Climate change, energy prices and food shortages will be the only topics in town and, to be honest, you can understand why.
The concern is that a focus on the two shorter term concerns - spiralling energy prices and worsening food shortages - could dampen appetites for action on climate change. But now, more than ever this cannot be allowed to happen.
These issues are so closely intertwined that you cannot address one area without tackling all three.
Food shortages will only get worse if climate change is not addressed, just as in the long term peak oil means rising fuel prices can only be brought under control by a shift towards alternative energy sources.
In this light, an agreement on climate change has to come first and if that means the short term pain presented by high oil prices continues then so be it - it's not nice but it is necessary to force people to make the transition towards greener alternatives.
But what do we want from such an agreement?
Green business experts the world over have gone blue in the face requesting binding emission targets, a working price on carbon, a greater focus on energy efficiency and fresh efforts to tackle deforestation. PwC was the latest to have a go this week, insisting that such a strategy would be technically feasible and economically affordable.
But sadly the G8 is unlikely to deliver on this wish list next week - not least because negotiators have it in their mind that Copenhagen in December 2009 is the key date for reaching such a deal and they don't want to get ahead of themselves.
However, that does not mean the G8 cannot deliver real progress.
What businesses want to see is real leadership and a clear signal that an agreement next year is now inevitable. Ever since the UN's Bali conference delivered some sort of breakthrough fears have continued that some countries are looking to delay the process and water down the final agreement. If the G8 unequivocally declares that this will not be allowed to happen then firms can start planning investments safer in the knowledge that a meaningful post Kyoto deal will be delivered.
Get that sorted and then not only will we be in a better position to address food shortages and rising energy costs, but perhaps we would also be able to find the time to return to all those other concerns that will necessarily have to take a back seat during next week's talks..
]]>Nowhere has the scale of this challenge been more clearly illustrated this week than in the reaction to the government's new renewable energy strategy.
To read most of the headlines you'd think that the whole affair was cooked up with the sole intention of driving up energy bills.
These headlines were supported by a raft of "experts" wailing about fuel poverty, the impact on the countryside of thousands of wind turbines and the strategy's £6bn a year price tag. Even the CBI - a vocal supporter of attempts to tackle climate change on most occasions - put the boot in, arguing that such a rapid increase in renewables capacity would not prove "cost effective".
The renewables industry and environmentalists did their best to kick back against this chorus of disapproval, praising the government to the heavens for finally developing a comprehensive strategy that combines the correct level of incentives with genuine commitments to remove the technical and planning obstacles blocking so many projects.
But sadly the media had decided on their angle and we were going to hear about little besides higher fuel bills, like it or not.
Never mind, that all the reports claiming that electricity bills would rise by up to 13 per cent and gas bills would climb by up to 37 per cent were based on the government's "worst case scenario". Never mind, that the projected increases in bills won't come on line until 2015. Never mind, that these calculations were based on the absurdly optimistic assumption that oil will cost $70 a barrel in 2020 and that as such the actual increases are likely to be far, far lower. And never mind, that in return for these higher bills the increase in renewable energy investment will create 160,000 jobs, bolster UK competitiveness internationally, and, most importantly, kick start the transition to a low carbon economy.
The problem for the government is that if it thinks these protests are loud now it ain't heard nothing yet.
Virtually every policy measure designed for driving the transition to a low carbon economy is governed by the principle of price signals. Whether its green taxes or plans to extend the EU's cap-and-trade scheme the end goal is to make carbon intensive activities more expensive in order to discourage people from undertaking them. This means that energy bills are going to get a lot higher, not as some unfortunate side effect of these policies but as the intended end product.
Businesses need to be aware that it is not just the renewables strategy that will drive up energy prices. The Carbon Reduction Commitment, changes to the European Emission Trading Scheme, the continued increases in the Climate Change Levy, the need for energy companies to pay for carbon capture systems and the natural effect of dwindling fossil fuel supplies are all going to contribute to higher prices.
