BRAD MEYER by leader6


									                                                                                 Appendix B

Transcript of the Environment Committee’s first evidentiary hearing for the
Developing a Green Economy in London scrutiny

The Chair: Welcome. We would like a short introduction of your work and then we
intend to look at the very, very important issues around the economy in London with
reference to the environment.

Dr Bevis Watts: Thank you, Chair. [Presentation attached at annex a to this transcript]

Slide 1 - Dr Bevis Watts, Business Development Service
I project manage a lot of WRAP’s work in the area of financing recycling. And that
includes managing something called our business development service, and some of the new
financial instruments we’ve looked at using to leverage investment into this sector.

Slide 2 - About WRAP
Just to give a bit of background to WRAP. We are a national Government-funded body
with a mission to create stable and efficient markets for recyclable materials and products.
We’re very much about strategic interventions in the market, in either the demand or the
supply side, depending on where the key barriers exist in different materials and markets.

Slide 3 - Grant Funding
We currently only focus on five material streams - paper, glass, plastics, wood and
aggregates. That remit is likely to evolve over time. We also have three generic areas of
work. One is on the procurement of recyclable materials and products. One is in standards
and specifications, particularly for the tradable recyclables that are collected. And then
there is the financial mechanisms programme.

I understood the thrust of today was to look at the barriers, particularly to financing the
green economy and stimulating growth towards that, and that’s the area I’m going to focus
on today.

Slide 4 - Grant Funding
One of the things we have done a considerable amount of is grant funding. We have made
capital support available. This has been strategically targeted and one of our capital
competitions has been for the development of an extra 330,000 tonnes of newsprint capacity
in the UK. We have also done a considerable number of smaller things in aggregates, glass
and wood processing.

Our initiatives are always geared particularly at overcoming certain issues. So, in wood,
where 87% of the secondary wood in the UK goes into the panel board industry, there is a
need to diversify the industry and create new applications. So that the market isn’t
controlled by a monopoly, we’ve tried to put money into new applications.

We’ve also made R&D support available to 42 projects to look at some of the strategic
technical barriers in various markets and encourage innovation.

Slide 5 - Grant Funding
However, as the informal session alluded to, there are considerable challenges with making
grant aid available on an ongoing basis. There are also considerable problems with creating
a very grant-dependent culture and a grant-dependent industry, which arguably the
recycling sector has already become.

Therefore, we’ve looked at levering in private sector money, and have looked at various
instruments to do that. We started, however, looking at it very scientifically. One of our
non-executive directors is a gentleman called Tim Sweeney, who was the previous Director
General of the British Bankers’ Association and he’s always telling me that the issue of
small business finance, in particular, is always overplayed. It’s always hyped up and up that
money is not easy to come by, but when you get down to some of the specific issues, and
model the availability of finance, there are readily available sources in most of the streams.

Slide 6 - Market Barriers
One of the things we started doing was a national consultation; 11 regional events including
one in London to look at what the specific barriers were to investment in recycling. The
slide shows some of the issues that arose. They’re in no particular order. They’re certainly
not a comprehensive list. But there is a publicly available report on the subject which I can
share with anybody who needs it.

Some of the issues we pulled out were really specific and acute in recycling. One was to do
with the specialised nature of assets as there is a non-transparent market for selling on
assets after their useful life or their desired life within a business. To any investor they
therefore represent low security and it’s also very difficult to get leasing arrangements for

I want to emphasise that you need to take a step back and look at the particular segment of
the green economy you’re trying to stimulate and identify the barriers. The Carbon Trust,
looking at low carbon technologies, are dealing with very different businesses and

We’ve also done some analysis of the required growth in the recycling sector if the UK is to
meet the requirements of the Landfill Directive and we’ve tried to model a supply of finance
to this sector over time.

Slide 7 - The UK Recycling Sector and Investment Demand
Some conclusions in brief. The recycling sector in the UK already has a £12 billion a year
turnover. That figure is based on looking at all the players in recycling from collection
through to the processing of a product that goes on to compete with a virgin raw material.

£7 billion of that is generated by the metals industry, which is already a very mature sector
of the economy. The remaining £5 billion includes light glass, light compost and so on.
Based on current growth predictions we’re looking at a £30 billion turnover industry in the
UK by 2018.

We then work back from there and try to work out that what somebody’s reprocessing
capacity will need to be if the UK is to deal effectively with its requirements under the
Landfill Directive. We estimate an extra £5.7 billion investment will be needed by 2018 in
reprocessing capacity alone. £1.5 billion of that will be needed by small and medium-sized

It’s that that we’ve really focused on, because it’s really in the SME market where there are
real barriers to accessing finance.
Slide 8 - Improving Access to Private Sector Finance
This is how we’ve tried to address some of the gaps that we’ve identified within that £1.5
billion. One is a business development service. On the one hand that helps with small
businesses, particularly the early stages, to make sure they don’t fall over a lot of the
common small business issues in making their applications for finance. On the other we act
as a sort of advocate for the financial sector, recycling, and the potential for growth. We’ve
had some considerable successes really in engaging the private sector.

There are two fundamental financial mechanisms that we’re going to establish in the next
few months - one is the Lease Guarantee Scheme, to overcome the problem of asset risk and
the fact that a leaser doesn’t really have any confidence in the secondary value of an asset in
an immature market place or where the technology is particularly new. The other relates to
the biggest issue we’ve found in modelling the supply of finance to the sector ie the supply
of equity and we’re piloting an equity fund for early stage or developing businesses.

The reason that there is a particularly acute gap in equity funding is largely down to the
lack of market information or understanding. It’s also down to the size of investment that’s
being sought. If you want to try and raise funds below half a million, it is by far the most
difficult margin to operate in. But that is a sensible amount to be raising if you are a new
composting business, and a new wood recycler, or whatever?

A word of caution on equities. I have come to distrust ethical funds.

Slide 9 - Future Areas of Activity
Just on some ideas of future areas of activity and particularly in relation to looking at it
more regionally, it’s certainly interesting to hear that London Remade is already starting to
think about modelling the investment requirements that London might need, and we’ll
certainly supply some of our work there, to help them extrapolate it.

There are acute problems with direct support to industry that we’ve already touched on.
And I think we’re very focused on trying to engage Government in funding, providing
additional funding for collection initiatives, which will directly benefit the private sector in
due course. And that’s really where the thrust of future funding mechanisms needs to be.

There is also a need for increased support for small businesses. In this sector, we see
particularly inexperienced management and we need to engage entrepreneurs and people
who have the experience of managing growth in a business and so on. And that’s certainly
something that is best delivered on a regional level.

