which emphasises the joint role of business and
political leadership. This is a really vital point about the LCCA. The Mayor cannot
meet these targets alone; you have to have a very strong partnership with the
business community in order to deliver these CO2 targets. That is not to say the
voluntary sector, the community sector and all of us personally, professionally and
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politically are not also very important, but I just wanted to emphasise the leadership,
political and business together. We want to catalyse others to act, especially in the
areas of renewables and trigeneration, which is combined heat, power and cooling.
The LCCA will be a not-for-distributed-profit municipal company, with its shares
wholly owned by the London Development Agency (LDA). In the early start-up years
of the Agency, support is bring sought from private sector companies; this is for the
first five- to ten-year period. We are very grateful for the philanthropic and
sponsorship support from the founders, global companies including BP and Lafarge,
as well as top UK companies Legal & General, McAlpine, and Johnson Matthey. We
have also had welcome support from the Corporation of London, the Carbon Trust,
the Energy Saving Trust, and the Rockefeller Brothers Fund.
The municipal company will set up and take a minority stake in a public-private joint
venture, London Energy Services Company. Its remit will be to reduce greenhouse
gas emissions. This means it will tackle the CO2-related aspects of energy, water,
waste and transport, which is, effectively, London’s environmental infrastructure. We
are concentrating on what I call the big CO2 hits, from new build, large regeneration
projects, clusters of existing commercial buildings and big institutions, including
public buildings. Of course, we have to set an example ourselves, and we have a lot
of public buildings. Wherever possible, we will also be retrofitting in the adjacent
neighbourhood because, of course, we need to do the existing buildings as much as
we can.
Combined heat and power (CHP) and cooling are important; we are talking about
locally generated, decentralised energy using the heat load and reducing emissions.
I am going to leave it to Allan (Jones) to expand on why this is so effective in terms
of CO2 reduction. He will give further details about how we envisage the partnership
working in practice.
There are going to be more details announced in the coming weeks, and I am sorry
about the timing about this today. If it had been a week or two later, we would have
been able to say much more than we can today. I am just going to make two further
preliminary points.
Planning is one of our main public policy levers because it guides public and private
investment. The Mayor has direct influence through the London Plan, through
strategic planning applications referred to him, and through the conformity of
borough plans. The aim of the Agency at one level is to complement planning work
by having a dedicated agency which can show by doing. At the moment, the London
Plan asks for trigeneration, renewables, etc., and asks people to meet our targets
‘where feasible’, as it says in the Plan. Developers come and say to us, ‘We would
like, Mayor, to meet your targets’. However, people say it is just not commercially
viable. In fact, what we would be able to do with the Agency is show that it is
commercially viable.
The second point I would like to make is about partnership relationships. These are
crucial bridges with stakeholders, and the interrelationship of the work is very
important. I am talking now about the Energy Partnership, the Climate Change
Partnership and the Hydrogen Partnership. They are complementary, and the
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synergy between them will become more evident as the LCCA’s work develops. The
LCCA is represented on all three partnerships and has a close working relationship
with all of them. I am chair of the Hydrogen Partnership; Gerry Archer, Chair of the
Climate Change Partnership, is also on the shadow board and will be on the board
when the LCCA is incorporated. There is a Memorandum of Understanding setting
out the relationship between the London Energy Partnership and the LCCA, between
which there has been very close working.
What have we done so far? We have scoped out the model for the LCCA. We have
recruited Allan Jones from Woking as the Chief Development Officer. We have
entered into a six-month exchange of expertise with the Toronto Atmospheric Fund,
bringing over the director, Philip Jessup, working on a range of scoping for early
projects around carbon accounting with the functional bodies and energy efficiency
in the domestic sector. We have identified and secured commitments from the LDA
board and the founding supporters, and we launched the LCCA last June. We have
established the shadow Board and we are about to incorporate the company and set
up the new Board. We have begun discussions with key stakeholders on projects,
and we have announced some initial LCCA projects. Allan (Jones) will give more
details on these. We have initiated the London ESCO process. Again, Allan (Jones)
will talk about that. We have worked with the London Energy Partnership, the Design
Council and the Department for Environment, Food and Rural Affairs (Defra), with
support from the Energy Saving Trust, on a deep-service model of domestic energy
efficiency, and a pilot has been worked out. We have also initiated relationships
between large world cities to tackle climate change through the C20 initiative
launched last October. That is looking at how cities can work together to raise their
game; to set higher differential targets, depending on whether it is a developing
country/city or a developed country/city; and also to set up study tours to really
accelerate action and to set up procurement alliances. The next city summit is going
to be in New York and is very much about cities working with businesses and
working closely with their national governments to get their national governments to
empower the cities.
Darren Johnson (Chair): Thank you, Nicky (Gavron). We will hand over to Allan
(Jones).
Allan Jones MBE (Chief Development Officer, LCCA): Thank you, Chairman. As
the model has been mentioned, just a brief background on Woking and what was
achieved there. If we can achieve that in London, we would be really home and dry,
we think.
The work in Woking started with submission of a report on global warming that I
submitted way back in 1990, two years before the Rio Earth Summit, so it is fair to
say that none of the Council had actually heard of the term at that time. The other
interesting thing about Woking is that it received cross-party political support. It was
a hung council that traditionally swung from Conservative to Lib Dem with Labour
sitting in the middle, and right throughout the period of achievement, the political
support from all three parties remained strong and firm.
From that initial beginning, we established an energy efficiency revolving fund – you
will hear me mention this later in relation to the LCCA – which at the time we did not
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think was rocket science; it was simply a practical financial means of achieving a
programme. A capital fund was established, and the fundamental difference was
that the revenue savings from the investment in energy efficiency projects, rather
than being done on a project-by-project basis, was done on a programme basis, and
the revenue savings were ploughed back into the capital fund, and the revenue
budgets were not reduced. That enabled a significant investment from an initial
capital fund of £250,000, bearing in mind the size of Woking, which has a population
of 100,000, that enabled several million pounds to be invested from that initial sum,
and indeed went on to capitalise the public-private joint venture ESCO company, as
well.
Right from the very early days in 1992, combined heat and power trigeneration using
private wire was implemented. Private wire enables the true value of these green
technologies to be extracted. Most people are unaware that most of the cost of our
electricity bill is not actually electricity; it is all the transmission and distribution losses
and the use of system charges, and only a small fraction of a domestic household’s
electricity bill is actually electricity. The trading system just regards CHP and
renewable energy as if it was a coal-fired power station in the Midlands, so it has all
those charges added to it. The one big advantage it has is lost as soon as it
supplies the Grid. Fundamentally we just put our own network in, and so we were
able to supply residential and non-residential customers with green energy at a lower
price than brown energy. Those economics are what funded the technologies in the
first place.
That also enabled us to tackle fuel poverty. We were able to supply residential
households regardless of their status that were in fuel poverty for something like 67% of the state pension income for both their heat and electricity, and that compares
with the Government’s affordable warmth criteria, which is for heat only, at 10% of all
income. That made a fundamental difference politically and was one of the reasons
why we had cross-party political support.
We then moved on, recognising that however clever we thought we were in
delivering this we were limited by the size of the authority and by central Government
capital controls, which affected all local authorities. We set about forming our own
public-private join venture company with the private sector, and, in order to do so, we
established a wholly-owned or municipal company, Thameswey Ltd, which is an
energy and environmental services company, and that invested into a public-private
joint venture company. That delivered even bigger projects. Now, they also set up a
separate recycling fund within that, so the return on investment for shareholders –
we had no shareholders to return profits to – that was reinvested in these ultra-low
green technologies, like renewable energy. In a period of three years, from a
position of having no renewable energy, Woking now has 10% of total UK installed
photovoltaic capacity. It is also the first and still the only location of a large-scale
combined fuel cell combined heat and power system. That was financed by that
way.
In terms of reductions, energy consumption was reduced by 48.5% since 1990; CO 2
emissions by 77.5%; and water consumption was reduced by 43%. The borough as
a whole, taking into account the activities in the private sector as well as the public
sector through the Thameswey vehicle, emissions were reduced from 1990 levels by
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17.25%. That is in excess of the 1% per year that you need to achieve the Royal
Commission on Environmental Pollution‘s target of 60% reduction by 2050.
It is that model that attracted the Mayor; I understand he looked all around the world
– Nicky (Gavron) knows more about this than me – and they alighted on this model.
Obviously London is a bit different from Woking, but they are central features of what
we are implementing here, not least that London is about 74 times the size of
Woking in population terms. In the first year, we have been establishing the LCCA
as a municipal company dealing with the climate change aspects of energy, water,
waste and transport. Energy is an obvious one, but water perhaps less obvious, until
you realise that water is responsible for greater CO2 emissions than a city’s street
and public lighting through the pumping, sewage treatment and so on. Also, 50% of
the UK’s water resources are used to evaporate the wasted heat and centralised
power generation cooling towers. If we save energy, we also save water, and it is
becoming an increasing issue for us in London. Waste is an issue that needs to be
resolved, in any event, but the potential for waste in not only maximising recycling
achievement, but also dealing with the residual waste, can be converted through
renewable energy by non-combustion processes using new technologies. That can
provide a significant renewable energy resource or, indeed, a renewable hydrogen
energy resource. Transport, again, is another form of energy, and we need to find
ways to have lower carbon, and eventually zero carbon, fuels for transport, and this
is where we see a link between the hydrogen economy and new renewable energy.
Early projects include carbon accounting. This is based on the ICLEI (International
Council for of Local Environmental Initiatives) model. We had a secondment from
Toronto for six months and we have done a lot of work internationally in looking at a
carbon accounting system that other cities around the world were using. Now, we
are seeking to rationalise that across the GLA group so that we are all singing from
the same hymn sheet so that when future reports come to a committee like this, we
know that has been based on a recognised international carbon accounting system.
There are also early projects and studies into housing and the impact the Mayor
could have on changes to powers that would enable greater energy efficiency,
renewable energy, tackling fuel poverty and what difference that could make in
London. We are also working with the London Energy Partnership on a deepservice model, so really going into some selective households, particularly the fuel
rich or able-to-pay sector, to see what could actually be achieved in really tackling
climate change in a difficult part of housing.