The issue for the government is how to make the case for such measures in the face of protests that will only grow more intense. To shrug its shoulders and admit it is trying to raise bills on carbon intensive fuels at a time when people are struggling to make ends meet will only appear callous and will undoubtedly lose it yet more votes.
Instead the government needs to try and find the positives, while doing as much as possible to ease the transition to lower carbon technologies. The CBI is right in its contention that energy efficiency measures are more cost effective than renewables as a means of initially cutting emissions - a view echoed this week by one Tony Blair - and as such the government must support the renewables strategy with a hugely ambitious efficiency programme. It also needs to make sure that measures are in place to insulate the least well off against rising energy prices and provide smaller businesses with the help they require.
But most of all it needs to be brave.
The government's thinking on climate change is arguably well behind where it needs to be, but it is still ahead of much of the public and many businesses. In this light, it must resist the temptation to water down policies that contribute to higher energy bills and it needs to keep making the point that acting now is more cost effective in the long run. It also needs to make an example of those businesses that have understood the reality of both climate change and higher energy bills and are now providing evidence that it makes great business sense to identify means of cutting energy use sooner rather than later.
If Gordon Brown wants guidance on how all this can be achieved he need look no further than California, which this week unveiled a hugely ambitious strategy for cutting carbon emissions 30 per cent by 2020.
Amidst all the praise that routinely heads California's way it is easy to ignore the fact that this programme (which far outstrips much of what is on offer in Europe) has faced concerted opposition from both the federal government and many less enlightened industry groups.
The reaction of Governor Schwarzenegger has been an unwavering commitment to press on with reforms that he regards as right, necessary and economically beneficial. Instead of trying to triangulate his position and appease the doubters he has simply continued clearly and simply make his case.
The result is that not only is the state now the world's premier clean tech hub, but a man who was elected amidst predictions that he would prove little more than one a term joke has emerged as one of the most respected and popular figures in global politics.
Schwarzenegger provides ample proof, as if it were needed, that support for green measures can be mustered if the case is made clearly and proposals are backed by strong, unwavering leadership.
Sadly, as we've all learned in the past year, these are not amongst the prime minister's strongest suits.
Right, I'm off to try and wangle me a test drive in one of those all electric Range Rovers.
Have a good weekend,
James
]]>Well, we could be about to get an answer.
According to The Guardian, the government's official Gallagher Review into biofuels could make extremely uncomfortable reading for those within Whitehall who perhaps hoped they would be able to stick with their proposed target of ensure five per cent of fuel comes from renewable sources by 2010.
Apparently, the review, which is due for publication next week and was commissioned by the Department for Transport itself, concludes that demand for biofuels has had a "significant" impact on world food prices and that the current targets require an urgent rethink.
The only surprise is that anyone should be surprised.
The simple fact is that with food shortages leaving over 100m people hungry and food prices soaring any agricultural land used to grow energy crops that could be used to grow food is only exacerbating the situation. You can cut the economics any which way you like, that is the situation.
The biodiesel industry can wail all it likes about the fact that its investments are being undermined and that governments are failing to take a consistent position, but anyone who invests in clean technologies accepts on the way in that while the rewards can be potentially massive some technologies will unfortunately fall by the way side.
To stick by an approach that has seen over a third of US corn and half of EU vegetable oils turned into biofuels at a time when food prices are soaring borders on the obscene. Moreover, anyone insisting, like the US and Brazilian governments, that the diversion of these crops into the tanks of people's cars is having a negligible impact on food prices are clearly deluding themselves.
It is painfully obvious that what is required is a major overhaul of global biofuel policy that ensures the only biofuels produced come from sources where it can be proved the crops have not displaced existing agricultural land or contributed indirectly or otherwise to deforestation.
That means the only biofuels authorised for use must be derived from waste organic matter, such as corn stalks or wood chips; crops that can be produced in an industrial context, such as algae; and perhaps crops such as switchgrass and jatropha that can be grown on marginal agricultural land not used for food production, although even here guarantees would be required that the crops do not spread onto established agricultural areas.
