Imagine you are a community energy entrepreneur in the UK. How will you be feeling after the Government’s action to tackle the “solar farm threat”?

You’ve said no to going to the pub at weekends more times than you can remember. You wonder if you should have given up your dull but well paid job for a career that won’t make you financially rich. But you’re excited when you arrive at your shabby yet friendly office because today is a ‘milestone day’ – you are going to submit your planning application for installing solar PV panels on the local secondary school. This will be paid for by local shareholders in the energy cooperative you run and a loan from a new non-profit community energy loan fund.

The clean electricity generated will be enough for most of the school’s needs plus 20 local homes. Today more than ever, it feels real. Later on, you have an interview set up with a local journalist. Soon, the town will know. You feel a bit apprehensive, but mostly excited, maybe you will go to the pub this evening.

You’re making a cup of tea, waiting for your knackered, donated PC to fire up. Eventually there come the ‘bings’ of new emails, lots of them. “Why so many”, you wonder as you scan your inbox. Then you see the same subject line repeated down your screen: ‘Huhne takes action on Solar farm threat’.

You knew that the government was concerned about energy bill payers subsidising fields full of solar panels, so you were half expecting it to limit them in the review of ‘feed-in tariff’ subsidies next year. Now you read that the review of these ‘solar farm’ scale subsidies will be ‘fast-tracked’ this summer. That raises your blood pressure, but you tell yourself that the school project is no ‘solar farm’. Of course it isn’t, it’s on the roof! But hang on, why does it say the review covers projects over 50 kWp. Our school project is for 90kWp! Why on earth would they do that, why would they want to stop our project, and those like it up and down the country!

You look at your planning application, your drafted share issue information pack and your wall calendar with the launch date circled in four weeks. You break into a cold sweat as you realise that now everything is unknown, just like it was when you started. You can’t complete the project before the review finishes, so you don’t know if there will be subsidies after that. Your investors will need to know what they will earn so there’s no point asking people to buy shares. No bank will lend to you. Suddenly you feel a pang of panic: how will you pay the mortgage? Your mobile rings. It’s the journalist. What will you tell them?

I’m sorry to say that this tale is very real. I have been involved in our Climate Finance project at Forum for the last two years, working with a group of experts to support community energy groups in creating and realising viable business plans for community owned energy projects, sponsored by the Ashden Trust.

We all welcomed the feed-in tariffs that started in April 2010. They have led to an explosion of interest and activity in community-owned energy, and commercial investors are awake to the opportunities as well. Already the costs of solar are dropping as we achieve some scale and new factory capacity is creating UK green jobs (which are now under threat). Britain badly needs these new business models to transform the way we generate and use energy and create meaningful jobs.

We also are working on ways to incentivise the long-term investments that we need to switch to a sustainable economy. Community energy entrepreneurs are making this long-term investment. They thought it was matched by a long-term programme of subsidies – feed-in tariffs – that wouldn’t change until at least April 2012. That gave investors long-term certainty, enough for the large banks to invest and enough for the entrepreneurs to take huge personal risks. They also trusted that the government understood the scale of different types of solar projects are and that was no threat of solar PV projects under 500kWp, let alone 50kWp, using up funds for communities and small businesses.

The horrid irony is that this 50kWp scale is fundamental to these vital creators of a sustainable energy system. The threat of this shock review goes beyond solar PV too. As Gareth Hughes, from Beetle Capital Partners, says “I worry for the damage done to investors’ confidence across the board [wind, hydro and solar]. How can they possibly look out 25 years and make a safe assumption that the rules won’t change. At the very least the cost of capital will increase to reflect the enhanced risks, which will make many projects hard to finance.”

I want you to hear what two of the leaders we have been working with have to say of this decision:

Managing Director of OVESCo, Chris Rowland: “It is infuriating that just as we are about to launch our first scheme that is in line with Greg Barker’s ‘big society ambition’, we are hit by this lack of vision at the top which totally scuppers the plans of many community groups across the UK. Perhaps the minister did not mean to destroy the plans of the groups he also wants to see succeed, but without a stable and viable feed-in tariff, community energy will never happen.”