We have also done some early work on the Better Buildings Partnership, which is
something that was developed in Toronto, similar to the public sector except applied
to the private sector. It is a process of identifying the largest 20 energy consumers in
London so that we can come up with our own version of the Better Buildings
Partnership to actually tackle private sector emissions, particularly in existing
developments.
Other projects we have been working on, which I think are mentioned in the report,
include City Hall PV, Palestra (the new LDA building) PV and building integrated
wind turbines, and the London Transport Museum PV. More recently, on Dagenham
Dock we have just commissioned a detailed commercial feasibility study for large-
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scale wind generation - an LDA development. We are now beginning to look at LDA
development sites and factoring in right at the outset renewable energy that complies
with the Mayor’s Energy Strategy and the London Plan.
I will not go into too much detail on founding support as Nicky has already mentioned
that. The procurement process for the London ESCO was completed at the end of
January. We are currently at the evaluation stage and will be making a
recommendation to the LCCA board for the private sector partner. Subject to their
approval, we are seeking to form that public-private joint venture energy services
company by about the end of April. The negotiating process takes us partway down
the completion of the agreements in the first stage, and so that is the next step.
Subject to the board’s approval, we will be moving forward with that.
The procurement process has also thrown up a number of other opportunities,
particularly in water – so there may well be a move forward on doing something with
sustainable water resources – and also on hydrogen and fuel cells. We have had
specific proposals as part of the procurement process that may well assist other
aspects of the Mayor’s Energy Strategy.
The London ESCO itself, the people that bid for this, are major utilities and energy
companies, some of them international companies. That just demonstrates that
Woking was watched by the large energy companies, but Woking itself was not big
enough to bring them in as private sector partners, which is why they had a Danish
partner. However, London is a different kettle of fish, and that is what has brought
the people out of the woodwork. They can now see that if the Woking model is
developed in London, it provides a significant commercial backdrop to achieve the
Mayor’s energy targets, as well as the LDA’s economic development targets, for a
normal commercial process rather than, as is perceived at the moment, that a lot of
public sector money is needed to make things like renewable energy and fuel cells
work.
I will stop there. I am happy to answer questions. You have a report from me that
has been submitted to members.
Darren Johnson (Chair): Thank you. We also have Robert Taylor, the interim
director of the LCCA, here. We are going to look at the setup issues first. Obviously
the Mayor and Nicky have looked around the world and the Woking model has been
held up as being the best. What are the main barriers to replicating the Woking
model for a little district council somewhere for the whole of London?
Allan Jones MBE (Chief Development Officer, LCCA): You have the usual
political barriers and things, so the only way that you can make something like this
work is an alignment at the highest level of the political make-up of the organisation.
That happened in Woking. I also think cross-party political support is important
because I think climate change and the environment generally is a politically neutral
area. I am sure that certainly in Woking, it actually ended up in the election
manifestos of all three political parties in terms of doing more than what the others
were, which was fine because we wanted to stimulate that competition between the
political parties.
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I think the main barriers are regulatory barriers, though not on non-residential
buildings because the rules that apply there are the same, however big the city is.
However, the rules that apply to the domestic sector, particularly on private wire
cogeneration schemes, limits individual projects to about 1,000 households. Now,
that is fine for new developments because developers are typically building 250 or
500 units, so you can do that on a phased basis, but it does present a severe barrier
with the existing housing stock. I can just quote one site that we are looking at in
Thamesmead of 60,000 households. Following the Government’s rules at the
moment, we would have to have 60 CHP sites instead of two or three, and that just
makes economic nonsense of the approach. These are regulatory rules that were
set in place in the late 1940s, which were really there for coal-fired power stations
and the National Grid, and they have never been properly revised to enable this new
technology. I do compare this to the equivalent of, say, mobile telephones to
landline telephones; it is a completely different technology and needs a completely
different set of regulatory rules. As yet, the central Government has not recognised
that. We are making use of the exempt licensing rules and we –
Darren Johnson (Chair): Do you think you have the muscle to overcome red tape
and get around these regulations?
Allan Jones MBE (Chief Development Officer, LCCA): You will not be surprised
that there is political push, indeed from all political parties, and not just here in
London, to actually get those rules changed because this is how we see the future.
By far the biggest emissions come from centralised power stations. When you think
about 70% of the energy is evaporated up into the sky and another 9% is lost across
the National Grid, you only get 21% of the energy by the time it gets to your front
door, and then you burn another load of energy to heat your home or to cool your
building. This clearly does not make a lot of sense when you are faced with climate
change, which is probably the biggest threat facing this planet that mankind has
seen.
So, with the stroke of a pen, a lot of these issues could be resolved, and that is the
area where we are trying, if you like, to educate politicians, because it is difficult
educating civil servants in the particular area because they just want to carry on with
the same thing that they have always been comfortable with. I do not know how
much Nicky wants to say about this, but there is obviously a push to actually get
these rules changed so that we can encourage the take-up of these new
technologies, not just for the LCCA, but for all those companies that want to enter
this market. That is what we would like to see. If we could turn the green energy
market into a competitive market, then these things would be much easier to
implement.
Nicky Gavron (Deputy Mayor and London-wide AM): I would just like to add one
thing there, if I might. I do not want people to think that decentralised energy does
not complement the Grid. I went to the international conference on decentralised
energy recently and discovered there that a lot of the utilities present welcomed
decentralised energy as being a way of complementing the Grid, particularly as the
Grid gets overloaded in the summer with heat changing from winter to summer
because air conditioning is needed much more now, which they have not anticipated,
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and so you get higher loads. The way decentralised energy works is that it can
complement the Grid.
Allan will explain this better than I can, but there is another barrier that could well be
a problem in terms of plans for microgeneration for individual houses, as well as
CHP factoring in renewables. When you want to trade with the Grid and sell your
surplus back to the Grid, you do not get a very competitive price. Allan can explain
that more.
Allan Jones MBE (Chief Development Officer, LCCA): You do not get a price at
all. It is just donated to the Grid because no one buys it from you.
Darren Johnson (Chair): We have actually looked into this and made
recommendations.
Allan Jones MBE (Chief Development Officer, LCCA): I think the issue there is
that it is just perhaps an issue that you did not actually consider because it was not
available to you. That is that the way to get a second market, which is the big
owner-occupier market. Most of those are unlikely to put their hand in their pocket
and spend £3,500 on a domestic CHP system. ESCO would be interested in that
market if they could write it down over a long period of time, and that is the issue.
These are more expensive technologies. In other words, it is a bit like how you sign
up for the internet or something. You have a long-term contract, you get some kit
that goes with it, but you do not buy or own it; that is how that service is delivered to
you. That is severely limited by the 28-day rule when you look at the Grid issue, and
I am sure you looked at the metering issue. There is a huge potential market out
there for microgeneration through the owner-occupier sector, which is currently
prohibited by Government regulation.
Darren Johnson (Chair): Just a few questions about the structure. You have
talked about the LCCA, and in your paper you have also referred to the LCCA Ltd
and the ESCO. Can you briefly set out the distinction between the three separate
bodies?
Allan Jones MBE (Chief Development Officer, LCCA): The LCCA is where we
are at at the moment; this is its set-up phase. That will be replaced by the LCCA Ltd
as the municipal company. That is 100% owned by the LDA, but is led by the Mayor.
The London ESCO is the public-private joint venture company. The ownership there
is 19% LCCA and 81% with a private sector partner; that is to keep that within the
Local Authorities (Companies) Order. Essentially, those are the three different levels.
Darren Johnson (Chair): Okay. Are there work plans for each of these three
bodies over the next few years? Will they be made available to the public?
Allan Jones MBE (Chief Development Officer, LCCA): The work plan was
originally established with the LCCA as it is, and that is the five-year programme, for
which you have the details in your report. That basically morphs from the LCCA as it
is at the moment – if you like, a department of the LDA – into the municipal
company.
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Darren Johnson (Chair): The business plan of the LCCA Ltd was approved last
November. Are there plans to publish that and put that in the public domain?
Allan Jones MBE (Chief Development Officer, LCCA): It is probably not for me to
say, but as far as company documents are concerned, there is much that can be
obtained from the Companies House, in any event. I’m not sure about the business
plan. Robert (Taylor), can you answer that?
Robert Taylor (Interim Director, LCCA): I was not informed that it was going to be
made available in the public domain. It will not be available through normal company
documents. The only documents that are registered at Companies House will be the
Articles and Memorandum of Association, not the business plan. If somebody wants
the business plan, I presume they can ask for it under the Freedom of Information
Act, but I did not think it was going to be put in the public domain.
Darren Johnson (Chair): Are there are any problems with putting it in the public
domain and with letting the Committee see it, Nicky (Gavron)?
Nicky Gavron (Deputy Mayor and London-wide AM): I do not know. I was just
thinking a quite similar document went to the LDA board in the summer; I cannot
remember exactly which month, but it was one of the part one documents to the LDA
board.
Allan Jones MBE (Chief Development Officer, LCCA): I think it is the lawyers that
dictate this rather than us. I mean, I have no problem with it being in the public
domain, and I am sure Nicky (Gavron) does not, but obviously there is a protocol that
the lawyers of the organisation give advice in this area.
Darren Johnson (Chair): I may well pursue this outside this forum.
Allan Jones MBE (Chief Development Officer, LCCA): That’s fine. I think as I
understand it, you have another month or so where you can bring together the
report, and there is information that will become available that you will probably want
to include in your report. There are certain features of the business plan that
appeared in your report, in any event, so in order to cover the questions that you
have asked us, that is where some of that information comes from.
Nicky Gavron (Deputy Mayor and London-wide AM): I am just trying to think
what is in the business plan that is not in Allan (Jones)’s report. Not much. I cannot
think of anything, actually.
Mike Tuffrey (AM): Before we move off organisational matters, can you just say a
little bit more about how the relationship is going to work between the Climate
Change Partnership, the Hydrogen Partnership, and the London Energy
Partnership? There was talk of a memorandum of understanding, but I have to say
that I am confused as to what the differing partnerships are actually going to do and
what their role is in this.
