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Electricity privatization and environmental accountability
Electricity privatization and environmental accountability Timothy O'Riordan
The generation of electricity modifies the physical environment of the globe more than any other industrial activity. Indeed, the industry may already create more long-term economic costs than benefits in terms of associated environmental repercussions. This negative economic equation could become even worse unless long-term and programmed investments into energy supply and conservation strategies are made with proper care for all indentifiable environmental effects. The present publiclyowned electricity industry in the UK has an environmental track record that is patchy but generally unsatisfactory, despite some improvements in recent years. The key issue facing the privatized industry is how comprehensive and effective all aspects of regulation will be - environmental, pricing, and research and development. That task can only be achieved by integrating these three regulatory functions in a single, independent, and effective agency. Keywords: Environment; Accountability; Privatization 'The environment' is a fashionable term with many meanings. For the purposes of this analysis it applies to three linked themes: •
•
The functioning of the physical and biological systems that make-up the non-human part of the globe. These laws and relationships are unmodifiable and only incompletely predictable. The values placed by human beings on these systems in terms of the usefulness of environ-
Timothy O'Riordan is at the School of Environmental Sciences, University of East Anglia, Norwich NR4 7TJ, UK.
•
mental functions, their beauty and their right to exist without being unduly molested. These values are continually changing. The yardstick against which good overall management performance should be assessed. A healthy industry can only operate if it responds to and maintains a healthy environment as defined above. That yardstick is durable but malleable.
'Environmental accountability' therefore becomes a metaphor for socially responsible management practice, sanctioned by regular public reporting and by demonstrable responsiveness to the public interest. The 'public interest' is mostly identified through the political demands of various pressure groups and other vested interests. This pluristic model of responsiveness is not, however, sufficient. Implicit in the concept of environmental accountability must also be an internal and an external regulatory regime. That regime must be sufficiently robust to maintain a long-term concern for environmental values over and above relatively short-term demands from narrow but powerful groups and organizations. When assessing environmental accountability we must look critically at the structure and responsiveness of management and regulation, the underlying forces of power and influence, and the capacity to adapt to the changing states of science and public values. These three features - scientific respectability, sensitivity to a changing public mood that is knowledgeable about what the industry is proposing and doing, together with responsiveness to management needs - combine the trio of environmental meanings outlined earlier. The key concepts for environmental accountability are institutional cohe-
sion, scientific credibility, openness, responsiveness, and effective scrutiny.
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ELECTRICITY PRODUCTION AND ENVIRONMENTAL IMPACTS Linking project, strategy and policy By any standards electricity production creates 'high profile' environmental impacts. One must look at such modification from the combined perspective of policy or strategy and specific project. The strategic frame sets the conditions and the cash for individual schemes, so the environmental implications of one cannot be disconnected from the other. It is always tempting to examine the environmental effects of electricity supply or electricity conservation projects as if they were promoted separately and in isolation of a policy setting. This has been the approach adopted by the principal current public corporation, the Central Electricity Generating Board (CEGB) which has largely focused its environmental attention on project impacts and strategic scientific research. Figure 1 shows that this combination is still not enough to meet the requirements of accountability. The official case for the controversial Sizewell B PWR was more political than environmental or economic. Yet the environmental cause was promoted, not just because nuclear is deemed in government circles as being environmentally more benign than coal. It has now become politically fashionable to deploy the 'environment-friendly' argument as a justification for investing in a viable (but not cost-effective) nuclear industry at the expense of furthering fuel dependence upon artificially high-cost UK coal. Politicians are beginning to realize that the environmental aspects of energy choice can be treated as at
Ii!
supply orientation security of s u p p l y high p l a n n i n g margin ambiguity over role of efficiency and conservation
Protection of an internationally nuclear i n d u s t r y _
_ l _competitive
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........................ s u p p l y over conservation
i • PWR p r e f e r r e d to AG R • the CEGB-Westinghouse-NCC
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link
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nuclear p r e f e r r e d to coal indigenous ( b u t efficiently produced] coal preferred to imported coal uranium supplies adequate and reliable radioactive fuel reprocessing policy, using in part spent PWR fuel, paves ways for multinational fast reactor
Figure 1. UK government policy biases that favoured the promotion of the Sizewell B PWR. 1 Source: O'Riordan, et a/. See Ref 1.
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least on a par with more established cost and national strategy justifications. Environmental accountability has to incorporate both a political and economic element. This suggests that environmental regulation cannot sensibly be separated from other areas of regulation. For a future privatized electricity industry the Office of Electricity Regulation, or whatever OFELEC will eventually stand for, ought also to be the regulator of the industry's environmental strategy as well as overseeing its tariffs, management, and R&D practices. Unfortunately, as matters presently stand, that message does not appear to have been heeded by those responsible for setting up the appropriate legislation.
Fossil fuel The environmental effects of various electricity options are becoming increasingly widely known. Good summaries of the state of the art can be found in reports by Mintzer, 1 and the World Resource Institute at the International Institute for Environmental Developmentfl Coal combustion carries in its exhausts warming gases (CO2, N20) and acidification products (SO2, HC, NOx) to such an extent that calls by the anti-nuclear lobby for more large coal-fired power stations in place of new nuclear schemes have become embarrassing. It is very likely that changes in atmospheric chemistry leading in turn to temperature warming, ozone depletion and enhanced acidification will become one of the two most pressing environmental concerns of the 1990s. The other will probably be the economic, military and trade-debt-aid implications of increasing environmental instability in the Third World. Some of this instability will bc due to climate-induced effects linked to fossil fuel combustion. Excessive fossil fuel consumption on a large scale may soon become politically unpopular even if international fossil fuel prices remain low in narrowly defined monetary terms. The causes of enhanced acidification and the links with coal combustion are neither fully known nor scientifically proven. It is tempting to wait until less ambiguous research results come in, and then act. This has been the strategy of the UK government and the CEGB. Yet this is neither a sensible approach nor is it environmentally responsible. Both remain reluctant to invest public capital, possibly adding as much as 10% to the price of electricity which is already unduly high, in part because of political manipulation of tariffs to help finance privatization. If a major public corporation endeavours to take this line, will a privatized corporaE N E R G Y P O L I C Y April 1989
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tion, anxious not to raise its costs unduly, not follow suit? And will the present administration, sensitive to charges that privatization carries with it price increases, let the industry invest to the hilt in SO2 and NO× reductions? Privatization and environmental accountability cannot be separated from strong and independent public interest regulation. If this is not to be the case, a lot is at stake in terms of the UK's environmental image abroad and its public interest duties both at home and overseas. As matters currently stand the UK line is partly dictated by European environmental directives, partly by the CEGB, and only ephemerally by the government. This is not a stable basis on which to develop environmental accountability for a future privatized industry. Nuclear power