However, the chances of any of this being agreed any time soon still look remarkably slim given the the oil tanker-esque turning circles that tend to characterise shifts in governments' environmental policies.
No one wants knee jerk reactions from political leaders, but when it comes to tackling the biofuel issue in particular and the climate change challenge in general we do need a level of urgency that is currently lacking.
Fears over the wider impacts of biofuels first appeared in the mainstream media midway through last year and the research vindicating these fears emerged by the end of the year. And yet despite much rhetoric the government's official review is only appearing now and we can still expect it to be another six to 12 months before the controversial biofuel targets get changed - assuming that is that the government does the right thing and listens to the review's recommendations.
A similar thing is happening now with regards to renewable energy policy whereby countless reports, including one study this week from a parliamentary select committee and another from the government's own Renewables Advisory Board, have labelled the UK's renewable energy policy as inadequate. Yet the official review will not begin until later this summer and the full blown strategy designed to address the problem won't emerge until early next year.
In the meantime, renewable energy projects are still being blocked and other countries are stealing a march in the pursuit of the low carbon economy.
Whitehall is hardly renowned for its panther-like agility and it could be argued that the biofuel saga provides ample evidence of the dangers associated with rushing out environmental policies. And yet, at a time when business leaders are actively demanding bolder action it seems perverse that no brainer decisions such as the revision of the UK's renewable energy targets, the introduction of a feed in tariff for microgeneration and the suspension of current biofuel targets are not being taken.
Right I'm off to try and build me a solar printing press, 'cos those things are going to change the world.
Have a good weekend,
James
]]>Hertzberg is chairman of UK solar start up G24i and founder of clean tech venture capital firm Renewable Capital, as well as the living embodiment of American can do brio. As a former Speaker of the California State Assembly and candidate for Los Angeles Mayor he also has a great insight into the relationship between environmental legislation and investment.
One of Hertzberg's top tips when looking for a clean tech investment is to be extremely wary of sectors that are only operating as a result of subsidy and legislative leg ups. He argues, not unconvincingly, that the best and indeed only way to transition to a low carbon economy is to make damn sure that green products are better and more cost effective than their traditional counterparts.
That is why he is enamoured with solar power in general, which advocates claim could soon compete with coal on price, and G24i's technology in particular, which the company, fresh from receiving $20m in venture funding, is seeking to integrate into mobile devices, providing them with a constant stream of power and removing the need for them ever to be recharged.
As Hertzberg observes if you have a Blackberry or mobile phone that never needs recharging and as such is far more convenient than conventional models people will want the device not just because it is greener but because it is better.
It is a philosophy that is hard to argue with and is all the more appealing because it envisions a scenario where if you develop the right product the switch over to a low carbon alternative can be achieved within a couple of years as opposed to a couple of decades. For investors it raises the possibility of backing the next Google, for the rest of us it offers the enticing prospect that we can genuinely decarbonise our economy relatively quickly.
There are signs in some sectors that this is beginning to happen. The recent shift in demand in favour of fuel efficient vehicles is a factor not of environmental concerns or legislation, but the simple fact that in a world of high fuel prices smaller cars are simply better.
Equally, it would be easy to dismiss the decision by developers of the Freedom Tower to install 12 fuel cells as a green publicity stunt, but if you believe the company providing the technology, UTC Power, the latest fuel cells are now cost competitive with the grid even before you consider the benefits you accrue from lower carbon emissions and not having to dig up the road to lay the electricity cables in the first place.
And who wouldn't want the washing machine unveiled this week that requires next to no water, uses little energy, doesn't shrink your clothes and doesn't require them to be hung out to dry afterwards. It's green, but is also in many respects just plain better than traditional models.
None of this is to suggest that legislation is not required to accelerate the transition to lower carbon technologies and business models in sectors where embedded economies of scale, decades long replacement cycles and cultural conservatism make it far harder for green alternatives to break through. And in this light it is encouraging to see political leaders in Japan, Europe and the US, including even President Bush, this week emphasising their commitment to more stringent environmental rules and regulations.