Allan Jones MBE (Chief Development Officer, LCCA): The purpose of the LCCA
was to be an actual delivery agency; so, to implement projects. By projects, I do not
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mean studies and the like, but actually physical, large-scale projects – cogen, trigen,
renewable energy, hydrogen and so on. If you look first of all at the London Energy
Partnership, that is a forum bringing together the private with the public sector, and
there is a broad base of support there. That is to catalyse the development of
energy efficiency technologies, and they do have from time to time small projects. It
actually sets the climate around what the Mayor is trying to achieve with the Mayor’s
Energy Strategy. It was then recognised that, on its own, without an actual body
stepping in to actually implement these projects – indeed, there was some resistance
from developers of new developments who did not want to do this at all – the Mayor
felt that we needed an agency that could actually make things happen. I am not
saying that it is going to do everything in London, but by doing something, it should
catalyse others to come in. The primary difference between what the LCCA does
and the partnership, is really to do with the type of projects, and we are talking
significant investment in these green projects. Hydrogen is similar.
The Climate Change Partnership is different in that it looks at climate change
adaptation, but there are many features of adaptation which impact on mitigation.
For example, if we are expecting very high temperatures in the summer and we just
put more traditional air conditioning in, we are just going to increase CO2 emissions.
That is where we need to look at not using traditional air conditioning systems but
using something like combined heat power absorption cooling, which is actually zero
global warming and zero ozone depletion protection. It is the same thing if we are
expecting rain storms at a time of the year that are twice what we would normally
expect; one would expect that our sewer designs ought to be twice as big. There are
some very simple analogies there as there are cross-links between adaptation and
mitigation. I sit on the steering groups of all three partnerships to make sure that
there is this kind of cross-cutting integration.
Mike Tuffrey (AM): Good. It is just an opinion: the Agency in action is brilliant in
terms of being what we need, but I still feel there is a kind of ‘who’s leading the
charge’, and winning hearts and minds, to get people into a position to then do the
action. As I say, I for one am confused, so heaven knows what others might be. We
might want to say something about that when we come to it.
Nicky Gavron (Deputy Mayor and London-wide AM): On the Energy Partnership,
I think we politicians use the word ‘delivery’ in a very loose way, and there is a
continuum, I feel, which goes all the way. We are working very closely with the
Energy Partnership; in fact, they are working jointly on domestic energy at this stage,
but I would say the LCCA is operating on the ground – it is at that end where there is
a distinction. That is what the LCCA is doing. That is not to say that the work with
the Energy Partnership will not also lead to a pilot on the ground.
It is about horses for courses, too. We have always been very keen that the Energy
Partnership should incubate some projects, which then the LCCA can take over. I
think there is a very close working relationship there. Ditto for the Hydrogen
Partnership. We are feeling our way; I think you have to recognise that. What we
are talking about is a new start-up company, and a not very old Energy Partnership,
Hydrogen Partnership, Climate Change Partnership. A lot is evolving, and it is
working very well.
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Darren Johnson (Chair): I am going to bring Val (Shawcross) in and then I am
going to ask about the structure and the organisational issues - if our other two
witnesses have any comments at this stage before we move on to the progress
report?
Valerie Shawcross (AM): I am going to ask about finance later, but this complex
group of organisations which is developing: can you just perhaps touch on how the
accountability works? The LCCA is owned by the LDA, and the Climate Change
Agency is a minority shareholder in the ESCO. Somewhere or other, the Mayor is in
a leadership role. Just touch on the transparency issue. How is all of this
accountable? Who is really responsible? When it becomes an 80% private sector
structure at the ESCO level –
Robert Taylor (Interim Director, LCCA): My name is Robert Taylor; I am the
Interim Director. I have been helping for nearly six months now to get the Climate
Change Agency set up and running. I helped Allan (Jones) with the procurement
process for the ESCO partner.
The LCCA will have 19% shareholding in the ESCO partnership, and then there will
be a partner or partners within ESCO, which will own the balance. Obviously, they
have a majority control. There will be Articles and a Memorandum of Association
which specifically set down the objectives of what that company can do, which will be
agreed by the LCCA board and the private sector partners. In addition, there will be
a shareholders’ agreement which will lay down the rules of engagement between
partners – a bit like a prenuptial. That is the other key document to make sure that
everything is aligned between the objectives of the LCCA and the objectives of the
London ESCO, albeit the LCCA will only have a minority stake. It will have a bigger
influence than a normal minority stake through the definition in the Articles and
Memorandum and the shareholders’ agreement.
Valerie Shawcross (AM): So, there is a legal framework that ensures pursuance of
the public objectives, essentially which you track back to the LDA?
Robert Taylor (Interim Director, LCCA): That’s right.
Valerie Shawcross (AM): It is not too unfamiliar, I think. We have seen those sorts
of situations with London Connects. You say that it is led by the Mayor. What does
that actually mean?
Allan Jones MBE (Chief Development Officer, LCCA): It is led by the Mayor in
the context that the Memorandum and Articles for the Climate Change Agency itself
is built around the Mayor’s Energy Strategy and other environmental strategies. The
Mayor is the chairman of the board and so has a direct role on the actual company
itself as representing the Greater London Authority (GLA).
Darren Johnson (Chair): We might need a chart at some stage. Robin (Stott) and
Steve (Harris), do you have any initial comments on issues around structure and
organisation before we move on to progress?
11
Robin Stott (Member, LSDC): I am not sure how these interrelate, really, but what
is important to me in this – and it is a great initiative – is that the elements which
Allan (Jones) talked about earlier on in terms of the social benefits are captured, and
whether the organisation enables this. By that I mean that the energy network,
distributed in the way that we are anticipating it, will have the need for local people to
be employed, to facilitate the conservation or putting in of technology, local grid
industries to be developed, and this all will – or should – enable local regeneration to
be a virtuous cycle of activity, so the constraint on CO2 is coupled with economic
gains, as we have heard, but also social gains. A good example that Allan (Jones)
mentioned was the fuel poverty in Woking, and there are many, many examples. I
feel we need to understand that the private-public partnership (PPP) did not
constrain opportunities for the development of those particular objectives.
Darren Johnson (Chair): Let us put that to Allan (Jones). How do you make sure
that the sector that you have established actually does the meet the sort of goals that
Robin (Stott) is talking about?
Allan Jones MBE (Chief Development Officer, LCCA): Interestingly, there is a
technical criteria. One of the things that makes sustainable energy in local
communities really fly economically is the mixture of residential and non-residential.
From the technical point alone, it is necessary to have a mix of residential with nonresidential. Putting it simplistically, you wake up in the morning, you are burning
peak energy to cook your breakfast and you go off to work and the kids go off to
school. Your energy profile at home is falling away at the same time as the buildings
you are going to is rising. There is actually a technical need to have the residential
as part of a local sustainable energy system.
In terms of new development, we can obviously make that happen because the
regulatory rules do not really inhibit us from that. However, I do go back to the
barrier that I mentioned early on: as far as existing residential development is
concerned, we are constrained by regulatory barriers that need to be removed in
order for us to do as much as we can in that area. There is also the whole issue of
the Mayor and the GLA having a locus in housing, which is primarily a function of the
London boroughs and the review of the GLA powers, about which Nicky (Gavron)
can talk in more detail. Those issues do need to be addressed so that we can really
maximise the potential for what we can achieve in London.
Mike Tuffrey (AM): Just to see if the wiring exists, do the Memorandum and Articles
of Association of the ESCO specifically address sustainability – in other words, social
and economic – or is it cast in terms of saving the planet?
Robert Taylor (Interim Director, LCCA): I have not even written it yet.
Mike Tuffrey (AM): Will you give us that commitment? Will the actual purpose of
the ESCO be social and economic as well as environmental?
Robert Taylor (Interim Director, LCCA): No. I do not think we can give that
commitment. The ESCO is a public-private venture where the projects have got to
stand on their own commercial two feet; these are not subsidised projects.
Therefore, the economics will have to be looked at very closely, and it depends on
12
the economics of each particular proposal, what can be done in each particular area
where you deliver a trigeneration solution.
Mike Tuffrey (AM): I understand that, and I take that as read: if it is not commercial,
it does not fly. But, what is the purpose of the company in its constitution?
Nicky Gavron (Deputy Mayor and London-wide AM): May I come in? To deliver
sustainable energy. In fact, I do not know if it has really been spelt out fully, but, in
fact, an energy services approach, which helps with what Robin was asking, is the
whole point of why we want to do it; it hits a lot of our objectives. Above all, it
captures the full value and gives multiple benefits to the customer. I think it actually
is socially a much better way of delivering energy because of the combined heat,
power and cooling and energy efficiency which you get with it.
Allan Jones MBE (Chief Development Officer, LCCA): That is why I mentioned
earlier that the technical side does impact on the economic. If you can get this good
mix and balance between residential and non-residential technically, it also gives you
a better fit economically. Robert (Taylor) is quite right: we cannot fund projects that
are not commercially viable. It is all going together: the mixing of the residential with
the non-residential actually gets us there.
Steve Harris (Senior Architect, Bill Dunster Architects, ZedFactory Ltd): Can I
just come in on that? In mounting a wind turbine on a building - who do you get to
do that? You do not find it in the yellow pages. We had to find a local building
strengthening company who had a cherry picker; the wind turbine was then dropped
and broken while they were fitting it; they took it around the corner to a railway arch
and got the thing welded up again. Local industry and technology will immediately
transfer to doing this as soon as that need is found there. I think it is something that
will naturally happen.
Everything is wonderful in the words we have been hearing; my concern is about
how that is actually delivered on a punter-based level, actually to the person.
Working with some very keen clients at the moment on some large housing
schemes, we are finding it very difficult to actually get these things economically
delivered and sensibly there – private wire, you have done. We are trying to work
out a way of doing that, and every barrier is put in our way at the moment for the
developer. That is a developer who is very, very keen; most are not.
Darren Johnson (Chair): That moves us very neatly on to our mixed area of
questioning, which Roger (Evans) and Tony (Arbour) are leading on. We are looking
at the progress report to date on delivery which should be the next area of
questioning.
Roger Evans (AM): Thank you, Chair. The Agency was originally conceived back
in November 2004. We are now nearly halfway through the Mayor’s term of office in
2006. I just wondered if the setup has progressed as you anticipated and whether
you are happy with progress.