So, they’re just some ideas for further reference.

The Chair: Thank you very much.

Zoltan Zavody: My name is Zoltan Zavody from the Energy Saving Trust. I’m a policy
analyst. The Energy Saving Trust is a non-profit organisation with most of its funding,
something like £80 million, coming from central Government. That’s for programmes
UK-wide including the devolved administrations.

We work in three areas - domestic energy efficiency, clean vehicles and small-scale
renewables. On domestic energy efficiency, we run a variety of programmes, and that’s
probably where we’ve made our name. We run a number of programmes for developing the
infrastructure for delivering energy efficiency to the domestic sector. And that involves,
amongst other things, offering grants to local authorities for innovative projects, and
providing them with a hand-holding support service.

We have a UK-wide network of 52 energy efficiency advice centres, which offer energy
efficiency advice to householders, and some of them are going further and actually assisting
local authorities with the development of their strategies for energy efficiency and energy
more generally.

And I should also mention our consumer campaign, which is called, “Energy Efficiency”.
The highest profile for that is in autumn, on television, during Energy Efficiency Week,
when the heating season kicks in. So, that’s our consumer campaign, which is hopefully
being picked up by a few Londoners as well.

Just to touch on our other programmes. On transport we have two programmes - “Clean
Up” which is about particulate traps for heavy duty vehicles and “Power Shift” which is
about conversion or grants for new vehicles running on LPG, gas or electric hybrids.

I’d like to make a point that I made earlier about the whole concept of energy efficiency, of
small-scale renewables and so on. The point has two strands. One is that money spent on
energy that’s generated far away, will go far away. It won’t stay in the local economy.
Money that’s not spent on electricity generated far away, because there’s energy efficiency
in place, or because the electricity is generated locally, that means that the money will
circulate in the local economy.

The second point is that healthy people in warm homes will make a bigger contribution to
the economy and social inclusion than unhealthy people, blocking beds in hospitals because
of respiratory and other causable diseases.

Neil Wallis: One point. Zoltan mentioned renewables, but he didn’t say that we’re also
responsible for running programmes on behalf of the DTI for mainly small-scale projects
throughout the UK.

The Chair: One of my missions today is to try and iron out where everybody is connected,
and who is related to whom, and where the energy advice comes from, and where it goes.
In energy terms, I am completely lost with the myriad of advice that is available and whose
job it is to do what. Dr Vincent…..

Dr David Vincent: Thank you very much. [Presentation attached at annex B to this

Slide 1 - Presentation Overview
I want to first of all give you an overview just in case you’re not aware of the Carbon Trust
and its objectives. That’s a sketch of what I’m talking about.

Slide 2 - Environmental, Health and Economic Drivers
The biggest drivers that we see are a mix of environmental health and economics.
Primarily of increasing concern are global warming and man-made causes of global
warming, principally the emissions of CO2 and the other greenhouse gases. The need to
improve air quality in urban areas is another driver that we see will become increasingly
important, as will the need to improve resource efficiency in business and commerce
generally. There are ways in which energy policy laws can be achieved by moving towards
a low carbon economy; in particular diversity of energy supply through increasing use of
renewables, and the security of supply in terms of reducing our dependence on imported
fossil fuels. You may be aware that - and it won’t be many years now - we will become net
importers of natural gas.

Of course there is a huge and growing global environment and energy technology market.
As one of our specific objectives we wish to encourage the development of a low carbon
sector in the UK, which can capitalise on those global opportunities.

Slide 3 - The Carbon Trust -
We were set up in April 2001 by the Government and the devolved administrations with
about a £50 million budget, partly from the fuel levy receipts, and partly through voted
funds from Parliament.

Our objectives are threefold:

Firstly, to ensure that UK businesses and the public contribute fully to the ongoing targets
for greenhouse gas issues - obviously we have got our own clear objectives, we’ve got the
Government’s domestic goal of the 20% target by 2010, and there may well be targets
which are even more onerous. If you think about the World Commission on Environmental
Pollutions recommendation of a 60% cut in CO2 emission by 2050, that gives a feel of the
scale and the step changes that will be required in our economy.

Secondly, to improve energy efficiency which in turn helps improve the effectiveness of UK
business generally and to improve resource efficiency. We think that’s very, very
important. There are huge savings to be had. Report after report talks about 20% savings
in the non-domestic sector to improve efficiency. And these savings can quite often be
achieved for relatively little capital outlay.

And thirdly, the most important development for the UK energy sector is that can capitalise
on the innovation and the commercial value of low carbon technologies nationally and
internationally. It’s a very powerful brief that we’ve been set by the Prime Minister.

Slide 4 - Action Energy
We have a number of programmes helping us achieve our objectives. The first programme,
Action Energy, is formally the Best Practice Programme. It seeks to maximise carbon
saving and investment. Looking at the application of today’s technology and know-how, it
is not inviting companies to take on rocket science about which they know nothing and may
care about even less. It’s about how one can take conventional energy efficiency technology,
get the technologies designed and into buildings and industrial processes, and to provide
the energy management know-how to get the most out of those technologies. I am thinking
here of very simple activities in buildings - I am looking at energy efficient air conditioning,
in areas where you need air conditioning. I am looking at low energy lighting systems. All
these technologies actually exist today. They are simply not being utilised anywhere near
enough to achieve those 20% target savings.

Slide 5 - £10 Million Energy Efficiency Loan Scheme for SMEs
Within the Action Energy envelope, we launched last summer an Energy Efficiency Loan
Scheme for small and medium-sized enterprises, up to £50,000 per loan for energy saving
projects. It’s the full project cost including installation. This is designed to stimulate
activity and overcome capital resource barriers which you know exist in the smaller
We are looking to seek energy pay-back in under five years. There are a number of projects
which can achieve that criteria. And through Action Energy surveys, which is run under
the Action Energy programme, we can help identify the primary investment opportunities.

Slide 6 - Enhanced Capital Allowances
Enhanced Capital Allowances - that was also a package launched by the Government in
April 2001, as part of the Climate Change Levy package. It gives 100% first year capital
allowances on qualifying energy saving equipment. That’s the generic list of technologies.
Nothing rocket science about that. Some very basic - pipe work insulation - stuff. You’d be
surprised how opportunities to improve the insulation of pipes - it sounds really boring - are
missed. It’s money for the taking.

There are within that suite of generic technologies and measures, 3,700 commercially
available products which you can pick up by looking at the ECA website. The products will
carry a badge. One of the important issues nowadays is to make sure we differentiate
products. Those products which have a better energy efficiency footprint and performance
will carry the Energy Technology List logo. It’s important to discriminate or differentiate
between products, so that potential purchasers can see what they’re getting.