However, it is perhaps even more encouraging that if green businesses get their products spot on there is every chance of them forcing traditional counterparts out of the market with the same speed with which iPod's put paid to portable CD players. Not because they are greener, just because they are better.
Right, I'm off to try and work out how intense my carbon is feeling.
Have a good weekend.
Cheers,
James
I'm sure they're kind to their mothers, save lots of birds, are upstanding for the national anthem, etc.
But what I find more than a little disdainful is the mind-bendingly bizarre value system that sees the organisation, and others like it including WWF-UK and the National Trust, lobby against the proposed Severn Barrage.
The RSPB and seven other green groups have this week released a report they commissioned from consultancy Frontier Economics which concludes that the proposed Severn Barrage would prove significantly more expensive than other forms of renewable energy and could not be justified on economic grounds.
They appear to have decided that the government will play deaf to their pleas not to evict 68,000 odd birds by flooding their homes and have instead argued that the project should be blocked for economic as well as ecological reasons.
It is hard to know where to start when assessing how wrong headed all this is, but if the RSPB and co want to talk economics let's start there.
The fact is that all forms of large scale renewable energy projects are "exorbitantly expensive" when compared to fossil fuels and that is not about to change any time soon. You can argue that we should ditch the Severn Barrage project in favour of other forms of renewables on cost grounds, but if cost is the only consideration then you should ditch all renewables in favour of coal.
Furthermore, if we are going to focus on cost the most cost-effective form of renewable energy currently available is onshore wind farms, which, you've guessed it, have also faced occasional opposition from the RSPB for shredding birds and destroying habitats.
In fairness to the RSPB, it has been far more supportive of the wind energy sector than nimby-motivated countryside groups and has supported the development of many wind farms, including the Thames Array. But it also recently secured victory in its campaign against plans for a 181 wind turbine development on the Isle of Lewis in Scotland, claiming it would damage ecologically important peatlands.
It is worth observing that if its sole concern when it came to the UK's renewable energy mix was cost then the RSPB would have supported the Lewis wind farm and opposed the far more expensive offshore Thames Array.
The fact is that cost is not the only consideration when looking at the pros and cons of the Severn Barrage. Yes, it would be far more expensive than other forms of renewable energy, but it would also deliver significant benefits: it would generate almost five per cent of the UK's energy in one hit at a time when attempts to build countless smaller projects are constantly hampered by local planning problems and the clock is ticking on the EU's renewable energy targets; it would provide a genuine flagship tidal energy project, underlining the UK's positions as a leader in marine energy and providing it with invaluable technologies and expertise that could be successfully exported; and it would provide a far more reliable source of energy than those turbines and solar panels that the RSPB et al are now advocating, but are at the mercy of changing weather conditions.
These benefits will have to be weighed up against the financial and environmental costs and it is exactly this work that the government is undertaking right now through its feasibility study.
Let's not kid ourselves here, the opposition of this coalition of green groups to the Severn Barrage is driven not by concerns for the tax payer but by their fears for our feathered friends - and it is this that I find so perverse.
Just so we're straight I do not hate birds. As a country boy born and bred I am well aware of the huge ecological, aesthetic and economic value of the biosphere - and that is precisely why I am so in favour of large scale renewable energy projects.
Climate science tells us that if by the end of this next decade we have not made significant progress towards decarbonising the economy then every single one of the habitats that wildlife groups campaign to protect will be irrevocably damaged. Yes, 60,000 birds could lose their homes as a result of the Severn Barrage, but if all such projects are stopped or even slowed down by concerns over local wildlife then the long term impact on the biosphere will be catastrophic.
And let's remember when we talk about the biosphere we are talking about human beings too.
It is hugely simplistic to try to position the Severn Barrage as a debate over the loss of wildlife in the Severn Estuary against the loss of human life in countries already being impacted by climate change, but at its most fundamental level that is what we are talking about.
