Published as a podcast at www.susbiz.biz on Friday 29th January 2015
Yes it's Friday and this is the Sustainable Futures Report. Hello, I'm Anthony Day with a new episode for Friday 29th January.
Energy’s in the headlines again, both the oil price and the UK energy policy. It’s not been the best week for Amber Rudd, Secretary of State for Energy. The World Economic Forum met in Davos last week. Apparently 62 people now own as much of the world’s wealth as is owned by the poorer 50% of the world’s population. I wonder if all 62 were there. I know I wasn’t. Stop laughing at the back. Among many other things, they discussed the circular economy, which is my main theme for today. But first, the website for the Sustainable Best Practice Exchange is now live at sbpe.co.uk…
On Tuesday of this week Energy Minister Amber Rudd defended the government’s energy policies following a letter from business leaders calling for clear leadership and long-term stable policies, and a hard-hitting report from the Institute of Mechanical Engineers. She re-iterated an energy policy based on nuclear, offshore wind and shale gas although support for offshore wind would be contingent on further cost reductions, but not on the need to decarbonise. On-shore wind, generally the quickest and cheapest to install, is off the agenda, mainly because voters don’t like it. They probably won’t like sitting in the dark, either. Fortunately it has been so incredibly warm this autumn and winter that electricity demand has stayed low and so there’s been no risk of power cuts. Apart of course from areas where power was knocked out by the floods, but that’s a different story.
On Wednesday EDF said it still hadn’t raised enough finance - despite massive support from China announced by George Osborne back in October - to be able to start work on the Hinckley C Nuclear power station. They have already said that it will not be in production until some time after 2023, and presumably the longer the start is delayed the later it will be completed. Apart from finance, similar plants have been delayed by technical difficulties. At Flamanville in Normandy EDF's plant is six years late and three times over budget. Manufacturing flaws have been detected in the castings and tests are expected to continue until the end of this year before the French nuclear safety agency will be able to decide on whether construction can continue. There are similar problems with a plant under construction in Finland, and the uncertainty has delayed the start of a major plant in India.
As I noted on 20th November, the Royal Academy of Engineering reported to the Prime Minister’s Committee on Science and Technology saying that fracking was unlikely to yield any shale gas before 2030, and even then not very much. All this points very firmly to an energy gap, which will surely be made worse by the closure of Longannet and Eggborough power stations in the first quarter of this year.
An energy gap, or at least an electricity gap, was highlighted this week by the Institute of Mechanical Engineers. In a report entitled Engineering the UK Electricity Gap they state that QUOTE the UK Government’s policy to close all coal-fired power stations by 2025, combined with the retirement of the majority of the UK’s ageing nuclear fleet and growing electricity demand will leave the UK facing a 40-55% electricity supply gap.
The report says plans to plug the gap by building Combined Cycle Gas Turbine (CCGT) plants are unrealistic, as the UK would need to build about 30 of these new plants in less than 10 years. The UK has built just four CCGTs in the last 10 years, closed one and eight other power stations. In addition, in 2005 twenty nuclear sites were listed for decommissioning, leaving a significant gap to be filled. According to the report, the country has neither the resources nor enough people with the right skills to build this many power stations in time. It is already too late for any other nuclear reactors to be planned and built by the coal ‘shut-off’ target of 2025, other than Hinkley Point C.
Dr Jenifer Baxter, Head of Energy and Environment at the Institution of Mechanical Engineers, and Lead Author of the report said: “The UK is facing an electricity supply crisis. As the UK population rises and with the greater use of electricity in transport and heating it looks almost certain that electricity demand is going to rise.Electricity imports will put the UK’s electricity supply at the mercy of the markets, weather and politics of other countries, making electricity less secure and less affordable…. Under current policy, it is almost impossible for UK electricity demand to be met by 2025.”
Carbon Brief is a UK-based website covering the latest developments in climate science, climate policy and energy policy at carbonbrief.org They have assembled a wide range of expert opinions on the report and criticise it for being simplistic and they dispute the conclusions. They question the IMechE’s assumptions about future electricity demand and they regret that the press has latched on to alarmist headlines which they believe cannot be supported. Nevertheless, they conclude, QUOTE “The UK’s electricity system is changing rapidly, the energy industry is being asked to invest to continue that transformation and yet there is little transparency over the details of government policy.” Similar points were made by the letter from the CBI to The Times.
The oil price this week has bounced up and down and global stock markets have bounced around in response. My man in the market says it will fall to $20 because no-one is buying. There were others on the BBC saying it would go even lower, even down to $5. Who knows? One thing is clear. Those who decided to sell out of oil for reasons of conscience have avoided significant losses. How much of your pension fund is in oil?
I’m Anthony Day and you’re listening to the Sustainable Futures Report. Let me just take a moment to tell you about the Sustainable Best Practice Exchange. It takes place in Harrogate on the 14th April and brings together experts on energy, supply chain, skills and economic development. Better still, it brings together people like you to share your experience and best practice in facilitated round-table discussions. Details at the website which is now open: sbpe.co.uk You can register there, but if you mail me at mail@anthony-day.com I’ll sort you out a discount.
At this time of year consultants PwC produce their annual CEO survey. The press made much of the fact that businessmen didn’t put climate change at the top of the list. Over-regulation was listed as the biggest threat to business, by 79% of CEOs. Climate change was mentioned by only 50%. Big improvement on last year, though, when PwC didn’t ask about climate change at all. And a WEF survey of 750 economists last week picked a climate-induced catastrophe as the greatest threat to the world economy for 2016.