And increasingly that list is developing a momentum of its own, primarily to identify those
opportunities where you get the EC allowance. What businesses and manufacturers are
recognising now, it is becoming a procurement list, bit by bit. People recognise that in that
list, there will be quality products in any case, not just for their energy efficiency
performance criteria.

Slide 7 - The Low Carbon Innovation Programme
The Low Carbon Innovation Programme - this is probably the one, I guess, nearest the
interests of the Environment Committee today, is our Low Carbon Innovation Programme.
There are four strands to the Low Carbon Innovation Programme - planning, research and
development, demonstration (carbon finance was a kind of equity-funded initiative) and
market diffusion. In a way the market diffusion one is the little Cinderella at the back that
people do tend to forget - they focus on the technology at the front end, and not realise
there are a whole host of non-technology barriers, which need to be addressed roughly in
the same order as you’re trying to overcome the technological barriers.

These are exactly the points we were making in the informal session earlier, about capacity
building and training, education and awareness. It is part of the educational inadequacies of
how we train our scientific engineers today with a focus on the technology. The eyes have
to be lifted to understand that to deploy the technology, you do need to address and
overcome the non-technological barriers. So, it’s no good making the most wonderful piece
of low carbon technology you can imagine, if you don’t have the supply chain and the
service provider chain suitably equipped to deploy and maintain that technology. That’s a
very important part of the low carbon innovation programme.

I just want to spend a couple of moments on carbon finance because it is currently in front
of the state aid officials with a decision due in 14 months or thereabouts. We have been
steadfastly putting forward our indications for over a year now, and it’s getting to the stage
that we think how much longer have we got to go through this process, before we can get a
tick or a cross. Because carbon finance and overcoming the equity gap is really one of the
most important factors that we see in bridging the gap between having a successful
demonstration technology, and moving towards commercial viability of products and
manufacturers in this relatively new industry. There are technological risks. There are
insufficient specialists in the venture capital market who know about the technologies and,
therefore, there is a certain degree of risk averseness. Generally speaking, there’s not a lot
of capital available for investment of this nature. And that’s quite an important gap that the
low carbon innovation programme is seeking to fill.

Slide 8 - Research and Development
Now R&D, that’s self-explanatory. I will just draw your attention to the bottom line. Our
new venture with the Engineering and Physical Sciences Research Council - it’s a £40
million/three year activity - in the first instance it is seeking to bring together top quality
university teams in the low carbon technology areas with those businesses who have
technological ideas and products to develop.

The idea is that the powerful research expertise we see present throughout our universities
will be harnessed to develop new technologies with a business side to their
commercialisation. It won’t just be academic research for the good of the science base, it’s
something that is beyond and above that which is going to help create wealth for the UK
with a new low carbon technology standard. That’s an exciting initiative and we really
hope a lot will come out of that.

Slide 9 - Demonstration Project
Demonstration Project - and this is possibly something which will be of particular interest
in this debate on the London green economy. There is a huge opportunity through
demonstration projects to begin to influence behaviours. There are companies who do take
the initiative and do take a step further than the building regulations, for example.
Unfortunately they are very few and far between. They need to be encouraged. The
benefits in terms of not just carbon alternate efficiency, but in crude tenant satisfaction with
the building, need to be logged, monitored and presented in the way that letting agents and
the speculative building industry in the UK will appreciate. That is quite a difficult trick to

The possibility here in London, where there are some extremely high profile companies, to
take the initiative and work with the low carbon innovation programme and the others, to
demonstrate top quality low carbon buildings. We would be very interested to pursue that.

Slide 10 - Carbon Finance
Carbon finance I mentioned a little bit earlier. The equity gap is also quite interesting in
terms of scale of activity. I just draw your attention again to the bottom point. We’re
looking to go from 250k upwards. There is a gap in terms of availability of venture capital,
and there is a gap in terms of the conception of the size of project that is relevant to low
carbon technologies. It is in this general area, £1/4 to £11/2bn, that certainly we feel can
be material. Other venture capital companies will make their own assessments of the scale
and size of the project. Unfortunately they are very few and far between.

Slide 11 - LCTA 2002
I mentioned the importance of capacity building and training. Just let me mention this very
briefly as we look at the last slide. We have just carried out an assessment of 50 or so low
carbon technologies. You can get the actual hard copy from The Carbon Trust. It divides
those 50 or so technologies into four bands. The “focus area” are the ones where we
obviously will be focusing on. The “consider” ones are where we think there will be the
potential of technological improvement, therefore promoting those technologies into the
“focus” category. The “review periodically” are the ones where we in The Carbon Trust feel
that our own resources are not going to be material; we won’t have the kind of impact that
we think we would have on other technologies. The “monitor” again are the ones where we
don’t think they’ll have impact in terms of £1 or £2 million investment project, but there
is, nevertheless, a high carbon saving technology impact.

I think that’s probably the end of my presentation.

The Chair: I would certainly like the Committee to have a copy of that. John Rose…..

John Rose: I think the first point that’s worth making is that our role is actually as
regulator of a scheme, as opposed to a funding body. Broadly speaking, ENTRUST
regulates the Landfill Tax Credit Scheme; a scheme that’s been in existence for six years,
which is about to go through quite radical change, firstly at the end of March and then in
the summer of this year.

Broadly speaking, the scheme can support a number of categories, which contribute towards
the green economy. They vary from the redevelopment of brownfield sites, importantly
projects with more sustainable waste management practices which I’ll come back to in more
detail, to the regeneration of public open spaces, green spaces, et cetera, and the public
buildings that are listed or are of historical interest. It’s quite a wide remit.

The key thing to understand with this scheme is that ENTRUST regulates it. Effectively
our role is to look at organisations and look at projects and judge whether they comply with
the current set of regulations, as opposed to making decisions on which projects are
supported and the value of those projects. And that’s the point I’ll come back to during
questioning, when you’re looking at the pros and cons of such a scheme.

As I mentioned, during the last four to five years, we’ve seen a wide variety of waste-related
projects, which of course will be of interest to this Committee, varying from education,
research and development, dissemination; and within the category of R&D, significantly
everything from pilot R&D practical recycling schemes right the way through to research.

This is about to change, because from the Government’s pre-budget statement, the
Chancellor announced that the waste-related elements of the scheme would be removed
from the scheme as from 31 March of this year. So, again, I think what’s important for the
Committee to consider is what it might be like with the future scheme.

