Monday, 18 August 2014

Green energy and jobs... oh and the EU...

Reading on The Telegraph yesterday I found out that "EU green energy laws 'put 1.5m UK manufacturing jobs at risk'". Now, this is mainly The Telegraph repeating a report of the Business for Britain (BfB) Eurosceptic group.

The storyline that the authors put together is that the EU is the source of green energy laws and these laws increase energy costs which eventually threaten the profitability of energy intensive industries which may leave the country as a result and leave behind them unemployed people...

Is this exaggerated maybe?

I should first of all clarify that:

1. Yes, there are energy intensive industries in the UK (and the rest of Europe) and yes, they would love to have low energy prices. In fact, I would also love them to have low energy prices, at least at levels that they would prefer to stay in the UK than leave.

2. Yes, that's an important debate especially when you realise that it's not just the low Chinese energy costs we're competing against but the very low energy costs available in the US (there's a link to shale gas on that matter but I will come to this at a later post). So it's not any more a decision between establishing factories in developed or developing countries but a direct comparison between developed economies.

and then add a few thoughts and observations to the debate:

a. The main Green Energy Laws that the article cites are really one, the Emissions Trade Scheme (EU-ETS). The Renewable Obligation (RO), also mentioned in the article, is not quite an EU law at all.

b. Increased use of renewable energy, which is the aim of RO, is aligned with the current EU policies. Specifically, those looking to achieve an average of 20% share for renewable energy across the EU by 2020. However, a new binding target for renewable energy for 2030 is far from certain.

c. Coming back to what is actually EU law, the EU-ETS has so far recorded rock-bottom carbon prices. Did it really threaten any of the large manufacturers? Not the least, since they've all budgeted for significantly higher prices which were never realised. Whether EU-ETS will survive post-2020 remains an open question.

d. The UK, and not the EU, has the Climate Change Act 2008 which requires the country to reduce its carbon emissions by 80% between 1990 and 2050. This is achievable with a combination of measures relating to improved energy efficiency, increased use of renewable energy sources and nuclear energy. That's the most demanding, long-term climate change target that exists out there and makes the UK world leader in the Climate Change agenda.

So, at this stage let's get one thing right. It's not the EU green energy laws but the UK laws that drive renewable energy investment in the UK. Green energy laws is not a good enough reason to be Eurosceptic I think!

Next post will be about the green levies and their "huge" impact on our bills which was not. Probably linking it with how the Coalition Government handled this issue...

Monday, 11 August 2014

The comeback and catching up news!

After several months of blogging silence, I eventually found the time to return to writing here. Last winter has been hectic with work on research and consulting bids and research papers.

A lot has happened in the energy and environmental scene of the UK over the last months and I will probably use some of the next posts to catch up. These will include progress with shale gas and some thoughts on the Coalition Government's green (not) attempts...

In the meanwhile, I thought I should share some exciting news. That is I am about to embark to a trip to the US where I will work at the Department of Geographical Sciences of the University of Maryland, College Park. My next post will be from there!

Thursday, 20 February 2014

Parents: your pensions are screwing up your children's future

When pension funds and investment managers are opposed to governments, they can be ruthless. These otherwise behind the scenes organisations played a big role in killing the EU's Robin Hood Tax (also known as the Financial Transaction Tax), claiming that it would harm their members.Now we want to harness this power for a much bigger goal – to help ensure we don't sleepwalk into climate catastrophe. It truly is, as the US secretary of state John Kerry has just called it, a "weapon of mass destruction".

That wouldn't be good for pension returns – as Anne Simpson, a senior official at one of the world's biggest pension funds says: "There will be no place for CalPERS to invest in a 4 degree climate warming world." And it won't be very good for us, young people, either. Who wants to live in that kind of dystopian world?

Protests can do a lot to raise awareness, but they lack a very important ingredient: Money. This is why the environmental movement turned to investors as a powerful lever of change. The fossil fuel divestment campaign with its focus on "easy" targets, such as universities and charitable organisations, has given a big boost to climate change activism. These institutions can give a powerful message. But their financial power is dwarfed compared to the trillion pounds average citizens jointly own in their pensions.

Pension funds are cruising along, unsuspecting of the large iceberg coming their way. The companies they own spend our parents' retirement savings in the search for new fossil fuels – at a time when existing reserves are already sufficient to lock us into potentially 5°C of global warming. What's worse, they also seek to manipulate public opinion and lobby governments, ensuring nothing stands in the way of profits.

Meanwhile, few global leaders are displaying the courage to address the issue of climate change. The blunt reality is that it's the older generation who largely ignored scientists' warnings, and many of them are still in denial about climate change. It is their culture of irresponsibility that created this mess, and their generation is over-represented among the political and business decision-makers. Yet it's we– the younger generation – who are going to suffer the consequences of their passivity. It is down to us to make our voice heard and to find a way around our lack of representation.

Most young people have no funds, but our parents collectively have a very large pot of money in their pensions. Whether they are concerned about climate change or not, they do really care about their children. If asked directly, what parent would want their money to fuel an economy which harms their children's prospects for the possibility of a little extra performance in the short term? And who is better suited to ask them to have their say on this trade off than us, their own children?

This is the thinking behind the Push Your Parents campaign: young people's future is at stake, so we encourage them to ask their parents to take two minutes to email their pension funds. Parents can find an emailing tool and a letter template online asking pension funds to act on climate change risks for their investments.

Alongside our own research on investment and pension funds, we received help from Share Action, the Asset Owners Disclosure Project and the experts on our advisory council. As it turns out, investing is not as complicated as it sounds, and with a fresh eye, you can actually notice inconsistencies that the experts have just learnt to ignore.