Barbara Hammond, Chair of West Oxford Community Renewables: “Our biggest installation so far is 100kWp of solar PV on our local secondary school. It seems very strange indeed to be suddenly considered a large developer of PV. As a small community-owned SME, the income stream coming into our community from our projects will have a huge impact on our ability to address climate change in a deep, long-term way. We are only just starting to understand how powerful our model could be, and are starting to share our learning with other communities. This momentum will be lost if the structure and size of the feed-in tariff is constantly in question.”

My fear is that these ‘little guys’ have been stung too many times and will just give up. But, in my heart I know that they will carry on because they have come this far and so many people want them to succeed. Too many realise how powerful their model for change is. I often wish I could have their courage.

I hope that the government will now realise that once you set out on a policy path, there will often be unintended consequences, but that changing the rules suddenly should only be done after careful consideration. The uncertainty this creates does very real damage to people’s lives and our ability to invest for the long term.

A Waitrose biomass plant on the Isle of Wight could supply heat to local houses

A supermarket which has been designed to go ‘off-grid’ may also offer a glimpse into a future where retail outlets act as local energy hubs.

A Waitrose store in the Isle of Wight in southern England is due to open a biomass power plant later this year. Fuelled by locally sourced woodchips, it will supply the store’s electricity, cooling and heating needs. And it’s been designed with extra capacity, so as to have the potential to supply heat to local housing.

Energy efficiency measures and onsite renewable technologies are becoming increasingly common in supermarkets. A biomass boiler has enabled Sainsbury’s to add an extension to its Durham store while reducing the outlet’s overall carbon emissions. A biofuel generator at Tesco’s zero carbon store in Cambridgeshire (see ‘Interview with Terry Leahy’) exports excess energy back to the grid. Paul van Heyningen, Tesco Climate Change Manager, said that such flagship developments were especially important to trial new technologies before incorporating them to stores elsewhere.

Decentralised power generation improves energy security, but it is the prospect of a supermarket helping to power the community that makes the Waitrose project “an exciting place to be”, says Martin Hunt, Head of Built Environment at Forum for the Future. Renewable technologies are important, he says, “but you can have a much more powerful impact if it becomes part of the community infrastructure”.

Planning and design issues, rather than technical ones, are often the main hurdle to overcome, Hunt adds. So practical examples which work will all help build confidence in the wider prospects of such local energy hubs. – Nick Chan

MENA2011, Chatham House, London
31 January 2011

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Introduction

Good morning and thank you, Robin [Niblett, Director of Chatham House] for that generous introduction. It’s my pleasure to be here today.

The focus of this conference is a timely and welcome one. No discussion of modern energy policy is complete without North Africa and the Middle East. It is too early to say how events in Egypt will play out, but this region will play a critical role in our energy future, powering the world economy for generations to come.

The International Energy Agency predicts global energy demand will rise by a third over the next 25 years.

In each of the scenarios in the latest World Energy Outlook, demand for gas will be higher in 2035 than it is in 2010. Both the Middle East and Africa will see demand rising above the global average. The region is a vital producer and also a major consumer.

Oil use will also rise; a fifth of the growth in demand between now and 2035 will be in the Middle East. And the oil price, such a key economic indicator, is expected to nearly double over the same time.

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Challenges

So the global picture is one of steadily increasing energy demand, driven not just by the emerging economies, but also by producer countries.

To meet it, the IEA estimates we need $33 trillion of investment in energy infrastructure by 2035. That’s twice the GDP of the EU.

In the UK alone, we need to secure £200 billion of investment in energy infrastructure over the next ten years. Annual investment in our energy system is expected to reach £25 billion by 2015.

But this investment cannot simply build more of the same. For countries and companies making long-term planning decisions, there’s another factor to consider: we must cut greenhouse gas emissions, and move toward a low-carbon future.