What we’ll see is a current scheme of about £150 million a year, supporting broadly six
categories of projects, being reduced to a capped scheme of £47 million a year which will
still include projects such as land mediation, public open spaces, et cetera. However, it will
exclude waste-related projects.

The replacement the Government has talked about to date has been a scheme of £100 to
£110 million per year. The way that will be divided up is not clear as yet. The only thing
the statement does say is that the devolved administrations will be given the responsibility
for their share. Working on the normal formula, the Barnet Formula, that means
immediately they’re likely to remove about £18 million out of that £100 to £110 million a
year. This would therefore be the remainder left for England.

Of course, what you also need to consider within that, is the need to support current
projects that are of strategic value. It may well be that there is a further top slice taken
from any future funds that are available.
It’s not yet clear whether the replacement scheme will run under the current guidelines or
change significantly. I think there is room for political influence into what the future
scheme might want to achieve. I know, from our point of view, we’re interested in working
with both Customs & Excise and with DEFRA and other Government departments, to
ensure that the remainder scheme is probably a little more strategic in achieving
Government aims.

The Chair: Can I just clarify a small point with you. You said £110 million a year would
be for the waste industries.

John Rose: That’s the indication in the pre-budget announcement.

The Chair: And when you said about the Barnet Formula, was that pre-supposing that it
would be along the borough guidelines?

John Rose: I’m not sure how the money will be divided up in England. In the statement, it
only goes so far as saying the devolved countries will be given their share of the finances.
Having talked with the Welsh Assembly, they indicate that, for example, in Wales, that
would probably equate to £5.5 million or somewhere around that. I understand that
Scotland is closer to £10 million, Northern Ireland is likely to go up to £1.5 million. How
the funds will be administered in England is very much at an early stage. From what I can
make out from the sparcity of information that’s out there, it is not decided how the public
spending programme will be administered.

The Chair: You’re talking about the future funds, not the legacy?

John Rose: That’s the future fund, the £100 to £110 million.

The Chair: I think we should note at this point that the Committee have made a position in
rewarding recycling and how London should spend tax credits. Maybe you weren’t aware
of our position, but we think it should be strategically spent across London and, since we
produce so much rubbish, we should certainly get a good share of funding in order to deal
with it.

Graham Tope: We ended on the Barnet Formula, which as John said really only applies to
Scotland and Wales. There is much debate on (a) it’s long overdue for revision anyway and
(b) whether it should be extended to the regions of England, including London. I didn’t
want to lose that point but because it’s a bit outside our scope I would like to suggest it
might be something we could think about when we come to it again.

I actually wanted to start with barriers, which we spent quite a lot of the informal session
talking about. We identified cost, short-termism then, I think, and - a British disease -
capacity. I was slightly surprised in the informal session, nobody really talked about risk,
but it did come up in the presentations. It seems to me that risk, whether real or perceived,
is actually quite a strong barrier. I just wonder whether our witnesses would agree with

What I wanted to ask about here was not what are the barriers, because I think we have
identified a lot of those, but to ask you to say a little bit more about how we get over or
round those barriers, and what we can do to achieve that.
Zoltan Zavody: I will briefly answer your question directly with a high level response,
which is that if you have a long-term framework, and a long-term strategy, at whatever
level, ultimately central Government or a London level, setting out a reasonably solid idea
of what policy will be in the next few years, then industry and others can invest in
technologies, and processes, and so on.

An interesting example of this is building regulations where, in the last review in England,
it took about five years from initial consultation to finally agreeing on the regulations.
Once we were coming up to final agreement, industry said, “Well, we couldn’t possibly
agree to those standards. We’ve only got a year to implement them”.

Had Government set out five years in advance broadly this is where it wants to go then
industry would be able to invest and do the relevant research without feeling that it may be
let down in 10 years’ time. That’s the point about the long-term process.

Dr David Vincent: Adding to what Zoltan was saying that the building regulations are
one of a fleet of regulatory drivers. The other driver which is going to come in shortly in
the next two or three years is the European Energy Prudence in Buildings Directive. That
is a directive which for the first time will enable buildings to be labelled as to their energy
efficiency performance. That’s the beginning of bringing some transparency into what is a
very opaque market. Consumers of buildings don’t know and maybe are not that bothered
about the energy efficiency importance of the buildings they’re thinking of procuring. The
issue for us is those buildings have a very long lifetime. The usual design life is 60 years.
So, if you get it right, to start with, you’ve got year on year improvements in energy
efficiency and low carbon properties to measure.

The European directive will have the potential to raise awareness, to discriminate between
buildings of different qualities and through, we would hope, public procurement policy there
will be a preference in favour of the low carbon building for public procurement purposes.

The Chair: Can I just ask very quickly, we’ve got the London Plan out and the public
examination is happening early in March. There is a sustainability section to it. I wasn’t
really aware of the contributions your bodies had made to the EIP. I know that as an
Assembly, we’re supporting low and zero carbon construction. I was curious if you’d made
a contribution and you’d come into the EIP. If you don’t know, you can come back to us.

Zoltan Zavody: We hadn’t planned to.

The Chair: But I do need to contact you before the Assembly contribute on that. The
procurement that you talked about, David Vincent, that is happening next year, isn’t it?

Dr David Vincent: No, the European directive will come in around 2005 and there will be
a derogation over a period before it is fully applicable to all buildings.

The Chair: But to Government buildings --

Dr David Vincent: It’s not just Government buildings, it’s all buildings.

Graham Tope: You made mention too of state aid and problems with Brussels’ European
Commission. Could somebody say or tell us a bit more about this? Is this part of the EC’s
competition policy? What is the problem exactly and what do we do about it?
Dr Bevis Watts: I think the problem essentially is the timescales and complexities
involved. The actual nature of the goals that they’re working towards are not necessarily
the issue. How you address it is at the early planning stage on all of the measures you’re
going to put in place, to address, not just the financial ones, because several others may
come under de minimis aid or aid in kind, and so on.

I guess an earlier understanding of the environmental guidelines, if you’re looking to put an
umbrella of measures under applications to environmental guidelines, would be a key
development, rather than doing it on an ad hoc, case by case basis.

Graham Tope: Can you tell us what opportunities there are for linking public and private
sector investment and whether there is more scope there.

Dr Bevis Watts: I think this comes back to your issue of risk. You’re right. A lot of these
barriers boil down to risk, technological or purely financial. Really, we’re trying to create
mechanisms in our equity funds and the Lease Guarantee Scheme that move beyond the
grant. I think that’s a very forward thinking approach. To look at the earlier stages, the
R&D and the innovation, there is a need for a grant. Then perhaps there is a need to address
some of the intermediate risks that there will be.