It is hard to completely shake the feeling that somewhere along the line the opposition to many renewable energy projects undertaken in the name of wildlife conservation is underpinned by a sense that animals are more important than people. A view, which personally, I can't even begin to comprehend.
I spoke with Martin Harper, head of sustainable development at the RSPB, yesterday and he argued vehemently that the organisation "passionately supported renewable energy". It is just that it believes there are more sustainable options than the Severn Barrage and that the low carbon energy revolution that is required should be "achieved in harmony with the natural world".
But while that is all well and good in an ideal world, we have just 10 to 15 years to deliver significant cuts in carbon emissions and the sad truth is that to achieve the requisite changes at the requisite scale we will have to be far less precious about those still relatively small parts of the natural world that will get trampled on in the process. The RSPB and groups like it claim they support more sustainable renewable energy developments, but even where they do not explicitly stand in the way of projects the hugely onerous and long winded environmental assessments that developers are made to carry out only result in further delays.
If you accept the analogy that the fight against climate change needs to be treated with the same urgency as a World War - as many environmental groups and politicians do - then what opponents to projects such as the Severn Barrage are suggesting is that you call a halt to a battle for fear that some moorhens end up as collateral damage. Personally, I'm willing to sacrifice the birds.
]]>Of course, if you're feeling pessimistic on this fine Friday afternoon you could counter that every week needs to be a good week for the renewables sector when the International Energy Agency claims that we need to invest $45tr in alternative energy by 2050, building 17,500 wind turbines a year in the process. But let's try to look at the positives.
The UK government's dream of powering every home in the country from offshore wind farms took a major step towards becoming a reality this week when the Crown Estate outlined plans to license large swathes of the seabed to wind farm operators.
The business models behind such developments may still be dependent on generous subsidies and there may still be huge infrastructure challenges to overcome, but that has not stopped a number of firms already expressing an interest in the licenses. Moreover, the British Wind Energy Association is convinced that a number of new start ups are also poised to enter the offshore market soon.
Meanwhile, the solar sector is also continuing to go from strength to strength with DuPont predicting solar sales will hit $1bn a year by 2013 and Bosch shelling out €1.1bn to break into the market with the acquisition of ersol.
If last week I argued that soaring fuel prices would mean that alternative energy technologies would become cost competitive far faster than many expect, then the sheer scale of the emerging renewable energy companies provides the flip side of that equation. They may be getting a leg up from generous subsidies and new legislation, but the economies of scale that they are building combined with the support they are now receiving from established multinationals such as Bosch should soon begin to impact production costs, bringing grid parity ever closer.
Right, I'm off to try and work out if drinking fizzy drinks really could save the world.
Have a good weekend,
James
]]>The global oil cartel may not be to the tastes of many environmentalists, what with its penchant for fossil fuels and all, but there is a very real chance that the actions of OPEC over the next few years could be the deciding factor in precipitating the emergence of a genuinely low carbon economy.
In an open letter to King Abdaullah of Saudi Arabia, environmental campaigner and some time pursuer of alleged war criminals George Monbiot urged the head of state to resist US calls for OPEC to increase oil production, arguing that a continuation of high oil prices represents the global economy's best hope of weaning itself off carbon intensive energy.
He has a point. The longer OPEC refuses to increase supply - and let's leave aside the on-going debate as to whether or not it has the reserves to do so - the higher oil prices will climb and the more attractive both alternative energy and energy saving technologies will look.
Much has been written about the time it will take many clean energy technologies to become cost competitive with conventional alternatives and solar manufacturers and electric car firms are currently focusing on the speed with which they can exploit economies of scale to bring their own costs down. They will get there in the end, but it is worth remembering that if the cost of fuel continues to rise at its current rate they will reach the Promised Land of cost parity far quicker.
Given the current outlook all those alternative energy firms pledging cost parity within five to ten years, must be revising their timelines downwards at a rapid rate of knots.
The longer the price of oil remains high the easier it will become for clean tech firms to make their business cases and secure investment.