The nuclear industry provides no panacea for this dilemma. It is plagued by a loss of public confidence in its guarantees of safety and its faltering costeffectiveness. This is partly a result of excessively demanding safety requirements and associated institutional and management difficulties. It is also largely due to the sheer technical and engineering complications of designing and constructing a major nuclear facility. This has led to delays in construction, and severe cost escalations, to the point where there is genuine doubt that the private sector will invest in large-scale nuclear power unless part of the costs are underwritten by the state. Such a course of action, though likely, would severely weaken the political and economic case for privatization. Furthermore there is growing public resentment over any proposals for radioactive waste disposal and nuclear reactor decommissioning, two linked elements in the much disliked 'back-end' of the nuclear cycle. That resentment, associated with a 'stigma' of being geographically connected to the 'dirty' end of nuclear power, will manifest itself in continuing political controversy over any proposal to dispose permanently of nuclear waste and, perhaps to a lesser extent, to the establishment of a decommissioned nuclear mausoleum. Such resentment will continue to plague the whole nuclear industry, whose public image could remain forever tarnished. Nuclear power in the UK is officially regulated by independent governmental agencies. But the bulk of safety management is handled by the industry itself for the industry currently carries a strict statutory duty to provide safe power. The creation of National Power, the 70% rump of the CEGB, should carry with it most, if not all, the CEGB's present in-house nuclear safety management teams. This is certainly
ENERGY POLICY April 1989
the intention of National Power's management. It is inconceivable that the government will seek to impose any limitations on in-house safety management and organization. That point has already been explicity signalled in the CEGB proofs for the public inquiry into the next PWR at Hinkley Point C. The future of nuclear power lies in ensuring that the new management is equally, if not more, competent at designing and constructing nuclear reactors compared with the present industry. This will have to be publicly shown to be the case, probably by opening up much more the procedures for nuclear safety determination and regulation. Renewables
Renewable energy options are by no means immune from environmental disturbance. Wind power, on any reasonable scale, blights landscapes, is noisy, scares birds, and creates a potential hazard should a generating blade break away. On environmental grounds alone the future of any very sizeable wind power programme looks bleak indeed. Tidal barrages inevitably turn saltwater ecosystems into fresh water zones and brackish lagoons, drastically altering bird and fish habitats. This could set one group of environmentalists against another. A serious proposal to advance a Severn tidal barrage will separate the environmental wheat from the environmental chaff in the UK. If the economics were right the environmental champions of tidal power would probably win, but there would be quite a battle. Solar power is less obviously environmentally damaging, but the construction of solar panels involves materials that carry an environmental burden both in their extraction, and in their manufacture, via toxic effluent discharges. This is not to say that there is no scope for renewable electricity generation in the UK. Far from it. Most of the best technology is still at the design and prototype stage, so further experimentation especially in high fuel cost areas is desirable. In any case, the government requirement that up to 20% of future electricity should be produced from non-fossil fuelled sources should help to stimulate the deployment of this technology. After all, the costs of renewable source electricity production should become quite competitive to large-scale nuclear power, especially if load following units are wanted. So the prospect of a modest flowering of renewable energy production looks reasonably bright. Here is an example where strategy and project become interlinked. This also demonstrates why a comprehensive e n v i r o n m e n t a l comparison between supplyproviding and demand-reducing electricity options
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U K E S I privatization - environmental accountability
needs to be undertaken by a fully competent, central organization.
Defensive investments Environmentally defensive technology such as NO, and S02 stripping create a potential environmental nuisance in both the materials they require, often in vast quantity, and in the residuals eventually produced, also in large amounts. Again this can create a challenging dilemma for front-line environmental organizations. For example the proposed SO2 stripping of three CEGB power stations at Drax, Fawley and West Burton will involve nearly a million tonnes of limestone/year to create a similar amount of gypsum, together with smaller amounts of other, more hazardous, wastes. The CEGB has been careful to claim that none of this limestone would come from the two English National Parks that contain limestone quarries (the Peak District and the Yorkshire Dales). But it is widely accepted that this new demand for limestone will create a 'knock-on' effect that will retain and even increase the demand for limestone from the existing national park quarries. NO, removal technology also requires very demanding standards of operation if effective pollution control of residuals is to be minimized. Even demand-reducing methods, such as insulation and restricted ventilation, can result in health hazards associated with air-conditioning technology, and the retention of toxic substances in indoor atmospheres. In every case it is already possible to reduce pollutant effects and to mitigate foreseeable environmental damage, with the notable exception of CO2 emissions. But it is a moot point whether the overall environmental transformation caused by whatever mix of electricity supply and conservation strategies are adopted can noticeably be reduced. It is more likely that electricity management will carry a special, highly public and potentially worldwide environmental burden. This is why environmental accountability is such an important aspect of the future private UK electricity industry. It is also a major reason why that industry cannot be left either to regulate itself or to be regulated solely by external statutory agencies. This tends to be the case for another potential environmental mischiefmaker, the chemical industry. The chemical industry is increasingly regulated through international regimes. It has developed, through its national and international trade connections, a strong sense of collective environmental responsibility, and it is highly sensitive to its environmental public image. But the chemical industry is not a natural monopoly. It does 144
not have to be regulated by government biased price controls, and there is no automatic link between the prices of its products and its environmental performance. Not so for the quasi-natural monopoly of the electricity industry whose environmental protection measures and long-term defensive expenditures can create such a significant cost burden as to trigger political attention. There is a very special case for a robust and politically responsive structure of environmental accountability in the electricity industry, whether privately or publicly owned. The present privatization proposals, still in a delightful state of flux, offer a wonderful opportunity to get this matter right.
PRESENT STRUCTURE OF ENVIRONMENTAL REGULATION ESI
IN T H E U K
Nuclear safety It is tempting to argue that the industry's environmental affairs can be promoted and regulated by the present official agencies and statutory requirements. But to leave it at that begs two questions: whether the present structure of environmental regulation is satisfactory, and whether that structure can effectively be transferred to private electricity corporations. Figure 2 indicates who is responsible for what I Generation I Nuclear Nil
RCI
MAFF
Fossil fuel
Renewable
HMIP LPA LEA
LPA
IDistribution I
I Transmission I LPA
LPA
LEA
Figure 2. Environmental regulation for the existing electricity industry. Nil
= Nuclear Installations Inspectorate within the Health and Safety Executive responsible for granting a site (safety) licence under the Nuclear Installations Act 1960. RCI = Radiochemicals Directorate within HMIP responsible for authorizing radioactive discharges into the environment. MAFF = Ministry of Agriculture Fisheries and Food responsible for authorizing discharges to the sea, foodstuffs and to ecological pathways involving food. HMIP = Her Majesty's Inspectorate of Pollution. LPA = Local planning authorities located primarily with the county councils but also including the district council, covering planning matters. LEA - Local authority environmental health and also local waste management departments. The former operate at district level, the latter at county level in England; both operate at district level in Wales.
