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Would you trust a farmer?
Would you trust a farmer to fill in the right field on an Excel spreadsheet?
I know, I know. "Agriculture is a modern, technologically savvy industry filled with IT literate professionals." But, seriously, would you?
I'm not picking on farmers. Would you trust a haulier, or a manufacturer, or a shipping firm to fill in the right field, either?
Nope, thought not.
Personally, I wouldn't trust 90 per cent of office workers – myself included – to fill in the correct field in an Excel spreadsheet, and yet this appears to be the tool the vast majority of firms are using to keep track of their carbon emissions.
Speaking at last week's Corporate Climate Response conference, Peter Klein, vice president of carbon management software specialist Carbon View estimated that around 90 per cent of the company's the firm engages with are using Excel spreadsheets to try and calculate and track their carbon footprint.
In a previous life I spent four years covering the IT industry and always felt much of the knee jerk criticism of Microsoft was driven as much by envy as legitimate concerns. Yet it is hard to argue with Klein's view that the flexibility that makes Excel such an attractive tool for so many tasks also ensures that it is ill suited for handling carbon data, particularly when that carbon data necessarily originates from countless different sources.
CSR departments using Excel to try and work out the carbon emissions of a product or supply chain are likely to have to regularly consolidate countless different spreadsheets provided by countless different suppliers and partners, all the time knowing that one rogue digit or field filled in incorrectly could undermine the integrity of the entire exercise.
Of course, using the advanced functionality offered by modern versions of Excel can limit these risks and help ensure it is easy for suppliers to input the right data in the right fields, but if truth be told most CSR departments probably lack the expertise to make full use of such functionality.
As I outlined last week, there are a large number of measures that need to be adopted to give firms and their customers greater confidence in carbon footprinting calculations, not least the adoption of clear international standards, but the development and installation of dedicated carbon management software tools that simplify and streamline the processes by which suppliers provide firms with carbon data has to be one of them.
The Week in Green
One of the most common criticisms of the emerging carbon market is that carbon credits are far too ephemeral a commodity to trade with any confidence.
In essence, all that is being exchanged is a vague commitment that some carbon emissions somewhere have not been released, or in the case of cap-and-trade only a certain quantity of emissions have been released. It is a whole market built on negatives which, as with all negatives, can not be proven.
And yet while this criticism has a certain validity it conveniently ignores the fact that much of the supposedly more tangible financial markets are similar dependent on the confidence that is held in otherwise worthless commodities. A carbon credit may be essentially a contractual agreement not to pollute, but cheques and even bank notes are just contracts too – albeit ones people have an enormous confidence in being honoured.
The problem is not with the concept of a carbon market, particularly given that evidence is beginning to emerge that the approach is working.
The issue with carbon credits, or indeed any attempt to establish carbon a currency, is in establishing confidence in that commodity.
The primary means put forward to establish this confidence is through the development of international standards. As more and more carbon markets emerge - and this week alone we've seen further developments in planned cap-and-trade mechanisms in Japan, the US and the UK - it is hoped that standardised approaches for measuring carbon and registering and trading credits will be imposed, providing rock solid foundations for this new commodity class.
Equally, the emergence of such standards should enable software solutions for measuring and monitoring carbon emissions - such as those unveiled this week by IBM and EPS - to become pervasive, further increasing confidence in the provenance of carbon credits and the accuracy of carbon footprinting initiatives such as that currently being piloted by Tesco.
However, while such standards and technologies will undoubtedly help build confidence in the carbon market an equally important component of the credibility building process appears to be being largely ignored by many business and political leaders – namely enforcement.
Standards are only as good as the enforcement and auditing mechanisms that accompany them and on this topic there has been a resounding silence from many of those organisations championing the emerging carbon market.
Environment minister Phil Woolas hinted at the opportunity presented by the need for enforcement when, speaking at this week's Corporate Climate Response conference in London, he outlined his ambition to make London the global capital for carbon auditing services.