Of course, the upward trend in energy prices could be reversed. With complaints over rising fuel prices becoming ever more vocal governments can seek to slow this process by cutting green taxes on energy. But such a move would not turn the global tide of rising oil prices and would attract fierce criticism from environmentalists, including the head of the UK government's climate change committee Adair Turner who last week defended the principle of green taxes on fuel.
Moreover, assuming it has the reserves OPEC could eventually open the taps and increase supply, prompting a short term drop off in oil prices. But again you have to ask if any increase in supply can keep pace in the long term with booming energy demands from the emerging economic giants of China and India.
Faced with this prospect of a sustained perion of high oil prices, the energy sector has two options, neatly embodied this week by ExxonMobil and Abu Dhabi.
The short term option is to make hay while the sun shines and exploit the high oil price for all its worth. But as that price continues to climb alternative sources of energy begin to look ever more attractive to both investors and customers, and as the group of dissident shareholders who were defeated in a vote at the company's annual meeting last week warned, should those clean technologies develop at a pace comparable to the IT revolution of the last two decades it will "seriously undermine Exxon's assumptions in demand for petroleum".
Meanwhile, the oil rich state of Abu Dhabi has taken a markedly different approach, investing billions of its oil wealth in the development of alternative energy sources such as solar power. The country will undoubtedly continue to benefit from the high price of oil, but should that price get too high and economies begin to switch to alternative technologies it will be ready to meet that demand too.
If I were an investor with even the smallest understanding of risk I know exactly which approach I'd be backing.
Right, I'm off to try and work out why everyone's so obsessed with offshore wind.
Cheers,
James
]]>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.
]]>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
]]>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
]]>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.
]]>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
]]>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
]]>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.
]]>It was the first three paragraphs that did it:
"The worldwide effort by supermarkets and industry to replace conventional oil-based plastic with eco-friendly "bioplastics" made from plants is causing environmental problems and consumer confusion, according to a Guardian study.
The substitutes can increase emissions of greenhouse gases on landfill sites, some need high temperatures to decompose and others cannot be recycled in Britain.
Many of the bioplastics are also contributing to the global food crisis by taking over large areas of land previously used to grow crops for human consumption."
It's all so blindingly obvious when someone spells it out for you isn't it?
The sinking feeling, which I imagine was shared by the marketing and sustainability departments of retailers up and down the UK, was prompted by the sense that I already knew on some level that there were environmental risks attached to these "bioplastics". What Vidal had done so effectively is make those risks plain.
Anyone with even a fleeting interest in environmental science knows that organic matter will release methane as it breaks down and is probably aware that methane is one of the most harmful greenhouse gases. Just as anyone who has any experience of the UK recycling sector, knows that recycling technologies tend to lag far behind the emergence of new types of waste.
Equally, it stands to reason that if biofuels are guilty of taking up land previously used for food crops and inadvertently contributes to deforestation, then any other product that similarly diverts food away from peoples' mouths and increases pressure on agricultural land will have similar effects.
What The Guardian's investigation has done is draw together these facts, and while the bioplastics sector can justifiably claim that it poses a relatively small problem compared to the burgeoning biofuels industry and that work is underway to enhance recycling capacity, the paper is entirely right to have raised these concerns.
The investigation also serves to highlight to corporate risk assessment and due diligence teams everywhere the extent to which many of the unintended consequences that arise from well intentioned green initiatives are in fact surprisingly obvious if you just take a detached look at the bigger picture.
It is always tempting when an exciting new green technology emerges to deploy it as quickly as possible. But as the problems experienced by biofuels and now bioplastics prove, such an approach could leave you repenting at leisure. It is a fact those scientists dallying with climate modifying technologies, algae based biofuels and various other clean technologies would be advised to remember.
In the long run, bioplastics may well prove a sustainable green alternative to conventional plastics, but in the meantime firms would be well advised to make sure they have considered the full environmental impact of using these types of polymers - or else they might just have to get used to that sinking feeling each time someone else points out that their green plastics might not be so green after all.
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