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U K E S I privatization - environmental accountability'
in terms of environmental regulation of the present, publicly-owned electricity industry. The management of nuclear safety was closely examined in the Sizewell B inquiry and found wanting in terms of coordination, consistency and economic justification, and specificity. The inspector of that inquiry, Sir Frank Layfield QC, was satisfied that safety as an end result was tolerable, but he was dissatisfied with safety assessment as a process. 3 The statutory regulatory agency, the Nuclear Installations Inspectorate (NII) the branch of the Health and Safety Executive responsible for such matters, together with the authorizing department for all radioactive releases, namely Her Majesty's Inspectorate of Pollution within the Department of the Environment and the health and safety directorates of the new generating company, will have to work more closely together than their current counterparts if the delivery of safety is seen to be acceptable. At present these working arrangements and how they have been adjusted in the wake of the Sizewell B Report remain something of a mystery. They are certainly neither open, nor obviously responsive to published codes of practice. Indeed, the revision of the safety assessment codes, asked for by Layfield, has not yet been comp.leted. It is a moot point whether this state of affairs will be acceptable for a privatized nuclear industry. Pollution control
For pollution control, the relevant government agency will be Her Majesty's Inspectorate of Pollution charged with a remit to seek to encourage integrated waste management practice across air, water and land. 4 That unified approach has not yet been achieved, but there is no intrinsic reason why a privatized industry cannot manage its emissions in an integrated manner any less satisfactorily than a public corporation. In general there is no particular conflict between the safety function and the pollution control aspects of the electricity industry. Safety matters, including the wellbeing of the general public, are the responsibility of the Health and Safety Executive. The new Inspectorate of Pollution controls emissions within the general principles laid down and agreed by the Executive. Though there has to be coordination between the Radiochemicals Directorate of the Inspectorate and the Health and Safety Executive, in principle the two could work at cross purposes. In practice the relationships are reasonably harmonious. From time to time abrasive conflicts of views do occur, but these are not in themselves serious enough to jeopardize public health and safety. More ENERGY POLICY April 1989
serious is the effectiveness of the NII's basic approach, and especially its coordinating mechanisms, as pointed out by Layfield. There does not appear to have been any publicly announced changes in procedures to indicate that the responsible agencies have generally responded to Layfield's criticisms. These important matters will have to be sorted out openly if privatizing the nuclear industry is to carry public credibility. A key determining factor will be the control of the tariff associated with the nuclear supply component. It is vital that the private industry will be enabled to charge for its product at a rate that fully meets its long-term environmental obligations. This could conflict with the government's desire to keep electricity prices down post-privatization, though the current highly controversial policy of artificially raising prices, to ensure profitability in the industry, may be sufficient to establish a satisfactory price regime in the private era. If this is the case, it will be by default, not by design. There is no indication at all that current price rises are in any way related to environmental considerations, either at present or for the foreseeable future. None of these regulatory bodies has a significant role to play regarding the industry's strategic project planning function. The regulatory agency becomes involved primarily at the project specific level, be it power station or transmission lines. True, codes of practice for safety assessment principles have been produced, but they are of a general nature to allow the individual inspector to judge for himself how far the industry is meeting its obligations and are by no means binding on multi-project decisionmaking.
THE SECTION 37 DUTY In-house environmental accountability within the present electricity industry rests largely upon its responsiveness to the statutory obligations under section 37 of the Electricity Act 1957. This section lays a duty on the industry via the following words: in formulating or considering any proposals the industry and the ministers shall take into account any effect which the proposals would have on the natural beauty of the countryside or on flora, fauna, buildings or objects. The precise meaning of this duty remains unclear, despite careful scrutiny during the Sizewell B inquiry. To begin with it is not a binding requirement. If an electricity industry faces a conflict between cost-economy and environmental damage, the former would probably win over the latter. At present, 145
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there would be no recourse in the courts for aggrieved environmental groups to pursue any failure to give due regard to the S 37 duty. In any case, it is not laid down how far that duty extends. The CEGB itself does not know over what range of issues it must examine for possible environmental effects. Nor is it clear how the CEGB should weigh these up against other legitimate duties, notably that of providing an 'efficient, coordinated and economical system of supply in bulk for all parts of England and Wales', as laid down in Section 2 of the same statute. The S 37 duty does not apparently extend to strategic questions such as the reduction of acidic emissions or the avoidance of sensitive ecosystems in the design and location of its projects. At present, for instance, the decision to remove SO2 and NO× from coal-fired power stations has nothing to do with S 37 in the specific sense of being driven by the dictates of that statute. Similarly, how much of overhead transmission line is placed underground and agreed in high amenity areas is a matter solely for the generating boards to determine. They have no legal conscience on this important environmental matter, only a narrow economic one. Currently the CEGB is proposing wind farms on sites that are sensitive both from a wildlife and an amenity viewpoint. Certainly its S 37 responsibilities have not stopped serious consideration of those suggested locations, despite objections from the statutory conservation authorities, the Countryside Commission and the Nature Conservancy Council. So we cannot look to the S 37 duty, as it now operates, with regard to the industry and authorizing ministers, as a satisfactory device for incorporating environmental accountability. S 37 does, however, give the present public corporations environmental conscience, and it does help the Board to justify some £30 million of expenditure on environmental research and environmental amelioration associated with power stations and transmission lines. So the S 37 duty must not be disregarded, in any formulation of environmental accountability for a future privatized industry.
ENVIRONMENTAL IMPACT ASSESSMENT One other item of environmental good practice is now on the industry's agenda. This is the formalization in the UK of the European Commission's Environmental Impact Assessment Directive, (EEC 885/337) via a series of statutory instruments passed in July 1988. The relevant secondary legislation for
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the electricity industry is SI No 1199, the Town and Country Planning (Assessment of Environmental Effects) Regulations 1988. This extends as a mandatory requirement to all thermal (including all nuclear) generating stations and other combustion installations with a heat output of 300 MW or more as well as radioactive waste disposal sites. For these projects, environmental assessment is not just a series of documents. It is linked to a formal process of public consultation before and after draft studies are prepared, and to independent review in Brussels if the final surveys are regarded as unsatisfactory. Environmental assessments, of course, can only be guides to decision. But they can also provide a useful vehicle for project-level accountability. Transmission lines, storage of fuel, small energyproducing installations, hydroelectric power stations, and facilities for enriching and reprocessing nuclear fuel and processing irradiated wastes will only be subject to discretionary environment assessment under the terms of the Directive. This means that the scope of the assessment, the degree of public consultation and the nature of independent scrutiny will depend upon the goodwill of the developers, and the mood of local planning authorities. Only when a scheme is deemed to have a 'significant' effect on the environment will an assessment and its associated procedures be required. Then, even if unwilling, a local planning authority will have to insist on a full-blown assessment. What constitutes 'significance' in environmental terms awaits more detailed planning guidance and, doubtless, legal interpretation, along the lines outlined in the Directive. Already the CEGB has sought to meet its obligations by preparing environmental assessments for its Hinkley Point C, Fawley and West Burton power stations, together with the Drax limestone-gypsum flue gas desulphurization plant. It is likely that the successor private companies will continue this practice if only to smooth the path of public inquiries. It is nowadays unthinkable for an electricity utility, public or private, to propose any scheme, whether under the mandatory or discretionary parts of the Directive, without a fully comprehensive environmental statement. What will matter is who will set the standards for these assessments, and how far the privatized industry will adopt a fully responsive environmental persona when building such assessments into project management. The European Directive is silent on the strategic or policy framework aspects of electricity planning. For assessments to be undertaken in these spheres either new UK legislation or a comprehensive code of practice will have to be put into effect.