However, his own department's plans to expand carbon trading in the UK through the Carbon Reduction Commitment appear curiously averse to establishing strong enforcement mechanisms, promising a light touch approach that while keeping administrative costs down also sounds like a tempting invitation for firms to under report their carbon data.
I don't wish to strike any further blows to confidence in the carbon market, but I imagine that fraudsters are currently watching developments in the global sector avidly. Similarly, with customers increasingly demanding that firms boast strong environmental credentials it has to be accepted that many suppliers will have a vested interest in underreporting their carbon data.
You just need to find yourself with a counterfeit £10 note in your hand to know that you can never establish complete confidence in any market, but until the enforcement and fraud detection mechanisms in the carbon market are at least as sophisticated as those in the financial markets then the concept of carbon as a currency will struggle to gain traction.
Right, I'm off to try and work out how on earth you could convince people to welcome a man made tornado to their community.
Have a good weekend,
James
The Week in Green
It is one of the most encouraging truisms of the entire clean tech sector that the vast majority of the technologies required to deliver a low carbon economy are already in existence.
This week we've seen countless examples of the extent to which zero and low carbon technologies are not only technically feasible but already fully operational. From zero carbon homes to biofuel powered flights, electric cars to highly efficient solar cells many of the solutions to climate change are already up and running.
The big question - in fact the only question that matters in the wake of the news that concentrations of carbon dioxide in the atmosphere are at frightening high levels - is how quickly these technologies and thousands more like them can make the transition from technical feasibility to economic viability.
A few months back I caught up with Jan van Dokkum, chief executive of fuel cell specialist UTC Power, who underscored the scale of the challenge faced by those firms developing these clean technologies. He said that anyone visiting the company's offices could go out into the parking lot and go for a spin in a zero emissions fuel cell powered car that in terms of performance was easily the equal of pretty much anything on the road today. The only problem was that it costs hundreds of thousands of dollars.
And, as he explained, in many ways it would be ridiculous to expect it to cost much less when you consider that the incumbent auto manufacturers are churning out millions of cars a year, while those pioneering fuel cell technologies are producing mere hundreds, or in some cases tens, of vehicles.
The problem for these firms is developing the economies of scale that will allow their technologies to become cost competitive, while simultaneously ousting incumbent competitors with established manufacturing operations and supply chains.
And yet, if they can build up the requisite economies of scale clean tech firms can find themselves in a position where the environmental, health and life time cost benefits of many green technologies means they will be able to grow surprisingly quickly.
Toyota, for example, announced this week that it has now sold a million Prius' worldwide and hopes to have annual sales of over a million within the next five years or so.
Meanwhile, Van Dokkum said this week that UTC is just a couple of years away from delivering a fuel cell powered bus that, when running costs are taken into account, will be cheaper than diesel alternatives. Similarly, Cisco this week unveiled the second generation of its video conferencing suite at a price point a massive 90 per cent below the first generation version.
Making that economies of scale breakthrough and attaining cost competitiveness will typically require vast investment, but as Toyota has proven if it can be achieved the rewards can be vaster still.
Right, I'm off to find a green gauntlet to throw at the feet of Boris Johnson.
Have a good weekend,
James
Why it's time for a darker world
Saturday morning and I find myself with a moderate sized hang over (family wedding, since you ask) standing in Gatwick Airport trying to work out how I get to the railway station.
I'm staring at a sign that reads "for arrivals follow the illuminated signs".
It's the word illuminated that's got my attention. I'd never noticed before, but as soon as you look you realise that all the yellow signs everywhere in the airport are backlit by what must be several thousand bulbs. Every last one of them is illuminated, even at ten in the morning on a bright sunny day.
One question: why?
What was so wrong with all the old signs? You know the ones: white background, black fonts, worked perfectly adequately for centuries.
I don't doubt BAA could trot out some kind of spurious business case for these signs. It would probably quote a research project somewhere that has shown that backlit yellow signs are the easiest to spot when you are hurrying to the gate - that the illumination makes it easier for the myopic amongst us to read the signs at a distance. They'd probably add that all the bulbs used are energy efficient.