Allan Jones MBE (Chief Development Officer, LCCA): I would like to just
compare that with what we did at Woking. From 1990 to 1999, we operated as a
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local authority on our own; we then decided to go down the route of a public-private
joint venture ESCO. That took about 15 to 18 months, so we are pretty much on
track with what was achieved in Woking. To a certain extent, we have had to win
hearts and minds here, because this is rather a new, innovative, novel idea for
people in both organisations - both the LDA and the GLA.
Picking up on the earlier point, one of the key factors here for the LDA is economic
development. If you look at the Green Alchemy report, that does actually say that if
we can achieve the Mayor’s Energy Strategy targets, that is worth about £3.35
billion, and that would employ about 5,500-7,500 people just through bringing in
these innovative technologies. There is an inward investment element of what we
are doing here, because companies are now talking to us in London about setting up
a manufacturing or assembly plant. If there is going to be a big green market in
London, and that is going to be the first in the world, then this is where you will want
to come. It is pointless trying to assemble a fuel cell on the other side of the Atlantic
and then transporting it all the way with the potential for damage and risk and so on.
It is much better to do that assembly where the actual load is. Any business man will
know that it is a good idea to have your markets close to where the biggest part of
your business is. There are lots of synergies here on economic development.
Roger Evans (AM): You talk about winning hearts and minds. Where have you
encountered difficulties? Is there anything we can do to help, for example?
Nicky Gavron (Deputy Mayor and London-wide AM): I think you have to
recognise that although the Mayor and I scoured the earth, so to speak, the process
of looking at models had to be gone through by this institution. I am thinking about
comparative models; this was absolutely, I think, due process in terms of which
model to go with and exactly how far to develop the model that we have chosen.
Roger Evans (AM): Are there different opinions about the sort of model that should
be adopted?
Nicky Gavron (Deputy Mayor and London-wide AM): The LDA does a number of
joint ventures; I mean, it has been involved in joint ventures. This is a slightly
different model from that because it was setting up an arm’s length company, which
then entered into a minority stake in a joint venture – or, it is about to. I would put
that in the plural because there have been subsidiary aspects, too. That is a rather
different model, but, in the end, the main argument is scale and acceleration, and we
have to have new ways of doing things if we want to actually tackle climate change
because it is moving so fast. You cannot use the tried and tested models,
necessarily. The other thing that I think that tipped the whole thing towards where
we are now going is, of course, that there is a tried and tested model, and it is
Woking, which has the highest CO2 reductions in the world in its own corporate
buildings.
Roger Evans (AM): Have you encountered any other setbacks along the way with
which you have had to deal?
14
Nicky Gavron (Deputy Mayor and London-wide AM): I would not describe what I
just talked about as ‘setbacks’. It is the process you have to go through in order to
set something up. It just takes a certain amount of time.
Roger Evans (AM): It just strikes me that the way this place works, if the Mayor
says, ‘I want this done’, then if you say you want this done, it should happen. It
seems a little strange that there has been a big discussion behind the scenes taking
several months over whether it is a good idea or not, or whether we should do
something else.
Nicky Gavron (Deputy Mayor and London-wide AM): I think at the end of the
day, we have to be very accountable, and we are heavily scrutinised. It is all there
now; if people want to scrutinise exactly the way we have actually come up with this
model it is all there for everybody to see, and the reasons why we have come up
with this one rather than others, and so on.
Roger Evans (AM): I am sure that we will take a great interest. The potential here
is quite exciting, in some ways, but the idea of generating more power locally,
providing all those services locally to people, do you anticipate having objections
from residents about any of this?
Nicky Gavron (Deputy Mayor and London-wide AM): I will pass that one to Allan
(Jones) because he has already dealt with this.
Allan Jones MBE (Chief Development Officer, LCCA): All I can say is that
wherever we went, we had 100% take-up. Indeed, as I mentioned earlier, it did
actually form part of people’s election manifestoes: ‘We want some more sustainable
energy in our wards; why is that ward over there getting more?’ We had to spread
out. When I left Woking, I developed something like 80 island generation sites with a
fair broad mix across all three political parties and across all wards. It was important
to actually get that balance because it was a demand from the local people, an focus
groups and politicians knew where they were coming from. It was a good crest of a
wave for them to ride on.
I was quite happy to see that because that just meant that we got more support,
particularly as I did not have to find the money. Once we formed the ESCO, it was
not even something that I had to worry too much about with the financing. It was,
‘Where can we reinvest this recycled money, into what particular pet projects?’
Various councillors said, ‘I would like some solar energy in my ward. I have this
building around the corner that would be an ideal location’, etc. We were getting a
lot of that kind of thing. We did not have any opposition at all. Planning applications
sailed through; the first one was the most difficult, not because people were opposed
to it, but they were trying to understand it. After that, it became almost like a
sausage machine being turned out – a system here, a system there. These projects
went forward through planning on a nod simply because all the dialogue happened
on the very first project.
Roger Evans (AM): What is the incentive for them? Are they getting cheaper
electricity?
15
Allan Jones MBE (Chief Development Officer, LCCA): Yes. As I said earlier, this
completely befuddles the mind because most people think that green energy is more
expensive – and it is, if you go through the Grid. If you do it this way, you are
essentially extracting the true economic value. People had a guarantee – whatever
benefit they started out with on day one was index linked in perpetuity for 25 years.
They knew whatever happened to energy prices they were always going to be that
percentage lower.
Roger Evans (AM): Is there an economy of scale here? I know if I stick a solar
panel on my roof, assuming that the people who own my block of flats let me do it, it
would take so long to get the payback for my bills that I would be bequeathing it to
my kids.
Allan Jones MBE (Chief Development Officer, LCCA): In the case of Woking, I
did not do that; I grouped them together. Half the cost of solar energy, for example,
is in the inverter and the connection. If you have a row of houses, each with their
own individual connection and inverters, that is why it is so expensive. If you
connect them up you can reduce the cost of photovoltaic (PV), which is one of the
most expensive renewable technologies, by half. The same thing will apply to
building integrated wind turbines; we will see a lot of that coming on shortly.
Nicky Gavron (Deputy Mayor and London-wide AM): This is crucial, actually,
because this is where one of the barriers is. Allan (Jones) mentioned Thamesmead.
Thamesmead is 60,000 households. If you were doing it with the current barriers,
you would have to have 60 inverters, whereas doing it the way we would like to do it,
it would be three or four.
Steve Harris (Senior Architect, Bill Dunster Architects, ZedFactory Ltd): Can I
just come in on those points? The same wind turbine I spoke about earlier we put up
on a building without planning permission. Talking to the planning officer, he said,
‘Put it up as long as you take it down if it doesn’t get permission’. Put it up and that
would be the consultation. It was across the road from a conservation area. We got
planning sailing through in six weeks; everybody in the houses across the road were
really keen. The main question was: ‘Can I have one, please?’ We had big, big
support. You would not expect it, but, yes: incredible support.
Roger Evans (AM): Where was this?
Steve Harris (Senior Architect, Bill Dunster Architects, ZedFactory Ltd): This
was in Bow, in East London.
Roger Evans (AM): It certainly did not happen in Hornchurch, where two
generators were put up opposite local residents’ houses there without planning
permission.
Nicky Gavron (Deputy Mayor and London-wide AM): Wind?
Roger Evans (AM): Wind generators on a BP service station. In fact, the trouble
caused by that meant that those local residents then opposed the introduction of a
hydrogen fuelling depot at the same station, despite the fact they probably did not
16
have good grounds to be worried about it. It was the lack of consultation over the
first system that had brought it about. We do not want to have those types of things
happen in London.
Steve Harris (Senior Architect, Bill Dunster Architects, ZedFactory Ltd): I
suspect there is something there to do with it being BP, a big multinational, putting
these things on the building.
Roger Evans (AM): That was not one of the things that residents said. It was about
not being consulted. I can assure you that not being consulted by the GLA is just as
bad as not being consulted by BP.
Steve Harris (Senior Architect, Bill Dunster Architects, ZedFactory Ltd): I
understand, but there was big support from everybody. There was not a single
person who had a bad word to say about it. Of course, you would not really expect
people to be against those, especially on a new building, but there was a lot of
support there.
Murad Qureshi (AM): I was just developing another angle on local opposition,
which I have seen, particularly to combined heat and power. When you look at the
estate renewing schemes throughout London, when you give residents a choice
between the combined heat and power that we have been used to and a boiler with
gas central heating, they would go for the boiler gas central heating time and again.
I think there is a lot of convincing to be done. If I understand from the Woking
example, it is quite clear a lot of the emphasis there was on the social housing sector
taking up combined heat and power. The real issue is the flexibility which boilers,
central heating and gas supplies offer to residents in social housing. Where they
have been accustomed to combined heat and power it has been pretty restrictive.
For example, it switches itself off for seven months of the year and they do not have
any more control over that. I am just wondering how are you going to deal with
those kinds of barriers.
Allan Jones MBE (Chief Development Officer, LCCA): It is not the same type of
technology. The problem that developed here in London was actually district
heating; there were actually very few with combined heat and power and they tend to
have virtually no controls in the dwellings. The systems that I developed in Woking
and what we are planning to do in London will be exactly the same as a gas-fired
boiler system. You have thermostatic radiators valves and room thermostats; you
have to set the thermostat and you have programmers and controls. To all intents
and purposes, it will look like a normal gas-fired central heating system, except it
doesn’t have a boiler.
The supply and cost effective electricity, as well as cost effective heat, is why we had
100% take-up. I understand what you are saying, and that is absolutely true. In
London, there are lots of systems that went in in the 1960s and 1970s and the only
way you could control it was by opening the window. As you say, it used to go off in
the summer. The whole point about our approach is that we need these things to
run 12 months a year because it is cogenerating electricity. It is not to supply the
Grid at certain favourable times of the year, but to supply at retail prices throughout
the year as a whole, you cannot do with it going off.
17
Darren Johnson (Chair): So, if you could convince people it is cheap and
reliable…
Allan Jones MBE (Chief Development Officer, LCCA): That’s right. You have to
explain to people what it is and why this is different to any previous experience they
have had. The simplest way of understanding that is they get exactly all the same
features that they would have had with a conventional gas-fired boiler system but
without the hassle of a gas-fired boiler system in terms of operation, maintenance,
and so on, which you do not get with private wire CHP schemes. You are quite right:
you cannot get these people to sign up to these schemes unless you can sell it to
them in that way.