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UK ESI privatization
For the present, that seems unlikely. The European Commission is attempting to link policy to strategy. It is currently exhorting member states to devise plans aimed at reducing electricity to GDP ratios by 20% over the next 10 to 20 years. That is an achieveable target, given the changing character of economic activity and improved appliance and insulation technologies. Efficiency in electricity-use is seen as a major component of energy conservation generally. But, to achieve success, it may be necessary to set specific performance targets for each member state. Given the prospect of a tougher Brussels regime in the 1990s, that is a plausible prospect.
E N V I R O N M E N T A L A C C O U N T A B I L I T Y IN THE PRIVATIZED ESI
The locus of environmental accountability could rest in one of four possibilities.
1. A separate function created within an indepen-
2.
3.
dent regulatory agency with responsibility both for project appraisal performance and long-term strategic R&D. This model could be something on the lines of the Electric Power Research Institute (EPRI) which services some of the US electric utilities, deriving its income via a levy on sales. The US experience is that EPRI has performed a valuable function, most notably by providing a point of access into the industry for e n v i r o n m e n t a l l y c o n c e r n e d groups and organizations. 6 A diffused function, simply by expanding the remits of the existing regulatory agencies to cover a more comprehensive environmental performance. The problem here is that the different agencies - the Health and Safety Executive, Her Majesty's Inspectorate of Pollution, the local environmental health, waste disposal and planning authorities, all work to a different set of rules, guidelines and statutory procedures with very little effective coordination. It is unlikely that this diffused regulatory model would meet the demands of accountability laid out at the beginning of this article. An independent ombudsman. The New Zealand government has established a Parliamentary Commissioner for the Environment, an environmental ombudsman, whose job it is to ensure that all public and private corporations meet minimum standards of environmental performance. The Commissioner's Office lays down
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4.
-
environmental accountability
guidelines under terms outlined in the Environment Act 1987, covering a range of environmental and social concerns. Failure to comply results in a Commission investigation and the possibility of a report to the Parliamentary Environment Committee with the scope for referral to the courts if the environmental disobedience is of sufficient magnitude. The New Zealand model offers an imaginative solution, but it requires a tough and well-funded Commissioner's Office, appropriate unambiguous supporting legislation and a real sense of corporate environmental responsiblity. Realistically this is not a model that is suitable for translation in the UK in the foreseeable future, though it has much intrinsic appeal. A linked regulatory office where responsibility for both project-based and strategic-level environmental good practice rests within the Office of Electricity Regulation. Figure 3 outlines a possible configuration of functions within that office. This has the advantage of being plausible given existing official pronouncements regarding the possible functions of OFELEC. This model links environmental pollution to tariff regulation and long-term R&D, it also provides for an input of two advisory committees, a consumer council and a research advisory council, that would establish a measure of public interest scrutiny into the affairs of the whole industry. US experience confirms the essential role of these two councils, especially the fusion of consumer, scientific and environmental advice and criticism.
For this scheme to function properly, it would also be necessary to make S 37, a statutory duty. The section would also have to be suitably amended to include a socioeconomic component, to ensure that
Office of the Director General for Electricity Regulation
I
I
d rectorate
directorate
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S 37 duty judicial review annual accounts environmental assessments (project)
I J
development directorate
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Figure 3. A possible structure for OFELEC. 147
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the wellbeing of local people was legally taken into account, so that, as far as possible, they would not suffer uncompensated discomfort or property value losses. This would mean that obedience to the expanded S 37 would be subject to judicial review litigation in the courts. Legal action could be initiated by individuals, organized groups, or by the official regulatory agencies, including the local authorities. The environmental appraisal directorate within OFELEC would set guidelines for the S 37 duty, which would become enforceable codes of practice in both project management and in strategic policymaking. The three major arms of the privatized industry (the generating companies, the transmission corporation, and the distribution boards) would be required to publish an environmental account in their annual reports, a task that would show how far they have interpreted their environmental responsibilities in specific instances and responded to publicly expressed concerns. The activation of the courts would be a last resort power, but its availability should make the industry much more responsive both to its S 37 requirements and the codes of practice that must inevitably be produced for all environmental assessments. This linked model depends very much on a well structured, well managed and legally robust OFELEC. It also relies upon a full integration of price and environmental regulation and long-term energy supply and conservation R&D. The new OFELEC needs to be sufficiently independent of government interference as to meet its responsibilities both to European environmental pollution directives and the wider public environmental interests. Both are usually ahead of the government's willingness to act to forestall environmental nuisance
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( v i d e the dragging of feet over SO2 and NO× removal). These are demanding requirements for any regulating institution. Unfortunately there are no good examples from elsewhere as how best to put these principles into practice. The challenge is to create an OFELEC, and to make it work in such a way that good management equates with good environmental practice. Then the newly privatized electricity industry would provide an enviable model for others elsewhere to emulate. Let us hope that this exciting opportunity is neither missed nor fudged.
1In general this policy, in some cases backed by statute, favours supply addition over demand reduction, nuclear over coal for fuel diversity and political justification to make the coal industry competitive and subservient, encouragement of advanced nuclear component technology for domestic and international trade promotion, and a belief that nuclear is a better environmental bet than coal in the light of the greenhouse gas (climate warning) and acid rain issues. These policy biases make a small nuclear family of replicated Sizewell B 'clones' politically inevitable, irrespective of privatization. The Sizewell B decision was not just an energy decision. It applied to foreign policy, economic policy, industrial policy and trades union policy. It became very much a Tory Party reactor. See Timothy O'Riordan, Ray Kemp and Michael Purdue, Sizewell B: An Anatomy of the Inquiry, Macmillan, London, UK, 1988, p 11. 2Irving Mintzer, A Matter of Degrees: The Potential for Controlling the Greenhouse Effect, World Resources Institute, Washington, DC, 1987. 3International Institute for Environment and Development, World Resources, lIED, London, UK, annual reports 1987, 1988. 4Sir Frank Layfield, The Sizewell B Inquiry, HMSO, London, UK, 1987. 5Department of the Environment, Integrated Pollution Control: A Consultative Paper, DOE, London, UK, 1988. 6Richard Zeren, 'The work of the EPRI and its views on the future of electricity', in Environmental Aspects of Electricity Privatisation, UK Centre for Economic and Environmental Development, London, UK, 1988, pp 14-36.