Around the world, ministers face similar challenges. To secure affordable, sustainable energy for our citizens. To trigger record investment in the next generation of energy infrastructure. And to sustain a vibrant, diverse and successful energy sector in the face of a global economic downturn.

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International co-operation

These challenges are shared. From Munich to Masdar, investment decisions transcend national borders. Producer and consumer countries both have an interest in price stability; in security not just of supply, but of demand. And action on climate change is a global concern.

That is why we must work together internationally. Cross-border co-operation already happens in the marketplace; but there is an important role for governments and institutions to play in bringing nations together to create a better business environment.

For commodities, greater transparency and a better understanding of world markets can increase price stability and reduce uncertainty for investors. That understanding is founded on better information sharing between countries.

Already, the signs are good. The IEA and OPEC are working to better understand gas markets, extending coverage of the Joint Organisations Data Initiative.

And I am very pleased with the new International Energy Forum charter. Thanks to close co-operation between the UK and Saudi Arabia, and the tireless work of Saudi Arabia’s deputy oil minister, Prince Abdulaziz, the charter reflects the balance of interests between producing and consuming nations.

It will give the IEF the institutional framework it needs, and I very much look forward to signing it in Saudi Arabia next month.

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UK / MENA relationships

I also look forward to building on the excellent relationships we already have with our partners in the Middle East; relationships based on co-operation and understanding. That is why the British Government has established a ‘Gulf Initiative’, designed to focus attention on the region.

It is a case of each playing to our strengths, and working together wherever possible. On technology, business, regulation and research, we each have a lot to offer.

Take the groundbreaking Masdar City. Designed with British architects, it will become the global hub for future energy innovation, with a zero-carbon, zero-waste ethos.

Like the UK, Morocco and Egypt have ambitious targets for renewable energy deployment. And Saudi Arabia aims to become an international hub for solar power, building centres of excellence such as King Abdullah’s City for Atomic and Renewable Energy.

The potential for solar power here in the UK is perhaps more limited. But we are blessed with world-leading science and research facilities. Two miles from where we sit, Imperial College London is carrying out cutting edge technology research that could pave the way for the next generation of low cost, high efficiency solar power.

 

And we’re keen that UK expertise stretches abroad, too, which is why Qatar’s support for carbon capture and storage research is so welcome. Shell and Qatar Petroleum have invested significantly in a state of the art research programme into how to store CO2 produced from Qatar’s industrial city in Ras Laffan.

Qatar is already a critical UK delivery partner. The South Hook LNG terminal, built with £1.2 billion of Qatari investment, can supply up to a fifth of the UK’s total gas needs.

Last year I was in Qatar to mark a significant production milestone: 77 million tonnes of LNG per year. I saw for myself the enormous scale and complexity of what they have achieved in such a short time. It is an achievement that is a tribute to the vision of the Emir; and a perfect illustration of the dynamism that defines the economies of the Middle East and North Africa. I also saw Shell’s ‘Pearl’ gas-to-liquids plant, which highlights the important role British businesses play within Qatar, and their long-term investments in the country. UK companies – Shell, BP, BG – are proven partners in the area, and all are ready to work with you.

As with the UK, the future of energy in the region includes civil nuclear power. We believe that nuclear power has an important role to play in reducing harmful greenhouse gas emissions – and relieving pressure on limited fossil fuel supplies.

I believe that our Nuclear Cooperation Agreements with Jordan and the UAE – and soon, I hope, agreements with other countries in the region – will lead to much closer cooperation and mutual benefit in the fields of nuclear research, training, security, safeguards, and infrastructure development.

From regulatory expertise to legal and technological experience, the UK nuclear industry has a great deal to offer. And it is ready and willing to contribute to all the key areas required to support a new nuclear build programme.

Our independent regulatory regime is world-leading, and has developed best practice principles of transparency and independence.

Our companies have expertise in a number of crucial areas such as programme management, technical support, engineering and construction, and the provision of plant and equipment.