Steve Harris (Senior Architect, Bill Dunster Architects, ZedFactory Ltd): Can I
just come in on that, as well, on the practicality side? The district heating systems of
the past are terrible things, and that explains why people on estates always insist on
having their own boiler so they are in control.
What we do on schemes now is you have £169 worth of heat meter; you are selling
heat as you would any other utility, and that heat has to be guaranteed in the pipes
in the same way electricity or water is. It is just another utility you are selling to
people, and it is metered individually. It is a very simple thing. The technology
makes it simple now; it used to be complicated, and hence it was not metered and
hence it had to be controlled by some benevolent state. Now, it is a utility.
Also, if you are looking at making building standards where you are needing less and
less heating space – and, of course, I would always argue for zero heating space –
as it becomes less of a summer/winter situation, you have a combined heat and
power plant that is pushing out the same heat winter and summer because all it is
doing is domestic hot water and it is cogenerating the electricity at the same time.
That is a lot more sensible system. It is not something that gets switched off in the
summer because it is not needed; it is needed the same amount all year round. It is
a different beast.
Tony Arbour (AM): As a preamble, I am very unhappy that Woking is the exemplar
for London and the world. You have already said that Woking is one-seventieth the
size of London. The critical thing is that the socio-economic background of Woking
is wholly, wholly different to London. I can well understand the middle-class readers
of the Guardian and The Independent in Woking, and happily the Telegraph and The
Mail, as well, subscribing to what you are suggesting. Frankly, however, I cannot
see people right across London from Bow to Bromley to Brentford clamouring for this
without an amazing sales job. I may say that you have done an amazing sales job
this morning, but I would want my 29 days to consider the contract. Formally, I am
charged with asking you how you are engaging the boroughs in your agenda.
Allan Jones MBE (Chief Development Officer, LCCA): One of the first things I did
when starting here was to actually do a presentation for the London boroughs’
Energy Management Group. Subsequent to that, we have done more detailed work
with the boroughs – not all of them, yet; we are going through this with those that are
approaching us. The ones I can mention are the City of London, Merton, Camden,
18
Islington, Croydon and Southwark; these are the ones we are actually participating
directly with. I have given presentations to their boards. They are boroughs that are
interested in getting their new developments sorted out, so we are actually assisting
them in this area with, basically, some of the questions that are being asked here
today about what are these systems, what does it mean, how are they different to
district heating, how can we get 10% renewables factored in, and how can we deal
with a sustainable resource. It is not just energy. We are gradually going through
those boroughs that are interested. Now, out of all the London boroughs, I suspect
that not all of the London boroughs will be as interested as the ones I have just
mentioned, and so this will be done on an approach where we will be there to help
those boroughs in London that actually want to do something.
Tony Arbour (AM): Why should they come to you?
Allan Jones MBE (Chief Development Officer, LCCA): We are going to them,
and they are coming to us. All I am saying is that these have been the most active
boroughs who were not backward in coming forward as soon as I arrived in London.
I have identified those boroughs simply because, to me, they seem to put more effort
into tackling this issue. That does not mean to say the other boroughs will not follow,
and, indeed, there is interest from other boroughs in terms of establishing meetings
and finding out further information to support them. We do have a limited resource
at the moment, which is why we are now building up with recruitment. We have
done half a dozen of the boroughs at the moment, but that is not where we are going
to stop.
Nicky Gavron (Deputy Mayor and London-wide AM): You might add that some
boroughs are interested in being stakeholders in their projects. You might want to
talk about that.
Allan Jones MBE (Chief Development Officer, LCCA): The structure is flexible
enough that if a particular stakeholder wants to be a shareholder in their project, that
could apply to a London borough; it could apply to a private sector participant, but
the majority of stakeholders just want their projects to start. I will not mention which
ones, but so far two of the boroughs have registered quite a significant interest in
being a minority shareholder in an ESCO that would operate in their area.
Nicky Gavron (Deputy Mayor and London-wide AM): It is very interesting for
boroughs because it means they can have neighbourhood sustainable energy
systems in their sheltered and social housing, for instance.
Allan Jones MBE (Chief Development Officer, LCCA): I would just like to say
something on the socio- economic background of Woking. It is not quite true,
actually; Woking is different from other places in Surrey. It does have a high level of
deprivation; there are something like 5,000 households out of the 36,500 households
that were in fuel poverty before I started the programme. We also have a very high
ethnic population, probably one of the highest ethnic populations in the South East
outside of Reading and Slough. Woking is quite unique, actually. It is not your
typical Surrey town, and in fact, there are many features of Woking that are very
similar to London.
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Robin Stott (Member, LSDC): I am interested in Tony (Arbour)’s comments
because it seems to me that actually the reverse is the case. If the clear social,
economic and environmental benefits which are coupled in this particular idea are as
they are, and I believe they are, then people who spend a greater proportion of their
money on energy therefore have more to benefit in terms of rewards and would be
more inclined to take this up.
There is another issue. I have a health background, and so this is a slightly different
business. The extent to which people wish to have some more direct control over
the utilities and facilities they have is, I think, a very important issue. Sometimes
here, going around and talking to people, the prospect of this happening in a local
energy network coupled with the financial benefits seems to me something which
would be very attractive rather than less attractive to people all over London. I am
just surprised at your thought that this might not be attractive.
Going back to the point that I was talking about earlier on, the necessity for a clear
understanding in the ESCO organisation that the social and economic good is clearly
part of this component delivery of network energy. Like Mike, I would like to
understand clearly how that is going to happen in the organisational structure of
ESCO?
Darren Johnson (Chair): Steve (Harris) wants to come in, and then I will bring in
Mike (Tuffrey) and Val (Shawcross).
Steve Harris (Senior Architect, Bill Dunster Architects, ZedFactory Ltd):
It is simply to say that most of our major clients at the moment setting up ESCOs and
looking at district heating systems, communal heating systems, are housing
associations providing affordable housing. They are the sort of people with the
control to do it. The private individual and the middle-class home is not really getting
it; it is the affordable housing sector
Tony Arbour (AM): David Cameron’s middle-class home is getting it.
Nicky Gavron (Deputy Mayor and London-wide AM): There is huge scope. 44%
of London’s CO2 emissions come from our homes, and there is massive scope to do
something with what we term the able-to-pay sector. In fact, you can see the homes
becoming not just a consumer of electricity anymore, but producers.
Steve Harris (Senior Architect, Bill Dunster Architects, ZedFactory Ltd): I am
building my own house to do the same at the moment.
Mike Tuffrey (AM): Moving on from boroughs to other stakeholders closer to home
in terms of the GLA family, the biggest energy user would be Transport for London
(TfL). Could you tell us a little bit about what are you doing with them and what
barriers there are to driving that – no pun intended – very fast forward?
Allan Jones MBE (Chief Development Officer, LCCA): We are working with the
GLA group on a regular basis. We have regular meetings set up with each of the
functional bodies, and we come together every quarter as a group of functional
20
bodies. I always find it is a good idea to put one against the other because some are
much further ahead than others.
One I would like to mention is the London Fire and Emergency Planning Authority
(LFEPA), and you will know what has been put through your Board. I think a
common or garden fire station that has a photovoltaic roof in the country, let alone in
London, and the desire to move on in this renewable energy field, and so we are
now talking about establishing an energy efficiency revolving fund. When you think
that the Fire Authority is the smallest of the functional bodies, they are actually right
in front there…
Having said that, TfL, where there is huge scope for more water and energy
efficiency savings, not just in transport but in their buildings – they own a huge
property portfolio – we are not seeing any restrictions there at all. Indeed, they want
to put as much money into this as they can, and we are working on some really
exciting projects, not just in terms of energy efficiency with the buildings themselves
– many of these buildings are big enough to actually have their own cogen or trigen
systems – there is also the little matter of the London Underground cooling system,
which we believe we can sort out using trigeneration. So, they are all up for these
kinds of things. There is work going on at the moment as we speak that is looking
into these areas and just how feasible that is. That will be one of the major projects
that I could see that the London ESCO could deliver, and the rest of it is more
practical matters like ownership of bits of land and how can we get from A to B, and
so on. From a financial and technical point of view we can actually make these
projects happen.
We are just working with the Metropolitan Police; they are not as far ahead as the
Fire Authority. There are some works that need doing to this building and that we
have been discussing with the facilities managers. One of the early projects, of
course, was a photovoltaic roof for the actual building itself. The building was
designed for it but it never actually happened. It may also be one of the locations
where we are looking to put a fuel cell CHP, not just because of practical measures
of supplying energy to this building, but as a prime location from a flagship point of
view. You need to demonstrate what the GLA group is doing in this area which is
why we have identified flagship projects. It is no accident that we are looking at City
Hall; it is no accident that Palestra - the new home of the LDA and LCCA - will have
the first integrated PV and building integrated wind turbine system. There are also
projects like the London Transport Museum, which is currently underway at the
moment. These are projects that are in flagship locations in London. One of the
experiences I learnt in Woking is that where people see these things happening, you
get ever more support and ever more drive forward to make these things happen.
Nicky Gavron (Deputy Mayor and London-wide AM): I would like to add to that.
There is work being done with TfL on their fleet, of course. It has just been
announced that there are going to be 70 hydrogen vehicles, 10-12 buses, and the
rest are –
Roger Evans (AM): Hybrids. These are not the same as the hydrogen buses.
21
Allan Jones MBE (Chief Development Officer, LCCA): These are fuel cell
hybrids. They are hybrids – you are correct – but they are fuel cell hybrids.
Nicky Gavron (Deputy Mayor and London-wide AM): Sorry; they are fuel cell
hybrids. In addition, there are going to be other kinds of hybrids. There are 70 fuel
cells, which is quite a significant amount. However, you have to bear in mind that
over the whole of the GLA family – so to speak, all of the functional bodies we have
talked about – between them it is 3% of London’s total emissions. It is a significant
amount and we have to set our own house in order.
Valerie Shawcross (AM): You were not going to let me come in on the back of the
Fire Authority, were you? I just wanted to mention a barrier that we have observed
already. As you probably know, we have just been through the planning process to
put our first wind turbine on the station at Hayes, and we have surveyed all of the
Fire Authority’s sites, and I am surprised at how few we are unable to do anything
with; most of them we will be able to do something, and there is a £3 million
revolving fund which has had enthusiastic cross-party support.