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The generation of electricity modifies the physical environment of the globe more than any other industrial activity. Indeed, the industry may already create more long-term economic costs than benefits in terms of associated environmental repercussions. This negative economic equation could become even worse unless long-term and programmed investments into energy supply and conservation strategies are made with proper care for all indentifiable environmental effects. The present publiclyowned electricity industry in the UK has an environmental track record that is patchy but generally unsatisfactory, despite some improvements in recent years. The key issue facing the privatized industry is how comprehensive and effective all aspects of regulation will be - environmental, pricing, and research and development. That task can only be achieved by integrating these three regulatory functions in a single, independent, and effective agency. Keywords: Environment; Accountability; Privatization 'The environment' is a fashionable term with many meanings. For the purposes of this analysis it applies to three linked themes: •
•
The functioning of the physical and biological systems that make-up the non-human part of the globe. These laws and relationships are unmodifiable and only incompletely predictable. The values placed by human beings on these systems in terms of the usefulness of environ-
Timothy O'Riordan is at the School of Environmental Sciences, University of East Anglia, Norwich NR4 7TJ, UK.
•
mental functions, their beauty and their right to exist without being unduly molested. These values are continually changing. The yardstick against which good overall management performance should be assessed. A healthy industry can only operate if it responds to and maintains a healthy environment as defined above. That yardstick is durable but malleable.
'Environmental accountability' therefore becomes a metaphor for socially responsible management practice, sanctioned by regular public reporting and by demonstrable responsiveness to the public interest. The 'public interest' is mostly identified through the political demands of various pressure groups and other vested interests. This pluristic model of responsiveness is not, however, sufficient. Implicit in the concept of environmental accountability must also be an internal and an external regulatory regime. That regime must be sufficiently robust to maintain a long-term concern for environmental values over and above relatively short-term demands from narrow but powerful groups and organizations. When assessing environmental accountability we must look critically at the structure and responsiveness of management and regulation, the underlying forces of power and influence, and the capacity to adapt to the changing states of science and public values. These three features - scientific respectability, sensitivity to a changing public mood that is knowledgeable about what the industry is proposing and doing, together with responsiveness to management needs - combine the trio of environmental meanings outlined earlier. The key concepts for environmental accountability are institutional cohe-
sion, scientific credibility, openness, responsiveness, and effective scrutiny.
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ELECTRICITY PRODUCTION AND ENVIRONMENTAL IMPACTS Linking project, strategy and policy By any standards electricity production creates 'high profile' environmental impacts. One must look at such modification from the combined perspective of policy or strategy and specific project. The strategic frame sets the conditions and the cash for individual schemes, so the environmental implications of one cannot be disconnected from the other. It is always tempting to examine the environmental effects of electricity supply or electricity conservation projects as if they were promoted separately and in isolation of a policy setting. This has been the approach adopted by the principal current public corporation, the Central Electricity Generating Board (CEGB) which has largely focused its environmental attention on project impacts and strategic scientific research. Figure 1 shows that this combination is still not enough to meet the requirements of accountability. The official case for the controversial Sizewell B PWR was more political than environmental or economic. Yet the environmental cause was promoted, not just because nuclear is deemed in government circles as being environmentally more benign than coal. It has now become politically fashionable to deploy the 'environment-friendly' argument as a justification for investing in a viable (but not cost-effective) nuclear industry at the expense of furthering fuel dependence upon artificially high-cost UK coal. Politicians are beginning to realize that the environmental aspects of energy choice can be treated as at
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supply orientation security of s u p p l y high p l a n n i n g margin ambiguity over role of efficiency and conservation
Protection of an internationally nuclear i n d u s t r y _
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....... ....... .....
........................ s u p p l y over conservation
i • PWR p r e f e r r e d to AG R • the CEGB-Westinghouse-NCC
| national electricity supply
• •
link
Jl I
| towards r i s k
I
nuclear p r e f e r r e d to coal indigenous ( b u t efficiently produced] coal preferred to imported coal uranium supplies adequate and reliable radioactive fuel reprocessing policy, using in part spent PWR fuel, paves ways for multinational fast reactor
Figure 1. UK government policy biases that favoured the promotion of the Sizewell B PWR. 1 Source: O'Riordan, et a/. See Ref 1.
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least on a par with more established cost and national strategy justifications. Environmental accountability has to incorporate both a political and economic element. This suggests that environmental regulation cannot sensibly be separated from other areas of regulation. For a future privatized electricity industry the Office of Electricity Regulation, or whatever OFELEC will eventually stand for, ought also to be the regulator of the industry's environmental strategy as well as overseeing its tariffs, management, and R&D practices. Unfortunately, as matters presently stand, that message does not appear to have been heeded by those responsible for setting up the appropriate legislation.
Fossil fuel The environmental effects of various electricity options are becoming increasingly widely known. Good summaries of the state of the art can be found in reports by Mintzer, 1 and the World Resource Institute at the International Institute for Environmental Developmentfl Coal combustion carries in its exhausts warming gases (CO2, N20) and acidification products (SO2, HC, NOx) to such an extent that calls by the anti-nuclear lobby for more large coal-fired power stations in place of new nuclear schemes have become embarrassing. It is very likely that changes in atmospheric chemistry leading in turn to temperature warming, ozone depletion and enhanced acidification will become one of the two most pressing environmental concerns of the 1990s. The other will probably be the economic, military and trade-debt-aid implications of increasing environmental instability in the Third World. Some of this instability will bc due to climate-induced effects linked to fossil fuel combustion. Excessive fossil fuel consumption on a large scale may soon become politically unpopular even if international fossil fuel prices remain low in narrowly defined monetary terms. The causes of enhanced acidification and the links with coal combustion are neither fully known nor scientifically proven. It is tempting to wait until less ambiguous research results come in, and then act. This has been the strategy of the UK government and the CEGB. Yet this is neither a sensible approach nor is it environmentally responsible. Both remain reluctant to invest public capital, possibly adding as much as 10% to the price of electricity which is already unduly high, in part because of political manipulation of tariffs to help finance privatization. If a major public corporation endeavours to take this line, will a privatized corporaE N E R G Y P O L I C Y April 1989
U K E S I privatization - e n v i r o n m e n t a l accountability
tion, anxious not to raise its costs unduly, not follow suit? And will the present administration, sensitive to charges that privatization carries with it price increases, let the industry invest to the hilt in SO2 and NO× reductions? Privatization and environmental accountability cannot be separated from strong and independent public interest regulation. If this is not to be the case, a lot is at stake in terms of the UK's environmental image abroad and its public interest duties both at home and overseas. As matters currently stand the UK line is partly dictated by European environmental directives, partly by the CEGB, and only ephemerally by the government. This is not a stable basis on which to develop environmental accountability for a future privatized industry. Nuclear power