What we’re trying to do is not offer an entirely soft option for businesses in our equity fund.
We are levering in a proportion of the private sector funds using WRAP money as a
cornerstone. The vision is for this pilot to actually co-invest with other funds, with
independent and private investors, to provide some track record. I think that’s something
which will receive a very warm reception. They are gaining comfort in that not only is
public money there to soften their risk, but actually that it’s coming with some expertise
and some credibility. WRAP has been involved in assessing this proposition and its place in
the market place. That’s the opportunity to match skills with the money.

John Rose: With the Landfill Tax Credit Scheme we ended up in a situation where the
Government was saying it wanted to see more money spent on waste-related projects, but
the regulations stated that the organisations receiving the money could not engage the
waste industry in those projects. So, you have a situation there where you’re beaten before
you start to a certain extent. I would therefore encourage a very careful strategic look to
ensure that fully open and transparent policies are in place, which allow you to engage the
industry which you will depend upon to deliver those targets.

Dr David Vincent: Just a comment on what was said about risk and investment. One of
the points I think that was made was to do with state aid. We have to be a co-investor in
carbon finance projects, i.e. we have to find a private sector investor to partner. The rate at
which we can attract private sector investors to come into the low carbon technology area is
thin. It’s limited. That becomes a limiting factor, rather than the growth and abundance of
bright ideas. So, that’s quite an important barrier to start addressing. One of the elements
of the notification of our funding schemes to Brussels is to seek to push the boundaries a bit
further, in terms of what those guidelines will accommodate. That is quite an important
issue from the point of view of kick starting small companies with technologies but
insufficient backing.

Graham Tope: Is this an issue you think we should pursue?

Dr David Vincent: It comes back to the point I was making in the informal session. It
really depends on what objectives we’re seeking to achieve here. We’re seeking to achieve a
low carbon footprint on London. You don’t necessarily have to have stimulated the
manufacturing capability. That is a UK-wide issue, not just a London-specific issue. So, it
really depends on what we’re focusing on.

Graham Tope: There is a reasonable amount of funds available now to pursue all of this.
Are they all taken up? What I have particularly in mind are SMEs. SMEs, in my opinion,
are notoriously difficult to get to and to get at. Are all the funds taken up and, if not, what
can we do about that, particularly with a view to SMEs?

Dr Bevis Watts: Shall I start with recycling? It depends on the type of finance you’re
looking at. If you’re looking at leasing debt equity we concluded, through modelling and
various consultations with both industry and the financial community and their
representative associations, there are huge gaps in the supply of finance to this sector.

Actually one of the issues going forward, and an area for some public intervention in the
next 10 years certainly, is that there is a lack of market understanding and willingness to
engage in what on paper is actually quite a small sector. For that reason you’re not seeing
people design the products to supply finance to that sector.

The Chair: I am conscious that the conversation is really around bringing in the private
sector. John Butt …….

John Butt: My name is John Butt and I am from Conduit Ventures, which is a venture
capital fund focused on the hydrogen economy and, with that, different types of fuel cells
and related hydrogen technologies. I will try, as much as possible, to broaden this into
other technologies, but really we’re looking at the green economy largely from the fuel cell,
hydrogen perspective and there are several reasons for that.

It’s a private sector fund. The investors are Shell Hydrogen, Johnson Matthey plc and
Mitsubishi Corporation. What we do is we invest in unquoted companies, start-ups, which
have products which have gone out of the laboratory. We take a lot of technology risk, but
we like to see that the box has gone out of the research lab where there’s a good chance that
it’s going to be commercially viable.

We don’t only invest in the UK. We look at continental Europe and North America as well.
Nonetheless, we’re UK-based. Now, in the context of barriers, what do we see? It was very
interesting to hear risk come up. In our view we see development cost as a major barrier as
well as funding risk to get the projects off the ground - all of these items are inter-related.
It’s a chicken and egg dilemma. The other barrier is the absence of a roadmap, which could
identify the key technologies that would create a viable green economy within the London
area. Obviously from our standpoint, we have identified that as being the hydrogen
economy and fuel cells, but we do know that there are others in existence which converge
towards these technologies.

One therefore has to say, “Okay, what are the different technologies out there, both in the
upstream and downstream side, which are viable, such that the appropriate resources, both
people-funding and the facilities which could be allocated?”

The other thing is that there are a diverse group of funding sources, all of which are sitting
here. However, it’s about pooling those resources and attaching them to the roadmap.
New technologies and opportunities can be expensive and it’s difficult to talk about just the
London area without looking at it in the national or even international context as well. The
UK as a whole, particularly London, has very, very strong innovation expertise. It’s first
class. Also, the UK has a very strong supply base in the wide range of green technologies,
be it on the PV, on fuel cells, on hydrogen. Those can be harnessed or leveraged.

Obviously, there is the absence of public awareness. I think a lot of people still feel the
technologies are something exotic. Some of them are not. It’s about adapting technology
for viable use.

Alistair Perkins: I am Alistair Perkins. I am here on behalf of CIT Structured Finance.
CIT Group was founded in 1908. It’s a very large, commercial finance company. It has a
single A rating and assets of $50 billion. It focuses purely on asset and commercial based
financing, so we provide financing for aerospace, shipping trains, telecom and media,
infrastructure - on the infrastructure side, we’re heavily involved in the PFI and PPP
market - and power engine renewables.

I work in the Project Finance Group in renewable energy. That’s really my field. And we
finance a number of renewable energy projects, primarily wind, energy from waste and
geothermal projects, large-scale geo-therm power plants. That’s really my focus. We are
talking about risks. I suppose really one of the barriers and the key features in renewable
energy projects that I see, are the legislative risks, and the risk of changes in law. We are a
long-term lender. Talking about the roadmap, we will provide finance for long periods of
time after the venture capital has developed the technology. It goes through
implementation and we want to develop a large project. So we take a very long-term view
and we will invest for 15, 20 years and over, in some cases.

For us, the cash flow reliability is very important. Also technology risk is a key issues
together with the overall commercial package too. By the commercial package, I mean
long-term contracts, et cetera, which will enable us to lend long-term. They have to be
matched with the kind of package. Often, renewable energy developers are less experienced
and, therefore, just putting together the overall package is often less well thought out.

Roger Evans: What are the big constraints that you find in encouraging more investment
in green technology?