The theme at the World Economic Forum in Davos this year was “Mastering the Fourth Industrial Revolution”. First came steam and machines, next came electricity and mass production, the third revolution was based on electronics and automation. They call the Fourth Industrial Revolution the age of cyber-physical systems and the circular economy is a key part of it. There’s a very good article about all this on LinkedIn. It’s by Oliver Hurrey of 2degrees and it’s called The Night the Circular Economy Joined the Revolution.
For the benefit of new listeners, what is the circular economy? My episode of this podcast published in March 2014 was an account of a circular economy conference at Bradford University staged by the Ellen MacArthur Foundation. It has been by far the most popular of any episode, and it’s still available. The text version, packed with hyperlinks, is at anthonyday.blogspot.co.uk.
Our traditional economy is based on take, make and discard. That’s the linear economy. We take raw materials by mining them or growing them, we manufacture them into products which we use and when we have finished we throw most of them into landfill. This has served us well for a couple of centuries, but as global population grows towards 9 billion people by 2050 there is unsustainable pressure on both raw materials and landfill sites. When we throw things away it is not just the materials that we are discarding, we are also destroying the value created from the energy and human labour used in the manufacturing process.
According to the Ellen MacArthur Foundation the present linear economy - take, make, discard - embodies a number of risks. The first is economic losses. For example, in Europe, material recycling and waste-based energy recovery capture only 5 percent of the original raw material value. The average car is parked 92 percent of the time, 31 percent of food is wasted along the value chain, and the average office is used only 35–50 percent of the time, even during working hours. There are price risks. The price of oil and other commodities has collapsed in recent months which may be good news for manufacturers, though not for primary producers. The fact that prices can spike with little warning makes it extremely difficult to plan. Continuous demand for natural resources leads to climate change, loss of biodiversity and natural capital, land degradation, and ocean pollution. Then there’s security of supply. Many developed countries need to import non-renewable resources. The European Union imports six times as much materials and natural resources as it exports, and at the same time it generated 2.5 billion tonnes of waste in 2013. According to the Environmentalist magazine, 1.6 billion tonnes of this were not reused or recycled. The EU has introduced targets for 2030. 65% of municipal waste to be recycled by then, up from 43%. 75% of packaging waste to be recycled and landfill to be reduced by 10%.
So is the circular economy just another name for recycling? No, it’s far, far more than that. Yes, reduce, re-use, recycle is still an important maxim, with particular emphasis on reduce. By reducing what we buy and what we waste we reduce the demand for primary materials, for manufacturing effort and ultimately for landfill. By re-using or re-purposing we delay our demand for replacement, and likewise for materials, manufacturing and landfill. The circular economy goes further. It starts at the design stage. It starts by considering how a product can be repaired, refurbished, and disassembled so that ultimately its raw materials can be re-used. The aim is to send zero to landfill. But the principal aim is to maximise the life of a product as a product, because once it reaches the recycling stage most of the energy and labour involved in the manufacturing process is lost. If it’s designed for repair and refurbishment it can operate at peak performance for a much longer period. The cost of ownership is reduced.
We may see changes in the way products are traded. For example, in the UK we used to rent our televisions. For a monthly payment we had a TV and if it went wrong it was immediately replaced or repaired as part of the deal. It was a service. Falling product prices and the wide availability of consumer credit put an end to that. Many people are effectively renting their cars. It’s common to get a finance deal which covers ownership, maintenance and breakdown recovery. It’s a service. So far the motor industry is not taking back cars, refurbishing them and leasing them to new owners, but there’s no reason why that should not happen.
This week Steve Howard, Head of Sustainability at furniture company IKEA, said we had reached “peak stuff”, the stage where we had more stuff than we knew what to do with. The growth in self-storage units where we keep things we haven’t got room for but might need, bears out his point. “We will be increasingly building a circular Ikea where you can repair and recycle products,” he said.
Reduce, Re-use, Recycle is now being superseded by Resolve, an acronym for REgenerate, Share, Optimise, Loop, Virtualise, Exchange.
Regenerate is about using renewable energy and materials, and restoring ecosystems.
Share is about sharing assets like cars in car clubs, sharing appliances (remember borroclub in an earlier episode?), about designing products for durability and for easy upgrading.
Optimise: improving efficiency, minimising waste and leveraging automation and big data.
Loop. The circle in the circular economy. Re-using, remanufacturing, recycling.
Virtualise: Books in the cloud instead of on paper. Shopping on line instead of on the high street.
Exchange: New materials, new technologies, new ways of doing things.
Find out more about this at ellenmacarthurfoundation.org.
We’ve all heard the clichés like, “You can never cross the same river twice,” or “If you keep doing what you’ve always done don't be surprised if you get the same results as you’ve always had.” The truth is that world is changing and faster than ever before. If you’re struggling to make a go of the swings it’s time to look at the roundabouts. Actually you need to look at the alternatives before business as usual starts to fall off. You don’t want to be rushed into decisions. You do need to examine the universal truths. You do need to question some fundamental beliefs. Nothing goes on for ever. Remember Yellow pages? A book left on the doorstep because it was too big for the letterbox? On the doorstep of every house in the land! If you can get one at all now, it’s about the size of a slim paperback. And wasn’t an independent Scotland going to be founded on oil revenues?
Plus ça change, as I’ve said before. Plus ça change, plus c’est la mȇme chose. The more it changes, the more it stays the same. What goes around comes around. Only probably not this time.
Come to the Sustainable Best Practice Exchange. Listen to experts. Talk to your peers. Find out how they see the future.
I’m Anthony Day
This has been The Sustainable Futures Report.
There will be another one next week.
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Bye for now!