The nuclear industry provides no panacea for this dilemma. It is plagued by a loss of public confidence in its guarantees of safety and its faltering costeffectiveness. This is partly a result of excessively demanding safety requirements and associated institutional and management difficulties. It is also largely due to the sheer technical and engineering complications of designing and constructing a major nuclear facility. This has led to delays in construction, and severe cost escalations, to the point where there is genuine doubt that the private sector will invest in large-scale nuclear power unless part of the costs are underwritten by the state. Such a course of action, though likely, would severely weaken the political and economic case for privatization. Furthermore there is growing public resentment over any proposals for radioactive waste disposal and nuclear reactor decommissioning, two linked elements in the much disliked 'back-end' of the nuclear cycle. That resentment, associated with a 'stigma' of being geographically connected to the 'dirty' end of nuclear power, will manifest itself in continuing political controversy over any proposal to dispose permanently of nuclear waste and, perhaps to a lesser extent, to the establishment of a decommissioned nuclear mausoleum. Such resentment will continue to plague the whole nuclear industry, whose public image could remain forever tarnished. Nuclear power in the UK is officially regulated by independent governmental agencies. But the bulk of safety management is handled by the industry itself for the industry currently carries a strict statutory duty to provide safe power. The creation of National Power, the 70% rump of the CEGB, should carry with it most, if not all, the CEGB's present in-house nuclear safety management teams. This is certainly
ENERGY POLICY April 1989
the intention of National Power's management. It is inconceivable that the government will seek to impose any limitations on in-house safety management and organization. That point has already been explicity signalled in the CEGB proofs for the public inquiry into the next PWR at Hinkley Point C. The future of nuclear power lies in ensuring that the new management is equally, if not more, competent at designing and constructing nuclear reactors compared with the present industry. This will have to be publicly shown to be the case, probably by opening up much more the procedures for nuclear safety determination and regulation. Renewables
Renewable energy options are by no means immune from environmental disturbance. Wind power, on any reasonable scale, blights landscapes, is noisy, scares birds, and creates a potential hazard should a generating blade break away. On environmental grounds alone the future of any very sizeable wind power programme looks bleak indeed. Tidal barrages inevitably turn saltwater ecosystems into fresh water zones and brackish lagoons, drastically altering bird and fish habitats. This could set one group of environmentalists against another. A serious proposal to advance a Severn tidal barrage will separate the environmental wheat from the environmental chaff in the UK. If the economics were right the environmental champions of tidal power would probably win, but there would be quite a battle. Solar power is less obviously environmentally damaging, but the construction of solar panels involves materials that carry an environmental burden both in their extraction, and in their manufacture, via toxic effluent discharges. This is not to say that there is no scope for renewable electricity generation in the UK. Far from it. Most of the best technology is still at the design and prototype stage, so further experimentation especially in high fuel cost areas is desirable. In any case, the government requirement that up to 20% of future electricity should be produced from non-fossil fuelled sources should help to stimulate the deployment of this technology. After all, the costs of renewable source electricity production should become quite competitive to large-scale nuclear power, especially if load following units are wanted. So the prospect of a modest flowering of renewable energy production looks reasonably bright. Here is an example where strategy and project become interlinked. This also demonstrates why a comprehensive e n v i r o n m e n t a l comparison between supplyproviding and demand-reducing electricity options
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U K E S I privatization - environmental accountability
needs to be undertaken by a fully competent, central organization.
Defensive investments Environmentally defensive technology such as NO, and S02 stripping create a potential environmental nuisance in both the materials they require, often in vast quantity, and in the residuals eventually produced, also in large amounts. Again this can create a challenging dilemma for front-line environmental organizations. For example the proposed SO2 stripping of three CEGB power stations at Drax, Fawley and West Burton will involve nearly a million tonnes of limestone/year to create a similar amount of gypsum, together with smaller amounts of other, more hazardous, wastes. The CEGB has been careful to claim that none of this limestone would come from the two English National Parks that contain limestone quarries (the Peak District and the Yorkshire Dales). But it is widely accepted that this new demand for limestone will create a 'knock-on' effect that will retain and even increase the demand for limestone from the existing national park quarries. NO, removal technology also requires very demanding standards of operation if effective pollution control of residuals is to be minimized. Even demand-reducing methods, such as insulation and restricted ventilation, can result in health hazards associated with air-conditioning technology, and the retention of toxic substances in indoor atmospheres. In every case it is already possible to reduce pollutant effects and to mitigate foreseeable environmental damage, with the notable exception of CO2 emissions. But it is a moot point whether the overall environmental transformation caused by whatever mix of electricity supply and conservation strategies are adopted can noticeably be reduced. It is more likely that electricity management will carry a special, highly public and potentially worldwide environmental burden. This is why environmental accountability is such an important aspect of the future private UK electricity industry. It is also a major reason why that industry cannot be left either to regulate itself or to be regulated solely by external statutory agencies. This tends to be the case for another potential environmental mischiefmaker, the chemical industry. The chemical industry is increasingly regulated through international regimes. It has developed, through its national and international trade connections, a strong sense of collective environmental responsibility, and it is highly sensitive to its environmental public image. But the chemical industry is not a natural monopoly. It does 144
not have to be regulated by government biased price controls, and there is no automatic link between the prices of its products and its environmental performance. Not so for the quasi-natural monopoly of the electricity industry whose environmental protection measures and long-term defensive expenditures can create such a significant cost burden as to trigger political attention. There is a very special case for a robust and politically responsive structure of environmental accountability in the electricity industry, whether privately or publicly owned. The present privatization proposals, still in a delightful state of flux, offer a wonderful opportunity to get this matter right.
PRESENT STRUCTURE OF ENVIRONMENTAL REGULATION ESI
IN T H E U K
Nuclear safety It is tempting to argue that the industry's environmental affairs can be promoted and regulated by the present official agencies and statutory requirements. But to leave it at that begs two questions: whether the present structure of environmental regulation is satisfactory, and whether that structure can effectively be transferred to private electricity corporations. Figure 2 indicates who is responsible for what I Generation I Nuclear Nil
RCI
MAFF
Fossil fuel
Renewable
HMIP LPA LEA
LPA
IDistribution I
I Transmission I LPA
LPA
LEA
Figure 2. Environmental regulation for the existing electricity industry. Nil
= Nuclear Installations Inspectorate within the Health and Safety Executive responsible for granting a site (safety) licence under the Nuclear Installations Act 1960. RCI = Radiochemicals Directorate within HMIP responsible for authorizing radioactive discharges into the environment. MAFF = Ministry of Agriculture Fisheries and Food responsible for authorizing discharges to the sea, foodstuffs and to ecological pathways involving food. HMIP = Her Majesty's Inspectorate of Pollution. LPA = Local planning authorities located primarily with the county councils but also including the district council, covering planning matters. LEA - Local authority environmental health and also local waste management departments. The former operate at district level, the latter at county level in England; both operate at district level in Wales.