Already, that collaboration is underway. Rolls Royce, a company with 50 years distinguished experience in the nuclear industry and a trusted track record in Middle East power projects, has a Memorandum of Understanding with the Emirates Nuclear Energy Corporation to assess Abu Dhabi’s civil nuclear industry potential.

And London is the leading Western centre for Islamic finance, with six firms that are fully Sharia compliant and over 20 banks in total supplying Islamic financial services.

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Domestic situation

So on technology, research, finance and supply, the ties between the UK and the Middle East and North Africa are strong. And the evidence suggests they will get stronger still. For the global picture of rising demand and ageing infrastructure is mirrored here, within our borders.

In the UK, with our indigenous production in decline, we expect our imports to increase significantly over the next two decades. Oil and gas will continue to play an important role in the UK energy mix; yet we have ambitious plans to decarbonise the economy by 80% by 2050.

Like so many countries, gas is a vital part of our energy mix. December last year saw record monthly gas demand, as a cold winter drove unprecedented gas use.

When our country lay blanketed in snow, LNG helped keep UK homes warm and UK businesses on track.

That dependence is set to continue. Imports of gas could rise to more than 50% by 2020, and throughput could rise too, as the UK is developing as a “gas import corridor” into continental Europe.

As demand rises, investment in exploration must be matched by investment in transport and distribution.

The UK supports a proposed Southern Corridor pipeline to transport gas from the Caspian region into Europe, which will open up new routes to market – including, potentially, for gas from Turkmenistan and the substantial reserves in northern Iraq.

Planning for infrastructure projects on that scale means giving investors confidence and certainty. Long-term contracts will be critical in ensuring security of demand as well as security of supply; we all have an interest in avoiding price volatility. The Government believes it too has a role in helping secure those long-term contracts.

But in a decarbonised world, we must have the technology to capture and store the carbon dioxide released when fossil fuels are burnt.

That is why, last autumn, this government announced £1 billion towards the first demonstration for carbon capture and storage, and that the three subsequent projects would be open to gas-fired power stations.

The long-term future of gas and coal in the low-carbon economy depends on the development and deployment of this emerging technology at scale. With CCS, fossil fuels can play a continuing role in the UK’s energy mix without jeopardising our emissions targets. And there is great scope for cooperation.

As we move toward a low carbon economy, gas will have a continuing role in helping to balance our power generation, as more electricity comes from renewable sources at the expense of older coal-powered stations.

That flexibility will be critical, because we are currently consulting on how to rebuild our electricity market to make it fit for the 21st century.

The current framework does not provide the certainty that investors need, nor can it deliver the low-carbon revolution that we need. So we are consulting on a new market framework for electricity; one that encourages green investment and gives consumers a fair deal.

 

Our reform will examine the levers we could use to secure investment at scale in cleaner, greener electricity generation. It is about working with our partners to build a market framework that can deliver secure, affordable, sustainable energy for decades to come. And we very much welcome the investment we have already seen from countries across the Middle East and North Africa region in our low carbon future.

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Conclusion

And perhaps that is fitting place to bring my remarks to an end.

In energy, the world is increasingly interdependent. An energy shock in one part of the world is felt thousands of miles away.

As we look towards a more connected, low-carbon future, the relationship with our partners in the Middle East and North Africa will remain of the utmost importance. British companies have an increasingly important role there, and the Government has a role to play in bringing them together.

I began today by talking about the shared challenges that energy ministers from around the world face. On technology, supply, co-operation and research, we can meet those challenges – together.

Thank you very much.
 

08 February 2011

 

Whether Britain succeeds in stealing a march in the global low carbon race will depend in part on the skills, enthusiasm and experience of our workforce.

From building, installing and designing the new energy infrastructure of the future, Britain’s green economy will need a massive injection of skills which could amount to a new ‘low carbon army’.

And the role played by the next generation of apprentices will be central to our success.

So as national apprenticeship week kicks off, there’s no better time for me to fly the flag for the massive opportunities presented by the low carbon economy to the apprentices of the future.