Alistair Perkins: We’re trying to encourage well thought out projects. A lot of things
come to us which are either not well thought out enough or they’re at too early stage and
the technology is very, very speculative. That’s really where John comes in. I think where
we come in is where the technology is more proven and there’s a prototype in place, or
another project that’s successfully operating. That gives us a lot of comfort. We have
something we can point to.

I think there is a shortage of venture capital type finance. That’s really where the hole is.
On the project financing, there are plenty of banks out there with project finance groups.
With the current state of the power market, a lot of them are looking to divert that funding
into renewable energy. So there is no shortage of finance, but there is a shortage of well
thought out and well developed projects coming through.

Roger Evans: What does a well thought out project look like to you?
Alistair Perkins: What I mean by a well thought out project is something where there are
contracts. The commercial package is there.

Roger Evans: So they have got to have a market?

Alistair Perkins: They have a market. You know what the income is going to be with
some certainty. You know what the cash flow is going to look like. I think one of the key
problems with renewable energy is the risk of change in law and because generating
renewable energy is still more expensive. It is coming down in price and getting more and
more competitive. But renewable energy is still generally more expensive than
conventional power generation. So, therefore, it does require incentives, whether those are
tax incentives or just incentives on extra revenues.

Roger Evans: So, are you looking for an immediate return or a return in ten years’ time.

Alistair Perkins: It’s long-term. We are looking at return over the long-term but that
does require the project to stand up economically with fairly stable cash flows. We have to
know we’re investing in a sector where the rules aren’t going to change in two years’ time.
Whatever the current assumptions we’re making about investing long-term, rules change
and our current assumptions become invalid.

Roger Evans: I get the feeling you might have had a bad experience.

Alistair Perkins: No, not at all. I think some of the frustrations we have include, for
example, renewables obligation certificates. At the moment that’s working extremely well.
But the targets are only there until 2010. So, people come to us, they have a project with a
life of, let’s say, 20 years, and they want to get plenty of money to meet the useful life of the
project. It’s very difficult to lend them 20-year money when any certainty of the cash flows
we can forecast only goes out to 2010. I think it’s got to be matched with legislation and
the whole economics have to have a long-term perspective in order to get long-term

The Chair: Where are electricity prices in that? Where do you fit that in?

Alistair Perkins: Well, certainly on renewables. I think a lot of banks have been burnt
very badly on taking merchant risk, i.e. market pricing risk. People are now going back to
looking for long-term contracts.

John Butt: Yes, before a project gets to the stage where Alistair would look at it, there’s a
further bottle neck, i.e. further development capital for R&D and working capital. I think
the type of projects Alistair would back are those which are proven and that’s where a
different type of capital, other than venture capital, would be required and can play a role.
At this moment, it’s a chicken and egg situation and Alistair talked about half-baked

I think the nature of these green technologies means that at some point they will converge.
But you currently have disparate groups that have not fully evaluated the viabilities of those
technologies. The fact that they are emission friendly does not mean that they are
commercially viable with a large market.

So the point I am trying to make is that at some point, maybe further upstream in the
provision of capital, there has to be some form of - I keep going to the issue of a roadmap -
but you need demonstrations. For instance, I understand that there is going to be the
Hydrogen Bus Project this year, sponsored by some of the car companies. People like
ourselves and different capital providers, who would co-invest with us, to help get a project
off the ground. You just need to see things working. We need to see a hydrogen refuelling
station. And that has a leveraging effect. It stimulates other parts. It incentivises the guy
at Bath University or Imperial who are tearing their hair out, saying, “We are looking for

And again, because all of these technologies at the end of the day have to be as good, as a
minimum, or even better than incumbent technologies, we are talking about codes and
standards. The ADVs, the Johnson Matheys of this world, will -- people don’t want to
change their systems. It will cost too much to blend in.

Roger Evans: Is what you’re saying an argument for you being involved in research
projects right from inception, right from when the idea first comes into someone’s mind?

John Butt: Research projects require a different type of capital provider. When that has
been incubated up to a certain point and there is a clear indication that it could be
commercially viable, there’d still be technology risk, but that is where we would step in.

Roger Evans: Obviously we face a lot of problems from a governance point of view, where
we can go two ways on the way people behave. You can either go backwards, restrict the
way people behave, stop them driving their cars, stop them producing so much waste, stop
them using so much energy, or we can say we accept they are going to behave in that way
and we will use technology to mitigate their behaviour as far as possible. I know I am an
enthusiast for that particular approach. As someone in government who is an enthusiast,
what do you need from us to encourage more of this type of work in London and make
London a world leader in environmental technology?

John Butt: The first thing is to identify the technologies and put together a roadmap;
critical milestones, guidelines. Pool all the resources around this table to make it happen.

Roger Evans: I don’t want to do too much, because I’m not good at it. I want the people
who are good at it.

John Butt: And you obviously have to have the institutions. That’s very helpful to pooling
our resources, the institutional building, the focal point for that, because these technologies
have to be adopted. For instance, the GLA could be a first customer, the market adopter.
It’s got to be seen, it’s got to raise the public awareness. That is nothing strange. Then
that leads into a certain element of standardisation, codes and standards. People don’t want
to change too much. I think I may be wrong, but that’s the impression. At the end of the
day, you want the private sector, people like ourselves, to put money into it. And then those
who initially incubate it step back.

Alistair Perkins: From what I’ve seen, it seems that Government, probably quite rightly,
has decided not to back one renewable technology at the expense of others. And you can
say let them all evolve, which is fine. It’s probably a good thing. But on our side, it’s quite
difficult to know, because there’s no clear roadmap and there’s no particular sector that’s
being encouraged. We don’t really know which technology to invest in, particularly in the
The Chair: That’s what I was going to ask. I’m very aware that we have decided not to
back a winner. In the light that John Butt needs some form of winner chosen, David, do you
have a particular perception of where The Carbon Trust is coming from on this?

Dr David Vincent: Well this was certainly one of the reasons we decided to carry out our
low carbon technology assessment study last summer. It was because, faced with the
dozens and dozens of potential technologies in which we could think about investing, we did
not think that spreading our resources, which are roughly £25 million per annum very
thinly across all those technologies made a lot of sense. So, we assessed where it was that
we thought that the carbon savings potential was strong and also where we, with our
envelope of £25 million a year, could be material, because with that kind of funding, we are
unlikely to be putting in more than a couple of million pounds into any single venture. It’s
too much in terms of unbalanced portfolios.