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April 1 9 8 9
U K E S I privatization - environmental accountability'
in terms of environmental regulation of the present, publicly-owned electricity industry. The management of nuclear safety was closely examined in the Sizewell B inquiry and found wanting in terms of coordination, consistency and economic justification, and specificity. The inspector of that inquiry, Sir Frank Layfield QC, was satisfied that safety as an end result was tolerable, but he was dissatisfied with safety assessment as a process. 3 The statutory regulatory agency, the Nuclear Installations Inspectorate (NII) the branch of the Health and Safety Executive responsible for such matters, together with the authorizing department for all radioactive releases, namely Her Majesty's Inspectorate of Pollution within the Department of the Environment and the health and safety directorates of the new generating company, will have to work more closely together than their current counterparts if the delivery of safety is seen to be acceptable. At present these working arrangements and how they have been adjusted in the wake of the Sizewell B Report remain something of a mystery. They are certainly neither open, nor obviously responsive to published codes of practice. Indeed, the revision of the safety assessment codes, asked for by Layfield, has not yet been comp.leted. It is a moot point whether this state of affairs will be acceptable for a privatized nuclear industry. Pollution control
For pollution control, the relevant government agency will be Her Majesty's Inspectorate of Pollution charged with a remit to seek to encourage integrated waste management practice across air, water and land. 4 That unified approach has not yet been achieved, but there is no intrinsic reason why a privatized industry cannot manage its emissions in an integrated manner any less satisfactorily than a public corporation. In general there is no particular conflict between the safety function and the pollution control aspects of the electricity industry. Safety matters, including the wellbeing of the general public, are the responsibility of the Health and Safety Executive. The new Inspectorate of Pollution controls emissions within the general principles laid down and agreed by the Executive. Though there has to be coordination between the Radiochemicals Directorate of the Inspectorate and the Health and Safety Executive, in principle the two could work at cross purposes. In practice the relationships are reasonably harmonious. From time to time abrasive conflicts of views do occur, but these are not in themselves serious enough to jeopardize public health and safety. More ENERGY POLICY April 1989
serious is the effectiveness of the NII's basic approach, and especially its coordinating mechanisms, as pointed out by Layfield. There does not appear to have been any publicly announced changes in procedures to indicate that the responsible agencies have generally responded to Layfield's criticisms. These important matters will have to be sorted out openly if privatizing the nuclear industry is to carry public credibility. A key determining factor will be the control of the tariff associated with the nuclear supply component. It is vital that the private industry will be enabled to charge for its product at a rate that fully meets its long-term environmental obligations. This could conflict with the government's desire to keep electricity prices down post-privatization, though the current highly controversial policy of artificially raising prices, to ensure profitability in the industry, may be sufficient to establish a satisfactory price regime in the private era. If this is the case, it will be by default, not by design. There is no indication at all that current price rises are in any way related to environmental considerations, either at present or for the foreseeable future. None of these regulatory bodies has a significant role to play regarding the industry's strategic project planning function. The regulatory agency becomes involved primarily at the project specific level, be it power station or transmission lines. True, codes of practice for safety assessment principles have been produced, but they are of a general nature to allow the individual inspector to judge for himself how far the industry is meeting its obligations and are by no means binding on multi-project decisionmaking.
THE SECTION 37 DUTY In-house environmental accountability within the present electricity industry rests largely upon its responsiveness to the statutory obligations under section 37 of the Electricity Act 1957. This section lays a duty on the industry via the following words: in formulating or considering any proposals the industry and the ministers shall take into account any effect which the proposals would have on the natural beauty of the countryside or on flora, fauna, buildings or objects. The precise meaning of this duty remains unclear, despite careful scrutiny during the Sizewell B inquiry. To begin with it is not a binding requirement. If an electricity industry faces a conflict between cost-economy and environmental damage, the former would probably win over the latter. At present, 145
UK ESI privatization - environmental accountability
there would be no recourse in the courts for aggrieved environmental groups to pursue any failure to give due regard to the S 37 duty. In any case, it is not laid down how far that duty extends. The CEGB itself does not know over what range of issues it must examine for possible environmental effects. Nor is it clear how the CEGB should weigh these up against other legitimate duties, notably that of providing an 'efficient, coordinated and economical system of supply in bulk for all parts of England and Wales', as laid down in Section 2 of the same statute. The S 37 duty does not apparently extend to strategic questions such as the reduction of acidic emissions or the avoidance of sensitive ecosystems in the design and location of its projects. At present, for instance, the decision to remove SO2 and NO× from coal-fired power stations has nothing to do with S 37 in the specific sense of being driven by the dictates of that statute. Similarly, how much of overhead transmission line is placed underground and agreed in high amenity areas is a matter solely for the generating boards to determine. They have no legal conscience on this important environmental matter, only a narrow economic one. Currently the CEGB is proposing wind farms on sites that are sensitive both from a wildlife and an amenity viewpoint. Certainly its S 37 responsibilities have not stopped serious consideration of those suggested locations, despite objections from the statutory conservation authorities, the Countryside Commission and the Nature Conservancy Council. So we cannot look to the S 37 duty, as it now operates, with regard to the industry and authorizing ministers, as a satisfactory device for incorporating environmental accountability. S 37 does, however, give the present public corporations environmental conscience, and it does help the Board to justify some £30 million of expenditure on environmental research and environmental amelioration associated with power stations and transmission lines. So the S 37 duty must not be disregarded, in any formulation of environmental accountability for a future privatized industry.
ENVIRONMENTAL IMPACT ASSESSMENT One other item of environmental good practice is now on the industry's agenda. This is the formalization in the UK of the European Commission's Environmental Impact Assessment Directive, (EEC 885/337) via a series of statutory instruments passed in July 1988. The relevant secondary legislation for
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the electricity industry is SI No 1199, the Town and Country Planning (Assessment of Environmental Effects) Regulations 1988. This extends as a mandatory requirement to all thermal (including all nuclear) generating stations and other combustion installations with a heat output of 300 MW or more as well as radioactive waste disposal sites. For these projects, environmental assessment is not just a series of documents. It is linked to a formal process of public consultation before and after draft studies are prepared, and to independent review in Brussels if the final surveys are regarded as unsatisfactory. Environmental assessments, of course, can only be guides to decision. But they can also provide a useful vehicle for project-level accountability. Transmission lines, storage of fuel, small energyproducing installations, hydroelectric power stations, and facilities for enriching and reprocessing nuclear fuel and processing irradiated wastes will only be subject to discretionary environment assessment under the terms of the Directive. This means that the scope of the assessment, the degree of public consultation and the nature of independent scrutiny will depend upon the goodwill of the developers, and the mood of local planning authorities. Only when a scheme is deemed to have a 'significant' effect on the environment will an assessment and its associated procedures be required. Then, even if unwilling, a local planning authority will have to insist on a full-blown assessment. What constitutes 'significance' in environmental terms awaits more detailed planning guidance and, doubtless, legal interpretation, along the lines outlined in the Directive. Already the CEGB has sought to meet its obligations by preparing environmental assessments for its Hinkley Point C, Fawley and West Burton power stations, together with the Drax limestone-gypsum flue gas desulphurization plant. It is likely that the successor private companies will continue this practice if only to smooth the path of public inquiries. It is nowadays unthinkable for an electricity utility, public or private, to propose any scheme, whether under the mandatory or discretionary parts of the Directive, without a fully comprehensive environmental statement. What will matter is who will set the standards for these assessments, and how far the privatized industry will adopt a fully responsive environmental persona when building such assessments into project management. The European Directive is silent on the strategic or policy framework aspects of electricity planning. For assessments to be undertaken in these spheres either new UK legislation or a comprehensive code of practice will have to be put into effect.