A low carbon apprenticeship will provide a great avenue into some high skilled, high value careers. And the evidence is that we’re going to need more highly trained individuals to help us make inroads into the green economy.

If my job’s about one thing, it’s making sure that Britain doesn’t miss a trick in making the transition to a low carbon economy. And not missing a trick means getting our best people stuck into the task.

The role of apprenticeships should be seen as crucial in that transition – by employers and by future workers.

The number of apprentices are growing – with twice as many last year in England compared with ten years previously. That’s 300,000 who started an apprenticeship in 2010.

The Government’s Green Deal is one area where there will be huge opportunities. The Green Deal is the Government’s answer to the energy leakage that’s currently inflicting Britain’s homes and businesses.

It’s the biggest shake-up in the history of energy efficiency and will be more ambitious than anything that’s ever been tried before. It will reduce energy wastage and save people and business money.

It will also be a bigger national drive than putting on the London Olympics. Just as the Games are closing in 2012, we will be kick-starting an energy efficiency overhaul of homes and businesses across the country.

Crucially, the Green Deal will be great for jobs.

Were all 26 million households to take up the Green Deal over the next 20 years, employment in the sector would rise from its current level of 27,000 to something approaching 250,000, working all around the country to make our housing stock fit for a low carbon world. Insulation installers and others in the retrofit supply chain all stand to benefit from this long overdue energy efficiency makeover.

But it’s important that the insulation and construction industry prepare their workforces with the appropriately skilled people to provide the quality installations and services the Green Deal will demand. And that’s where apprentices come in.

Apprenticeships can provide real business benefits for employers by bringing productive, enthusiastic and loyal people into the business.

In my own Bexhill constituency at Torr Scientific I have seen at firsthand how vital apprentices can be in driving forward business.

The coalition Government wants to work with business to deliver up to 400,000 apprentices across the economy by 2014. The budget for apprenticeships will increase to over £1.4 billion in 2011-12 alone.

The Insulated and Render Cladding Association is already getting involved with its own apprenticeship scheme. And I’m sure there’ll be many more opportunities in this growing industry over the coming months and years for apprenticeships. Employers will be mad to ignore this opportunity.

But it’s not just in the insulation industry that apprentices are getting a foot hold and where big opportunities are materialising.

It’s happening across the low carbon economy:

• A hundred young people are taking part in the community apprenticeship scheme run by the National Skills Academy for Nuclear;
• EDF Energy took on 80 apprentices last year;
• British Gas are looking for 500 new engineer apprentices this year;
• And a modern apprenticeship in wind turbine operation and maintenance is making sure we have the skills in this fast moving industry.

In my own Department we have six apprentices working across a range of areas, making a really valuable contribution to the work of DECC.

But the issue of apprenticeships can’t just be left to an annual week of celebration.

Now’s the time to make sure we secure our future green economy – and that means giving proper recognition to the skills and contribution that apprenticeships can bring to the low carbon economy.

Greg Barker 

I’ve never been one for corporate jargon – I don’t “push the envelope”. My thought processes are never “blue sky” or “out of the box”. So when I came across the latest bit of business-speak I had to laugh – apparently, if you turn a crisis into an opportunity it’s a “crisitunity”.

Despite the cringey new word, the sentiment behind it makes a lot of sense – when you are faced with a crisis, look for the opportunity. And you don’t have far to look for a crisis now. Public spending is being slashed, but people still demand better services and legislation requires huge cuts in carbon emissions.

But what if we started to view the financial crisis as an opportunity to approach service delivery in a totally new way? One which resulted in better services with lower carbon emissions?

A study by Forum for the Future and ADEPT (the Association of Directors of Environment, Economy, Planning and Transport) aims to help the public sector to seize these opportunities. “Building a Low-Carbon Britain” presents four scenarios of a low-carbon UK in 2030 and explores how the public sector might respond to each.