Just going back to the argument about whether London is different from Woking,
there are some differences. The objections we got during the planning process at
Hayes, I am told, although there were some local people who were concerned, and I
think that is possibly about lack of experience in part – they do not really know what
is coming – were from air operators and mobile phone companies. There is a
problem in London about competition for resources, space resources, and that was
an unpleasant learning curve. We are worried now about how the planning process
will go elsewhere. Hayes is probably a particular issue. However, why mobile
phone companies should wish to object, I do not know, because I have not really
looked at their objections yet. It could well be because mobile phone companies
have got used to being able to exploit public buildings like fire training towers, for
example, for their technology.
Allan Jones MBE (Chief Development Officer, LCCA): Yes, you raise an
interesting point. It is fair to say that London actually has significant advantages.
You have these functional bodies, which are huge organisations in their own right, so
the potential of actually hitting some targets in London is of some significance. I
would imagine that the targets the functional bodies will be given will not be the
same as London; we would expect them to be much better, and we would expect the
whole GLA group to be much better.
On things like wind, this is why feasibility studies are needed – not from consultants,
but from developers – because there are things like microwave routes – in other
words, lines of sight – and it you put a turbine up in the middle of that, it might not be
obvious to you, but there might be some mobile telephone mast a mile away,
another one in one direction and two miles in the other direction. It raises an
interesting point for planners to consider in the future as to what is more important,
climate change or mobile telephones?
I will give an example of that. In the Thames Gateway area, we have identified
about 20 sites for large-scale wind generation. On a rough rule of thumb, we would
probably expect about half of those to conflict in some way through air transport
22
routes, microwave routes, that sort of thing. That is part of the process you have to
go through, even before you put a planning application in, to determine whether it is
in a viable location for those reasons. I would also imagine that some boroughs will
just oppose these things for the hell of it because climate change is not in their
psyche and sustainable energy is just not on their agenda. What you will see is that
in some parts of London it will be easier to get planning permission than in others. I
am sure you know that already.
Valerie Shawcross (AM): We decided to go with the easier ones first.
Tony Arbour (AM): One of your key activities is to provide advice and support.
How are you doing that?
Allan Jones MBE (Chief Development Officer, LCCA): We are working quite
actively with the boroughs that I mentioned previously on specific large-scale
developments, and you can probably guess what they are, that sits on those various
boroughs, as well as with private sectors right across London and some large private
sector owners-occupiers – some of the largest companies in London, so not new
development. If you consider that most of what we need to do, probably 95% will be
in existing development, and not new development. It may well be you get your
planning side strengthened, and it may well be that you can make things happen on
new development, but by far the biggest chunk is existing developments. It is quite
important to pick up existing owner-occupiers, and I do not just mean households,
but some of the really big companies in London. You will see some of the
organisations that are our founding supporters, so you will not be surprised that we
are actually using them first. However, we are also working with and giving advice to
some of the really large owners of buildings in London to come up with sustainable
and renewable energy systems, some of them even hydrogen. It is both stationary
and transport; it is not just TfL. There are other operators out there that are
interested in moving in this market.
Tony Arbour (AM): When you consider some of the very large developments… I
am probing you to find out who these private developers are. Is the developer of the
Lotts Road scheme, is he coming to you? Is the developer of the London British
Tower coming to you? Who exactly are these people? At the planning stage is the
time to come.
Allan Jones MBE (Chief Development Officer, LCCA): I do not think it is
appropriate for me to comment on specific projects because these are commercial
negotiations and we have yet to have our private sector partner on board, so we
cannot pre-empt what a group of private sector organisations will work with or not.
Suffice to say, we are working with some of the largest of London’s developments
and a fair smattering of medium-scale developments right across London. They will
form part of the initial project list of the London ESCO so, without mentioning names,
you will find that when that comes into the public domain is when we have reached
agreement. By that, I mean commercial and legal agreements, so we can then put
that project into the public domain.
Tony Arbour (AM): Let me ask the question another way. What is the gross
capacity of development over which you are consulting?
23
Allan Jones MBE (Chief Development Officer, LCCA): I have not added that up,
to be honest.
Tony Arbour (AM): Come on. Is it a million square metres?
Allan Jones MBE (Chief Development Officer, LCCA): It is getting on to that kind
of size, yes.
Tony Arbour (AM): Is this work that you are doing pro bono?
Allan Jones MBE (Chief Development Officer, LCCA): We charge for the actual
studies themselves.
Tony Arbour (AM): You charge everybody?
Allan Jones MBE (Chief Development Officer, LCCA): In terms of new
development, if a new developer wishes to develop a site, they are used to paying
for feasibility studies, so someone like EBF or British Gas to actually get connections
to their site. This is essentially displacing that area. When the ESCO carries out a
feasibility study, it is basically within the same realm and at a similar cost to what the
developer would otherwise have spent on a conventional connection.
Tony Arbour (AM): There has been a lot of reference to Thamesmead this
morning. Are you charging them?
Allan Jones MBE (Chief Development Officer, LCCA): We are not charging them
anything yet because we have not actually moved forward with that project.
Tony Arbour (AM): Oh, so it is not going to happen?
Allan Jones MBE (Chief Development Officer, LCCA): It will happen if the
regulatory barriers are removed. Thamesmead does have potential in the nonresidential area and in development. There are a number of new developments and
there are a number of existing industrial estates in that area which do not fall foul of
regulatory barriers. If the owners of those sites wish to proceed forward with the
London ESCO in developing that site we do not see any barriers there. However,
the actual existing residential homes currently fall foul of the regulatory barriers.
Darren Johnson (Chair): Thank you. We are going to move on now to finances,
and Val (Shawcross) is going to lead on this.
Valerie Shawcross (AM): What I would like to try to start to understand is how the
resourcing of the organisation is going to work and how it matches the enormity of
the task, because it is a huge and grand exercise and an enormous challenge.
Looking at the table of operating costs here, which I am assuming are your core
costs as opposed to your project costs, it is a paltry sum. You are short even on
grant and you are still having to hit sponsorship targets from within this. It is a very
small amount of money. Salary costs account for just over half of the first year’s
24
operating costs and two-thirds in subsequent years. How many people will that give
you?
Allan Jones MBE (Chief Development Officer, LCCA): The structure that I set out
from the outset was starting at about 18 people. That was based on experience of
what I had actually done previously. Bearing in mind that most of the staff resource
will actually come from the private sector as far as the big ESCO projects are
concerned, we will also be jointly working with them on that. We are at the interim
stage at the moment where we are recruiting the staff for the interim phase, which is
about 10-12 people – a couple of administrative staff are included in that. Probably
after our move to Palestra, which is late August, we will then be looking to fill the rest
of the structure.
Valerie Shawcross (AM): There were some changes in the figures. I think the
Mayor indicated that the operating costs would be higher – closer to £900,000 – but,
in fact, here they are down to £570,000. Have there been some changes in the
figures?
Allan Jones MBE (Chief Development Officer, LCCA): The costs you have there
are LDA costs only; they do not include the founding supporters.
Valerie Shawcross (AM): Okay, so the mismatch is just the difference in reporting?
Allan Jones MBE (Chief Development Officer, LCCA): Nicky (Gavron) has a
target – it is not my target – to procure private sector funding through the founding
supporters. For year one, she has procured £305,000 per year. These are five-year
agreements that are being signed up to. The reason for the five years is that, as you
will probably imagine, large-scale development, new as well as existing
development, will take a few years to actually be physically completed on site before
a rate of return is achieved. It is that rate of return that is initially recycled into low
and zero carbon technologies, but, long term, that is from where the self-sufficiency
finance of the Agency will come. I estimate that will be between five and ten years.
Valerie Shawcross (AM): Do you think that these core operating costs you have
been grant aided are giving too slow a start? Is it too slow a build-up given that you
are going to have to do a lot of fundraising?
Allan Jones MBE (Chief Development Officer, LCCA): You are probably right
about the LDA’s funding on its own, but that is one of the reasons why the private
sector came in. It is fair to say that a number of these approached us rather than us
approaching them. They perceive climate change to be probably the major threat
and risk to their businesses, and so the additional funding was really to increase the
scale of operations of the LCCA from what we envisaged originally to what we are
looking at now. The targets that the Deputy Mayor has set are in relation to this
sliding increase where we see that we need to be in year three, which gets us up a
bit beyond our current complement and beyond our envisaged complement of 18.
Valerie Shawcross (AM): Early on, you mentioned a rolling fund. I understood that
there was going to be something like a £6 million rolling investment fund.
25
Allan Jones MBE (Chief Development Officer, LCCA): Yes; project investment is
separate.
Valerie Shawcross (AM): What has happened to that?
Allan Jones MBE (Chief Development Officer, LCCA): Capital fund: there is
actually funding set aside which is funding these early flagship projects. We are also
working with the functional bodies to establish separate capital funds for flagship
projects and, more importantly perhaps, we are making sure that the LDA, with its
own development projects, is actually being factored in there so that LDA
developments pass through the London plan requirement, do the singing and
dancing, because they are probably able to go some way beyond the minimum
requirements.
Valerie Shawcross (AM): The £6 million rolling fund seems to have disappeared.
Have I misunderstood this? Just reading the Fire Authority’s paperwork where we
set up our own £3 million rolling fund, we were expecting the LCCA to have a similar
fund.
Allan Jones MBE (Chief Development Officer, LCCA): One of the things that the
LDA considered before we won the Olympics was that that was going to be a fund
created and added to by the functional bodies. Since we won the Olympics the LDA
has a bit of a cash shortfall for the first couple of years, and then we are going to
revisit this again after that. In the meantime, we are encouraging functional bodies
like the Fire Authority to establish their own capital fund.
Valerie Shawcross (AM): We have done it. We are waiting for you guys to catch
up and help us out with advice…
Allan Jones MBE (Chief Development Officer, LCCA): You are in the lead.
Valerie Shawcross (AM): We are really happy with that. You said actually that,
basically, your start-up costs did not quite meet your aspirations for what you ideally
would have liked. I appreciate that nobody ever gets what they ask for, but how far
short do you think it is on what would have been the ideal?