But I'm not sure I buy it, particularly when you consider that airports, like shopping malls and most other public spaces, are typically hyper-illuminated forums, capable of giving you a headache regardless of what you were up to the night before.
I don't believe that prior to some bright spark deciding to illuminate many of the signs that we are bombarded by everyday we were all constantly wondering around getting lost and confused. Even if the most efficient bulbs available are used, the benefits of the illuminated signs are surely so marginal as to be outweighed by the environmental and financial cost of the energy they are using.
It is always difficult to advocate ditching a technology in favour of a simpler alternative. It is too easy for such a move to be accused of being regressive, even luddite, in its thinking.
Ask public spaces to ensure signs are only illuminated when it is dark and anti-environmentalists will inevitably try and lump you in with those killjoys who call for an end to Christmas lights or turn their nose up at any technological product that has the faintest whiff of frivolity.
And yet, as resource scarcity issues mount and pressure to cut energy use becomes more acute, perhaps it is time for more firms to ask if the technologies they use have been over-engineered. If the original, low tech version a product replaces could not continue to do the job just as effectively?
Technological progress is, of course, essential to the transition to a low carbon economy and new low carbon product need to be developed at a breakneck pace over the next two decades. But for every low carbon leap forward achieved by engineers and scientists, a new over-engineered technology emerges that threatens to negate some of the environmental gains achieved while delivering only a fractional, or in many cases non-existent, improvement on the product it aims to replace.
My personal recent favourite were the reports of a new installation in the changing rooms of a New Look store in Birmingham that uses a video camera and plasma screen TV to allow shoppers to tell what the clothes look like from behind. Because, apparently mirrors just aren't good enough anymore.
That, and the electronic post it notes that beep at you if you forget to do the things on your to do list.
It is not regressive to suggest that some technologies have reached a level of perfection, or at least satisfactory competence, whereby further "improvement" can not be justified in a resource strapped world. The sooner firms realise this, the easier they will find it to focus their attention on the genuinely sustainable technologies and business models that promise to reduce both their running costs and their carbon emissions.
The Week in Green
So it looks like the £25 a day congestion charge for gas guzzlers will never see the light of day.
According to Mayor Boris' press office a final decision has not yet been made, but our blonde bombshell of a new mayor made the eradication of the new charge a manifesto commitment and considering he is on record as describing the proposed levy as "the most vicious fines [sic] of any civilisation yet known" he will be left looking even more stupid than usual if he does not scrap the proposed changes.
Attempts to characterise the new mayor as anti-green have always been overly-simplistic. In his inimitable style, Johnson once described himself as "a voortrekker of the Cameron movement", who breathes "the spirit of the solar-powered, bike-riding, glacier-friendly modernising tendency of which I am proud to be a part". He is also a famously keen cyclist and his manifesto included eye catching commitments to plant 10,000 trees across the capital and introduce a token-based scheme to promote recycling.
Furthermore, there is little doubt that mistakes were made by his predecessor in the development of the £25 a day charge. For example, the debate over whether or not the charge would actually cut emissions was never comprehensively won and there were valid concerns that the decision to exempt smaller cars from the charge would have undermined demand for genuine zero emission electric vehicles.
Furthermore, the arbitrary nature of the £25 charge, bearing as it does no relation to vehicle emission levels, meant it was far too easy to characterise the move as a classic example of the politics of envy, a relic from Mayor Ken's days as a Class Warrior designed solely to penalise the wealthy residents of Chelsea. The whole exercise would have been far easier to defend as a genuine environmental initiative if a sliding scale of charges had been introduced whereby cars with emissions of 120g per km pay £8, while those cars emitting double pay double.
And yet despite these flaws, it is hard to regard the decision to scrap the £25 a day charge as anything other than a retrograde step.