The study makes five recommendations for actions that councils can take now to seize the opportunities presented by a low-carbon economy. They should:

1. Redefine the role of local government in a low-carbon economy
   As the local economy changes, so will the role of local government. The current financial crisis makes it imperative to seek out new revenue streams and re-orientate business models to encourage low-carbon behaviour.
2. Invest in low-carbon infrastructure and set favourable planning conditions
   Opportunities range from intelligent energy saving solutions in council buildings to using planning policy and community engagement to facilitate development of large renewable infrastructure.
3. Build resilience at the local level
   Investing now in climate change adaptation and emergency planning to cope with extreme weather events is essential. Water management and the maintenance of biodiversity are also vital to future-proof food, transport or biological systems.
4. Prevent low-carbon social exclusion
   The drive for a low-carbon society may make some groups more vulnerable, such as rural communities isolated by higher carbon and oil prices. E-government offers a means to support these people but councils may need to make sure they have the necessary skills and access to the relevant technology.
5. Foster low-carbon innovation
   Councils need to make radical changes in their own internal operations and service delivery. They also need to invest in low-carbon industries to encourage businesses and communities to reduce their carbon footprint, and they need to build links with universities to ensure the local workforce has the skills these industries need.

To help bring councils together, exchange ideas and find where the real opportunities for low-cost, low-carbon projects lies a series of local events are also being planned.
Some local authorities are already forging ahead and finding ways to reduce carbon emissions and deliver better services cost effectively. Cornwall County Council, for example, is investing in a huge solar park, which will bring in a new revenue stream, improve energy security and provide carbon-free energy for residents. Click here to find out more.

The Birmingham Energy Savers scheme is creating jobs and supporting the growth of green businesses by providing insulation and solar panels to residents and companies. It will help the council meet its carbon targets and lower fuel bills for the community. Click here to find out more.

Examples like these should inspire all local authorities to seek out projects that have multiple benefits – for the community, the public purse and the environment. Otherwise this “crisitunity” could go to waste.

Suspension of transfers in EU ETS registries

 

Gregory Barker
03 February 2011

On 19 January, following a number of successful cyber attacks on EU member states’ emissions trading system (EU ETS) registries, the European Commission suspended all internal and international transactions within all the EU ETS registries. These registries are the repositories for EU emission allowances and an important part of carbon market trading. 

The UK agreed with the European Commission that EU member states should not be able to reopen registries until they had provided sufficient evidence to the European Commission that their registries meet a number of minimum security requirements. The UK registry is widely seen as one of the most secure registries in Europe with at least one market participant recommending this week its clients should use the UK registry. The UK’s registry administrator, the Environment Agency, earlier this week submitted the required evidence to the Commission. We have received confirmation this morning that the UK registry will reopen on Friday 4 February at 7am.

While it is important to ensure a minimum level of security now to ensure the reopening of the registries, the UK will continue to press the European Commission to ensure that registry security across Europe is raised above this level. This is vital to ensure continued confidence in this growing market.

The temporary suspension of registry transfers has had an impact on the carbon market, though this has been concentrated in spot trading (which allows for instant delivery of allowances bought on the secondary market), which represents only 10% of trading on the carbon market. The futures market, which is predominately based in the UK, and accounts for the remaining 90% of the carbon market, has shown only a limited level of disruption. Trading here has continued at broadly the same volumes as before the registries were closed and the impact on the EU emission allowance price has been limited.

David Bent on how to make sustainability count

It was 2008, and Julius Brinkworth had a problem. As Head of Energy and Environment at Sainsbury’s, he had created an investment programme which could make the retail giant’s stores massively more energy efficient. It would save large amounts of carbon – and money, too. There was just one snag. The upfront costs, which ran to hundreds of millions of pounds, had to be signed off by the Capital Investment Committee. Would it get the green light? It seemed touch and go. But then Julius discovered something surprising.

He looked into how the committee calculated the net present value (one way of measuring whether an investment is worthwhile). He discovered that this completely ignored the Carbon Reduction Commitment and Enhanced Capital Allowances – two UK government schemes which reward companies for becoming more energy efficient. This may not sound that exciting – but for Julius, it was a real breakthrough moment. He realised that, by failing to take these rewards into account, the committee was in danger of turning down what would otherwise be a demonstrably sound investment. Once the monies available from those schemes were added into the pot, the decision was straightforward. Sainsbury’s made the investment.