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UK ESI privatization
For the present, that seems unlikely. The European Commission is attempting to link policy to strategy. It is currently exhorting member states to devise plans aimed at reducing electricity to GDP ratios by 20% over the next 10 to 20 years. That is an achieveable target, given the changing character of economic activity and improved appliance and insulation technologies. Efficiency in electricity-use is seen as a major component of energy conservation generally. But, to achieve success, it may be necessary to set specific performance targets for each member state. Given the prospect of a tougher Brussels regime in the 1990s, that is a plausible prospect.
E N V I R O N M E N T A L A C C O U N T A B I L I T Y IN THE PRIVATIZED ESI
The locus of environmental accountability could rest in one of four possibilities.
1. A separate function created within an indepen-
2.
3.
dent regulatory agency with responsibility both for project appraisal performance and long-term strategic R&D. This model could be something on the lines of the Electric Power Research Institute (EPRI) which services some of the US electric utilities, deriving its income via a levy on sales. The US experience is that EPRI has performed a valuable function, most notably by providing a point of access into the industry for e n v i r o n m e n t a l l y c o n c e r n e d groups and organizations. 6 A diffused function, simply by expanding the remits of the existing regulatory agencies to cover a more comprehensive environmental performance. The problem here is that the different agencies - the Health and Safety Executive, Her Majesty's Inspectorate of Pollution, the local environmental health, waste disposal and planning authorities, all work to a different set of rules, guidelines and statutory procedures with very little effective coordination. It is unlikely that this diffused regulatory model would meet the demands of accountability laid out at the beginning of this article. An independent ombudsman. The New Zealand government has established a Parliamentary Commissioner for the Environment, an environmental ombudsman, whose job it is to ensure that all public and private corporations meet minimum standards of environmental performance. The Commissioner's Office lays down
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4.
-
environmental accountability
guidelines under terms outlined in the Environment Act 1987, covering a range of environmental and social concerns. Failure to comply results in a Commission investigation and the possibility of a report to the Parliamentary Environment Committee with the scope for referral to the courts if the environmental disobedience is of sufficient magnitude. The New Zealand model offers an imaginative solution, but it requires a tough and well-funded Commissioner's Office, appropriate unambiguous supporting legislation and a real sense of corporate environmental responsiblity. Realistically this is not a model that is suitable for translation in the UK in the foreseeable future, though it has much intrinsic appeal. A linked regulatory office where responsibility for both project-based and strategic-level environmental good practice rests within the Office of Electricity Regulation. Figure 3 outlines a possible configuration of functions within that office. This has the advantage of being plausible given existing official pronouncements regarding the possible functions of OFELEC. This model links environmental pollution to tariff regulation and long-term R&D, it also provides for an input of two advisory committees, a consumer council and a research advisory council, that would establish a measure of public interest scrutiny into the affairs of the whole industry. US experience confirms the essential role of these two councils, especially the fusion of consumer, scientific and environmental advice and criticism.
For this scheme to function properly, it would also be necessary to make S 37, a statutory duty. The section would also have to be suitably amended to include a socioeconomic component, to ensure that
Office of the Director General for Electricity Regulation
I
I
d rectorate
directorate
I
S 37 duty judicial review annual accounts environmental assessments (project)
I J
development directorate
I ......
1
I Environmental assessments (strategic)
Figure 3. A possible structure for OFELEC. 147
UK ESI privatization - environmental accountability
the wellbeing of local people was legally taken into account, so that, as far as possible, they would not suffer uncompensated discomfort or property value losses. This would mean that obedience to the expanded S 37 would be subject to judicial review litigation in the courts. Legal action could be initiated by individuals, organized groups, or by the official regulatory agencies, including the local authorities. The environmental appraisal directorate within OFELEC would set guidelines for the S 37 duty, which would become enforceable codes of practice in both project management and in strategic policymaking. The three major arms of the privatized industry (the generating companies, the transmission corporation, and the distribution boards) would be required to publish an environmental account in their annual reports, a task that would show how far they have interpreted their environmental responsibilities in specific instances and responded to publicly expressed concerns. The activation of the courts would be a last resort power, but its availability should make the industry much more responsive both to its S 37 requirements and the codes of practice that must inevitably be produced for all environmental assessments. This linked model depends very much on a well structured, well managed and legally robust OFELEC. It also relies upon a full integration of price and environmental regulation and long-term energy supply and conservation R&D. The new OFELEC needs to be sufficiently independent of government interference as to meet its responsibilities both to European environmental pollution directives and the wider public environmental interests. Both are usually ahead of the government's willingness to act to forestall environmental nuisance
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( v i d e the dragging of feet over SO2 and NO× removal). These are demanding requirements for any regulating institution. Unfortunately there are no good examples from elsewhere as how best to put these principles into practice. The challenge is to create an OFELEC, and to make it work in such a way that good management equates with good environmental practice. Then the newly privatized electricity industry would provide an enviable model for others elsewhere to emulate. Let us hope that this exciting opportunity is neither missed nor fudged.
1In general this policy, in some cases backed by statute, favours supply addition over demand reduction, nuclear over coal for fuel diversity and political justification to make the coal industry competitive and subservient, encouragement of advanced nuclear component technology for domestic and international trade promotion, and a belief that nuclear is a better environmental bet than coal in the light of the greenhouse gas (climate warning) and acid rain issues. These policy biases make a small nuclear family of replicated Sizewell B 'clones' politically inevitable, irrespective of privatization. The Sizewell B decision was not just an energy decision. It applied to foreign policy, economic policy, industrial policy and trades union policy. It became very much a Tory Party reactor. See Timothy O'Riordan, Ray Kemp and Michael Purdue, Sizewell B: An Anatomy of the Inquiry, Macmillan, London, UK, 1988, p 11. 2Irving Mintzer, A Matter of Degrees: The Potential for Controlling the Greenhouse Effect, World Resources Institute, Washington, DC, 1987. 3International Institute for Environment and Development, World Resources, lIED, London, UK, annual reports 1987, 1988. 4Sir Frank Layfield, The Sizewell B Inquiry, HMSO, London, UK, 1987. 5Department of the Environment, Integrated Pollution Control: A Consultative Paper, DOE, London, UK, 1988. 6Richard Zeren, 'The work of the EPRI and its views on the future of electricity', in Environmental Aspects of Electricity Privatisation, UK Centre for Economic and Environmental Development, London, UK, 1988, pp 14-36.
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