Imperfect it may have been, but what the new charge had in spades was symbolic value – and you can't overestimate the power of symbolism.
Combined with changes to road tax bands designed to make it more expensive to run high emission vehicles the new charge would have sent out a clear signal to consumers and businesses that gas guzzling cars are not in the social interest. Such signals would undoubtedly be ignored by many of those who voted for Boris, but the combination of higher costs and a nagging sense that they were somehow in the wrong would also serve to steer some towards more environmentally responsible choices.
Instead, one of the most powerful politicians in the UK is now poised to send out the contradictory signal that high emission vehicles are in fact fine and despite their disproportionate contribution to climate change they should not be penalised.
Moreover, just as the government's fudging of environmental targets, refusal to countenance hypothecated green taxes and failure to invest adequately in climate change adaptation has undermined the credibility of many of its green policies, the decision to effectively water down the congestion charge will overshadow any future environmental initiatives Boris comes up with.
It is not too late to hope for a u-turn, but something tells me that Boris, like his hero, is not for turning.
Right, I'm off to stock up on canned food and start work on a nuclear bunker in the back garden.
Have a good weekend,
James
The Week in Green
There is a story, possibly apocryphal, that has been doing the rounds through clean tech companies for several years and relates how Bill Clinton first gave his approval to the embryonic sector.
It was at a press conference for one of his many Clinton Foundation initiatives, where the former president was asked what he would do if he was 21 again and did not want to go into politics this time round.
He responded that clean tech would be the sector for him.
Now, you can say what you like about the former president and possible future first husband (indeed most people already have; personal favourite, The Simpsons episode where he is quoted as saying "Hell, I've done it with pigs ... real no-foolin' pigs") but he is no one's mug and it is hardly surprising that in recent years growing numbers of ambitious graduates, executives and entrepreneurs have reached a similar conclusion as the Comeback Kid.
And yet despite the surge in investor and media interest surrounding the clean technology and green business sector it is fast dawning on many experts that the influx of skilled staff entering the sector is failing to keep pace with what is required.
This week the government acknowledged this fact, albeit tacitly, with the publication of a new strategy document designed to help develop the skilled workforce required to meet growing national and international demand for "green collar workers".
The move was welcomed by business groups, but as the CBI's Matthew Farrow observed it could have already come too late for some sectors, which are already beginning to feel "the pinch" when looking for skilled "green" staff.
If you take just one topical example, in the form of the offshore wind sector, you can understand the scale of the problem. From a virtually standing start the government wants 33GW of offshore wind capacity installed within the next 20 years, but at the moment there does not seem to be much idea as to where the people are going to come from to do that installing.
Bottlenecks in the supply of raw materials have been rightly highlighted as a major problem for the sector - driving up costs and contributing to Shell's controversial decision this week to exit the flagship London Array project - but bottlenecks in the supply of skilled staff are likely to pose similar problems as the sector continues to expand.
Wherever you look across the clean tech sector these same concerns are being voiced. The eventual roll out of smart grid technologies, for example, will require considerable skilled man power, as will the installation of solar farms and the auditing and enforcement of many firms' emerging green supply chain policies. And all that is before you look at the real high end technical and scientific skills that will be required to accelerate the development of the cutting edge technologies required to genuinely decarbonise the economy.
The government can of course help in addressing these imminent shortages, as can the growing number of CSR and sustainability courses being offered by academic institutions. Moreover, the market will play a key role as competition, and consequently salaries, for green professionals begin to rise.
However, it is worth noting that the amount of time it takes for people to develop new skills means that the job market is notoriously inelastic and it now seems inevitable that many clean tech sectors will face serious skills shortages over the next decade or so as governments and businesses struggle to meet their various carbon targets.
It is hugely encouraging that the capital required to fund clean tech projects appears to be in pretty abundant supply at the moment (Shell's cold feet notwithstanding), but capital is worth nothing without people to turn it into something useful and unless business and political leaders are willing to act soon there is a serious danger that the transition to a low carbon economy could be seriously harmed by nothing more than an absence of personnel.