The principle that sustainability saves money is nothing new, of course. There are plenty of examples out there. Take BT. What’s interesting, though, is how often the financial upside comes as a surprise. When Marks and Spencer launched ‘Plan A’ in 2007, its budgeted cost was £200 million. Within a couple of years, it was breaking even; and by 2009-10, the various initiatives which made up Plan A had actually added £50 million worth of net benefit to the company.

With rich pickings like these on offer, you would imagine that finance departments would have become adept at identifying savings from sustainable development. In practice, this is often far from the case. Instead, many SD specialists have similar problems to Julius Brinkworth. They want their companies to succeed through sustainability, but they struggle to express the business case for the particular product, programme or strategy. And that means they struggle to convince their colleagues that there is one.

Why is this? In essence, it’s because sustainability is both complex and uncertain. And that puts it outside the comfort zone of most corporate financial decision makers. For the most part, the tools they use to calculate costs, risks and benefits assume that tomorrow will be more or less like today (‘today plus 2%’, as the phrase goes). That is fine for many of the decisions the tools are used to make. But these are often either blind to the wide array of potential financial dividends from sustainability initiatives – as with the Sainsbury’s example above – or they simply cannot cope with its inherent uncertainty.

A new, more sustainable product, for example, might be hugely successful in the coming years, as energy and resource prices spiral, as tighter regulation kicks in along with generous incentives for green innovations, and as consumer preferences shift and markets realign. But when it comes to capturing the value of those advantages, there is inevitably an element of conjecture. The numbers are much ‘softer’ than financial decision-makers are used to. As a result, the sustainable innovation looks less well developed, less mature – essentially, less of a good bet – than an unsustainable alternative.

“When faced with a choice between the familiar and the fuzzy, decision makers often play safe – too safe”

So when faced with a choice between the familiar and the fuzzy, decision-makers often play safe – as they see it. But in so doing, they take what may well be a bigger risk of missing out on future opportunities. As a result, companies get stuck in a vicious cycle: they want a cast iron business case before they will act, but they can only get the data they need by going ahead and taking a punt on innovation, which many will understandably be reluctant to do. Changing this pattern means finding ways to make what looks ‘fuzzy’ solid and important: making it show up on the spreadsheets, as it were. Often, this means expressing it in terms of shareholder value. At Forum for the Future, we’ve developed a toolkit to help do just that [see ‘Making it count’, below]. It is clear that specific sustainability challenges are already hitting value drivers. Any company with an agricultural supply chain is worried about security, quality and cost of supply. The Climate Act in the UK and the EU Emissions Trading Scheme are affecting the cost of energy use. Customer expectations and purchasing behaviour are shifting – just look at the rapid mainstreaming of fair trade. And as the Carbon Disclosure Project demonstrates, investors, too, are already asking tough questions of management. These and other factors are all shifting the future landscape in which companies will operate. Sustainability professionals are well placed to map out its contours, identifying opportunities to create real value for their business.

Short-term action, long-term vision
For short-sighted companies there is a standard business case about capturing known ‘win-wins’, which both satisfy shareholders and contribute to a more sustainable future. Some actions taken in pursuit of this, such as cutting costs by reducing waste and emissions, should in theory show up on the standard finance professional’s radar. Others, such as retaining market share by protecting the brand, may be more ‘fuzzy’. For more astute companies, there is a strong business case for taking a leadership position: effectively reshaping the landscape so that there are more sustainable business opportunities to capture. Leading companies like Marks and Spencer, Unilever and GE are making long-term investments to do just that: shaping customer demand, investor expectations, the regulatory environment, their innovation pipeline, supplier capabilities and more. Such investments may be hard to quantify using today’s financial tools. But their long-term value cannot be overestimated.