Allan Jones MBE (Chief Development Officer, LCCA): I do not think it is going to
fall short; it is just going to be delivered in a different way.
Nicky Gavron (Deputy Mayor and London-wide AM): My aim was to raise, for the
year we are in, half-a-million, and with the two secondments, which are salaries
given in kind, we have raised half-a-million and are now beginning to raise another
half-a-million. We will then have, together with the LDA, a million and a half per
annum. If that is not enough, we will raise some more.
Darren Johnson (Chair): I will bring Mike in, but at this point if there are any
members of the public who have a question they would like to put, you can jot it
down on the question sheet on page 4 and 5 of the Climate Change Agency report in
the agenda. We will try to reach those if there is time.
26
Mike Tuffrey (AM): I think there is a bit of an issue about how much money the LDA
is putting in versus all the other things it is doing versus, for example, how much it is
putting into food. Supportive though I am of the whole food strategy, I think that runs
into even more millions than this. In a sense, we have the wrong witnesses to
pursue that point.
Valerie Shawcross (AM): They are very loyal though.
Mike Tuffrey (AM): They are; they are sticking to the family line, but we might probe
a little bit elsewhere on that. Just sticking with the fundraising, and just to be clear
because I think I have a question about not just the current year, but going forward,
the money that is coming in from the private sector partners is committed over five
years, presumably? Yes? Thank you. In terms of the £305,000, that is what has
been raised to date against a target of £320,000 for this year, so you are more or
less on track for that?
Nicky Gavron (Deputy Mayor and London-wide AM): I do not know where the
£320,000 has come from. It was always £305,000…
Mike Tuffrey (AM): It says £320,000 in the table on page 6.
Nicky Gavron (Deputy Mayor and London-wide AM): It is not just £305,000. You
have to include the Rockefeller Brothers Fund. It is more than that, because that
was a one-off. This is annual.
Mike Tuffrey (AM): I suppose the question is: what is in it for them, really? Let me
leave the question there. What is in it for them? Why are they putting their hands in
their thick pockets as opposed to commercial investments and so forth?
Allan Jones MBE (Chief Development Officer, LCCA): Perhaps this needs a
political answer rather than one from me, but from a practical point of view, I think I
already referred earlier on that these businesses do see climate change as a real
threat to them, and particularly in London. If you think about just the moderate rise in
sea levels in London and how much property could be damaged, it runs into billions
of pounds, quite apart from the effects of extreme summer heat waves and even
people dying from those issues. It also impacts on the transport infrastructure, which
is not actually designed for these high temperatures. It is an issue where the
adaptation and mitigation are trying to come together.
Just looking at this from the outside, these are big companies that already have huge
budgets set aside for funding philanthropic purposes. Some of these are art
galleries and some of these are all kinds of public good things that they put money
into from a corporate social responsibility (CSR) point of view. I see nothing wrong
with coming in there with climate change. We have essentially hit the button there
because all of these companies have not really put anything from CSR into the
climate change issue, although it is a big issue for them. If you look at someone like
Legal & General and what their business is involved around, we could reach a stage
as far as insurance goes where the damage from climate change could exceed what
insurers could actually insure. We would then end up with a real problem. I can
27
quite well see it from their point of view. From our point of view, we just tapped into
something that was already there, and we needed the money.
Nicky Gavron (Deputy Mayor and London-wide AM): Every company that has
come in has a very good track record themselves in terms of CO2 reductions. In
their own internal operations, they are already working at it. I think companies want
to be associated – they absolutely see the point of business and political leadership
working together. These are lead companies in relation to doing something about
climate change.
Steve Harris (Senior Architect, Bill Dunster Architects, ZedFactory Ltd): No
one has yet today talked about peak oil and the writing on the wall for oil being
something that is soon going to run out. Any company that has expertise in other
forms of energy will rule the world. It is less philanthropic than we think. We know
that it has been about climate change, but I think it is becoming far less about that
and much more about what we are going to do when the oil runs out. When they put
their turbines up at Dagenham, it was not because they were saving the planet, it
was because they could guarantee their energy prices for the next 10 years.
Mike Tuffrey (AM): I agree, and in a former life as a lawyer I encouraged
companies to do this sort of thing. What was behind the question, getting straight to
the point, is what strings are attached to this? For example, taking BP, the first on
the list, have they agreed with you some sort of first right of refusal for some of the
more commercial projects, the ESCO, and so on? Is having BP at the starting line
preventing you from doing deals with Shell and anybody else?
Allan Jones MBE (Chief Development Officer, LCCA): No. Nicky (Gavron) can
come in on this. There are no strings attached to these, they are purely
philanthropic. There are not any detailed agreements stating any conditions
whatsoever. Just to give an example, in terms of the procurement of the private
sector partner, 10 organisations are part of that negotiated procedure.
Mike Tuffrey (AM): Good, so long as there are no strings and no side agreements
and all of that. It would be nice to have a big bank on board. I appreciate Legal &
General is kind of financial services, but the banks stand to make quite a lot of
money through funding these things.
Nicky Gavron (Deputy Mayor and London-wide AM): HSBC, who are not listed
here, have agreed to be a founding supporter but we have not yet negotiated the
amount. Their logo is on the launch because they have put it in writing that they will
be a founding supporter. In fact, they are number three on the Dow Jones
Sustainability Index. I just was giving an example. BP – we have case studies on
these companies in terms of their record on CO2 reductions.
Mike Tuffrey (AM): Thank you.
Murad Qureshi (Deputy Chair): In February 2004, the Mayor put his Energy
Strategy in place; that is his statutory responsibility to do that. The LCCA came into
being in November. What progress has been made on the targets the Mayor set in
his Energy Strategy? In effect, you are the executive arm delivering this.
28
Allan Jones MBE (Chief Development Officer, LCCA): The detailed work on what
London has achieved still needs to be done. London has actually achieved quite a
bit. For example, since 1990, which is the base year at which we are looking, there
has been quite a significant amount of cogeneration put into London. There has
been a small amount of renewable energy. There has been work that the GLA have
been doing on transport within London. These are all quite big hits against carbon.
Unfortunately, at the same time, the population has increased in London, and
commercial developments have also increased. What we therefore have is a
reduction in CO2 emissions on the one hand with increasing growth on the other,
which is a problem that faces all cities and countries around the world. You have to
achieve a significant reduction in CO2 emissions to get ahead of growth and
significantly change the nature of the energy you are using.
In terms of the GLA group, work has been undertaken. I will just mention a few
projects: the largest photovoltaic array in London is at CEME (Centre for Engineering
& Manufacturing Excellence in Rainham in Essex), which is an LDA project; what TfL
has done at Vauxhall Cross; more recently, Richmond fire station. You will also
have seen some announcements from TfL on something like a 25% reduction in
energy consumption on the Tube. A number of the functional bodies have been
purchasing increasing amounts of green energy. There is work going on and it is a
little bit uncoordinated at the moment, but I think by the time we get up and running
and we get the carbon accounting system in place, we will be able to have a much
clearer picture about what the GLA group itself is doing. However, it is not as if
nothing has been done. The GLA group has been doing things.
Murad Qureshi (Deputy Chair): What I was really aiming for was actually that in
the Strategy there are specific targets. In some ways, not being privy to the
business plan, it is not clear whether those have been set up as business targets.
For example, one of the first proposals on CO2 emissions is 20% reduction on 1990
levels by 2010. It would be useful if you could say how we are progressing on that.
There are actually quite clear targets: 7,000 domestic PV installations, 250 PV
applications from commercial and public bodies, 6 large wind turbines, etc. That was
quite unique about this Strategy. Like I said, you are effectively the executive
agency delivering on this. It would be useful to actually see where we are going on
progress against these specific targets by 2010. If we are not going to meet them,
when will we meet them?
Allan Jones MBE (Chief Development Officer, LCCA): Some of these targets will
be achieved, some will be exceeded, and some will not be achieved. You refer to
some specific targets there. The 7,000 domestic wind turbines, for example, will not
be achieved until the regulatory barriers are removed, so there is an impediment
against some of these things happening. When you look at the Energy Strategy, it
does not necessarily identify those things that are more important to actually
achieve, and I think the overriding one here is the reduction in CO2 emissions. That
is probably the most difficult of all of those targets.
I see that if we can get these revolving funds up and operating at the scale that we
need, the GLA group should be able to achieve those emission targets. London as a
whole actually is an unknown quantity at the moment because there is not, as far as
29
I can see, a mechanism in place that checks and monitors how London as a whole is
performing. I would like to see an extrapolation of the carbon accounting system that
we are looking to implement in the GLA group to cover London as a whole. This
would involve collecting data from various government departments; people like the
Office of Gas and Electricity Markets (Ofgem) would keep a database of CHP and
renewable energy, and so on. There are some practical issues about just exactly
what is out there. You only see what new developments are coming in from what
might be in the local press. A lot of stuff is going on in London which we are totally
unaware of. It is an issue about collecting that data. The boroughs themselves and
the Home Energy Conservation Act, some of those are approaching their 30%
improvement in energy efficiency targets, but some are a long way behind. There is
a lot of data out there that has to be collected before we can answer a question like
that.
My reading of the rules and comparing what I did in Woking, bearing in mind that I
started in 1990 and they are actually running ahead of their target, that is actually a
20-year timescale; the GLA was established in 2000, so I think you gave yourself an
almost impossible task to achieve a 20-year CO2 reduction target in 10 years. That
is essentially running at a 40% ratio. You use 1990 as your base year because you
adopted the UK national, but you were not even in existence then. The Mayor’s
Energy Strategy itself took several years to develop, so that did not even start from
2000. We just have to be practical and realistic here when you are looking at some
of those targets. Having said that, think about the large-scale wind turbines. I think
we will exceed six. I think we will get a fair number of those 20 we were talking
about.
Nicky Gavron (Deputy Mayor and London-wide AM): I have a question. We
know we have 40 million tonnes of CO2 produced per year. How does that relate to
the 20%?
Allan Jones MBE (Chief Development Officer, LCCA): The 40 million tonnes of
CO2 was in 1990.
Nicky Gavron (Deputy Mayor and London-wide AM): No, it is now.