Right, I'm off to write an angry letter to a tabloid newspaper about their climate change coverage.
Have a good weekend,
James
Shell in Wonderland
It's time for a trip down the rabbit hole.
I had one of those conversations this morning with a very polite spokeswoman in the Shell press office that leaves you trying to decide whether it is the Valium or the scotch that you should reach for first.
I began the exchange by suggesting that the decision to pull out of the world's largest offshore wind project could perhaps be interpreted as an indication that the company's commitment to renewable energy had become somewhat equivocal. Alas, I was wrong.
Apparently the "strategic decision" to consider selling off the oil giant's stake in the London Array should not be seen as a sign that its commitment to alternative energy is on the slide. In fact, Shell remains a staunch supporter of renewables through investments in 11 wind energy projects in the US and Europe, as well as various biofuel, solar and hydrogen fuel cell projects.
Shell's proposed disposal of its stake in the Thames Array is simply down to an "ongoing review of projects and investment choices" that has resulted in it deciding to focus a bit more on the US as its preferred location for future wind energy investments, in part because of the incentives on offer there.
Which surely implies that the UK government has not been generous enough in its support for offshore wind?
Nope, wrong again (and I hope you are following this, because by this point the task of following this Boris Johnson-esque master class in circuitous logic was proving a bit disorienting). The spokeswoman insisted the government has been great and that it is not just the incentives that have attracted Shell to the US, it is just that it is better equipped over there to make a success of wind energy projects.
So the UK is less well equipped to deliver these wind energy projects?
Erm, wrong again. If you believe what Shell told The Guardian it still reckons the UK remains a great place to invest in wind, claiming that the government has developed a "positive" policy framework and that it is "hopeful" the London Array project "will proceed as planned". Well, not quite as planned obviously, but let's not sweat the small stuff.
It took Shell's partner on the project, E.ON, to cut through the Dr Seuss levels of surrealism and deliver a hefty dose of reality. Shell would not divulge what had prompted its "strategic decision", but Dr Paul Golby, chief executive of E.ON had no such qualms in revealing both how "disappointed" he was with Shell and how risky the project has now become.
"The current economics of the project are marginal at best," he explained. "With rising steel prices, bottlenecks in turbine supply and competition from the rest of the world all moving against us."
It is in the light of this information that it becomes clear what Shell means when it says it wants to focus on "capital discipline and efficiency", but why couldn't the oil giant come out and say that itself.
Personally, I don't have a problem with Shell ditching this project – it clearly reckons that with oil at $120 a barrel it can make more money elsewhere and that's its own prerogative (Although, I'd also hazard that when you are making £7.2bn a year and are under intense political and commercial pressure to diversify your energy mix towards renewable energy then the brand and experience benefits it would have gained from being involved in the world's largest offshore wind project would have far outweighed any short term economic hit it might have to take on the investment).
No, what really grates is the lack of transparency behind the decision. Had Shell come out and said we don't feel this project is economical when compared to drilling for tar in Canada or even investing in wind farms in the US then we could have had the debate that is so desperately needed about how to make projects such as the Thames Array compelling to investors.
We could have asked what needs to be done to tackle the supply chain and planning issues that have dogged the project from day one. We could have asked why when the government has recently increased the incentives for offshore wind it has still not proved sufficient to keep one of the project's main backers on board. And most importantly we could of asked how we can make renewable energy a more attractive investment proposition when compared to fossil fuels.
Instead, we are once again left with a fudged statement praising the "positive policy and support framework for offshore wind projects" in the UK, while at the same time the underlying structural and economic faults that have meant the UK has thus far failed to exploit the best wind profile in Europe remain in place.
The simple fact is that Shell and the government need to climb out of this particular rabbit hole and accept that the policy and support framework was obviously not positive enough and as a result a project that could provide clean energy to a quarter of London's homes is now at risk of serious delays and even outright failure.