Making it count Over the years, Forum for the Future has learnt a lot from working with its corporate partners on the nitty-gritty of the business case. It’s distilled those experiences into a toolkit called Better Decisions, Real Value. Aimed at sustainability practitioners and enthusiastic financial professionals, it can help them find the leadership business case for their company. For more information, contact David Bent on 020 7324 3662 or d.bent@forumforthefuture.org

Base 2011For anyone still working to convince their finance director of the value of sustainability, there’s a chance to nail the arguments once and for all, with the workshop ‘Finding your business case for sustainability initiative’, led by Forum for the Future. To register visit the Base website 

David Bent is Head of Business Strategies at Forum for the Future.

 

01 February 2011

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Responding to the publication of final greenhouse gas emissions statistics for 2009, Energy and Climate Change Secretary Chris Huhne said:

“Yes, emissions were down in 2009 but so was the economy so this is no time for back slapping. A low carbon approach has to be a vital part of kick starting and future proofing our economy, getting us off the oil hook and onto long term green growth. That’s why we’re wasting no time in reforming the electricity market, setting up the Green Investment Bank, and legislating for the Green Deal.”

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Greenhouse gas emissions – headline results

• In 2009, UK emissions of the basket of six greenhouse gases covered by the Kyoto Protocol were estimated to be 566.3 million tonnes carbon dioxide equivalent (MtCO2e). This was 8.7 per cent lower than the 2008 figure of 620.5 million tonnes. Between 2008 and 2009 there were decreases in emissions in all sectors, including 11.0 per cent (24.2 MtCO2e) from the energy supply sector, 11.8 per cent (11.5 MtCO2e) from the business sector, 36.5 per cent (6.0 MtCO2e) from industrial processes, 4.2 per cent (5.4 MtCO2e) from the transport sector, and 5.8 per cent (4.8 MtCO2e) in the residential sector.
   
• Carbon dioxide (CO2) is the main greenhouse gas, accounting for about 84 per cent of total UK greenhouse gas emissions in 2009. In 2009, UK net emissions of carbon dioxide were estimated to be 473.7 million tonnes (Mt). This was around 9.8 per cent lower than the 2008 figure of 525.1 (Mt). There were decreases in emissions of 11.5 per cent (24.1 Mt) from the energy supply sector, 13.1 per cent (11.5 Mt) from the business sector, 4.2 per cent (5.2 Mt) from the transport sector, and 5.9 per cent (4.7 Mt) from the residential sector.
   
• The overall decrease in emissions has primarily resulted from two factors: a significant fall in energy consumption across all sectors, and an increase in the use of nuclear power rather than coal and natural gas for electricity generation. As the UK economy contracted during 2009, this resulted in an overall reduction in demand for electricity, together with lower fossil fuel consumption by businesses and households.
   
• All the sectoral breakdowns included in this statistical release are based on the source of the emissions, as opposed to where the end-user activity occurred. Emissions related to electricity generation are therefore attributed to power stations, the source of these emissions, rather than homes and businesses where electricity is used.

For the relevant data tables, please go to the UK emissions statistics section of this site.

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25 January 2011
DECC Press Notice: 2011/008

 

Energy Minister Charles Hendry today gave the go-ahead for ScottishPower to construct  a new 1,000 megawatt gas-fired power station near Hoo St Werburgh in Kent, adjacent to the existing Damhead Creek 800 MW gas-fired power station.

Charles Hendry said:

“This power plant will play a vital role in providing secure electricity supplies for the South East, as well as creating jobs in the region.

“It will be one of the most efficient power plants in the world, and be built carbon capture ready, which means that eventually CO2 produced by the plant could be captured and transported for storage under the North Sea.

“There is also potential, in the future, to use the heat created by the plant to supply the local area.” 

The Damhead Creek 2 Combined Cycle Gas Turbine Plant could generate enough electricity to supply almost 1.5 million homes.

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Note for editors
 

1. For recent decisions on planning applications: https://www.og.decc.gov.uk/EIP/pages/recent.htm