Pension funds engage in short-term trading, or "beauty contest" investing as Keynes called it. This is harmful to long-term returns and clearly ignores the fact that pension members often have investment horizons of decades. If the financial system carries on with business as usual, atmospheric carbon concentrations will rise alarmingly with the real risk that pension assets will be wiped out along with the world as we know it.

Because of their long-term horizon, pension funds can and should be the drivers of the transition to the low carbon economy. Pioneers include the Norwegian fund Store brand, which recently divested from 29 coal and oil sands companies, taking a strong engagement position on the climate change issue.

Many funds are also requesting fossil fuel companies to assess and report on their carbon assets risk. Yet these are exceptions. Public pressure is needed for pension funds to become the active owners of companies they ought to be. The laggards need to be cajoled, and the leaders rewarded. The good news is pension funds are accountable to pension members. If you or your parents have a pension, the power is in your hands. Please demand that your fund stops fucking up our future!

This article was originally posted online at the Guardian's website and reposted here. As an owner of this blog I do not claim any right on this article and I am grateful to the Guardian and the authors who are: Antoine Thalmann is a masters student in economics at Oxford University and co-founder and member of the coordinating team of the Push Your Parents campaign. Maria is a PhD Student in Biomedical Engineering at the Oxford University. She is in charge of social media and communication for the Push Your Parents campaign.

Tuesday, 19 November 2013

Energy Storage: a review from Berlin.

I am glad to find myself in Berlin this week to attend the 8th International Conference on Renewable Energy Storage. This is the core European research and industry event on energy storage. There is a balance of excellent academic and industry speakers but at any instance anyone can notice that this event is dominated by German activity. The German academia and German industry are serious about energy storage... Storage for electricity grid stability, for industrial energy management, for households, for off-grid isolated consumers and on-grid consumers and most importantly storage for vehicles.

Norwich Business School is part of the event with 2 studies. A first one on the "Utility-scale energy storage for the regulation of wholesale electricity prices" and a second one on "The multiple role of energy storage in the industrial sector". The first study is a detailed examination of the arbitrage value of electricity storage for the Greek electricity market. The core theme of this work is currently developed through an institutional innovation framework for the UK electricity market by our NBS team.

The second study is the result of a collaboration with our colleagues in the Technological Education Institute of Piraeus in Greece and the Institute of Power electronics and Electrical Drives of RWTH Aachen. Nevertheless, this project would have never taken place without the contribution of our industrial partners Systems Sunlight SA in Greece and AEG in Germany. We looked into the potential revenue streams for the development of demand management and energy storage for energy intensive industries. For the first time commercialisation analytics were combined energy billing savings, participation in the spot market and a lookout for potential governmental subsidies that the value of storage is worth for.

In fact this second study has inspired our research group for further discussions for the development of a larger consortium that will enable us to apply at the forthcoming EU Horizon 2020 funding competition. Being at this conference is really the right place to explore the dynamics of possible collaborations. Simply put, most of the potential industry and academic partners we would wish for are already here. Clearly the contribution of NBS in an engineering intensive consortium is essential. Our partners do not expect us to develop technological R&D. They do however, expect us to develop innovative architectural and institutional business models that will enable mainstreaming of energy storage. They also expect us to inform policy making and inform governments about the financial and utility value of energy storage.  

Following from that last issue, our German colleagues and the panellists at the conference's sessions discuss quite extensively that funding for energy storage should not for much longer be directed to R&D but to market implementation. They are looking for direct subsidies similar to those that started-up the markets for wind energy and PV-panels. Perhaps the UK's subsidy for electric vehicles is already doing that?

Tuesday, 15 October 2013

Carbon reporting became mandatory!

The UK Government has regulated for carbon (ore more precisely - carbon dioxide - CO2, methane -CH4, nitrous oxide - N2O), hydrofluorocarbons - HFCs, perfluorocarbons -PFCs and sulphur hexafluoride - SF6) reporting to become mandatory since the beginning of October 2013. The legislation was introduced as part of the Companies Act 2006 (Strategic and Directors Report) Regulations and requires companies to include in their Directors' report carbon disclosures for the financial years ending on or after 30 September 2013. The legislation affects all UK quoted companies which essentially includes all UK incorporated companies whose equity share capital is listed on the Main Market of the London Stock Exchange UK or in an EEA State, or admitted to trading on the New York Stock Exchange or Nasdaq. 

Relevant guidance has been published under the broader "Environmental Reporting Guidelines: Including mandatory greenhouse gas emissions reporting guidance" scheme. The current guidance allows a lot of freedom with regards to the format and layout that the reporting should take place. Therefore companies that are already using the Greenhouse Gas Protocol Corporate Standard  or even ISO 14064-1 will not be surprised by the requirements. However, it is expected that the reporting framework will be reviewed by 2015 and 2016 with the intent to enhance its scope. 

This development can be criticised widely; lack of mandatory and comparable reporting framework; lack of commitment or even strategic reference to reducing emissions rather than just merely reporting them and the list can go on.  But the fact is that this initiative puts the UK in the lead of climate change action in the world since this is the first and only scheme currently operational in the world. The consequences of this regulation will not be limited in the UK. Quite clearly the scheme involves companies with a strong presence in international stock exchanges and their reporting in one region (UK or even the EU or EEA) will not leave unaffected their activities in the rest of the world. 

Some may even argue that the majority of companies affected were already reporting their greenhouse gas emissions. But, Delloit's "UK Carbon Reporting Survey - Lip service or leadership?" shows that this is only partially true. Indeed a very large number of companies choose to report on their emissions but  only a fraction of them does so in a transparent, accurate and complete way. Very rarely companies provide details about their emissions calculation methodologies or have their reporting verified by external auditors.

Nothing can be improved if it's not measured. The Government has made a first step in the right direction and it looks like more developments will follow.