Faced with that size of project and the areas of technology, we carried out the assessment
and we came up with categories where there is plenty of opportunity for The Carbon Trust,
with its size of investment and the degree of contribution to CO2 segments, where it could
make a difference. There will be those technologies, for example nuclear fusion, and we will
never be in that business; we simply can’t make a difference, and it’s not an area for The
Carbon Trust. But fuel cells, hydrogen economic infrastructure, photo conversion, those
kind of areas are of interest to us. And we will be beginning to become more proactive.
When we invite calls for proposals, as we have been doing in the last six months, when we
start our new round of proposals next month, we will be more proactive in those areas of
technology where we think we can be of use.

Darren Johnson: I want to pick up on this whole area of networking and accessing funding
and information. Is there adequate information about where to go for advice, help and
where to go for funding for new projects?

Dr Bevis Watts: In summary, no. The business development we set up essentially tries to
be that broker; on the one hand providing advocacy to investors and on the other trying to
get projects that do stack up and that are passed at the very early stages of development.

I think there is a lack of transparency generally in people who are perhaps a bit more open
minded to this sector, and the phrase, “venture capitalist” shouldn’t be taken too lightly,
because certain people have different interests in terms of the size of deal they’re after, the
specific sectoral interests and so on. And that goes for the debt market as well. Some of the
banks are very focused on waste and energy. Others aren’t really focusing on those areas in
terms of specialisation at all.

Darren Johnson: It would be useful to get a view from the receiving end.

John Butt: That is actually very, very true, because I think we actually receive a lot of
proposals at different stages of development and from different sectors. It’s in our interests
to help people along. So, if it doesn’t fit our criteria, we pass them along to someone else.
In the past, I think I sent everybody to The Carbon Trust, but now I know more people to
send to. We will try our best, but the lack of transparency on the different sources of
funding, depending on the stage of their development is key.

Darren Johnson: That’s useful on the information about funding, but what about the
funding itself? Are the levels adequate to make a difference?
John Butt: If you compare it to the types of funding in other countries, for instance both
private and public, I think it’s probably quite a lot.

Darren Johnson: Are you aware of projects that have actually failed because of lack of

John Butt: I know of projects which have been struggling. They didn’t fit our criteria in
the right areas, and I hope that they’ve got some funding now. There is evidence of success
stories however because if you look at what’s happening in The Netherlands, Germany and
small cities like Vancouver, there’s huge success. Companies there can access the public,
private investments at the early stages.

Darren Johnson: What would you say are the main factors which led to the lack of

John Butt: It’s certainly not a lack of expertise, because it’s here. I think it’s very difficult
to pinpoint it. It’s a very soft issue, a lack of focus, pooling together all of these resources -
financing people, facilities, having a focal point and allocating the resources appropriately.
Quite frankly, the expertise is here.

Darren Johnson: What about the problems of the general bureaucracy in terms of
accessing and managing public funds, and in terms of actually meeting the conditions. Do
you find there are too many conditions imposed on the use of those funds to help a
successful project get off the ground?

John Butt: I don’t know enough about the conditions each individual public funding
agency imposes.

The Chair: Can I ask a very basic question? If I take solar water heating as an example,
solar water heating is tried and trusted. It is not rocket science and it is not a new
technology. It is there. It is available. It isn’t exactly massively expensive, I would
suggest. £1800 would buy you nice solar water heating. It’s carbon reduction, it’s not a
renewables obligation. It can cut water heating in the home by 50% to 70%. It’s quite good
in energy saving terms and certainly CO2 commitment terms. So, it’s not something that
we need to worry about the technology of it. Why hasn’t something like that hit the
ground running and mainstream, and where do we go with the funding of it.

John Butt: One of the first things is that we don’t know enough about it, which would
stimulate that adoption. It’s a question of who’s going to adopt it first. Again,
demonstration needs to be shown, at least from our standpoint.

The Chair: I think the demand will go up for this product, the prices come down like
everything. Anne Gardiner, you have said consistently it’s still too expensive to be able to
take on. But creating a demand for it would bring the price down.

So what can we do for such a technology that is tried and trusted and works?

Zoltan Zavody: One of the things that the Energy Saving Trust is rolling out is the
renewable energy advice service - and that’s on the back of the energy efficiency advice
centre network. So, we’ve got an existing infrastructure, giving advice to householders on
energy efficiency, and we’re now piloting whether that kind of advice can be provided on
renewable energy, which includes solar water heating.
I guess the issue that we have very much focused on is technologies with a payback of three
to five years, whereas with solar water heating, it may be a bit longer. Perhaps the first
thing is to have authoritative advice available to householders and there may be other
things to do with grants that can help support them.

John Butt: I would go one step further. I think that if you have, say, one of the
Government buildings installed it they become a market adopter. Somebody has to take it
on, let’s say, on a leasing arrangement with the overriding goal that it is seen to be working.
Then that has a trickle down effect, hopefully.

Chris Dunham: I’m not sure that the problem with solar water heating is finance. The
payback is quite long compared with other technologies, so it’s persuading people to do it,
and they have to be willing to put it on their houses for reasons other than financial ones.
One of the things I’m interested in - I don’t know if you’re aware of the KPMG study, which
looked at the cost-effectiveness of PV. They found that if somebody was willing to invest
$500 million, which is the equivalent to 0.5% of current expenditure on oil and gas
exploration, on a large manufacturing plant for PV, then that plant will be able to supply
PV panels at a price that would be competitive with conventional power generation.

Now, why doesn’t somebody do that? Why don’t you do that? Why can’t you join up with
a PV manufacturer and just build that plant?

John Butt: I think on that scale of plant, it’s a different kind of financing. Alistair is the
one who would fund that.

Alistair Perkins: If somebody came to us with that proposal, we may very well finance it.
It’s just not coming forward.

The Chair: I think I have heard that before. They’re not coming forward. I have heard
that the entrepreneurs aren’t coming forward. David, do you have a handle on that? Are
there sufficient people coming forward in the right packaged sense that John was talking
about, presented with proper objectives? Is that really where the training needs to be?

Dr David Vincent: I think there is certainly no shortage of people coming forward,
certainly to The Carbon Trust, seeking carbon finance. There is a shortage in terms of the
quality of propositions, not just in terms of how are you addressing the technological risk,
but how are you addressing the downstream issues, because we are like a handmaiden to
commercial reality. We’re not there as a long-term prop.

The stories that we tend to get are promising technological ideas, but lacking in the vision
that says, “This is going to have to displace conventional products with conventional IP”.
The holders of that IP will not simply lie down and be walked over. They will respond and
they will respond to all kinds of market and commercial mechanisms, that these poor people
coming to us with technological ideas haven’t got a clue about.