Allan Jones MBE (Chief Development Officer, LCCA): No, I think in the Mayor’s
Energy Strategy that was your base. So, it is just a simple calculation as to how
much that represents as a percentage. You would save 6 million tonnes against an
original 46 million tonnes as a rough estimate, and I would not say that those figures
were accurate.
Murad Qureshi (Deputy Chair): I do appreciate in some ways that as a
methodologically it is a moving feast, but nevertheless it would be useful, I think, to
judge the Energy Strategy against its own targets and at least have that analysis to
say where the Energy Strategy is doing better in delivering certain things. For
example, on the planning I noticed that each local authority has been asked to
achieve at least one zero carbon development. Just a simple checklist on that would
be useful.
30
The other thing is that we have had a major boost, as well. The fact that gas prices
are going up 20% does mean people will be actively looking at alternatives, whether
private, individual, or whatever. I think we have to use that vehicle of market prices
to actually deliver on this Strategy, and I think it would be useful just to start with
where we are with the ones the Mayor has already set.
Allan Jones MBE (Chief Development Officer, LCCA): You are absolutely right,
but I keep going back again to the regulatory barriers. That is a severe impediment
to microgeneration, so you have a significant impediment on those particular subtargets on PV and building integrated turbines in the domestic sector until the
regulatory rules are adjusted. On the commercial side, it is more open simply
because they are not covered by those barriers.
Nicky Gavron (Deputy Mayor and London-wide AM): The Community Heating
Study, which was launched very recently, presumes that about 10.5 million tonnes of
CO2 will be saved out of the 40 million by 2010 if one gets on with those projects. If
the regulatory barriers were removed and it was easier to do something about
energy efficiency in the existing stock, it would make a huge difference. In fact, one
of the exciting things to be done by now by the LCCA, the partnerships, and the GLA
environment team, is that we have to really focus on the targets and the means to
achieve them. It would be very helpful if the climate change duty is accepted under
the new powers.
Darren Johnson (AM): Robin (Stott), and then we briefly have two questions from
members of the public.
Robin Stott (Member, LSDC): One of the things that is not here is the engagement
with the wider population in London. To me, this is a very exciting and remarkable
project and there are enormous benefits for local people. There are also a lot of
misunderstandings because of the nature of what has happened before in terms of
combined heat and power plants, for instance. It would be really helpful to get an
inspirational, educational programme leaping across from the boroughs to the people
and in some way finding a way of touching… Everybody is searching around for
what the hell we can do about climate change, and people are really needing some
way of understanding what we as individuals can do. In many ways, this offers some
of the help. I think we need to use it to find some more effective way of
communicating to individuals in London.
Darren Johnson (Chair): Let’s put this to Nicky (Gavron). You have come here to
sell it enthusiastically this morning to the Environment Committee, but how are you
going to sell it to London as a whole?
Nicky Gavron (Deputy Mayor and London-wide AM): I want to go back to Murad
(Qureshi)’s point, which is about what is the Climate Change Agency. There was a
slight implication that it was the deliverer of all CO2 reductions in London. I want to
very quickly dispel that. I talked about it showing by doing and I talked about it
acting as a catalyst for trigeneration for renewables and for ESCOs, but it would
never succeed if it were to do it all itself. That is not the point. Planning is really
important. We are reviewing the London Plan to put climate change absolutely at
the heart of it and we are looking to work with Government to find ways of
31
strengthening our planning framework, and that is very important. That, combined
with the Climate Change Agency saying, ‘look, it can be done’, will encourage others
to follow.
Allan Jones MBE (Chief Development Officer, LCCA): Even with the largest
private sector partner in the joint venture ESCO, it could not do everything in
London. What it can do is do a significant amount and, has been said, showing by
doing and drawing in other players that will pick up the small- medium- and largescale developments that are available there. I think the catalytic effect is quite
important. It is about London and the administration in London showing the way
forward, but also encouraging others to follow what we are doing.
Darren Johnson (Chair): In terms of selling this to London, I would like more on
this point.
Nicky Gavron (Deputy Mayor and London-wide AM): We also want to do it in
commercial buildings through the Better Buildings Partnership. We want to look at
energy efficiency in clusters of commercial buildings, and the ESCO will probably be
looking at combined heat, power and cooling in those clusters. We are working with
Government now on schools and major institutions in London. The main thing is to
get a climate of ‘this is being tackled; this is being done’. That is one part of
communication; we can say it is already being done here and there with regeneration
projects. Hopefully we can retrofit around them into existing neighbourhoods. The
minute you start getting some neighbourhoods having sustainable energy systems,
then I think boroughs will follow – and there are a couple of boroughs that are
absolutely raring to go on this, but we cannot announce it. The minute that is done,
then other boroughs will want to be doing it. There is nothing to stop boroughs from
actually becoming Wokings in their own right – nothing to stop them from doing that.
It is already there; the legislation is there. If we all worked together to get the
barriers removed, then I think the whole thing is going to snowball.
We are thinking hard about a communications programme. Already there are 700
primary schools with which the Mayor works on giving environmental awards, and
we have had discussions around how we can raise the profile of energy within those.
The Government and Malcolm Wicks (Minister of State for Energy, Department of
Trade and Industry) has already said that he wants to see microgeneration – wind
turbines, for instance – in primary schools.
Darren Johnson (Chair): The Agency does not have a communications strategy at
the moment, then?
Nicky Gavron (Deputy Mayor and London-wide AM): It is scoping out of the
Strategy and, indeed, yes, you are just anticipating; it just that we cannot tell you
what it is going to be at the moment. It is being scoped, and I am looking at raising
the funding to be able to back it.
Darren Johnson (Chair): Okay, that is clear. We have a couple of questions now
from members of the public. Firstly, one for Allan (Jones), who said earlier that you
cannot fund projects that are not commercially viable. The questioner in the
audience just wants to know what exactly you mean by this. Presumably, what he is
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getting at is that if something is commercially viable it does not need help or funding
from you in the first place.
Allan Jones MBE (Chief Development Officer, LCCA): It is about actually making
projects commercially viable in the fist place. These are projects that would not be
commercially viable in the current environment – i.e., connected to the Grid and
selling electricity to the Grid. However, establishing an ESCO, putting in a private
wire network, and providing energy at retail prices or below retail prices, which is six
to seven times the wholesale price, is what makes these projects economically
viable. When we are talking about commerciality, it is about making that happen. It
is not there at the moment.
I would also say that the return on investment, the profits, will be recycled back into
projects that would not otherwise be commercially viable in their own right –
additional renewable energy technologies, for example, which would go within the
GLA group.
Darren Johnson (Chair): Another question for Allan (Jones), I think, as well. You
referred to the work by the Agency at Thamesmead and the advice on mitigation
aspects in perhaps the rising water levels. Is the Agency proffering advice to the
boroughs in the larger Thames Gateway area and engaged in the Office of the
Deputy Prime Minister’s Sustainable Communities Development Programme?
Allan Jones MBE (Chief Development Officer, LCCA): The reference to
Thamesmead was an example which I think Nicky (Gavron) quoted and is not
necessarily an actual project. In terms of water, I am actively involved in the water
action plan. This is more than a policy or a strategy; this is about embedding in
sustainable water resources, which also deals with flooding issues. One of the
problems we have at the moment is that these are all being looked at as separate
entities. If you want to make use of sustainable water resources, a combination of
rainwater harvesting and grey water recycling, you will need large-scale storage. At
the same time, somebody else is looking at sustainable urban drainage design
systems to store water for a different purpose at a different time of the year. It is
about looking at this in a much more holistic, integrated way, which is much easier to
do on a communal basis because 98% of the water that we treat to drinking water
standards we do not actually drink; we use it for flushing the toilets, washing towels
and watering the garden. There are municipalities elsewhere in the world – and I will
quote St Petersburg, Florida, which has two water circuits, a potable water circuit
and a non-potable water circuit. The non-potable is cheaper than the potable, so
everybody alters their plumbing to take advantage of it.
Darren Johnson (Chair): Are you involved in the Regional Development
Framework for East London? When we looked at flooding, this Committee said that
we were unhappy that it was not being taken into account in the draft framework and
that it needs to be taken more seriously.
Allan Jones MBE (Chief Development Officer, LCCA): Not directly, but I am
involved via the Climate Change Partnership in looking at adaptation.
Darren Johnson (Chair): Nicky (Gavron), do you have anything to add?
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Nicky Gavron (Deputy Mayor and London-wide AM): No, that would come under
the Climate Change Partnership.
Darren Johnson (Chair): We will wind up there. Thank you very much to our five
witnesses; thank you for your time on that. We have a few other items of business to
conclude with briefly.
I do not know where we want to take this. I do not know whether people feel we
need to do a full report or a brief report, or even just a letter, because we are not
being asked to submit or anything like that. It is an investigation and a progress
report, basically, on where things are at. I do not know what people think is most
appropriate.
Valerie Shawcross (AM): I do not know what my colleagues feel, but I feel we
should support this initiative incredibly strongly. Despite the fact that they were
deeply loyal to the LDA, I do think there is an issue about their being underresourced, and they need more support. Nicky (Gavron) is doing enormous amounts
of fundraising, and I think the GLA should be behind this work in a more meaningful
way.
Darren Johnson (Chair): Are these issues that we can pick up perhaps in a letter
to the Mayor and to the LDA? Is that the best way of taking that forward? We can
then agree that through the delegated authority discussion.
Roger Evans (AM): I think the letter is the best option here, but I think the important
thing is that we stress we want them to be ambitious and to achieve things rather
than just telling them they are good. I think we should really be expecting more.
Darren Johnson (Chair): Obviously, there are some clear points that came out this
morning that we can pursue, and I believe they are publishing some other
documents very shortly, from which we may be able to draw, so maybe it is best to
wait until those are published.
Valerie Shawcross (AM): The point you made, Darren (Johnson), about the need
for a communication strategy and how important that is, is key to put in place.
Murad Qureshi (Deputy Chair): The point I would add is that I do think they need
to exploit the situation of the gas prices going up because I think Londoners
individually will [come up?] with the solution; it is just as a society…
Darren Johnson (Chair): In terms of format, we are looking at a fairly detailed letter
to the Mayor and the Chair of the LDA rather than a full report?
(Members indicate consent)
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Ends
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