What is needed is a certain degree of education, in reality experience, that says, “Yes you
have got a good product, but what do you see as your pathway to market and the barriers
you will address?” We have to have a dialogue and a debate. Lots of people have come to
us. Few people walk away with a cheque. And that’s not because we’re being mean; it’s
because there’s no point in giving a cheque to overcome one barrier, if they haven’t
addressed the others.
Neil Wallis: I just want to make one general point about defining technologies and the
issue of whether the Government should set technical choices. My view is the Government
has a pretty poor history of not backing winners. The role of Government should be to
define the goals, to set the targets, against which business and partnerships can deliver,
rather than sending a message that by putting solar water heating on this building, that
solar water heating is the way forward. You need to be telling people where we need to get
by what time.

Darren Johnson: I want to come back to this. Various people have talked about Britain’s
record and what Britain needs to do. I’d just like to get more of an idea about what you see
as our main strengths and our main weaknesses in Britain, compared to other countries.
You talked about the expertise and the innovation.

John Butt: A limited section of the broad act of green technologies. Let’s talk about the
hydrogen economy. The hydrogen economy can divide into generation, storage and
delivery of hydrogen, and that links into fuel sites. From that you can also bring in wind
and solar, because to be quite honest, you need wind to run a wind plant, you need sun to
run a solar plant. The challenge to be faced is you need to store it, and that is where the
hydrogen economy comes through.

On the option side, looking at the hydrogen economy, the UK is quite strong on the supply
base. In actual fact you will see the UK supply base dominating outside of the UK.
However, systems integration within the hydrogen economy sector is an area of weakness
particularly on the technical side.

On the corporate side, another weakness we see is the institutional building that’s required.
The strength is the expertise and know-how.

Darren Johnson: You mentioned inadequacy of funding earlier. Is that the main weakness,
or do you think it is integrated with --

John Butt: It’s tied in with people recognising what the viability and the functionality are
for a lot of these technologies. Funding could have a leveraging effect as the technology
ceases to be exotic. UK funding however is a drop in the ocean when compared to North
America and Germany where billions are being thrown into the sector.

Alistair Perkins: From my own perspective as well, on renewable energy projects, in
Germany and Denmark they’ve actually made a gamble and backed one particular or a
number of technologies at the expense, probably, of others which remain less developed.
Whether or not that’s advantageous down the road, I don’t know, but what it’s meant is
that they’ve actually established a clear roadmap. They’ve got well-established
Government-supported loan programmes of various technologies. On the tariff side,
they’ve got fixed tariffs. There are incentives in place, which mean that they are cost-
competitive with conventional technologies. That’s enabled the market to develop at a very
rapid rate and has brought in a lot of private finance. That clear direction does not seem to
be coming through in the UK.

Darren Johnson: Do you think Britain is too cautious in not wanting to back a particular
technology until it’s really taken off, by which time it’s --
Alistair Perkins: Or basket of technologies. There’s no real roadmap there to follow.
That’s my perspective. And it’s the same with the planning process. It’s a very difficult
task to get things through planning permission.

The Chair: I would like to move on to what we’ve learned. I think the “where we’re at” is
it’s very clear a strategy is required and the Mayoral strategies have given, by and large,
some very good indications there. Also working together, I think that this Committee has
been a very big fan of London working in concert and, therefore, we do need to know where
all the funding is and that it ties in with our strategies. Obviously there’s a need for more
money. And there’s certainly a need to look at how planning and the London Plan can fit
in. We’ve got ideas around how we can support the European dimension - is that right,
Graham? We need to think about how we can be very, very proactive in getting some
strategic money into areas, and we’ll need to apply the Europe dimension. And the issue of
tax incentives was raised very, very notably and loudly earlier on.

Are there any other questions?

John Rose: Just a few observations really on the basis of going along with the scheme over
the last few years. It’s interesting that there does seem to be a gap in high risk funding
although we’ve seen a number of projects which the landfill tax credit has been used to

I sit on a grants committee completely unrelated with work and have noted there is a
suspicion about any project that may result in financial gain for the person who is bringing
it to the table. I think that could be a real barrier. I’ve seen some tremendously innovative
projects come across the table there that are instantly greeted with a degree of suspicion,
because ultimately that committee is involved in allocating what are public funds. I must
say that’s a personal comment and not on behalf of ENTRUST. But I think that’s a
significant barrier.

There’s also - which may well come about as a result of the development of regional
government - the need to marry up decentralised decisions, i.e. regional decisions with
strategic projects. There is a need for national co-ordination as well as regional co-
ordination and that’s certainly a criticism that’s come in from many of the funding bodies
that work under the scheme - the lack of strategic direction. I think it’s important to tie the
regional priorities in with national priorities in.

Zoltan Zavody: I would like to end with what John Rose said about linking in regional
with national. We very much welcome the targets suggested by the GLA for carbon
reductions for London, the 20%, and also the 10% renewables for new developments. I
guess what we’d like to see is where London boroughs, and indeed local authorities and
other players around the country, see their role as contributing towards meeting a target, in
this case the London target. I think Neil made a similar comment about technology; if you
have a final target, then the various technologies will filter up to meet that target. You
don’t need to pick a specific winner. We very much welcome that broad framework.

Neil Wallis: I think it’s important to set targets, to have overriding aims that are clear
with an appropriate mix of both sticks and carrots. I don’t think technology alone is going
to solve the problem. In the context of London, the planning powers are perhaps a pretty
important area to look at. Also a point that Zoltan raised earlier about public awareness -
it’s vital that the public are aware of carbon footprinting and the link between what energy
we use and the effect that’s having on climate change, flooding, and severe weather etc.
Raising awareness will enable effective policy to be implemented and to gain widespread
acceptance. I think that is an important factor.

Dr David Vincent: I haven’t really got much to add. It’s really useful, though, to address
the fact that there are huge technological barriers in risks, and commercial risks to
achieving a green economy whether you’re in the energy area or in other areas of activity. I
think trying to get to grips with that is a monumental task. We have to start segmenting
those bits where we feel we could actually be material and effective, rather than trying to do
everything across the board.

Dr Bevis Watts: I think the only point to add is something I’ve tried to stress already.
We’re trying to address issues which are very specific or acute in recycling and, within that,
the segments of the green economy. Perhaps London’s focus should be on trying to identify
what are London-specific issues, or where London has a potential to set a precedent for
something that might roll out elsewhere. For that we’re very keen to supply the
information and research we can to your process and thinking.

The Chair: Thank you very much for coming. We will be writing to you with the reports.
We’ll invite you all to the final session for discussion or we’ll present it to you. I hope that
you keep in touch with our process. Thank you very much.

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